The Upside of Nationalism

You don’t need to listen to presidential speeches or watch party attack ads to know that full-throated nationalism is now lodged in the ideological center of American politics. Look at social networking expert Valdis Krebs’ January chart to see what we–the royal We–are reading. Krebs amassed data from Amazon.com, examining what other titles buyers of conservative and liberal political books purchased in 2007. Most of this “also bought” data showed buyers of one liberal book buying other liberal books–and conservatives doing the same on their side.

Krebs’ chart, which draws a line connecting each “also bought” book, looks like a dumbbell, with two big clusters on the right and left–a cliché of the media’s “polarized America” meme. However, right in the middle are two books that both liberals and conservatives purchased: War on the Middle Class and Independents Day by Lou Dobbs, America’s most famous nationalist.

As economic anxiety grips America, the controversial CNN anchor vents history’s conservative and liberal expressions of contemporary nationalism–an ideology built around a self-interested, America-first fervor. When Dobbs tilts right, he rails against undocumented immigrants and “broken borders,” tapping into nationalism’s law-and-order pride and its xenophobic-tinged desire for cultural stasis that typically spikes during recessions. When he goes populist, he is the only major TV journalist in America to express nationalism’s disdain for global economic policies written by, and for, a transnational elite.

As evidenced by his surging ratings, Dobbs reflects powerful mass emotions. And thanks to the presidential election, some of those emotions may forge a political mandate. The key word is “some,” because the GOP nominee will be Arizona Sen. John McCain. Unlike most congressional Republicans, McCain has shied away from the anti-immigrant edge of today’s nationalism, effectively shoving the most extreme immigration positions off the presidential stage, at least in 2008.

Thus, today’s nationalistic sentiment will likely crystallize as economic nationalism–good news for progressives.

‘What do we do now?’

As the campaign wends its way through the heartland’s crumbling factory towns, the election is pivoting on debates over globalization and economic sovereignty.

Polls from the Wall Street Journal and Fortune magazine show that voters of both parties have had it with trade policies that they believe help other countries and slash jobs and wages here at home. A February Bloomberg poll found that by two-to-one, Americans say acquisitions of U.S. companies by other countries’ so-called “sovereign wealth” funds have a negative impact on our economy. More than two-thirds said that “allowing foreign investment in U.S. companies gives foreign governments too much control over the U.S. market.”

With blue-collar swing states central to both the nominating and general election contests, the Democratic candidates have responded forcefully to this ferment, sometimes even trampling their own records.

Before the Ohio primary, both Sens. Barack Obama (D-Ill.) and Hillary Clinton (D-N.Y.) were applauded for promising to reform America’s trade policy. Clinton, pretending she never supported the North American Free Trade Agreement (NAFTA), even held a press conference to feign outrage that anyone would remind the public about her repeated speeches championing NAFTA.

If the Democrats win, they will take the White House thanks to economic nationalism and their ability to amplify it with a populist message. But when the election ends, many who supported that message will be asking the question actor Robert Redford famously asked in The Candidate: “What do we do now?”

Specifically, how will rhetorical populism be cobbled into a concrete agenda, and how can economic nationalism be successfully legislated? The answer is in how we trade, tax and spend.

The trade transformation

In the early ’90s, economic nationalism spiked. Gallup polls showed almost half of all Americans saw free trade policies as “a threat to the economy.”

Around this time, Bill Clinton was campaigning for president on a promise to oppose trade preferences for China and NAFTA until China and Mexico improved their wages, environmental standards and human rights. Meanwhile, Texas billionaire Ross Perot was demanding the government “impose a ‘social tariff’ at a level equal to the difference between the wage paid in the developing nation and the wage paid in the United States for comparable work.”

As the tech boom of the mid-’90s hit, the number of Americans seeing free trade as a threat dipped to about a third, and the Clinton administration used the lull to ram NAFTA and China trade preferences through Congress.

Now, however, Gallup’s numbers have returned to early ’90s levels. And unlike before, the economy doesn’t look ready for a fast recovery. At a bare minimum, today’s surge in economic nationalism will likely stop Congress from passing more NAFTA-style agreements. Such a “time out” is not the wave of protectionism that corporate interests claim it is, nor is it any move toward new tariffs, social or otherwise. But stopping the current trade trajectory would be significant progress.

A three-pronged approach

More proactively, a three-pronged package of reforms has a realistic chance of moving forward.

First, a proposal by Sens. Sherrod Brown (D-Ohio) and Byron Dorgan (D-N.D.) would make new trade agreements harder to pass “unless they are accompanied by a more thorough financial analysis,” as the Washington Post reported. Their bill would end the practice of flying blindly into the free trade abyss by forcing the government to provide estimates of potential job losses with any trade pact. (That’s right–Congress currently makes trade policy without even asking what the consequences are.)

Second, for pacts that do pass, Rep. Keith Ellison (D-Minn.) is developing a proposal that would give nonprofit groups and individuals the same enforcement powers that corporations currently enjoy. Ellison floated a truncated version of this concept during the 2007 debate over the Peru Free Trade Agreement, arguing that if a trade deal gives a corporation the right to sue in international courts for enforcement of investor rights (copyrights, patents, intellectual property, etc.), then individuals and advocacy organizations should also have the same right to sue for enforcement of other rights (labor, environmental, etc.). A Democratic administration could incorporate this forward thinking into the core text of any future trade pact.

Finally, there are the concerns about foreign economic influence. The 2006 brouhaha over a Dubai company attempting to buy a group of American ports focused the public’s attention on the larger issue of state-owned companies and investment funds buying up large segments of the American economy. Today, these sovereign wealth funds hold $2.5 trillion in assets, and Morgan Stanley estimates they could hold $17 trillion within a decade. Many fear that these state-controlled entities, which often operate in secret, could use such assets as a political weapon.

Unlike the typical investor concerned only with the bottom line, foreign governments have agendas beyond making a buck. They could easily push companies to behave in ways that are politically advantageous to the owner country. That nationalist concern has led to congressional hearings, and according to Financial Week, some Democratic legislators appear poised to introduce a bill to strengthen the weak regulatory regime that currently oversees these international economic transactions.

Redefining ‘tax and spend’

Since 2004, when Sen. John Kerry (D-Mass.) lambasted “Benedict Arnold” companies that move jobs and operations overseas to avoid taxes, tax reform in the name of economic nationalism has become a staple of Democratic Party orthodoxy. Now, that orthodoxy has a bill name.