Once the Wuhan coronavirus has been overcome, we’ll no doubt go back to being scared by Greta Thunberg and company. “Deadly” virus replaced by the ongoing scare of impending death by a thousand belching chimneys, interruptible only in the event of the onset of another pestilence.
Be comforted. All is not doom and gloom. The virus has cast welcome doubt on the virtues of globalism. Too much interconnectedness evidently has its drawbacks. For one group with a particular philosophical outlook, to wit, conservatives, its drawbacks were evident long before the virus hit. And it has nothing at all to do with rubbing shoulders with international tourists.
This essay appears in May’s Quadrant.
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Globalism and nationalism are not mutually exclusive. There is a tension, but nation-states can retain their integrity (wholeness and cohesion) while interacting with one another on a global scale. It’s a question of setting the right balance between porous and impermeable national borders. Perspective on where the balance should lie separates conservatism from the rest of the political spectrum. From this separation different positions and policies flow, along with political allegiances and the future of capitalism.
While libertarians and classical liberals are on the same side of the political and economic fence as conservatives, they are, nevertheless, inclined to favour positions and policies which give rise to more porous borders which, if taken too far, can undermine the integrity of the nation-state. But, to be clear, those of the Left put them in the shade.
Leftists of today appear to have undisguised and profound disdain for the integrity of the nation-state; for what binds it together—sovereign territory, strong borders, a common rule of law, common values and customs, shared history and traditions. While they might be wary of the free movement of goods across borders, they certainly embrace people movements. In the United States, “Bring us your voters” is their subliminal siren call. Giving free health care to illegal migrants drew the support of all Democrat candidates when there were many of them on stage. What a magnet that would be.
Libertarians and classical liberals cannot be put in any category close to those on the Left. That would be insulting to many good people, including people I know. However, they embrace free trade. And, albeit in a measured and nuanced way, they do tend to err on the side of favouring borders open to the international movement of labour.
Conservatives also have a measured and nuanced position on international trade and people movements. However, reverence for the integrity of their nation-state and the need to guard it from all enemies, foreign and domestic (to borrow from the US presidential oath), informs their policies. “America first” sums it up for President Trump. Not all conservatives are fans of Trump. But most are fans of Roger Scruton. This is one way he put it in his book Conservatism: “The nation state elevates neighbourhoods and territory into the thing to which you belong. It is the means to reconcile people of different faiths and lifestyles.”
Of course, a nation does not have to be self-sufficient to retain its integrity. In fact, it must take advantage of specialisation and trade. At the same time, it must have an abundance and range of skills and talents and the capacity to fend for itself in extremis. It’s a balancing act, making sure the nation remains whole and cohesive while, at the same time, enjoying the benefits of exploiting free-market forces inside and outside its national borders.
Care is needed. Not all market forces produce good outcomes. The market which came to light in the United States, for example, of buying and selling aborted baby parts, the market for illicit drugs, for human trafficking, for child pornography and, close to home, the black market for grog in remote indigenous communities. The common factor in these and many other examples is that one or more parties directly involved in the transactions, or third parties touched by them, suffer harm. Harm is the key.
The essence of beneficial free-market forces that Adam Smith talked about is that all parties to a transaction benefit; there are no injured parties. Additionally, there is an implied condition that third parties suffer no significant harm; or, more broadly, that there is no significant collateral damage. If there is such damage, then trade-offs potentially come into play. Do benefits outweigh costs? This is precisely to the point, I suggest, when weighing the benefits and costs of allowing free-market forces to play out in a global marketplace.
When Rexford, an American company, decided to switch its production of ball bearings from Indianapolis to Mexico, the contracting parties on both sides of the transaction gained. And when major US pharmaceutical companies decided to outsource production of drugs to China, again the contracting parties to the transactions gained. But some third parties lost. Collateral damage occurred. The international outsourcing of production inevitably causes loss of employment which can extend into the longer term and materially harm many individuals and their communities. It can as well pose national security concerns. All of that should be taken into account, yet the evidence is that consideration of collateral damage is lost in the celebration of benefits. The result is evident.
In January 1980 the number of jobs in US manufacturing stood at 19,282,000 (as reported in March 2020 by the Bureau of Labor Statistics). Despite President Trump doing what President Obama said couldn’t be done and creating an estimated 477,000 manufacturing jobs between January 2017 and January 2020, the number of such jobs has fallen by 6,436,000 since 1980, and all but 2 million of these since 2000. Sure, some jobs have been lost to automation but this is a furphy when you consider how many manufacturing jobs have been outsourced to China and Mexico; both with sweatshop wage levels. And it is no coincidence that NAFTA was signed in 1994 and that China was allowed to enter the WTO at the end of 2001 (with, and still with to this day, concessionary developing nation status).
Take Australia’s position. The Australian Bureau of Statistics released a report (December 10, 2019) on job growth in Australia over the twenty-four years from September 1995 to September 2019. Total jobs filled increased by 64.6 per cent. In contrast, manufacturing jobs fell by 270,000; from 13.4 per cent of total jobs to just 6.3 per cent. As with America, most of our drugs and medical equipment are made overseas. Nor do we any longer make electrical goods, or not many; nor clothes or, again, not many of them. We have outsourced most of our manufacturing and all of the great variety of skills it entails, and all the small businesses it supports, and all the richness it brings to our national culture, to foreigners. On the loss of the remnants of car manufacturing in Australia with the demise of General Motors Holden’s operations, Greg Sheridan (Australian, February 20) called it “a catastrophic loss of capacity, complexity and competence across our economy, a dumbing down of society, a needless limitation on our potential and a serious dent in our national security”. I have quoted Sheridan because I don’t believe the sentiment could be better expressed.
Two past articles of mine in Quadrant were centred on international trade. In “The Debate that Never Dies” (July-August 2011) my support for free trade was wavering. My view had sharpened in “The Deplorable Victims of Free Trade” (April 2017) in which I wrote: “Free trade deals are like any other deals. There must be a quid pro quo. Both sides need to reap tangible gains otherwise the deal is exploitative.”
Two events have since sealed the deal and hardened my born-again jaundiced view of free trade. The first was the completion of the loss of all car manufacturing in Australia. The second was the revelation coming out of the coronavirus pandemic that almost all antibiotics are made in China. Surely even the most committed globalist would acknowledge that it is madness to put the production of antibiotics in the hands of a nation which just might be the most powerful potential adversary? Don’t be too sure. Free trade, like climate change, is akin to a religion among its supporters.
Of course, international trade is good. It is essential. It makes nations more prosperous. But it is a means, not an end. And trade deals should be put into that perspective. The end for any individual nation is to sustain a free, secure and prosperous population made up of many communities each having the opportunity to flourish. Industrial wastelands, occupational uniformity and dependence on potential enemies for essential supplies are not a good outcome.
Perhaps since Adam Smith, but certainly since David Ricardo set out his theory of comparative advantage in 1817, the benefits of specialisation and international trade have been extolled. Those taking a contrary view were gradually relegated to the periphery of debate, classed as deniers of economic reality (typically union troglodytes clinging to jobs in uncompetitive industries) long before the new class of climate-change deniers came into vogue. Well, in the tradition of Galileo, not all deniers of the conventional wisdom prove to be wrong.
One of the difficulties of debating free trade is that one side argues along purely economic lines. It operates under the assumption that those thrown out of work will find employment elsewhere in industries which benefit from being able to import intermediate materials and goods more cheaply and from selling into wider markets. True enough, but it is an overarching assumption which hides the reality that the dislocation costs for many individuals and communities can be devastating. It also takes no account of the cultural costs which follow from the loss of diversity of occupations, nor of the security costs of losing self-sufficiency in vital supplies. Effectively, it ignores collateral damage. A more plentiful supply of cheaper goods is the sine qua non of the argument. And, note, when this is the defining argument it is a short hop from extolling the free movement of goods to extolling the free movement of labour. One complements the other.
Compare the similarity of Sheridan’s comment with that of American Fox News commentator Tucker Carlson:
The people in charge inherited an economic superpower with unchallenged military dominance. In a little more than a generation they squandered all of it … they wrecked what they did not build. They outsourced entire sectors of our economy to China. They imported a serf class to drive down wages and they crippled the middle-class while doing it. [My emphasis]
In the same recent segment Carlson reported that AT&T is effectively forcing a large number of its employees, on pain of losing severance pay entitlements, to switch to a related consulting firm for the purpose of training foreign workers. Mainly from India, these workers enter the US on temporary work visas. Whether the AT&T employees will be rehired once they have completed their training assignment is in dispute. But, whatever the truth of that matter, it is clear that the jobs for which Indians are being trained will not be available to Americans.
There are various types of temporary foreign-worker visas issued by the US government. The one applying in the AT&T case is for “speciality” occupations. It corresponds roughly with Australia’s Temporary Skills Shortage (TSS) visa which replaced the old 457, which was so much in the news not so long ago because of union opposition. According to research published by the Economic Policy Institute in March 2017, an estimated 460,000 people were employed in the US in 2013 on this category of visa and over 1.4 million on all temporary work visas. As a comparison of sorts, the Australian Department of Home Affairs reported that a little over 19,000 TSS visas were issued in the September quarter of this financial year. Incidentally, those coming from India topped the list.
Of course, those on temporary work visas account for very few of the many migrants pouring into the West, legal and illegal. But they point to a relatively modern trend. Why train and hire homegrown employees when it is easier and cheaper to import and recruit foreigners? The result is the loss of opportunities for homegrown workers and a general depression of wage levels, which we have seen across the Western world for the past two decades and more. And this doesn’t touch on the loss of social and cultural cohesion in the nation-state.
It is, I believe, unarguable. Untrammelled international trade and people movements have weakened, and are weakening, the integrity of the nation-state. I will take a leap but not an idle one. If this weakening were to continue at the pace of the past two decades, it could potentially undermine support for capitalism and open the door for socialism. Maybe not communism, but enough socialism to make us all poorer and less free.
Free-market capitalism is a wonderful unplanned outgrowth of Western Christian civilisation—but also, of secure and law-abiding nation-states. Respect for individual natural rights, the separation of secular from religious life, and the Ten Commandments weighing on the would-be corrupt, had transnational effect. However, the nation-state was instrumental in enshrining a body of law which applied equally and dispassionately; which protected each individual’s right to go about earning a living without coercion or undue restraint; to own, to buy and to sell property on voluntarily agreed terms and, vitally, to grow rich.
As successful as it has been, capitalism doesn’t come with a guarantee of permanency. It has been overthrown in parts of the world in the past. Socialists cum Marxists are forever lurking, feeding off the wishful thinking, naivety and short-term memories of the young; off economic recessions, as they loudly did in 2009; and off the nonsensical hype about income and wealth inequality. Spreading wealth destroys wealth. Which, when you think it about, could fit on a T-shirt. But, of course, whether on a T-shirt or explained at length it would not be understood by the leftist economic illiterates who push the inequality barrow.
I am fairly confident that neither recessions, however deep, nor inequality will undo capitalism in the Western world. Ordinary people have more common sense than to fall for it. They know that economies have ups and downs and they are much more interested in the size of their pay packets than they are in whether there are fewer or more billionaires buying Maseratis and mansions than there used to be. I am not quite as confident that capitalism, as we’ve known it, will necessarily survive many more gargantuan doses of globalism as it finds expression in unbalanced international trade and in people movements.
I am not at all suggesting anything as dramatic as insurrections or revolutions; obviously not. But the fallout from globalism has already provided fertile ground for an emerging breed of old socialists with youthful followers. And this is quite apart from the propensity of many migrants, particularly those with Islamic background, to lean leftwards.
One thing that socialist Bernie Sanders has in common with Donald Trump is scepticism about the benefits of so-called free international trade. This is no accident. Both have a populist following. Unsurprisingly, blue-collar workers don’t like being put on the scrapheap as their jobs are outsourced overseas. Nor do they like being consigned to living in hollowed-out urban areas from which manufacturing jobs have disappeared. Nor do they like being replaced, or having their wages depressed, by cheap imported labour. Populism feeds off the resulting discontentment. And populism can fall either side of the political spectrum.
In America Donald Trump came on the scene just in time, as the Democrats lurch ever leftwards. A case can be made for Boris Johnson in the UK, if not as persuasively. Bernie Sanders is a more formidable socialist than is Jeremy Corbyn, hamstrung as he was and is by past associations with, to put it mildly, unsavoury characters. Ageing socialists seem to have a harder job in Australia of attracting a fan base, for which we can be thankful and self-congratulatory. In any event, whatever is happening elsewhere, it’s worth paying attention to America. If it were to adopt a socialist agenda it would likely have far-reaching effects.
Fortunately, that time is not now. For one thing, socialists have lumbered themselves with an open-borders and jobs-destroying environmental agenda, which has rather dented their credentials among most sensible blue-collar workers, whose allegiance is required for there to be any decisive populist uprising. At the same time, more globalisation and a changing demographic which, given the opportunity, even so-called moderate Democrats would inflict on America, could change the odds. Younger and better-looking versions of Bernie Sanders (known as “The Squad”) are waiting to take up the torch. Socialists haven’t lasted so long through so many failures without being resolute in biding their time.
Peter Smith, a regular contributor, wrote on “The Origins of Morality: God versus Nature” in the January-February issue