People like Pat Buchanan, Ralph Nader, and Sen. Barbara Mikulski (who presumably agree on little else) have argued that we need to engage in economic patriotism in order to slow the trade deficit and outsourcing to other countries (among other things). Nader has spoken about this issue. Buchanan was on TV yesterday talking about this. Mikulski joined with Senator Byron Dorgan to introduce a bill that would remove tax subsidies for companies that outsource jobs.
The support for this idea seems to stems from a few issues. First, the belief that many foreign currencies are artificially low, creating “a nearly insurmountable advantage,” according to the 10 Republicans and six Democrats wrote Bush regarding this issue. It is estimated, the renminbi, is 15% to 40% below its true value, giving Chinese goods what amounts to an export subsidy.
Second, exacerbated by the above, the US isn’t competing on fair playing ground. Not only because of foreign skulduggery, but also because of comparatively weak labor laws. It seems impossible for a US citizen to compete with a child in a third world country when there aren’t laws that prevent the child from being exploited. Additionally, unions complicate the situation.
Third, the tax base is decreased by questionable tax cuts and abusive offshore tax avoidance schemes. In 2002, the IRS estimated that 1-2 million people may be hiding off-shore assets to evade taxation. Even Alan Greenspan has said the American economy is suffering from “infectious greed,” on the part of a business community that threw governance to the wind and ethics to the wolves (Greenspan’s quoted portion comes from his speech in 2002, which can be read here). There are more issues, but I think this is a good starting point.
While the economic impact of many of the above things is debatable. It’s been argued that outsourcing has a positive impact on the economy, and, of course, protectionism has its own problems. But, it makes me wonder if the trade off is worth it. And, even if the economic reality created by economic patriotism is worse, mitigating the animosity between workers and shareholders could be more important. Additionally, while competitiveness and the bottom line are important in terms of practicality, they should not greatly factor into the moral calculus.
Economic patriotism, as a comprehensive strategy, should do the following:
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Expose people and corporations that use ambiguities in the laws to avoid taxation by closing loopholes.
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Impose restrictions, and taxes on countries that impose financial and legislative barriers that create an unfair playing field.
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Impose financial disincentives to companies that outsource jobs (ie. no tax breaks), and/or pay substandard wages that are supplemented by taxpayers.
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Reform immigration laws so that immigrants aren’t exploited, and enforce minimum working standards and wages.
IMO, we have succumb to what Thomas Jefferson referred to as “the excesses of the monied interests”. Economic growth has been divorced from economic progress for many Americans. Mostly, because the current economic outlook pits workers against shareholders. What’s good for one, is usually bad for the other. To a CEO, if the stock price goes up, it doesn’t matter if you had to fire 25,000 people, you can still pay yourself 400x what some of them were making. In short, it doesn’t seem fair to put a perverse version of globalism ahead of American workers and families. We should not allow corporations, who are beholden to their stockholders, to set the rules of international commerce, and exploit our collective resources. Instead, we should insist that government, beholden to all their citizens, govern international investment and trade, and ensure that our economic livelihood is not compromised by corporate greed. I realize that complete economic isolation and protectionism are bad ideas, but I think we need some serious reform that gives more gravity to the circumstances of working people.
Is there any reason why embracing economic patriotism would be less advisable than our current policies?