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Reich writes: "As we're now witnessing, Trumpian economic nationalism is a zero-sum game in which the industries of the future are dominated either by China or by the United States. We win or they win."

Robert Reich. (photo: unknown)
Robert Reich. (photo: unknown)

Elizabeth Warren's Economic Nationalism Vision Shows There's a Better Way

By Robert Reich, Guardian UK

09 June 19

Why do Americans think the sole choice is hardline economic nationalism or unfettered free trade?

s we’re now witnessing, Trumpian economic nationalism is a zero-sum game in which the industries of the future are dominated either by China or by the United States. We win or they win.

The loudest opposition to this view comes from multinational American corporations and their Republican shills in Congress, who don’t want tariffs stopping them from making bundles of money around the world.

So is this the only choice – zero-sum economic nationalism or unfettered free trade?

No. There’s a third alternative: “industrial policy” – which means putting national resources (government spending on research and development, along with tax subsidies and export incentives) behind emerging industries, while making sure the nation’s workers get the resulting experience and jobs.

Elizabeth Warren’s new Plan for Economic Patriotism, unveiled on Tuesday, marks a stunningly ambitious version of American industrial policy.

Industrial policy centers on a social contract between the public and business: corporations get extra resources to grow bigger and more innovative. In return, those corporations create high-paying jobs in the nation, and focus on sectors promising the greatest social returns.

This isn’t laissez-faire economics; nor is it zero-sum economic nationalism. America’s investments in its workers and leading-edge industries wouldn’t prevent other nations from making similar investments.

Such competition is positive-sum: if all nations’ workers became more productive, and all socially-beneficial industries grew, the world will be better for everyone.

Those of us who advocated for an industrial policy decades ago argued that America already had one, but it was hidden.

Our giant defense industry had turned America into the world’s leading maker of bombs, airplanes, satellite communications, cargo ships, and container ships, as well as the leader in computers, software and the internet. Our subsidies for pharmaceuticals under the National Institutes of Health (NIH) were central to our dominance over new drugs.

But America’s hidden industrial policy didn’t necessarily benefit America. Military spending was bloated and wasteful. The NIH didn’t require drug companies using its research to invest in good jobs in America, or to hold down drug prices.

In subsequent years, special tax breaks for oil and gas have hastened the climate crisis. The huge, no-strings-attached 2008 bailout of Wall Street allowed financial executives to prosper even as millions of Americans lost their homes and savings because of Wall Street’s gambling addiction.

State and local subsidies to lure companies their way (like the recent bidding war for Amazon’s new headquarters) have merely moved jobs from one place to another, and are ignored when a company decides it can do even better by moving elsewhere.

Other countries such as Germany and China have been far smarter and more open about their industrial policies.

Smartness and openness go together. An open, explicit industrial policy becomes a national competitive strategy. A hidden industrial policy becomes a haven for political payoffs – a form of corporate welfare.

Which may be why big business in America killed off industrial policy in the 1980s. Such talk threatened to expose how much public money big business was raking in without doing anything in return.

Warren berates American companies that “have no loyalty or allegiance” to the nation they were born in. “These ‘American’ companies show only one real loyalty: to the short-term interests of their shareholders, a third of whom are foreign investors,” she writes.

But Warren is no zero-sum economic nationalist. She understands globalization can be a positive force if focused on improving the conditions of a nation’s workforce rather than on maximizing returns to capital. “Globalization isn’t some mysterious force whose effects are inevitable and beyond our control. No – America chose to pursue a trade policy that prioritized the interests of capital over the interests of American workers.”

Warren proposes enlarging federal research and development, and targeting it on leading technologies. These R&D investments would be “spread across every region of the country, not focused on only a few coastal cities”. The products that emerge would be built by American workers.

Her Green Manufacturing Plan proposes allocating $150bn annually for the next decade to renewable, green, American-made energy products, along with a dramatic expansion of worker training to ensure Americans have the skills for the anticipated new jobs.

It’s a national investment in our future. “Over the next decade, the expected market for clean energy technology in emerging economies alone is $23tn,” she explains.

It would also be good for the world. She calls for a Green Marshall plan, “dedicated to selling American-made clean, renewable, and emission-free energy technology abroad and a $100bn commitment to assisting countries to purchase and deploy this technology.”

As Trump erects tariff walls and rolls back federal efforts to curb greenhouse gas emissions, Elizabeth Warren is promoting a positive economic nationalism designed both to advance America’s workers and respond to one of the most profound crises confronting the world.

She reasons that if China can commit its national resources to promoting its domestic industry through plans such as Made-in-China 2025, and Germany can undertake economic planning, there’s no reason America can’t plan a future of cutting edge industries and good jobs – while combating the climate emergency.

She’s right.

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+27 # pmargaret7 2019-06-09 14:24
OK - is it Sanders/Warren or Warren/Sanders in 2020?
+4 # Rodion Raskolnikov 2019-06-09 19:04
"“industrial policy” – which means putting national resources (government spending on research and development, along with tax subsidies and export incentives) behind emerging industries, "

The US has had this for most of its existence. Almost all corporations that are huge got that way with government "incentives." And they never return a fair share of the profits to the workers.

The more Warren talks about her "kinder and gentler" capitalism, the less she interests me. It was US capitalism which decided to send jobs to the lowest wage nations on earth. US capitalism has demanded that the State Department negotiate "free trade zones" in many countries where labor laws are non-existent, taxes are zero, and wages are below subsistence. Often near-slave labor forces are brought from around the world to work in these zones created by US corporations with US government incentives.

This proposal is all wrong. The true solution is an international wage scale. Make corporations pay the same wage everywhere on earth and then the will bring manufacturing back home to save on transportation costs.

Warren calls herself a capitalist. She is very clear that she is not a democratic socialist. She does not know that there is an oppositional relationship between capital and the people of the nation where it exists. Capitalism needs to be regulated and controlled, not incentivized.
+7 # librarian1984 2019-06-10 03:47
Actually it's a continuum, pure capitalism at one end, pure socialism at the other.

'Pure' socialism means the workers own the means of production; there are no private companies or rapacious corporations. Everything is run by the government or workers. There are no CEOs.

And no one is suggesting anything like that.

Every nation has its own blend of capitalism and 'socialism' (a word demonized by Madison Avenue types working for goon types).

To understand the motivation and methods behind the 'matrix' in which we find ourselves, one can read the Powell Memorandum and 'Crisis of Democracy', establishment reactions to '60s activism; otherwise, just know WE HAVE A CHOICE as to how much or even what form socialism takes in our country. We can define and enact a uniquely American socialism. All it means is that the system serves the people as well as the businesses. Are we really against that?

No. We've been trained to fear the word and the idea. But oops, the jack-booted inbred sociopaths and their thug lackeys were lazy; they made us fear the word, not the idea. When people are surveyed about actual policies, devoid of any label, the people are progressive. Hell, they're social democrats,just like Bernie!

They want dignity and justice, decent health care and wages commensurate with their labor. They want to be able to pay their bills and take a vacation.

Not really so radical.

Warren will make a superb Treasury Secretary.
+3 # economagic 2019-06-10 15:30
"Warren will make a superb Treasury Secretary."

Brilliant idea! Warren knows more of government and corporate finance--and of the corruption in both areas--than any three of the other candidates, while her arguments in most other policy areas are seldom convincing.

Right about the Powell Memo, which advocated almost exactly what has happened since. Amid all the turmoil of the 60s and 70s and the screed that accomp0anied it, somehow I missed "Crisis of Democracy"
+1 # Wally Jasper 2019-06-10 08:23
Warren's plan seems like a "trying to please everybody" plan: a mix of corporate capitalism, workers' rights and a kind of green plan all in one. Reich calls it "win-win." To me it sounds like another unsustainable concoction. Warren doesn't challenge, but even promotes, the rather insane idea that economies must continually keep growing. This nonsensical human construct is at the root of our dysfunction, along with our continually growing population and our insatiable appetite for "things." No, Elizabeth, I don't believe we can have it all.
0 # lfeuille 2019-06-10 17:14
It's still Sanders for me. Warren has put out a lot of proposals recently, but I'm not sure how well thought out they are. Most of all, her continued vocal alliance to capitalism and the "market" economy gives me pause. We are not about to eliminate capitalism regardless of who is president, but I would like to see it shrunk to the point people with non-competitive natures can survive without engaging in it. This is definitely not possible now and I'm not sure it would be possible under Warren's vision. I'm pretty sure it would be under Bernie's.
+2 # dbrize 2019-06-11 14:43
Elizabeth Warren is decent on banking issues period.

Leaving aside her clumsy, silly attempts at ancestry games and the ease with which she invites parody of same, more important, she is wrong, very wrong on foreign policy, the national security state and represents marginal change at best. This alone should disqualify progressive support.

She has provided the requisite DNC fealty to Likudniks in the Mideast and the establishmentar ian neolib/cons will be happy to work with her.

That she is currently being pushed by many ostensibly “progressive” sites hearkens us to the ongoing warning of this site to “...beware hardened operatives attempting to shape the dialog of our community...”.

All while the ideal progressive candidate Tulsi Gabbard, continues to be ignored like a terminal case of poison ivy. That is when not being trashed by all the bad people.

P T Barnum had nothing on the DNC.
0 # librarian1984 2019-06-13 05:10
Completely agree.
+1 # DongiC 2019-06-11 18:16
But, Warren is right on the overwhelming issue of the day which is the deterioration of the environment. I agree she would make an ideal Secretary of the Treasury and that Tulsi Gabbard would do just fine as vice-president. A Green New Deal is a must, however, if we are ever going to have a chance at saving humanity. We might have to make major changes in how we live and function and manufacture things. We must decarbonize our industrial and domestic systems. We must also limit our population growth. There are some mighty sacrifices right ahead. Here's hoping.

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