The Human Case for Economic Nationalism

Critics of Donald Trump “America First” economic nationalism are undoubtedly correct when they assert that his policies will raise consumer prices or, put concretely, the $5 made-in-who knows where but probably overseas shirt from Walmart may be history. But, the awaiting price increase is only part of the larger financial perspective, and if viewed more broadly, the picture looks less bleak.

The costs of economic nationalism can be viewed from two vantage points. The dominant perspective, and the one usually favored by multi-national businesses, is to focus on imports as an unqualified good deal for consumers. It is an alluring argument -- after all, how many shoppers will pay a premium for an item that comes with a “100% made-in-America” tag?  Imagine if Walmart offered imported products side-by-side with those costing a third or more? A no-brainer or so it would seem. In other words, trade agreements like NAFTA and cheap immigrant labor are a boon for bargain-minded American consumers.

But bargains may be illusionary and these hidden costs probably far exceed the ending of paychecks for unemployed American shirt-makers. After all, idle shirt makers are not guest workers who can be deported when their jobs evaporate. Many if not most will live for decades and their government-paid “upkeep” should be included in the bargain shirt.

These monetary costs can be gleaned from the campaign rhetoric of candidates seeking votes in those areas where jobs have “fled” overseas. The typical “cure” for this job loss is an assortment of government measures such as extended unemployment benefits, tax credits for firms locating in these areas, subsidized job training, low-cost community colleges to acquire “21st Century” job skills, plus handouts like food stamps, Medicaid, and old-fashioned public welfare.

But these dollar figures ignore the “human” costs of long-term unemployment -- psychological pathologies such as alcoholism, drug addiction, domestic violence, and depression whose treatment will inevitably be paid for by Uncle Sam. 

In other words, those buying cheap imports are “paying” for these bargains with higher taxes so the price tag on the $5 imported shirt should read as follows:

One shirt manufactured in Bangladesh 

$5.00

Taxpayer cost of sustaining unemployed US shirt-maker (And as with a detailed telephone bill, this could be itemized)

 

$4.40

Human unhappiness from economic dislocation           

No charge

Total Cost

$9.40

But you now pay only $5.00 at the register, and the IRS will bill you on April 15th for the difference.

It does not require much to discern winners and losers here. Clear winners include those who will work for the big tax-funded liberal state, most of whom identify with the Democratic Party. I personally first observed this in upstate New York’s Catskill Mountain area where I stay during the summer. This was once a thriving area but is now an economic wasteland populated by retirees, local government employees and those mowing lawns. In driving around I noticed that state offices offering everything from psychological treatment to marital counseling all had full parking lots. More disconcerting is that such rural areas and old rust belt cities are now experiencing epidemics of heroin and crystal meth, yet more business for job counselors, social workers, addiction specialists and even law enforcement officials. It is exaggerating only slightly to say that a factory closing may now be a bonanza to those who earn a livelihood ministering to the needs of the newly unemployed.

What, of course, is missing in the public debate is assessing the trade-off in these consumer bargains. What if the former factory worker were given a choice of earning, say, $500 a week plus decent benefits for building cars or $500 a week worth of social work counseling, tax credits for community college courses, food stamps and the like? I’d guess that few would opt for these Big Government-supplied “benefits.” Nor would many of the unemployed blue collar workers rush to embrace “Information Age” jobs as computer coders or call center employees, let alone being an addiction counselor to cure the deadly habits of neighbors. America’s blue collar workforce cannot be re-cycled by dispatching them to a local community college.

Critics of Trump’s bring-back-the-jobs vision will, of course, insist that the days of America as an industrial power are long gone, a fantasy in a world where you can produce steel in India and ship it to Youngstown, Ohio cheaper than making locally. But if this comparative advantage argument were correct as an economic fact of life, why has the US attracted countless Japanese, Korean and German car manufacturers.  Nor have Japan, Korea or Germany launched a trade war over the US “stealing” jobs. 

A certain unnoticed irony pervades today’s marketplace. On the one hand you have free- market economists who insist that Americans demand cheap consumer prices über alles and that Trump and his ilk are inviting trouble by upsetting these bargain hunters. Well, Yogi Berra once said you can see a lot by looking around, and this is certainly applies to today’s marketplace. To take a simple example, I live in Manhattan and I sometimes visit Chinatown’s street vendors for blueberries shipped in from Chile for maybe a $1.25 a box, sometimes less. Meanwhile, my neighbors can purchase a similar carton of blueberries at Whole Food for $4.25. The difference is that Whole Food customers willingly pay a premium for produce that is organic, grown at a local farm employing sustainable production methods where blueberry pickers are paid an above market living wage that includes generous healthcare benefits.   In fact, there are some New Yorkers, including our current mayor, who have publicly stated that Walmart is not welcome in New York City even if it would save consumers millions (but 55% disagree).  

Our examples of Walmart shirts and Whole Food blueberries are not atypical. What is paid at the checkout register is not the full price of an item and, as the blueberry example, illustrates, altruism can shape the buying equation. Various do-gooder NGO’s have convinced millions of virtue-seeking consumers to boycott inexpensive products manufactured in Asian sweatshops, using exploited child labor living in areas of rampant air and water pollution.

I suspect that part of the aversion to spending extra for made-in-America products, products whose manufacture here will improve the lives of millions of Americans, may reflect an unspeakable cultural aversion. To be blunt, millions of  “socially conscious” consumers will avoid anything made by exploited 10-year old dewy-eyed barefoot girls forced to work 12 hour shifts but will feel no sympathy for fellow Americans categorized as trailer court trash, rednecks, yahoos, hicks or hillbillies. Somehow, helping these overseas workers displays social responsibility but shunning $15.00 shirts made in rural Alabama in favor of the $5.00 version from China is celebrated by economists as marketplace “sophistication.” 

Decades ago Michael Harrington’s The Other America (and Night Comes to the Cumberland by Harry M. Caudill) argued that modern highways made the rural poor “invisible.” Alas, much remains as before and perhaps the Donald should hold a giant press conference in a de-industrialized town so millions of TV viewers can see the human carnage of an economic vision that treats Americans as unmitigated bargain hunters.   

Critics of Donald Trump “America First” economic nationalism are undoubtedly correct when they assert that his policies will raise consumer prices or, put concretely, the $5 made-in-who knows where but probably overseas shirt from Walmart may be history. But, the awaiting price increase is only part of the larger financial perspective, and if viewed more broadly, the picture looks less bleak.

The costs of economic nationalism can be viewed from two vantage points. The dominant perspective, and the one usually favored by multi-national businesses, is to focus on imports as an unqualified good deal for consumers. It is an alluring argument -- after all, how many shoppers will pay a premium for an item that comes with a “100% made-in-America” tag?  Imagine if Walmart offered imported products side-by-side with those costing a third or more? A no-brainer or so it would seem. In other words, trade agreements like NAFTA and cheap immigrant labor are a boon for bargain-minded American consumers.

But bargains may be illusionary and these hidden costs probably far exceed the ending of paychecks for unemployed American shirt-makers. After all, idle shirt makers are not guest workers who can be deported when their jobs evaporate. Many if not most will live for decades and their government-paid “upkeep” should be included in the bargain shirt.

These monetary costs can be gleaned from the campaign rhetoric of candidates seeking votes in those areas where jobs have “fled” overseas. The typical “cure” for this job loss is an assortment of government measures such as extended unemployment benefits, tax credits for firms locating in these areas, subsidized job training, low-cost community colleges to acquire “21st Century” job skills, plus handouts like food stamps, Medicaid, and old-fashioned public welfare.

But these dollar figures ignore the “human” costs of long-term unemployment -- psychological pathologies such as alcoholism, drug addiction, domestic violence, and depression whose treatment will inevitably be paid for by Uncle Sam. 

In other words, those buying cheap imports are “paying” for these bargains with higher taxes so the price tag on the $5 imported shirt should read as follows:

One shirt manufactured in Bangladesh 

$5.00

Taxpayer cost of sustaining unemployed US shirt-maker (And as with a detailed telephone bill, this could be itemized)

 

$4.40

Human unhappiness from economic dislocation           

No charge

Total Cost

$9.40

But you now pay only $5.00 at the register, and the IRS will bill you on April 15th for the difference.

It does not require much to discern winners and losers here. Clear winners include those who will work for the big tax-funded liberal state, most of whom identify with the Democratic Party. I personally first observed this in upstate New York’s Catskill Mountain area where I stay during the summer. This was once a thriving area but is now an economic wasteland populated by retirees, local government employees and those mowing lawns. In driving around I noticed that state offices offering everything from psychological treatment to marital counseling all had full parking lots. More disconcerting is that such rural areas and old rust belt cities are now experiencing epidemics of heroin and crystal meth, yet more business for job counselors, social workers, addiction specialists and even law enforcement officials. It is exaggerating only slightly to say that a factory closing may now be a bonanza to those who earn a livelihood ministering to the needs of the newly unemployed.

What, of course, is missing in the public debate is assessing the trade-off in these consumer bargains. What if the former factory worker were given a choice of earning, say, $500 a week plus decent benefits for building cars or $500 a week worth of social work counseling, tax credits for community college courses, food stamps and the like? I’d guess that few would opt for these Big Government-supplied “benefits.” Nor would many of the unemployed blue collar workers rush to embrace “Information Age” jobs as computer coders or call center employees, let alone being an addiction counselor to cure the deadly habits of neighbors. America’s blue collar workforce cannot be re-cycled by dispatching them to a local community college.

Critics of Trump’s bring-back-the-jobs vision will, of course, insist that the days of America as an industrial power are long gone, a fantasy in a world where you can produce steel in India and ship it to Youngstown, Ohio cheaper than making locally. But if this comparative advantage argument were correct as an economic fact of life, why has the US attracted countless Japanese, Korean and German car manufacturers.  Nor have Japan, Korea or Germany launched a trade war over the US “stealing” jobs. 

A certain unnoticed irony pervades today’s marketplace. On the one hand you have free- market economists who insist that Americans demand cheap consumer prices über alles and that Trump and his ilk are inviting trouble by upsetting these bargain hunters. Well, Yogi Berra once said you can see a lot by looking around, and this is certainly applies to today’s marketplace. To take a simple example, I live in Manhattan and I sometimes visit Chinatown’s street vendors for blueberries shipped in from Chile for maybe a $1.25 a box, sometimes less. Meanwhile, my neighbors can purchase a similar carton of blueberries at Whole Food for $4.25. The difference is that Whole Food customers willingly pay a premium for produce that is organic, grown at a local farm employing sustainable production methods where blueberry pickers are paid an above market living wage that includes generous healthcare benefits.   In fact, there are some New Yorkers, including our current mayor, who have publicly stated that Walmart is not welcome in New York City even if it would save consumers millions (but 55% disagree).  

Our examples of Walmart shirts and Whole Food blueberries are not atypical. What is paid at the checkout register is not the full price of an item and, as the blueberry example, illustrates, altruism can shape the buying equation. Various do-gooder NGO’s have convinced millions of virtue-seeking consumers to boycott inexpensive products manufactured in Asian sweatshops, using exploited child labor living in areas of rampant air and water pollution.

I suspect that part of the aversion to spending extra for made-in-America products, products whose manufacture here will improve the lives of millions of Americans, may reflect an unspeakable cultural aversion. To be blunt, millions of  “socially conscious” consumers will avoid anything made by exploited 10-year old dewy-eyed barefoot girls forced to work 12 hour shifts but will feel no sympathy for fellow Americans categorized as trailer court trash, rednecks, yahoos, hicks or hillbillies. Somehow, helping these overseas workers displays social responsibility but shunning $15.00 shirts made in rural Alabama in favor of the $5.00 version from China is celebrated by economists as marketplace “sophistication.” 

Decades ago Michael Harrington’s The Other America (and Night Comes to the Cumberland by Harry M. Caudill) argued that modern highways made the rural poor “invisible.” Alas, much remains as before and perhaps the Donald should hold a giant press conference in a de-industrialized town so millions of TV viewers can see the human carnage of an economic vision that treats Americans as unmitigated bargain hunters.