Tony Blankley is an instinctive conservative, a patriot and—one finds every reason to believe—a chivalrous, decent man. He has earned the public respect his voice is accorded, which is why it matters when he writes nonsense like this:
[Regarding] South Korean trade, … in the absence of very prompt United States policy decisions and actions, we shall incur long-term irreversible economic … harm.
I have recently been reading the book Diplomacy by Henry Kissinger, Richard Nixon’s and Gerald Ford’s U.S. secretary of state. The reading occasions some comment on the book’s conception of international trade. First, however, follow some general observations on this interesting book.
What went wrong at General Motors? Without understanding, blindly groping mainstream Republicans have seized together on a false but plausible answer, expressed thusly by Paul Ingrassia in the Wall Street Journal:
The picture of a heedless union and a feckless management says a lot about what went wrong at GM. There were many more mistakes, of course—look-alike cars, lapses in quality, misguided acquisitions, and betting on big SUVs just before gas prices soared. They were all born of a uniquely insular corporate culture.
Mr. Ingrassia himself ironically, probably happens to know better, but his words nonetheless give form to the prejudice-serving conventional wisdom now crystallizing in the GOP—which wisdom, if true at all, is true accidentally.
Considering the matter with an appropriately open mind, does any Republican seriously think that GM would be bankrupt today, had Pat Buchanan won the White House in 1996 and Congress followed in 1997 with a traditional, 30-percent general tariff?
Mr. Ingrassia undoubtedly would answer no, but that the 30-percent tariff would have flowed largely to a corrupt automotive labor union, to whose corruption commercial competition is the antidote. There is much merit in this judgment, but Mr. Ingrassia ought then to ask why Americans should not have looked to Ford and Chrysler for the needed competition, or to some U.S. start-up that in the event never started, rather than to Toyota, Nissan, Mercedes and the like.
Never having encountered Mr. Ingrassia’s writing before, the writer hesitates categorically to assign him motives. We don’t certainly know what he was thinking. (The interested reader can follow the link, read Mr. Ingrassia’s words in context, and make up his own mind.) Whatever Mr. Ingrassia’s personal intention might have been, however, his words as excerpted ably represent the emerging Republican sensibility in the matter. Indeed, if one begins by assuming that organized labor were bad and free trade good, it becomes necessary to conclude that GM must be incompetent. Any organization of GM’s size must make scores of significant mistakes every year; so, if one seeks anecdotal evidence of corporate incompetence, such evidence cannot be hard to conjure.
But might it not be, mainstream Republicans will ask, that GM had brought its own troubles upon itself?
Answer: it might, except that Ford is in trouble almost as deep as GM’s, and Chrysler is in deeper. This is no coincidence.
Notice that mainstream Republicans curiously do not seem to want to talk much about Ford. They are reading from an anti-labor, pro-free trade script which Ford does not fit.
The reader will have to decide for himself whether he believes the script, but the Economic Nationalist has another script to offer which fits the actual facts on the ground rather more comfortably. General Motors was murdered, done to death by a feckless Congress less interested in preserving American markets, promoting American production, and ameliorating the intrusive, incentive-killing federal income tax by a traditionally American tariff; more interested in indulging the sophomoric intellectual vanity of free trade. Congress could not be bothered to review its own record, which would have showed that it itself had levied tariffs averaging not 30 but about 40 percent from 1816 through 1939—a period which, though it included the Great Depression, brought the most remarkable economic growth in the history of man, in any era, anywhere on earth.
Congress keeps Alexander Hamilton’s portrait on the ten-dollar bill while forgetting Hamilton’s chief contribution to the Republic, eclipsing even his contribution to the Federalist Papers (whose other, more significant authors are not pictured on our currency). Hamilton’s chief contribution for which he is rightly memorialized was his American System, a system of tariffed trade which fostered, among others, General Motors, the greatest commercial enterprise to date of all time. A GOP-driven Congress has now carelessly demolished Hamilton’s American System. Is it any wonder then, really, that GM has fallen?
The wonder is that GM had managed heroically to stand so long.
The United States want their tariff back.
HJH
[P.S. Lots of people have opinions to offer now regarding the Panic of 2008 and its aftermath. Rush Limbaugh is typical of these. Which of these folks’ opinions have merit and which do not is for the reader to judge, but it seems worth pointing out that at least some of the relevant economic issues were already topics of serious discussion at the Economic Nationalist before the panic ever struck. The reader can weigh credibility accordingly. —Howard Harrison—]
I love Dave Ramsey’s daily radio program, though naturally I get to listen to it only occasionally. If you do not yet listen to Dave (as he asks to be called), why, I would recommend his show most heartily to you.
Yesterday, Dave broadcast half an hour on the federal bailout of GM. Listening to my car radio at the time, without a cell phone, I was unable to phone in until it was too late, but Dave invites e-mails and I did send him one on the topic later. For readers whom this sort of thing interests, the e-mail follows.
L. Gordon Crovitz, former executive vice president of Dow Jones and past publisher of the Wall Street Journal, opines in the newspaper he once published,
At the dawn of the Industrial Age, in 1719, the British Parliament passed a law banning craftsmen from emigrating to France or other rival countries…. “At that time the chief concern was the loss of iron founders and watchmakers,” Gavin Weightman writes…. Spies from around the world tried to uncover the secrets of British engineering…. This attempted protectionism of ideas was doomed by easier travel and communication.
The writer outlines the calculus of basic tariff theory in these ten pages of new PDF notes. The notes detail quantitatively the essential analytical reasons the economics profession recommends free trade between nations.
As far as the writer is aware, such notes—written for a serious audience of mathematically inclined non-economists, pitched at the MBA level—have never heretofore appeared on the World Wide Web.
Admittedly, the writer tends to disbelieve the notes’ conclusion—or rather, more precisely, he believes that their mathematics are correct but does not believe in the prudence of their translation to finely tuned practical policy—but he has not prepared the notes because he believes in them. He has prepared them rather because the economics profession believes in them. Foremost among those we wish to convert to the good cause of economic nationalism stand the leading members of the economics profession and, perhaps more importantly, graduate students in economics at our leading universities (the latter of whom, after all, besides still having open minds where their professors’ minds are too often wrongly closed, necessarily tend to represent economics’ rising generation). Such folks deserve respect for their knowledge and expertise even when you and I disagree with their conclusions. One way to show respect is to have taken the time to acquaint oneself with their strongest arguments before presuming to dispute their faulty findings.
They won’t listen to you or to me, after all, so long as they think us untutored. Therefore, if you lack an advanced degree in economics but can handle the requisite single-variable calculus, then you may find it worth your time to study the notes.
As for the rest of you, if calculus is not your thing, don’t let it trouble you overly much. You can page through the notes and look at the graphs if you like but your intuition in the matter is quite right: radical free trade is a horrifically bad idea. The main reason many free traders, including far too many U.S. Congressmen, sophomorically believe in the idea is because they do understand just barely enough calculus to grasp its analytical rationale, because it pleases their vanity to contemplate your supposed ignorance in the matter—or, more likely and worse, because like John McCain they do not understand quite enough calculus and are worried that you might notice. Either way, you and I are not obligated to honor their vanity.
But for those that wish to understand the basic theory in detail, to study the notes could be a profitable exercise nonetheless.
Howard J. Harrison
The Economic Nationalist
News: As of Friday morning, December 19, the U.S. Treasury had not burned through quite the entire $ 350 billion fund Congress had appropriated for it to bail out Wall Street. At least $ 17.4 billion evidently remained. The outgoing George W. Bush administration has decided to exercise the discretion the bailout statute affords it to redirect this last remainder to rescue Detroit.
Some fret that the auto-industry bailout bill delivers operational control of the U.S. auto industry to a federal government that knows little or nothing about making cars. This concern is proper, it is right, and the Economic Nationalist shares it—for the federal government indeed should not be trying to operate car manufacturers—but the concern entirely misses the bailout’s point. The point is not to make America’s auto industry more efficient, for the industry itself has already done that. The point is to ensure that America still has an auto industry at all.
If any of Congress’ anti-bailout Republicans can produce a concrete plan to guide Detroit’s Big Three auto makers through Chapter 11 bankruptcy toward future vigor without compromising the actual Americanness of the American auto industry, then Congress ought to consider such a plan on its merits. In the meantime, however, Tom Piatak is right when he writes, “But even if the attempt to save the Big Three ultimately fails, both prudence and patriotism suggest that it is worth trying.” On unapologetically conservative grounds, the Economic Nationalist believes that Congress should appropriate from the Treasury the needed billions to bail out the U.S. auto industry.
Now, whether you agree or you disagree, the present public discourse on the topic nevertheless suffers an extremely serious flaw, a flaw which makes it nearly impossible to reach rational public conclusions in the matter and a flaw of which all this blog’s readers should make themselves acutely aware. The flaw: there is no such person, there is no such corporation, as “the American auto industry” or “The Big Three.”
It does not exist.
America’s material wealth consists not of the things we finance, communicate, administer and trade. It consists, largely, of the things we manufacture, grow, mine and build. The Economic Nationalist thus wonders how it comes to pass that the United States can spare $ 2000 billion to bail out Wall Street, which makes nothing, but, seemingly, not $ 50 billion to bail out Detroit.