The Year of the Economic Nationalists
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| Marine Le Pen, National Front France via Business Insider |
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| Donald J Trump via votesmart |
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| Bernie Sanders via USA Today |
a body of policies that emphasize domestic control of the economy, labor, and capital formation, even if this requires the imposition of tariffs and other restrictions on the movement of labor, goods and capital. In many cases, economic nationalists oppose globalization or at least question the benefits of unrestricted free trade. Economic nationalism may include such doctrines as protectionism and import substitution.Now control of the economy is not necessarily left- or right-wing; it's simply authoritarian. (Some leftists argue that authoritarians are exclusively right-wing; there are studies of left-wing authoritarianism, e.g., here.)
It's not that difficult to find examples of these policies. For example, "progressives" are furious about the current omnibus bill which finally relaxes a decades-old ban on US oil exports. The net effect of the ban has been to limit the market to domestic suppliers, which favors domestic buyers. In fact, over the last few years, West Texas sweet oil has trailed the more global Brent price. Much domestic oil is easier to process and should, in theory, command a premium price. The leftists/populists think that artificially low crude prices under an export ban should translate into lower prices for refined products like gasoline and heating oil. This is not just a left-wing phenomenon; right-wing populists like Bill O'Reilly often bash the "oil speculators" and see some corporate conspiracy against the little guy behind "high" retail prices. (He's less likely to gripe about declining prices in the current global glut.)
A lot of it has to do with labor protectionism; countries see exports as a way of boosting employment but see imports and immigration as threats to employment, a "race to the bottom". Labor unions try to restrict competition through regulations like occupational licensing and minimum wages. Consider this excerpt from Bernie Sanders:
Bernie SandersKeep in mind that the GOP, stemming from predecessor parties like the Federalists and the Whigs, favored high tariffs, over and beyond its use as the principal source of revenue for the federal government until the sixteenth amendment, as a protectionist measure. Hoover, in fact, jawboned employers against cutting wages, worrying that lower discretionary income would dampen consumer demand and exacerbate the Depression. Unions also joined in with Big Business, knowing that pressure of import goods on prices would lead to cost-cutting measures, potentially including staffing and compensation, if not an existential threat to an employer and its jobs.
Open borders? No, that’s a Koch brothers proposal.
Ezra Klein
Really?
Bernie Sanders
Of course. That’s a right-wing proposal, which says essentially there is no United States. ...
Ezra Klein
But it would make ...
Bernie Sanders
Excuse me ...
Ezra Klein
It would make a lot of global poor richer, wouldn’t it?
Bernie Sanders
It would make everybody in America poorer — you're doing away with the concept of a nation state.…
What right-wing people in this country would love is an open-border policy. Bring in all kinds of people, work for $2 or $3 an hour, that would be great for them. I don’t believe in that. I think we have to raise wages in this country, I think we have to do everything we can to create millions of jobs.
In reality, when government picks winners for protection, it also creates less politically connected losers. Take, for instance, this assessment of "conservative" GW Bush's 2002 steel tariffs:
As a result of a Section 201 (“safeguard”) investigation brought at the behest of the U.S. steel industry, President Bush in March 2002 imposed tariffs on imports of certain steel products for three years and one day. The tariffs, combined with other challenges present in the marketplace at the time and in the months that followed, boosted steel costs to the detriment of American companies that use steel to produce goods in the United States. The resulting negative impact included job losses for thousands of American workers. The Consuming Industries Trade Action Coalition (CITAC) Foundation requested a formal examination of the impact of higher steel costs on American steel-consuming industries, and in particular, a quantification of employment losses at those companies. This study employed straight-forward and widely accepted regression analysis using a variety of price and employment data to maximize the reliability of the results. We found that:Artificially high prices subtract from alternative consumption or savings (future consumption), which also support jobs, not to mention leave the consumers better off.
• 200,000 Americans lost their jobs to higher steel prices during 2002. These lost jobs represent approximately $4 billion in lost wages from February to November 2002.3
• One out of four (50,000) of these job losses occurred in the metal manufacturing, machinery and equipment and transportation equipment and parts sectors.
• Job losses escalated steadily over 2002, peaking in November (at 202,000 jobs), and slightly declining to 197,000 jobs in December.
• More American workers lost their jobs in 2002 to higher steel prices than the total number employed by the U.S. steel industry itself (187,500 Americans were employed by U.S. steel producers in December 2002).
I shouldn't need to explain what 15 years of low economic and job growth have meant: worse-off household income, declining assets, a decades-old labor force participation rate. Younger people have a harder time finding a job, even with a college education. This leads to scapegoats, even though government has exacerbated economic insecurity through counterproductive taxes and regulations: immigrants, refugees, liberalized trade, etc.
Trump's economic nationalism is obvious: he has argued that US trade representatives are "stupid", have given away the store to wily foreign governments; he threatened to slap tariffs on Ford vehicles manufactured in Mexico; he has promised to deport 11M immigrants, many of them productive workers supporting our economy and tax burden. His motto, to make America great again, is explicitly nationalist.
Why have I included far-right French nationalist Marine Le Pen in the group? First, she's not the only example outside the US, but second, she recently led an impressive early round of elections (although the last round went against the National Front). There is a nationalist backlash against the a more US style free market among states, the European Union: Brussels rule trumping French policy preferences, the Syrian refugee crisis, sticky high unemployment, etc.
I am citing them, not because I agree with them (I've discussed these topics before in the blog and won't repeat them here)--in fact, being pro-liberty I am opposed to authoritarianism in all forms. But they have caught the public's imagination this year--the unprecedented Trump phenomenon in the GOP Presidential race, Sanders' unlikely summer competition to Hillary Clinton, and as cited above, the recent French elections. I find this uprising very troubling, because I know we need to do exactly the opposite of what these demagogues are demanding. I could easily see a global recession gapping into a depression if and when we engage in related global economic warfare.
