Incite -- (v) 1: give an incentive; 2: provoke or stir up; "incite a riot"; 3: urge on; cause to act
Monday, March 22, 2004

Nationalism and Free Trade
Written by: Answerman

Nationalism is important because I speak as someone interested primarily in American policy-making, not in growing the global economic pie. If I need to do the latter to satisfy the former, or if it is a side effect, then great. But it is not my focus, nor do I think it should be the focus of U.S. economic policy. It certainly should not be the focus of U.S. foreign policy.

The fact of the matter is that free trade can, in theory, cause a country to do something in its net economic interest that is not in its overall national interest. Beck agrees with this point, perhaps Spectator does as well. In my view, Beck ignores the fact that this not only can happen in theory, but does happen, and often, in practice. Sometimes economist-types who are smart concede the obvious theoretical point and then pretend that it is only a marginal problem that doesn't crop up very often. They assume that a confluence of theoretical economic and actual national interests is the norm, and that deviations only occur a small percentage of the time. I think this is incorrect, and that our overall national interest often deviates from our theoretical economic interest.

You guys make the same error in logic when you write off the peace and cooperation point. You say, "Sure you need it, but hey, the U.S. can impose it," or, "Sure you need it, but hey, it's not like China is suddenly going to close its doors." The fact is that peace and cooperation is extraordinarily rare; it is the exception, not the norm. If the exception is a necessary assumption underlying free trade theory, then free trade theory is by definition less useful than everyone seems to think it is. Moreover, the proposition is not either/or. China currently, although it is not taking drastic measures (and remember, I only use China as an illustration), could be "harming" our national interest by taking advantage of our trade policy. In fact, it is. Where do you think their nuclear and satellite technology comes from (assume for a moment that the Clinton administration didn't give them a bunch of stuff)?

Finally, no one has answered my point about relative economic power, which is yet another reason nationalism is important to trade policy. If free trade with China results in China closing the relative gap in economic power between it and the United States, then free trade with China may not be in the U.S. national interest. Do you dispute that statement?

I'm not saying any of this means we should pursue autarky. What I am saying is that it means we should develop a sensible industrial policy, with exceptions to our baseline free trade strategy where warranted. And that we should stop dismissing as "protectionist nonsense" intelligent propositions along these lines, as if having an industrial policy is something akin to preferring horses to cars and typewriters to computers.

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