Former chief strategist and campaign manager Steve Bannon’s departure from the Trump White House surely does not mean an end to the demagogic racial politics in which Donald Trump has trafficked for decades.
It does, however, seem to mark the final eclipse of the notion that Trump would move beyond demagoguery and construct a vision of “nationalist” economic policy that would differ in a meaningful way from standard-issue pro-business Republicanism. Bannon, on his way out the door, appeared serious about this idea — phoning up progressive magazine editor Robert Kuttner to try to find common ground on trade policy and explain that “to me, the economic war with China is everything.”
Kuttner’s view of why this is unworkable stems from skepticism that “possible convergence of views on China trade might somehow paper over the political and moral chasm on white nationalism.”
Julius Krein, who tried to position himself as a rare pro-Trump intellectual who favored the then-candidate’s brand of nationalist politics during the 2016 campaign, gave up the ghost in a New York Times op-ed last week. He denounced “never-ending chaos” inside the administration and “unforced errors,” arguing that Trump’s “only talent appears to be creating grotesque media frenzies — just as all his critics said.”
Ross Douthat as early as May flagged indications that Trump “never really believed in Trumpism himself.” As Ramesh Ponnuru and Rich Lowry wrote that same month, the president certainly never seems to have taken the time to flesh out what “a Trumpist philosophy” that would feature skepticism of trade, immigration, and foreign intervention, a moderate social conservatism, and support for government activism to benefit the working class” would look like in details.
The reality, however, is that “economic nationalism” has grave flaws as an ideology beyond Trump’s racism, lack of policy knowledge, and personal indiscipline. The idea that the United States as a whole is locked in zero-sum economic competition with other countries or that average Americans could become wealthier at the expense of foreigners is simply wrong.
At best, it’s an analytical error born of bias or confusion about relative versus absolute living standards. At worst, it’s a con job — an effort to distract middle- and working-class Americans from very real questions about the domestic distribution of economic resources by casting aspersions on foreigners.
Globalization makes most Americans better off
The media, for understandable reasons, likes to cover controversy more than consensus. But attention to controversy can in its own way be misleading. And the extent of expert consensus on the economic impact of both trade and immigration is important to understand.
Probably the most prominent highly credible critique of China trade policy comes from David Autor, an economist whose work with David Dorn and Gordon Hanson argues that the impact of trade with China was much bigger and in some ways much more negative than experts predicted before the fact.
Their argument is, specifically, that the impact on manufacturing workers and heavily manufacturing-focused communities was too big for them to successfully adjust. The result was a “China Shock” that was large and semi-permanent, rather than small and transitory as previously thought. But even if that’s true, the fact remains that most Americans don’t work in manufacturing or live in heavily manufacturing-focused communities, and we’ve benefitted from trade with China.
“It doesn't mean the aggregate gains aren't positive,” Autor told my colleague Zeeshan Aleem in March. “Your and my cost of living might be a couple hundred dollars a year lower because of China.” The problem is that these are small gains spread across hundreds of millions of people counterposed against much larger losses for a much smaller group of people.
Jonathan Rothwell of Gallup and the George Washington University Institute of Public Policy has some contrary research that says this is wrong and doesn’t properly account for weak overall macroeconomic conditions in the mid-aughts.
It’s a fascinating and in some ways very important dispute, but both sides of the argument agree that the typical American was made better-off by trade with China. By the same token, the entire bitter argument among labor economists about immigration and wages is about whether or not immigrants have depressed the incomes of native-born high school dropouts. This is another fascinating, and in some ways very important, dispute. But, again, only 8 percent of the native population lacks a high school diploma. Both sides agree that most Americans are benefitting from immigration.
Better globalization wouldn’t immiserate foreigners
None of that is to say that American public policy with regard to trade or immigration has been perfect over the past generation or so. Dean Baker of the Center for Economic and Policy Research argues that “globalization, meaning the greater integration of economies across the world, could have been designed an infinite number of ways.”
In particular, he argued, it could have been designed in a way that was less beneficial to the upper classes in the United States and more beneficial to the working and middle class.
For example, policymakers could, and he argues should, have “focused on removing professional licensing barriers to make it as easy as possible for doctors, dentists, and other highly paid professional to train to U.S. standards and practice in the United States.”
These are critically important ideas to debate and consider. Globalization is, fundamentally, an enormous opportunity for almost everyone in the world. But the United States has, thus far, primarily taken advantage of it in order to obtain cheaper manufacturing goods for domestic consumers. That’s fine as far as it goes, but fundamentally, inability to afford manufactured goods is not a big problem for more Americans. Deploying the power of globalization to make health care services cheaper and more convenient, by contrast, would be a huge win for the vast majority of the population.
But note that just as manufacturing-focused globalization hasn’t been bad for most Americans, shifting emphasis to professional services would hardly hurt foreigners. Creating broad and clear pathways for foreigners to train to US standards and then move here to work as doctors, dentists, and nurses would be great for most Americans while also creating great new economic opportunities for foreigners. All policy choices involve winners and losers, but the tradeoff is almost never the kind of strict country versus country battle that Bannonism implies.
Domestic distributional conflicts are inescapable
The concept of “economic nationalism” is, fundamentally, a dodge. The substantive promise and political peril of reengineering globalization is that it would alter the domestic distribution of wealth and income. Keeping doctors scarce and manufactured goods plentiful is good for doctors, and if you try to change it the American Medical Association will try to stop you.
In that sense, the economic aspects of globalization are fundamentally similar to domestic economic controversies over taxes and spending. Either you believe in trying to rewrite the rules of the economy so that the gains from growth are less hyper-concentrated among one or 2 percent of the population or else you’re not. And here, tellingly, Bannon has very little to say on this. And what he does have to say would be devastating to the interests of most Americans.
When complaining in his Weekly Standard exit interview that his former colleagues in the White House are “going to try to moderate him,” Bannon predicts that among other dire consequences, Trump will likely “sign a clean debt ceiling” without agreeing to the Freedom Caucus’s extreme fiscal policy. This means that despite his occasional flirtations with antitrust regulation for big tech companies, he’s happy to embrace draconian austerity budgets that would drastically increase child poverty and eviscerate the American educational system.
To the extent that there’s any heterodoxy about domestic economic policy from Bannon, it’s simply as an extension of culture war posturing — a way of lashing out at Silicon Valley’s “woke” pretenses — rather than any vision of economic uplift.
Possessing as he does the soul of a con artist rather than the pretenses of an intellectual, Trump himself is much better positioned than Bannon to recognize the full potential of “economic nationalism” as a useful distraction tactic but not much more.
Trump knows how to work a good hustle
While Americans who follow politics were obsessing over the latest ups and downs of the Trump Show this summer, real policy changes that are important to wealthy business interests continued to roll out of DC. In late July, for instance, the Senate confirmed David Bernhardt to serve as deputy secretary of the interior. Bernhardt was previously a lobbyist with the firm Brownstein Hyatt Farber Schreck, where he represented, among other clients, Nestlé Waters. Nestlé is not particularly nationalistic, but they do enjoy selling bottled water. Luckily for them, last Thursday the Interior Department decided to reverse restrictions on bringing bottled water into national parks.
The Trump administration was also hard at work last week on making it easier for nursing homes that provide substandard care to avoid legal liability. Like Trump’s effort to let Sinclair Broadcasting violate longstanding media concentration rules, make workplaces less safe for the people who work in them, reduce workers’ overtime pay, and make it easier for financial advisers to rip off their clients, there hasn’t been a lot of tweeting about these two regulatory actions.
Instead, Trump feeds the public a steady diet of racial conflict hoping that if he punches nonwhite America hard enough, white America will be so busy gawking they won’t notice their pockets are being picked too.
This is a time-honored hustle in American politics, and Trump grasps its operation intuitively. And he also grasps in a way that Bannon may not that “economic nationalism” is useful as an extension of the hustle and no further. Adding immigrants and the Chinese to the scapegoat list alongside the traditional African-American targets makes for a more compelling narrative, and it’s let him bring the scam to parts of the urban North that have traditionally been too overwhelmingly white for the standard race hustle to seem compelling.
Bannon’s pretension to constructing something larger than that failed mostly because of his own interpersonal conflicts with other members of Trump’s team. But there’s nothing to mourn in the failure to build a more substantive vision of “economic nationalism” because the vision itself never made sense.