Be Careful What You Wish For

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Recently, Timothy Egan published an opinion in the New York Times1 raising the question of whether Trump's economic nationalist advisor Steve Bannon was right – not in his simplistic view of economics, but rather when he claimed that "if the left is focused on race and identity, and we go with economic nationalism, we can crush the Democrats."

In other words, he is re-stating the famous James Carville campaign maxim, "it's the economy, stupid."

Unfortunately I think the problem is far greater than that. If the only issue is winning one election, and defeating one historically unqualified and ignorant candidate, then vague messages of economic hope and optimism might be enough. It's true that identity politics are great for those whom you "identify" while leaving everyone else cold; money talks, and when it comes to economic issues, people listen. But political campaigns based on messaging are tactical, while what we face is a strategic problem, and voters instinctively know it.

The real problem is that globalism – a wonderful idea when the most urgent threat was aggressive communism – has structurally changed the way economic systems work and interact, and has created a merged system that spans legal and regulatory boundaries. This was a smart strategy to prevent Russian expansionism, and it fit well with American ideals of worldwide democracy and law. But the result is an ungovernable economic network. When legal "zones" don't match economic ones, the result is that the least powerful legal zone wins.

Before WWII international trade – and certainly international manufacturing – was a rarity, and while products like wine and tractors were shipped back and forth, it was small portion of the overall economy. Further, the manufacture of those goods remained largely local.  In the post-war period, America used its dominant moral and political authority to push democracy and capitalism everywhere. This converged nicely with the growth of US-based manufacturers, who became the dominant brands worldwide as exporting emissaries of the capitalist idea.

As long as this was simply about exporting, things worked. Laws regarding monopolism, worker protection, quality standards, etc. largely matched the geography of manufacturing and employment. But eventually, once it became possible to make some or all of a product in another, newly-capitalist country with stable politics and laws, corporations realized that the cost benefits of chasing the lowest labor costs and least regulated production were competitive advantages. Jobs moved abroad, followed by manufacturing plants, and in some cases, entire companies (often to Bermuda). Add to this the injury of automation and the damage to the US workforce was complete. This structural change in global commerce isn't reversible.

At the same time, almost unnoticeably the Republican party began to adopt the credo of the capitalist idea to an extreme. The notion that capitalism was a perfect self-adjusting system to cure all suffering, improve the human condition, and undermine tyranny became a kind of orthodoxy, until it reached its natural conclusion: that ANY government regulation was a kind of tyranny, and that even American government was an evil to business.

It's been astonishing, after years of attacking government, promoting free trade, and encouraging open economic borders as essential to the success of American business, that today we have a Trump/Bannon worldview promoting government intervention, trashing large international corporations, and trying to isolate America from the globalized system. It's a 180-degree turn from generations of GOP policy, but it's completely understandable if you realize that the Trump/Bannon constituency is not the investor class but the working class. In this view economics is a zero-sum game: rising tides don't lift all boats, only the most powerful one, and we have to use our nationalist power to put ourselves (read, "our labor force") first.

This is completely wrong and doomed to fail, largely because other countries won't play ball when they know we intend to grab it away from them, because large American corporations won't voluntarily give up their competitiveness in world markets just to look good by paying too much for US workers, and because automated jobs – well, they don't exist anywhere anymore, so they can't be brought back. It's been head-spinning for the Republican mainstream, who didn't foresee how dramatically the country's voters would react to globalism. But it successfully won the GOP base for at least one election cycle, and perhaps for more until the truth sinks in. Sadly for the GOP, they have no alternative policy.

The problem for the Democrats is that they don't, either. The traditional Democratic conception of employee vs. employer is meaningless in a world where there is no employment to start with. Blaming the "1%" is blaming capitalism for its own success (several years ago when Congress grilled Apple's Tim Cook about overseas cash hoards and tax avoidance, Rand Paul rightly criticized his fellow Senators for doing so: as he pointed out, Apple was being attacked for following the laws Congress itself had set to promote American corporate advantage on the world stage). When a corporation is a world entity, American laws – meaning, American government policy – have only a marginal affect on its business practices. What then does a political party promote?

Really, the only tools of any immediate effect are industrial policies, tax policy, and trade agreements. Industrial policies could help push or create American businesses into emerging fields with little international competition (past examples: automobiles, computers, movies) where domestic employment would matter. Tax policy would disincentivize corporations from fleeing the domestic labor market – but at the cost of raising prices for American consumers. And trade agreements could act as international regulations to limit the damage to labor sectors in all involved countries by controlling the degree to which the least-regulated country undermines the manufacturing in all the others.

Over time, educational changes and incentives for the next generation of workers may be needed to provide appropriate skillsets. College-level liberal arts may prove irrelevant to most, while digital skills, “virtual” labor, and other technology-based training could be more productive. It may even be that work as we understand it today morphs into a 7-day-a-week background task, in parallel with one’s personal life.

Right now, neither party seriously talks about this: they are consumed with scandal, terrorism, political posturing, and re-living the battles of the past, all without trying to speak to the new economic and political landscape. The old leadership is spent. Their ideas are history. The new political class, whose future is at stake, hasn't yet found its voice. So we are consumed for the moment by 24-hour news cycles about temperament, fitness, and party infighting. Bernie Sanders came close to changing the conversation (regardless of what you think of his ideas), but he struggles to get the attention of the Democratic leadership and he isn't much inclined to cooperate. It looks as though we are doomed to repeat ourselves for another cycle or two until the spell is broken, Trumpism is dismissed, and someone in either party begins to formulate a platform of policies that can reasonably offer the large American working class some hope that a solution is seen.

What is resistance to do in the current circumstance? It’s clear that opposing the Trumpist reactionary effort to barricade the country is fundamental. What isn’t clear is whether assisting the mainstream Democratic Party to near-term victory will result in the emergence of long-term plans to address these issues and maintain their appeal. It seems more likely that a new generation of young leaders, who accept the ineluctable nature of technological change and globalism – and their benefits – will best be able to formulate new liberal policies that will prove durable. As resistors, we should focus on identifying and supporting these new voices.

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1. "What if Steve Bannon Is Right?" (Timothy Egan, Aug. 25, 2017)

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