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Economic Nationalism Helps Workers and Strengthens the Nation

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Among the many malapropisms of Donald Trump during the campaign, one in particular rankled the credentialed class. After his primary victory in Nevada, Trump intoned, “We won with young. We won with old. We won with highly educated. We won with poorly educated. I love the poorly educated. . . . So I’m very proud of you, this is an amazing night. I love the country, I love the country.” While fat shaming is out, education shaming has been in for a very long time. Commenters at the time were aghast at Trump’s offering this kind word for a fairly large part of the electorate. By contrast, Hillary Clinton smugly described her voters as coming from places “that are optimistic, diverse, dynamic, moving forward.”

The Middle Class and the Middle of the Country Are Suffering
The Midwest and the Rust Belt have been coterminous for a long time. These places were admittedly not very optimistic or dynamic prior to Trump’s election. They were moving backward. The people were hurting. And this hurt stems from a broader problem in the economy: it has become unbalanced. And this problem is creating cascading stress to family life, health, and safety in the affected communities.

Since the early 1990s, the economy’s rewards increasingly go to the technology sector, which produces neat gizmos, but few jobs, as well as the finance sector. Incidentally, both of those sectors are the place where the really smart kids end up. They siphon talent from the Harvards and Stanfords of the world, and they make a ton of money for their companies, their shareholders, and their top level talent. These sectors do not, however, create jobs among those who used to work in steel mills, auto plants, refineries, and other places where “dirty, dangerous, and difficult” work takes place.

The decline of the manufacturing sector has gone on a long time and has occurred for many reasons, including automation, stricter environmental controls, and the crippling short-sightedness of labor unions. But the decline has particularly accelerated since the 1990s when China’s large, low-wage, high-IQ workforce became available to the world. Labor and environmental regulations at homemade domestic manufacturing less attractive. At the same time, the American financial sector grew to a remarkable 7.5 percent of the U.S. economy, even as its investments in capital goods increasingly occurred overseas. Things got messy. After lackluster wage and income growth for all but the top earners, the economy essentially blew up in 2008. In the Obama years, following this debacle, the economic picture was mixed. Jobs grew at an appallingly low pace, wages remained flat, but those at the top, on the eve of retirement, or with positions in technology and the finance sectors, benefited tremendously as the stock market rose through a combination of earnings growth and artificially low interest rates.

Republicans and Democrats each treated the decline of the manufacturing sector as a fact of life. Obama callously declared, as if he were a mere observer, “some jobs aren’t coming back.” Jeb Bush said he wanted more millionaires, this at a time when many would settle for $40,000 a year.

The most famous cheerleader for these anxiety-inducing changes to our country’s economy is Tom Friedman, whose contempt for workers is only matched by his love of name-dropping. He excitedly quoted an expert who declared “the high-wage, medium-skilled job is over.”

Friedman says the solution is education and training. “In a world where average is officially over, there are many things we need to do to buttress employment, but nothing would be more important than passing some kind of G.I. Bill for the 21st century that ensures that every American has access to post-high school education.”

Friedman, Hillary, Jeb, Wall Street, and Silicon Valley forgot that average gets to vote. Average liked the way things were before. And average ain’t so average that they can’t figure out when a system is rigged against them.  

Enter Trump and Economic Nationalism
The centerpiece of Trump’s policies of economic nationalism is immigration restrictions and protective tariffs. Contrary to Friedman’s advice to get training and be prepared to job hop until you somehow retire, Trump’s proposals are substantially more realistic and find strong historical examples of success in America’s phenomenal growth as an industrial and world power during the 19th Century.

Under Trump, manufacturing jobs have grown nicely—171,000 in 2017—and he has reiterated his support of this sector with the recent call for tariffs.

Coming back to Trump’s offending remarks, it rankles because it reveals an important truth about life that undermines the deus ex machina solution of education and training: half of the people are, by definition, below average. Yet, somehow in the past they found jobs. When Trump says “Make America Great Again,” he recalls an era when the merely average (or below average) could have decent lives, intact families, home ownership, high trust communities, and economic progress.

The key to this equitable and rising tide was not merely free markets and limited regulations at home—although that was part of it—but also a limited labor pool, which encourages capital investment, which increases the average productivity per worker, and ultimately leads to an increase in wages. If you permit the natural limits of the labor pool (through sensible immigration limits) and if you discourage capital flight and pure wage competition (through protective tariffs), the result is a more productivity and investment at home. And thus, high wage manufacturing, as well as services that cannot be outsourced, reward the hard-working, but not necessarily high IQ or dynamic, cohort to earn a decent living.

Lake Wobegon We are Not
With all of the gnashing of teeth regarding the Bell Curve and its alleged implications for America’s commitment to racial equality, commenters missed out on two important insights for the future. First, that education can do little to enhance the prospects of those of middling intellect. That is, IQ tends to be stable, heritable, and mostly immutable. And, two, that our system increasingly rewards a “cognitive elite,” which intermarries at a greater rate than ever, and that this elite has replaced the more intellectually diverse, hereditary WASP elite of yesteryear, which was animated in part by an ethic of noblesse oblige and patriotism, values not necessarily restricted to the brilliant. As the authors observe, “The cognitive elite has pulled away from the rest of the population economically, becoming more prosperous even as real wages for the rest of the economy stagnated or fell. The divergence has been most conspicuous in the lowest skill jobs.”

America’s free trade policies served it well after World War II. The rest of the world was in shambles, and America had the capacity to sell its goods far and wide. As the rest of the world rebuilt, however, competition became fierce. Other countries developed policies to favor their own manufacturers and through various policies shut out American exports. Following the post-World War II script in the 1990s, China obtained “most favored nation” status, and its economic power was unleashed. Americans could buy low priced Chinese goods if they remained employed and had disposable income, even as others sunk from middle class to destitute status.

The promise of opening China’s markets was that they would liberalize over time through contacts with the West. Further, their interconnectedness with the rest of the world would create conditions for international peace and prosperity. Instead, they have built a first-class navy on America’s dime, and products that we used to make at home are now imported from China, while millions of jobs and communities have been crippled in the process. Their growth would be of little moment when G.I. Joe dolls, iPods, and trinkets are involved. But the focus of Trump’s tariffs—steel and aluminum—are essential to national independence and national defense, as well as being a source of high-paying jobs. You can’t build cars, skyscrapers, planes, guns, tanks, and aircraft carriers without them, and when the industry sinks below a certain level thousands of years of experience and know-how can be lost. When that happens, not only the jobs but the ability of the nation to remain independent is jeopardized.

Trump’s immigration and tariff policies are part of a unified policy of economic nationalism. The two components of this policy—immigration restrictions and tariffs—are designed to strengthen the nation as a whole, as well as to address the extreme and destabilizing imbalances in the economy. Any realistic economic policy must deal with people as they are, which includes the fact that many are “poorly educated.” Instead of imaging they can all become computer scientists and verbally facile “knowledge workers,” we must instead capitalize on the fact that they are willing to work and are finite in number, but the skills required must match their abilities. In other words, we need a robust, high-paying manufacturing and services sector.

Open borders, whether for goods or people, do not allow this cohort to benefit from the one thing they traditionally can trade upon: their work ethic and their scarcity. Instead, they must compete with the 7 billion people worldwide who are willing to do what they can do much cheaper, whether in factories abroad or in the shadows here at home. So long as they face this kind of competition, their wages will become decoupled from their increasing productivity, as demonstrated in the chart above. Restoring their prosperity and dignity is essential to national greatness.

Even someone who is poorly educated can see that.

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12 replies
  1. Avatar
    ek ErilaR says:

    Too bad the governing duopoly of neocons and neolibs don’t know that.

    Or maybe they do and just don’t care.

    • Avatar
      Matt Frihart says:

      its worse than that, they know it, and are actively acting against it. The reason being is all about the wealth gap and the socialist idea that only the smartest can run the government. Reality says even a high school drop out can do a better job than the last 4 presidents combined governing, just using common sense.

      neocon, neolib, elitist types only believe in two things, 1 they are smarter than you (which is often conflated with more educated) 2 only the smartest people can run the country. Its an egotism that feeds itself, but doesn’t necessarily lend itself well to governing.

      Trump’s election was literally a giant middle finger to these guys, and they haven’t realized it because their collective ego-of-elitism has not allowed them to fathom the possibility that they can lose elections.

      • Avatar
        Matt Frihart says:

        to be more specific they realized they lost, they didnt realize they were getting the middle finger.

  2. Avatar
    Brett baker says:

    I’ve read plenty of articles about the cognitive elite. Usually by journalists who want you to know they’re in it.

  3. Avatar
    AJ Costa says:

    The first mistake the author makes is assuming that Trump knows or cares anything about this on a deep level. This is purely a political ploy. In any other industry, the worker would be told to just retrain themselves for the new job market and move on. However, this industry gets special treatment, being swing state. And why not support for unions? Why no acknowledgement that lack of wage growth is also the problem? National defense uses a small amount of steel; we can keep that production, but you’re just delaying the inevitable with tariffs. It’s long-term harm when people see this type of favoritism.

    • Avatar
      Incarnation of Truth ✓Vilified says:

      Your attempt at shilling has failed. Go back to your masters and forfeit your shekels in shame.

    • Avatar
      hamburgertoday2017 says:

      Clearly you aren’t paying attention to what the President says and does. The notion that POTUS Trump is somehow not knowledgeable about the problem and the solution is not born out by the facts. It’s clear he understands the economy as a system and is intervening in the system in ways to bring about the changes he expects and that his supporters desire.

      The ‘American System’ goes back to the days of the Founders, most specifically Alexander Hamilton. But the ‘American System’ was not invented in the US, but has been tried and tested in many nations before the Founding and since. The emphasis on curtailing illegal entry as well as legal immigration is just an addition to the ‘American System’ due to the current situation.

      The President has been very articulate — many, many times — on the lack of wage growth. He has also articulated his support for unions. But, truly, the person who was in a position to pass ‘card check’ was former President Obama and he refused to expend any of his ‘political capital’ on doing so. Don’t expect Republican POTUS Trump to do for unions what Democratic President Obama would not.

      The idea of ‘delaying the inevitable’ is precisely why Donald J. Trump is President. There is nothing about the current economic system that is ‘inevitable’. The low-growth, low-wage economy is a result of multilateral trade agreements, and this outcome was well-understood (at least by those who have opposed them) and continuance of these agreements was a conscious choice by human agents, not the result of some natural phenomenon.

    • Avatar
      Doctor Bass Monkey says:

      More trolling from someone with a third-grade understanding of economics. Is the Atlantic sending people here again?

  4. Avatar
    Debi Williams says:

    Great article, Thank you for pointing out what should be obvious. I truly do believe that Trump DOES care about this country and its people. He did not NEED to be president, for ego purposes, financial purposes or for power. He was already wildly rich and powerful. Being president of this country is a PAIN IN THE ASS!!! Certain powers that be, saw a golden opportunity to demonize nationalism using the mad man Hitler as its poster child. But Hitler was only a nationalist in order to become Furor, then he became a CONQUEROR. So for generations we have had to live with the lie that NATIONALISM IS BAD. Now we see in the face of Globalism that Nationalism is a pussy cat compared to the dangerous tiger of Globalism!!! It destroys cultures, countries, people, families and tradition. It callously steam rolls over everything that we as humans value and does not apologize for it!!! Nationalism in all sectors is the only thing that will save this planet from total destruction. Only through nationalism do people care about anything, because they care about their families, their communities, their countries and their traditions. Without that apathy would be the ruling emotion. It was already becoming that way. Long live NATIONALISM!!

  5. Avatar
    Deathdefiant says:

    Ethnic nationalism will do even more for the workers and nation. It built America after all. And the rest of the West. And every other industrialized first world nation.

  6. Avatar
    Rifleman says:

    Great article. Some points about our Economy:

    – nearly half the men ages 18-34 now live with their parents—the highest level since the Great Depression
    -in one of America’s richest cities (Seattle) there are now 400 unauthorized homeless camps under bridges and along freeway medians
    -when 78% of the U.S. population now lives paycheck to paycheck, with essentially zero savings
    -working class Americans have gotten dramatically poorer over the past 40 years
    – richest 10% of America owns 75% of the nation’s wealth… a level we have not seen since the 1930s
    -Low income earners now make LESS in real terms than they did in 1980! And middle income earners make just 6% more than they made back in 1980. That’s an increase of just 0.00172% a year
    -It used to be that most Americans didn’t hold debt, outside of a mortgage on their first home. But after almost 40 years of declining real wages, Americans now have to go into serious amounts of debt for just about everything they buy
    -$1.5 trillion in college debt, $1 trillion in credit card debt, and more than $1 trillion in auto loan debt.
    -73% of Americans now die with debt… with an average total of more than $60,000
    -From 1973 to 2016, net productivity rose 73.7 percent, while the hourly pay essentially stagnated—increasing only 12.5 percent over 43 years… This means although Americans are working more productively than ever, the fruits of their labors have primarily accrued to those at the top and to corporate profits, especially in recent years.
    -nearly 10% of working age adults receive disability payments. more than 50% of young people no longer believe in capitalism

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