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Why Economic Nationalism Fails

This essay is adapted from remarks delivered by the author at the Philadelphia Society on October 19, 2019.

I will readily admit that I am neither a prophet nor the son of one. I do not know what the economic future of conservatism will be, but I can say something about what it ought to be. Conservatives ought to reaffirm the good of economic liberty, both domestically and internationally. Free markets and free trade, sustained by the rule of law and a culture of basic propriety, as Adam Smith outlined, ought to undergird the economic policy of any free and prosperous nation without neglecting the importance of non-state, non-economic spheres, such as religion and family.

However, at present economic liberty has fallen out of favor with some who see a sea change in recent events—from the election of President Trump in the United States to Great Britain’s “Brexit” referendum—moving away from a perceived elitist, globalist liberalism and back toward the old order of nation states, not only politically but also economically.

To some degree, this observation is correct. There is nothing all that new about the “national conservatism” of people like Yoram Hazony or Patrick Deneen. There has always been a nationalist and populist strand to conservatism, represented by the likes of Pat Buchanan, for example. On this view, immigration is presumed to be largely harmful, while tariffs, subsidies, and other protectionist economic policies are viewed as good and necessary. This not-so-new nationalism currently represents the most popular alternative to free markets and free trade among conservatives.

Which Nationalism?

That said, I’m an academic, so I’m a little dismayed by the lack of precision in the current debate. The recent “national conservatism” conference this summer is a case-in-point. It did a great job demonstrating the broad divergence of opinion among conservatives, from people like Yuval Levin and Richard Reinsch to Yoram Hazony and Patrick Deneen to former ambassador John Bolton and TV personality Tucker Carlson. These people do not together represent a coherent movement. Yet they all spoke under the same banner: a new, friendlier nationalism, a “national conservatism.”

The problem here is that nationalism can mean a lot of things. Without parsing out what those things are and discussing the extent of their desirability and compatibility, both those who support this new nationalism and its conservative critics are destined to misunderstand not only each other but even others who claim the same label. With that in mind, and with a view toward my stated goal of promoting an economically liberal future for conservatism (which is not a contradiction in terms), I offer the following four possible historic components of various nationalisms:

  1. Ethnic Nationalism – At its worst, this is the nationalism of Nazis, the KKK, and other “blood and soil” movements around the world. It is the nationalism no one in polite society wants to be associated with, and rightly so. That it is the original form of nationalism, however, must be admitted. The word “nation,” after all, comes from the Latin natio, which comes from nasci, meaning “birth.” Indeed, the English words “race” and “nation” were historically—and sometimes still are—used interchangeably, and ethnic nationalism is the belief that “the State and the nation [meaning race] must be co-extensive,” to quote Lord Acton, who notably, contra John Stuart Mill, opposed that theory. [1]
  2. Cultural Nationalism – This is often related to—but in my view separable from—ethnic nationalism. To value one’s national—or even ethnic—cultural achievements and to wish to preserve them does not require conflating one’s racial group with the state or other racial groups with hostile foreign powers. To be proud to be an American, for example, does not require one to be proud of everything the United States has ever done, including slavery, Jim Crow, or Wounded Knee. One may simply love democracy, the Protestant work ethic, hotdogs, and/or baseball (as all real Americans should).
  3. Political (or Civic) Nationalism – At their core, the many varieties of political nationalism put the principle of national sovereignty at the heart of domestic and international politics. In practice, this may come from sophisticated theory or populist sentiment. Militarily, it may be hawkish or embrace a more passive kind of restraint, as both invading other countries and staying out of foreign wars can be justified on the principle of national interest. The common ground comes down to where the decision to do so is made: not by a transnational governmental body, like the EU or UN, but by a sovereign national state.
  4. Economic Nationalism – This nationalism seeks to prioritize domestic industries over/against foreign imports. This is the nationalism behind “America first” economic policies, such as tariffs on foreign goods and subsidies for domestic manufacturers. Those today who claim the United States needs an “industrial policy” like Saudi Arabia are economic nationalists. They have so far rejected “zombie Reaganism” as to embrace the Frankenstein’s monster of Mondale conservatism.

Now, any particular nationalism may be a combination of several of these, and alternatively being sympathetic toward one or two of these may not be enough to classify one as “nationalist.” I am not a nationalist, for example, but I do think patriotism is a good thing and that national sovereignty and the national interest deserve their political due. That said, I am not a “globalist” or “imperialist” either. Rather, I am a classical liberal, and that extends into the domain of political economy.

Conversely, a nationalist may be a nationalist without necessarily embracing all of these nationalisms. Yoram Hazony, for example, is at pains in his book—and elsewhere—to distance his brand of nationalism from ethnic nationalism. In doing this, he conflates political and cultural nationalism, defining nations in terms of shared language, history, and religion, as well as the group loyalties arising from them. And there are some, like Senator Elizabeth Warren, who are primarily, if not entirely, economic nationalists, who may have little care for national sovereignty, patriotism, or cultural heritage.

Economic Nationalism vs. National Sovereignty

It is my contention, however, that while all of these nationalisms are separable, some are actually incompatible. In particular, the principle of national sovereignty is incompatible with the policies of economic nationalism.

Edmund Burke once remarked that “[o]f all things, an indiscreet tampering with the trade of provisions is the most dangerous…. [T]here is nothing on which the passions of men are so violent, and their judgment so weak, and on which there exists such a multitude of ill-founded popular prejudices.” Burke notably lauded the publication of Adam Smith’s Wealth of Nations, and Smith’s insights therein about the positive-sum nature of exchange extend from the domestic trade of the butcher, the baker, and the brewer to the international trade between nations across the globe. What makes an exchange positive-sum is when it is faster and cheaper for me to buy something from you rather than making that thing myself, and vice versa. This is the principle of comparative advantage, a principle too many, under the sway of “ill-founded popular prejudices,” have lost sight of today.

The products that are a matter of a nation’s comparative advantage are those that its economy is the best at producing at any given time. Comparative advantages change over time, and it is a mistake to presume that yesterday’s comparative advantage still holds for today or tomorrow. Rather, exploiting one’s comparative advantages means prudently playing to one’s economic strengths and thereby strengthening one’s economy. A nation that knows and exploits its comparative advantages has greater power of self-determination internationally than one that does not. It has more to offer, more chips on the table, more with which it can bargain with others. And it is only free markets that allow for the coordination of information necessary for economic actors to continually adapt to the needs of any given moment. In this way, free markets and free trade strengthen national sovereignty.

To be clear, however, my first principle is neither liberty nor national sovereignty but natural law, without which liberty is but license and sovereignty illegitimate. There is such a thing as self-evident truth, originating from God, discoverable through reason, sanctified by religion, and confirmable through conscience. It is no coincidence that the global expansion of the free enterprise system—the economic arrangement most consistent with human nature—has also led to the most monumental reduction in poverty in human history. The overwhelming weight of evidence supports the conviction that when human beings, created in the image of God as free, rational, social, and moral animals, are allowed to creatively serve each other’s needs and responsibly plan their own lives, they flourish. And when a nation’s citizens flourish, the nation as a whole flourishes as well.

By contrast, economic nationalism actually injures national sovereignty as well as human flourishing. Despite the intention of punishing foreign competitors to domestic manufacturers, Russell Kirk rightly noted that “higher prices for consumers” is the result “within any country that sets high tariffs.” Tariffs do indeed mean fewer imports but, therefore, also higher prices and fewer choices for American families. According to President Trump’s Office of the United States Trade Representative, the president’s tariffs have affected a wide variety of meat, seafood, produce, chemicals, oils, rubber, luggage and other baggage, wood products (e.g., plywood, flooring), paper products, fabrics, glass, metals, electronic components, and more. Tariffs also mean less competition for domestic producers. Indeed, that is their explicit goal. However, less competition means a less dynamic economy, one more vulnerable to sudden changes and shocks, as the economic misfortunes of US Steel evidence, for example.

Furthermore, as our new nationalists today are ever wary of the evils of imperialism, I would remind them that no less than William F. Buckley called tariffs:

the meanest form of imperialism, in that [they are] a denial of economic ascendancy and a denial of hope to poorer nations for the sake of immediate short-term gain of competitors in the wealthier nations, which are strategically harmful in any event.

On this basis, he continued to argue, “It is … an obligation intellectual, historical, and ethical for young conservatives to reject facile calls for protectionist policies.” Tariffs make for a better instrument of imperialism than for supporting a global community of sovereign nation-states, as the EU, for example, knows well. It may be internally economically liberal between its member states, but it is externally more like a medieval guild of nations, unilaterally enacting duties and other restrictions on foreign imports on behalf of all its members.

Similarly at-odds with the national interest, subsidies for domestic industries prop up uncompetitive companies at the public’s expense. Kirk correctly called subsidies “costly economic mistakes.” California cotton subsidies, which persist despite yearly droughts, are a case-in-point. Other crops that require far less water, such as almonds, could more profitably be grown in the region in the absence of subsidies for cotton. Thus, the opportunity cost is not merely economic but also environmental in this case, which of course includes further negative externalities. On a national scale, as increased public spending is now routinely financed through increased debt to foreign powers—30 percent of public debt at present—national sovereignty, in that case, is directly undermined while economic growth is slowed or hindered. The protectionist policies of economic nationalism, therefore, are no recipe for national greatness.

Economic Freedom in the US Today

The good news for economic liberty is that there is more to it than eliminating subsidies and expanding the scope of international trade. Free markets are open markets—markets with as few barriers to entry as possible within the bounds of just laws. In fact, since President Trump’s election in 2016, the United States has actually improved its ratings in both the Fraser Institute’s Economic Freedom of the World report and the Heritage/Wall Street Journal Index of Economic Freedom. Many of my fellow free marketers have been far too pessimistic about the Trump administration, missing the forest of the economy as a whole for the few trees of increased tariffs and subsidies.

Conversely, however, many economic nationalists have misattributed our current economic strength to protectionism. Rather, this is due to significant deregulation and the reduction of the corporate tax down to a rate comparable to other developed countries. Our economy is stronger today than it was under President Obama because our economy is freer today than it was under President Obama. That said, when we look at specific metrics, we can see that while things like “business freedom” have improved, “trade freedom” and “fiscal health” are on the decline. At some point, the latter may outweigh the former, which would be bad news, indeed.

Conservatives today ought to reaffirm and promote economic liberty in its entirety, as did so many notable conservatives of the past, such as Edmund Burke, Russell Kirk, and William F. Buckley. This is not merely an issue of data points like GDP or the Gini coefficient. Rather it is a matter of the economic burden placed upon American families, the opportunities available to American workers, the markets available to American companies, and the strength of our nation both domestically and internationally. I do not know what direction the future holds. But if the tide of history has truly turned and support for free markets and free trade continues to decline on the right as well as the left, conservatives who have not lost sight of the principles and values they aim to conserve, ought to stand athwart history, yelling, “Stop!” when no one else will.

Economic Freedom and Religion

Indeed, the value of economic liberty extends beyond conventionally economic issues to some of those most valued by social conservatives. We must say, “Stop!” to those on the right and the left who would conflate the nation with a particular religious—or anti-religious—tradition. The sort of cultural nationalist that advocates for an established religion funded by a church tax shares this conflation of church and state with one-time Democratic presidential hopeful and unemployed skateboarder Beto O’Rourke, who wants to tax churches that do not conform their doctrines and practices to the progressive dogma of the day. A recent essay at First Things aptly labelled O’Rourke’s position “woke integralism.” In both cases, advocates must bring church and state into alignment and suppress their detractors. In this view, pluralism must be persecuted. Thus, it is not liberal but totalitarian.

Rather, religion should neither be subsidized nor taxed by the state. Religiosity has dramatically declined in precisely those European states that have retained established churches, and we all know of the mess that anti-religious movements like the French and Russian revolutions wrought upon the piety of those peoples. By contrast, religiosity remains high in the United States, where the market for religion continues to be one of the freest in the world. This religiosity has even endured letting in scary international imports, such as Roman Catholicism!

Despite the fears of religious conservatives, it is worth noting that in the United States those religious institutions that are in decline tend to be those that do not deliver on the product they claim to offer. When a church or other religious institution says, “Come here for salvation!” but all one hears inside are the mantras of popular political activism, it is no wonder that such institutions are not gaining members. By contrast, religious groups such as Orthodox Jews, Southern Baptists, and Mormons, all of whom prominently emphasize their distinctly spiritual character and call their members to rigorous moral and ascetic observance, tend to do quite well. Thus, O’Rourke’s claim that they and others should be compelled to alter their moral teaching about the nature of the family offers the prospect of financial ruin to those that would resist and declining influence and membership to those that would compromise, ultimately undermining religion in general no matter how any particular institution might respond. In the face of such illiberal proposals, conservatives must say, “Stop!”

Classical Liberalism and the Family

Speaking of the family, we must also say, “Stop!” to those like Yoram Hazony and Patrick Deneen who claim that classical liberalism presumes an atomistic individualism that undermines familial integrity. It does not. Not to their favorite boogeyman John Locke, at least. Regarding marriage, Locke wrote in his Two Treatises of Government that “GOD having made man such a creature, that in his own judgment, it was not good for him to be alone, put him under strong obligations of necessity, convenience, and inclination to drive him into society, as well as fitted him with understanding and language to continue and enjoy it. The first society,” he continues, “was between man and wife, which gave beginning to that between parents and children….”[2]

It may be objected that for Locke marriage is founded upon consent, and that is true, but even Hazony admits that much about 50 pages after criticizing Locke for saying the exact same thing. What is too often omitted by Locke’s critics is that he believed there to be duties between parents and children in a state of nature, that is, apart from any consent and as a matter of natural law. Contrary to Patrick Deneen, who claims classical liberal anthropology views human beings as “nonrelational creatures,” Locke actually believed that we are not self-sufficient, atomistic individuals, but that we are rather, by nature, “drive[n] … into society,” because it is “not good for [us] to be alone,” clearly alluding to Genesis 2:18.

Deneen does a little better reading Locke than Hazony, but not by much. He still finds insidious, radical individualism in Locke’s claim that adult children may choose whether or not to accept an inheritance from their parents. Locke does in fact say that, but Deneen overlooks the larger points that Locke was making: firstly, that if adult children do accept an inheritance they are at that point bound to terms that are not of their own making and beyond their consent. And secondly and more importantly, Locke was specifically objecting to the ancient Roman idea of a paterfamilias, who—at least on paper—retained absolute control over his wife and children, including their very lives, until his death. Does Deneen not think adults should get to make their own decisions so long as their fathers live?

Furthermore, Locke clearly differentiates the family from “political society” due to the different “ends, ties, and bounds” of family relationships, i.e., due its unique nature and teleology. Thus, conflating Locke’s understanding of political society and the family, the latter of which is founded as much upon nature as consent, grossly misrepresents his views. When one takes the time to understand Locke in context, the new nationalist narrative reads more like sloppy historical fiction than serious historical criticism. Last I checked, conservatives were supposed to value history, rather than distort it to serve present-day political ends.

Indeed, in addition to Locke, when we look at the earliest modern representative governments, as is well-known, the franchise was commonly restricted to heads of households, indicating that these first modern liberal democracies all viewed the household or family as the most basic unit rather than the individual. Now, call me a radical, but I personally support women’s suffrage. On that account I will happily be accused of individualism. But one could not fairly charge most early classical liberals with radical individualism even on that account. Indeed, the economist Frank Knight succinctly summarized this point in 1939, stating that “in the nature of the case, liberalism is more ‘familism’ than literal individualism. Some sort of family life, and far beyond that, some kind of wider primary-group must be taken as they are, as data, in free society at any time….”[3] Classical liberalism does not undermine the family by presuming an atomistic individual. Rather, as the historical record shows, it starts with the family, thus presuming it.

Classical liberalism’s emphasis on the family also has an economic aspect, evinced by the fact that intact, two-parent families thrive in relatively free economies like the United States. Healthy families increase their children’s likelihood of economic success. As one recent study concluded, “People raised outside stable two-parent families are more likely to be in the lowest income quintile as adults and less likely to be in the highest quintile than people raised in stable two-parent families.”[3] In a fairly free economy like the United States, healthy homes make for more favorable economic outcomes. Free markets reward healthy families and thus support, rather than undermine, them. The importance of healthy families, then, ought to be part of any future free market political economy for conservatives.

The Common Benefit of All

Cultural, non-state, non-economic institutions, like religion and family, matter for a free and prosperous economy as well as free markets and free trade, and it is conservatives in the United States who historically have understood that best. Whatever our coming economy may look like, conservatives should say, “Stop!” to any economistic, technocratic, or purely political solutions to social problems. Nations, I hope we can all agree, are far more than simply the market plus the state. Families, religious institutions, schools, and other spheres of society all have vital roles to contribute not only to the common good but also to the national economy.

My background is theology. Given that background, I’d like to conclude with a quote from the medieval Christian theologian Hugh of St. Victor. Not only do non-economic spheres contribute to the economy, but a healthy, free economy also contributes to all those other spheres of life. “Commerce,” he wrote, “penetrates the secret places of the world, approaches shores unseen, explores fearful wildernesses, and in tongues unknown and with barbaric peoples carries on the trade of mankind. The pursuit of commerce reconciles nations, calms wars, strengthens peace, and commutes the private good of individuals into the common benefit of all.”[4] The expansion of economic liberty since the Industrial Revolution and the monumental, qualitative improvements to human life occasioned by it testify to the veracity of this conviction. Rather than turn our backs on the legacy of economic liberty we’ve built and received in the United States and in the West more broadly, conservatives today ought to further its advancement for the strength of our nation and families, the peace of the world, and “the common benefit of all.”

 

[1] That both Acton and Mill were liberals demonstrates additional terminological problems, as liberalism and nationalism are commonly set opposite one another today. Addressing this is outside the scope of this essay, however, and I honestly find the current distinction convenient, even if ahistorical. On this see Lord Acton, “Nationality,” in Lord Acton: Historical and Moral Essays, ed. Daniel J. Hugger (Grand Rapids: Acton Institute, 2017), 112.

[2] John Locke, Two Treatises of Government, new ed. (London: Whitmore and Fenn; C. Brown, 1821 [1690]), 252-253

[3] Dierdre Bloome, “Childhood Family Structure and Intergenerational Income Mobility in the United States,” Demography 54, no. 2 (April 2017): 541-569. The quotation here is from the draft version, emphasis added.

[4] Hugh of St. Victor, Didascalicon, trans. Jerome Taylor (New York; Lordon: Columbia University Press, 1961), 2.23, 77.

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