Economic nationalism can no longer be denied
Every once in a while during a crisis or problem, you run across a quote or an observation that summarizes events on the ground in a nutshell.
Former Republican Party presidential candidate and now MSNBC commentator Pat Buchanan offered one such insight during an exchange with talk show host Chris Matthews Monday on his show Hardball. During a discussion on the merits of the U.S. government's rescue of automakers General Motors (GM) and Chrysler, Matthews asked Buchanan if it was correct for U.S. taxpayers to let the government make the investment.
Matthews:Pat, is this the right policy response?
Buchanan: You think Tokyo [Japan's government] would have an "us or them" relationship with Honda or Toyota if they're in trouble? Those countries understand manufacturing is really the engine of any country, and we're letting this thing go down.
The rise of economic nationalism
Buchanan, a conservative with populist strains, presents a view of reality that economic conservatives -- and some economic liberals, for that matter -- don't want to consider, let alone recognize. But as the decades pass, their argument gets weaker and weaker. For decades, the United States has championed the private sector model, and its inherent advantages: innovation incentives and the more-efficient deployment of resources, including capital, among other benefits.
But now the U.S. model is coming up against a formidable competitor -- economic nationalism -- about which Buchanan has sounded the alarm for, oh, about three decades, arguing that unless the United States revises its economic policy, it's in for a very difficult fight, and will continue to lose key industries.
National interest Is paramount
And the reasons are obvious enough: economic nationalism has many advantages over market absolutism. For example, In Japan, economic nationalism takes the form of a cozy relationship between regulatory officials, automakers, and suppliers. Japan rarely balks at a request for help from Toyota (TM), Nissan, or Honda (HMC), and it would never let any of its Big Three go bankrupt. In China, it takes the form of government "loans" to various corporate enterprise -- loans that, in fact, will never be repaid. And in Europe, such as in Germany, it takes the form of advantageous national health care policies. American companies, due to the U.S.'s lack of national health insurance program, bear the brunt of health costs, yet they must compete against Germany companies who bear decidedly lower costs. In Russia, it takes the form of whatever Prime Minister Putin thinks is necessary to further Russia's national interest.
Put another way, one segment of the American public is talking about "getting the government off the backs of the American people," while abroad, governments are working in unison with their home companies to (economically) defeat the American people.
In short, the international economic playing field is hardly level. Buchanan has long recognized and argued this point, and it highlights the need for the United States to revise its antiquated economic strategy.
Economic Analysis: With selected qualifications, the view from here argues that the U.S.'s market absolutist stance has to be revised. The myth is that General Motors is competing against Toyota or BMW, when the reality, as Buchanan outlined, is that the United States is competing against Japan, Germany, China, South Korea, and Brazil. Further, it's futile to think that Japan, et al., will move to a strict private sector model.
The sooner the American people recognize this, the sooner the United States will implement a unified stance -- a national industrial policy -- that will enable it to compete more effectively in the global economy -- an economy that is comprised, essentially, of national entities, not corporate entities.
Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.