Features > April 4, 2008

The Upside of Nationalism

America-first fervor could be the driving force behind economic populism

By David Sirota

You don’t need to listen to presidential speeches or watch party attack ads to know that full-throated nationalism is now lodged in the ideological center of American politics. Look at social networking expert Valdis Krebs’ January chart to see what we—the royal We—are reading. Krebs amassed data from Amazon.com, examining what other titles buyers of conservative and liberal political books purchased in 2007. Most of this “also bought” data showed buyers of one liberal book buying other liberal books—and conservatives doing the same on their side.

Krebs’ chart, which draws a line connecting each “also bought” book, looks like a dumbbell, with two big clusters on the right and left—a cliché of the media’s “polarized America” meme. However, right in the middle are two books that both liberals and conservatives purchased: War on the Middle Class and Independents Day by Lou Dobbs, America’s most famous nationalist.

As economic anxiety grips America, the controversial CNN anchor vents history’s conservative and liberal expressions of contemporary nationalism—an ideology built around a self-interested, America-first fervor. When Dobbs tilts right, he rails against undocumented immigrants and “broken borders,” tapping into nationalism’s law-and-order pride and its xenophobic-tinged desire for cultural stasis that typically spikes during recessions. When he goes populist, he is the only major TV journalist in America to express nationalism’s disdain for global economic policies written by, and for, a transnational elite.

As evidenced by his surging ratings, Dobbs reflects powerful mass emotions. And thanks to the presidential election, some of those emotions may forge a political mandate. The key word is “some,” because the GOP nominee will be Arizona Sen. John McCain. Unlike most congressional Republicans, McCain has shied away from the anti-immigrant edge of today’s nationalism, effectively shoving the most extreme immigration positions off the presidential stage, at least in 2008.

Thus, today’s nationalistic sentiment will likely crystallize as economic nationalism—good news for progressives.

‘What do we do now?’

As the campaign wends its way through the heartland’s crumbling factory towns, the election is pivoting on debates over globalization and economic sovereignty.

Polls from the Wall Street Journal and Fortune magazine show that voters of both parties have had it with trade policies that they believe help other countries and slash jobs and wages here at home. A February Bloomberg poll found that by two-to-one, Americans say acquisitions of U.S. companies by other countries’ so-called “sovereign wealth” funds have a negative impact on our economy. More than two-thirds said that “allowing foreign investment in U.S. companies gives foreign governments too much control over the U.S. market.”

With blue-collar swing states central to both the nominating and general election contests, the Democratic candidates have responded forcefully to this ferment, sometimes even trampling their own records.

Before the Ohio primary, both Sens. Barack Obama (D-Ill.) and Hillary Clinton (D-N.Y.) were applauded for promising to reform America’s trade policy. Clinton, pretending she never supported the North American Free Trade Agreement (NAFTA), even held a press conference to feign outrage that anyone would remind the public about her repeated speeches championing NAFTA.

If the Democrats win, they will take the White House thanks to economic nationalism and their ability to amplify it with a populist message. But when the election ends, many who supported that message will be asking the question actor Robert Redford famously asked in The Candidate: “What do we do now?”

Specifically, how will rhetorical populism be cobbled into a concrete agenda, and how can economic nationalism be successfully legislated? The answer is in how we trade, tax and spend.

The trade transformation

In the early ’90s, economic nationalism spiked. Gallup polls showed almost half of all Americans saw free trade policies as “a threat to the economy.”

Around this time, Bill Clinton was campaigning for president on a promise to oppose trade preferences for China and NAFTA until China and Mexico improved their wages, environmental standards and human rights. Meanwhile, Texas billionaire Ross Perot was demanding the government “impose a ‘social tariff’ at a level equal to the difference between the wage paid in the developing nation and the wage paid in the United States for comparable work.”

As the tech boom of the mid-’90s hit, the number of Americans seeing free trade as a threat dipped to about a third, and the Clinton administration used the lull to ram NAFTA and China trade preferences through Congress.

Now, however, Gallup’s numbers have returned to early ’90s levels. And unlike before, the economy doesn’t look ready for a fast recovery. At a bare minimum, today’s surge in economic nationalism will likely stop Congress from passing more NAFTA-style agreements. Such a “time out” is not the wave of protectionism that corporate interests claim it is, nor is it any move toward new tariffs, social or otherwise. But stopping the current trade trajectory would be significant progress.

A three-pronged approach

More proactively, a three-pronged package of reforms has a realistic chance of moving forward.

First, a proposal by Sens. Sherrod Brown (D-Ohio) and Byron Dorgan (D-N.D.) would make new trade agreements harder to pass “unless they are accompanied by a more thorough financial analysis,” as the Washington Post reported. Their bill would end the practice of flying blindly into the free trade abyss by forcing the government to provide estimates of potential job losses with any trade pact. (That’s right—Congress currently makes trade policy without even asking what the consequences are.)

Second, for pacts that do pass, Rep. Keith Ellison (D-Minn.) is developing a proposal that would give nonprofit groups and individuals the same enforcement powers that corporations currently enjoy. Ellison floated a truncated version of this concept during the 2007 debate over the Peru Free Trade Agreement, arguing that if a trade deal gives a corporation the right to sue in international courts for enforcement of investor rights (copyrights, patents, intellectual property, etc.), then individuals and advocacy organizations should also have the same right to sue for enforcement of other rights (labor, environmental, etc.). A Democratic administration could incorporate this forward thinking into the core text of any future trade pact.

Finally, there are the concerns about foreign economic influence. The 2006 brouhaha over a Dubai company attempting to buy a group of American ports focused the public’s attention on the larger issue of state-owned companies and investment funds buying up large segments of the American economy. Today, these sovereign wealth funds hold $2.5 trillion in assets, and Morgan Stanley estimates they could hold $17 trillion within a decade. Many fear that these state-controlled entities, which often operate in secret, could use such assets as a political weapon.

Unlike the typical investor concerned only with the bottom line, foreign governments have agendas beyond making a buck. They could easily push companies to behave in ways that are politically advantageous to the owner country. That nationalist concern has led to congressional hearings, and according to Financial Week, some Democratic legislators appear poised to introduce a bill to strengthen the weak regulatory regime that currently oversees these international economic transactions.

Redefining ‘tax and spend’

Since 2004, when Sen. John Kerry (D-Mass.) lambasted “Benedict Arnold” companies that move jobs and operations overseas to avoid taxes, tax reform in the name of economic nationalism has become a staple of Democratic Party orthodoxy. Now, that orthodoxy has a bill name.

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• Reader Comments

  When did in these times become a newsletter for mr Sirota?

  Posted by headed on Apr 4, 2008 at 7:46 AM

  Back in the 1990s when NAFTA was proposed, Ross Perot was the only candidate who saw what it would eventually bring to the average American. He got my vote and my Congressman got my letters urging he vote against it. He has gotten lots of letters ever since.

  The last line of my first letter in November of 1993 ended with my comment, “NAFTA — Not A Fine Thing America!”

  Maybe if Supply Side Economics had been applied to our former nationalistic idea — that Congress was instituted to represent Americans — it would have been a good thing.

  Supply Side works on the theory that by cutting taxes companies will invest their tax savings, to create higher productivity, new jobs and profits. Sounds like a win-win all the way around. Right?

  Well, that was the theory ... and it worked!  All kinds of companies and the wealthiest individuals got nice tax breaks. They invested the savings. They created higher productivity. They created jobs — millions of jobs.

  The only problem is they created those jobs outside the U.S. — and they did make huge profits!

  Now some people on TV are asking, “How did the economy get to the point where the vast majority of U.S. citizens think the economy is in deep do-do? (to borrow from Bush the First who started the NAFTA, happily ever afta process rolling)

  Today job losses are increasing and job quality is decreasing. The categories which were biggest losers most recently were construction and manufacturing. The greatest gainers were government (If you can’t lick ‘em...), health care and hospitality (motel cleaning).

  As if that weren’t enough the Wakk St. shenanigans — CDOs, SIVs ARMs, etc., (Do these qaualify as four-leter words when plural?) have led the Fed to go rate-cut-wild and driven the dollar into the pits and given us a giant helping of inflation.

  “America First “ has come to mean we got the financial clap first and have now infected the whole world.

  Like I said fifteen years back — Not A Fine Thing America!

  Posted by whattheheck on Apr 5, 2008 at 2:57 PM

  “...American politics is perfectly aligned to help progressives use nationalism for our economic agenda.”

  It’s not just about American corporations being given incentives to keep their operations in America, or uphold American labor and environmental standards when abroad. Your economic agenda would benefit from including emphasis upon supporting small businessmen, both rhetorically and legislatively. This might sound like a classically “Republican Party” agenda item (if that matters, and of course to plenty it will), but if it’s economic empowerment of regular folks in the neighborhood you want to push, endorsing and supporting the efforts of small business owners by way of law and advocacy of policy agendas is a big way to do it. It is not common to regard that sector as being akin to “the working class”, so maybe you all will shy off. But I submit that the small business owner and the employee in that business have more of common interests than they do opposing ones. Any sort of gathering of power into fewer hands (including the gathering of economic power into a few conglomerated hands) is in opposition to broadbased empowerment, and that’s the case whether the corporations getting in bed with government, as we know they do, are based in the US or abroad. To the clerk trying to earn enough to put food on the dinner table or her boss trying to get a loan to consolidate her business debts, what’s the difference?

  Do something overt and striking to back up the regular guy, and not just the clock-puncher but the one who pays the salaries from his business account in the local bank as well.

  Posted by Kuya on Apr 11, 2008 at 1:13 AM

  I think today’s economic trend in the U.S. may be a uniting factor to override the racial divide. In fact, it could even be the uniter of many categories of discrimination — racial, sexual preference, gender — all of which are increasingly being shoved aside in favor of imported low-income foreign workers.

  It began with encouraging Hispanics to come here as sub-minimum wage workers. Then our best jobs were exported. Now both are happening at all levels of income, even lawyers.

  You may remember hearing how as a service economy our people are getting better jobs in the tech sector.

  Recently Bill Gates went to Congress to plead for more visas (raising the 65,000/year limit) for tech jobs. He claims there is a shortage, but recent estimates are for 300,000 U.S. college graduates to come into the workforce this year — so apparently Bill meant a shortage who will work for what he wants to pay.

  Many of my friends and relatives lost their jobs for the same reason. Machinists (also now claimed in short supply), architects, salespeople and others because their long service and experience made them the highest paid.

  The falling dollar now puts an individual pre-tax income of $30,000 at near poverty level. Forty years ago I easily supported a family of four on that.

  My father’s father was a coal miner before unions. The unions made things better for millions of people for decades. Then, when they got too powerful our manufacturing became sloppy and lost the competitive edge to Japan, Germany and others. (My 1973 Pontiac nothing but trouble and I have owned 5 VWs since.)

  Since the 1980s management has taken the power seat and shifted the income overwhelmingly in their favor. Some CEOs now earn 500 times as much as their lowest paid employees here (who knows how it compares to China and Mexico?)

  We need to take back our government, do away with the massive influence of lobbyists and demand leaders who realize their job is to serve Americans first.

  I had hoped Obama would be a person to do this, but I think his genuine opinion of ordinary Americans has been distorted by his associations (Rev.Wright and his own wife) to the point where he sees most of us as ant-black and/or too ignorant, too self-centered and too superstitious to know right from wrong.

  Posted by whattheheck on Apr 16, 2008 at 7:19 AM

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