A dangerous narrative is establishing itself in the newspapers and in the national mindset, as seen today on the front page of the Wall Street Journal in an article by Bob Davis and Jon Hilsenrath (hidden behind a reg wall.)
The line of analysis, which is line with Steve Bannon’s thinking, is that the people who have advocated globalization have done so at the expense of American interests. This analysis continues: the so-called “globalists” believe in selling out the interests of American workers and coddling up with other global elites at Davos at the annual gabfest.
This is false. American politicians and business leaders have promoted globalization (defined as relatively open trade and investment flows) because it serves American interests. There have been losers in the United States, to be sure, and they helped elect Donald Trump. But the right response is to find ways to bring more people along for the ride, rather than retreating full-scale from our current global embrace.
Davis and Hillsenrath trace the globalization push back to Adam Smith and David Ricardo in the 1776-1817 time frame. In my thinking, the Americans started a globalization push when we opted to develop Western Europe with the Marshall Plan after World War II and also sought to develop Japan’s economy as part of a benign occupation. The thinking in both cases was that we wanted these countries to be stable and prosperous so that they would not fall into the hands of the Soviets. They also were good markets and U.S. sales there helped spur our post-war prosperity.
President Nixon was something of a skeptic. When Japan’s exports of textiles to the United States reached the point that Japan was achieving a trade surplus of a mere $1 billion to $2 billion on an annual basis, he summoned Prime Minister Tanaka to a meeting in Hawaii in 1972 to complain.
President Reagan had no such problems. He believed in ramping up economic ties with the world and sharing the wealth in such a way that the Soviet Union would crumble. And it worked.
American business leaders, of course, have been eager to take advantage of open markets and have created truly globe-girdling companies. At the same time, we have allowed German, Japanese, French, and Korean companies and others to establish major manufacturing and sales presences in the United States. You wouldn’t be able to buy a BMW today if it weren’t for globalization.
All along, I think the people who promoted globalization believed in the inherent power of the American economy to generate new jobs and new industries. They thought we could shed textiles and footwear and low-end electronics assembly and charge into newer, more advanced fields.
We have created enormous wealth for millions by doing that, but this is where the dream has fallen short. We haven’t brought enough Americans along. Technology also has transformed the workplace. Yet many Americans continue to think that with only a high school education, they deserve high-paying jobs with benefits, a cabin on the lake and a Chevy Tahoe.
That world has been shattered. It’s gone forever. We need to have a more robust discussion about how we educate our people at vocational schools and community colleges. We have done an awful job of this. There are something like 47 different programs in the federal government (in the Departments of Labor and Education) dedicated to training and retraining workers, but they are poorly funded and organized. If there is anyone in the Trump camp who is capable of listening, why not create one agency in charge of training and retraining? Streamline it. Give it more funding. Tell American workers that this is the path they must take if they wish to take part in the prosperity of globalization. Telling them that you are going to bring back millions of jobs may make for great political theater, but it is not going to happen because the nature of the jobs has changed forever. I established that to my satisfaction in a story I did last year about reshoring jobs for Chief Executive magazine.
The goal is for all Americans to feel the benefits of a world that is relatively at peace and that is eager for the products and services that our companies can provide and that our workers are involved in providing. That’s economic patriotism, as I called it in my 1990 book, “The Japanese Power Game: What It Means For America.” I decided not to use the word “nationalism” because it obviously has nasty implications. I still believe that one can be an economic patriot and support globalization. There is no logical contradiction between the two.
The contradiction is arguing that one can be a “nationalist” who wishes to retreat from our global embrace without harming the interests of American workers. A wholesale retreat would be disastrous for entire sectors of the economy. So those who are calling them “nationalists” or “America First-ers” are frauds. Their ideas will harm American prosperity, not benefit it.