Economic “patriotism” as the folly of our age
Monday, March 13, 2006 at 4:09PM ARTICLE: “Ports Deal Shows Roadblocks for Globalization: Foreign Buyers, Not Trade, Spark a Political Backlash; Angst from Bolivia to France,” by Greg Ip and Neil King, Jr., Wall Street Journal, 11-12 March 2006, p. A.
ARTICLE: “DP World and U.S. Trade: A Zero-Sum Game,” by Eduardo Porter, New York Times, 10 March 2006, p. C1.
COLUMN: “The nationalist resurgence: Why the force of economic nationalism seem weaker than those of globalization,” Charlemagne, The Economist 4 March 2006, p. 50.
ARTICLE: “Mideast Investment Up in U.S.: Proposed Ports Deal Is Just Part of Flood of Oil Wealth Spilling Ashore,” by Paul Blustein, Washington Post, 7 March 2006, p. A1.
COLUMN: “Purple haze: Clintonism is alive, well and living in a governor’s mansion near you,” by Lexington, The Economist, 4 March 2006, p. 32.
In retrospect, the failed Dubai ports deal looks a lot like the same fear factor displayed with CNOOC’s bid for Unocal: a new form of economic nationalism recast as patriotism. Hell, if the Statue of Liberty can stand for homeland defense, why can’t patriotism be recast as protectionism?
What’s so slimy about this turn is: 1) it attracts the far right and labor left alike (two “braking cabooses” on globalization if ever they were); and 2) it makes America seem so French that I’m just about ready to vomit.
Of course, it’s the French who push this notion of “economic patriotism,” which represents the Old Core of the West doing nothing more than playing down to the level of the New Core, which does feature this sort of sentiment in their state-heavy planning for export-driven and FDI-driven growth (Brazil, Russia, India, China--the BRIC).
But in the end, it’s just so silly. We didn’t get to the top of the heap by playing this way, although long ago we did play this way. We sit on top of the global economy because our economy is so conducive to risk taking and entrepreneurship and innovation. I’m watching this process in spades with Enterra Solutions. We’ve got the sweet new thing in technology, and we’re marrying it up to some impressive thought leadership, and we’ve got all the usual types of investors to help us start, and all the expected types of larger companies looking to gobble us up. There are players fore and aft of this entire process, who specialize in all of its stages from initial start-up to roll-up into some “next generation entity,” as Steve DeAngelis likes to describe what we’re trying to do in building Enterra. I mean, it’s just been amazing to watch this process unfold and realize that none of it has anything to do with government control. All these investors and mergers and acquirers and buy-outs and venture capitalists and so on and so on: they all just appear of their own volition at the times of their choosing and this train just keeps rolling. We innovate, we attract investors and allies and partners and suitors, and we go from small to bigger to something truly amazing down the road--and no one in the government decides any of this, or protects it, or stops it. It’s just the market figuring stuff out on its own, and it is really cool to watch and participate in. Gives you a lot of faith, actually.
But too bad there’s not enough of that faith to go around. Want to know why the French are so patriotic right now? “Total foreign purchases of French companies hit an all-time high last year.”
And no, it ain’t just the oil-rich players, because in the end, these guys actually buy very little (they like their assets like their oil: liquid). No, the new buyers tend to be New Core companies, stretching their wings in the global economy.
So while they securitize their new wealth, we insecuritize ourselves with this infantile thinking on the zero-sum nature of trade and globalization. It’s pathetic but its widespread, and it reminds one of how humanity once trashed a previous form of globalization in the 1930s: too many identities too challenged all at once.
But it’s pissing in the wind, really. The U.S. needs, Clyde Prestowitz calculates, about $3B in foreign capital every day to keep our economy rolling: “Yet all of the body language here is ‘go away.’”
Indeed, we’re heading into the same stupid territory as some less-developed country headed by the Big Man who has to approve every deal, lest he lose out on some graft. As Kevin Hassett of American Enterprise Institute put it, “I think it is very dangerous to enter a new world in which every purchase of an American asset by a foreign entity is scrutinized by the government.”
Sounds like some socialist BS, doesn’t it?
As Charlemagne points out, the fear underlying all this unease is that these companies who purchase other countries’ companies are really acting as agents of the government. That’s a defensible concept when state-owned companies are involved. But ask yourself, which side changes the other more? Do the increasing trader roles of the state-owned companies make the government more capitalistic, on average? Or does that state make the market more statist in form or operation?
History says, the more trading, the greater the resulting pluralism and market-orientation of the entities involved. I mean, that’s how it worked in America, in sector after sector, and in century after century. But somehow we forget that constantly repeated trajectory of dominant monopolistic player that originally defines a sector, often with government help or complicity, and then eventually withers under the onslaught of competitors who arise, sometimes with government help or complicity. Microsoft is just the latest example in a very long list of companies and sectors that arose in this manner in the U.S.
But there is little escaping this rising tide of fear. We’re watching a flood of mergers and acquisitions right now, the biggest since the dot.com era (oh so long ago), and this time it’s amazingly cross-national, reflecting the BRIC’s rise. So now we have lean-and-mean BRIC companies targeting our fatter and slower and less competitive companies--and well they should. That’s economic Darwinism at its best: let the new and nasty devour the old and pokey.
National politicians and nationalists in general will fear this, but now is a time to watch the governors, or the guys and gals who are classic Clintonians in their approach to international relations. Clinton was the purest governor-president we’ve ever had: half the time working the domestic scene and half the time playing American salesman to the world, pushing U.S. companies and deals abroad like no other president we’ve ever had.
Now, the only Clintonians you find are governors, as the Republicans have turned the federal government into one giant spendathon, jacking up our deficit primarily through the ill-advised tax breaks Bush pushed through (and I say that as someone who will pay more federal taxes this year than I made in income just a few years ago, and I was earning a decent living back then).
And so you wonder why I pine for a Clintonian’s return! Someone who gets back to the biz of selling America in a competitive global landscape and who works alliances to make things like the Balkans go relatively smoothly as a SysAdmin effort (remember all our casualties on that one?).
And when you think of Balkan military boss Wes Clark as SECDEF in another Clinton Admin… that really gets my attention.
I know, I know. It’s just dreaming for now. But spot me the same sort of internationalist-free trader mix on the GOP side right now. Please! Spot it right now! Because if one isn’t found, this election could be as bad for America as Bush’s win in 2004 is turning out to be.
And that won’t just be bad, it could be disastrous. You combine an inward-turning America with a protectionist White House and all this economic patriotism flourishing in Europe, and you have the mix to turn the 2000s into the 1930s all over again.
And yeah, millions upon millions will die prematurely in that scenario. And if you’re in the business of preventing that, you need to care.
Reader Comments (9)
Just curious at how you got to "protectionist White House", seems the White House was the only one pushing this port deal like no other. Seems they were the only ones wanting this deal, but for strictly political reasons on both sides this deal was squashed.
This is a political year - let the muckraking, gutter brawl begin.
vinny
Tom,
"But spot me the same sort of internationalist-free trader mix on the GOP side right now. Please! "
Two words: Chuck Hagel.
For your consideration:
http://www.foreignaffairs.org/20040701faessay83407/chuck-hagel/a-republican-foreign-policy.html
http://select.nytimes.com/search/restricted/article?res=F60911F73C5A0C718DDDAB0894DE404482
(Apologies for not using HTML tags, just haven't mastered it yet.)
Ray Kimball
Isn't it ironic how it was Clinton vs. Clinton on the ports deal? Weren't the entire congress, both Democrats and Republicans, against the deal? President Bush was the one championing it, so I don't understand why he is the target here.
And maybe it is the tax cuts that have made the economy great enough to allow our incomes to be so much higher and as a result be paying more taxes? But I agree, we need to tighten our pocket book and make some sacrifices as a country.
I also agree that we need an internationalist-free trader to take the baton in 2008. My vote is for Giuliani if he jumps in; I feel he would be great abroad, in addition to at home. Right now the Democrats seem to be the most protectionist, although the Republicans flashed a side of their personality on the ports deal that scared me.
Perhaps really important this year is the election soon to occur in Japan, my side of the world. I hope whoever follows Koizumi will drop the stupid Yasukuni visits and mend fences with South Korea and China, while still saving some face for Japan.
Rodham-Clinton w/ FIRED! SACEUR Clark as SecState intrigues you? The Balkans were/are a mess. No US casulties just thousands of locals who don't count. Plus I still like Gov. G. Bush selling America + tax cuts spurring the economy. Tax cuts have always increased revenue! The pay raise generated did not cause the deficits to increase.
Tom,
I very much like the concept of protectionism recast as patriotism. However, I think that getting the European left, as well as much of the population of the Gap on board with this will require a global economic infrastructure with more credibility.
It's very easy to dismiss the anti-globalization faction as the second coming of Chicken Little and frankly, they deserve it sometimes. But as I've read more of where these guys are coming from, it seems to me that the dominant position in that movement is not opposition to globalization per se, but opposition to the Core, represented most specifically by the IMF, not optimizing opportunity for Gap economies to emerge successfully. It's not really fair to dismiss protests in the developing world as paranoia when the IMF forces developing countries to eliminate their agricultural subsidies while allowing the US to maintain theirs. I think that's the genesis of the whole idea of economic imperialism. The argument over whether to globalize has been resolved for years now, but it's hanging around on a purely rhetorical level, obscuring the important question of how we globalize because it's there where you'll find real solutions for the people who are willing to get tear-gassed at G-8 summits.
Those against the port deal just did not look at all the information. They saw the al-Quida link from years ago. Did they forget the Saudi Arabia link from years ago that is still with us?
Well economic patriotism is hardly a new thing. Of course economics has trundled on in spite of politcs since about the 60's. The sudden implimentation of a "protectionist stance" on a multi-national business does seen foolish. Like america just woke up and sees the world as a threat because an english company owned by a Dubai Prince wants to manage ports?
I am not fond of agreeing with GWB, but in this case he may have a point. Congress is pandering to paranoia on this point, not making policy.
Part of the problem is that now the economic world evolves faster than the political one. In terms of economic strategy, we are playing catch-up, and have been for years.
Its not economic imperialism that keeps the Gap countries down, its lack of focus and stability. Ultimately it maybe the the Gap countries will never be able to have the stability, as they are trying to move from 1920 to 1980, and the world is moving to 2010.
it makes America seem so French that I’m just about ready to vomit.
****
You crack me up!!
Just when we need to be considerate of our allies, leave it to politics to go the opposite direction.
Politicians are good at 2 things, doing nothing and over-reacting. (quoted from John Shadegg)
The deal probably would have been recieved very differently had the White House socialized this ahead of time with Congress. Blind-siding Capitol Hill, then following-up with veto threats and accusations of racism did not win any one over.
DG