We are in an economic war, with China. The government of China has brought the full power of the Chinese State, behind trying to win that war with us, and become economically dominant over us. So we have no choice but to organize and pursue our own national interests. The Chinese are not here to look after our economic interests. We must do that. It is naive beyond belief, to throw away nationalism, as we have done.
It’s a practical thing. Humans form in groups, with common languages, common interests. And all groups compete as well as hopefully cooperate with other groups. The world is a complex place. The best way to understand the interests of a group, and to act on those interests, is on a local level, with people who share as much as possible, with the people whose interests they are trying to represent. That’s why globalism was always bound to fail.
The Achilles Heal of Globalism is that economic systems run on information and feedback loops…..based on self-interest of individuals and groups, who organize to pursue their interests. Capitalism evolved in local areas, reflecting local interests. Globalism works in opposition to that. It says local interests don’t matter. That is foolish on many levels. On the level of pure information flow alone, the most accurate way for information to flow in an economic system, is within smaller economic units. Globalism is doomed because it interferes with natural patterns we evolved with, such as local groups sticking up for the economic interests of the people who created the wealth in the first place. The way patterns of information flow best, is where there is accurate information feedback loops, of vested interests.
It’s very simple and central to how reality itself works. If you understand this sentence, you understand my meaning: What is central to you, is peripheral to all others.
Think about this: If you are an American, how well could you understand the problems of the people in a specific region of China? Not well, I suspect. The reasons are many: different language, different customs, your perception of the world, as an American, is at it’s best in understanding things on as local a level as possible. That’s the practical, sensible approach, much more grounded in reality, grounded in experience and common interest. That’s why nation states were formed, in the first place.
The world has moved in the opposite direction, for decades. With globalization, workers were interchangeable. It meant that workers in Milwaukee were now competing with workers around the world. As in all things, when you have a large increase in supply, the price of something goes down. So it is with labor. Globalization of manufacturing was done, to give companies an edge in production costs. And this is the process that weakened capitalism in America, for the ordinary person. That’s why so many Americans support socialism: capitalism is being ruined, ironically, by the capitalists themselves. What we need to do is create an America again, where most people can win.
Trump’s response is trying to move America, to a more entrepreneurial society, where workers can get a piece of the action. Part of this means reducing the size of government, so people can keep more of their own money. This differentiates Trump from Bernie Sanders, who believes in big government regulating everything and redistributing money. And as part of this, Trump has been pushing hard for fewer regulations, which makes everyone’s lives easier. Trump has ordered anyone bringing in one new government regulation, must get rid of two regulations. This is hard to do, because lobbyists write most of the regulations, and they do so for industry, for vested interests, of the rich looking after themselves, with regulations that favor people already with money.
One great thing President Trump did, was cancel TPP….the Trans-Pacific Partnership, a trade deal with China which was a bad deal and would have taken away much of our sovereignty on economic matters.
However, we face even greater long term challenges; automation, advanced chip design, robotics, genetic engineering…the convergence of computing power and AI….will likely be the greatest challenge in the 21st Century, and the greatest challenge ever. Unless we take back from the scientific, engineering, managerial political class, the ordinary person doesn’t stand a chance. For the most part, we Americans are coming up with these modern marvels. But: will most Americans even benefit from them? Or only a few?
We live in an age of great promise. Much technology is coming online, that can create a much better future, for all humans. Maybe the most important economic lesson, for the average person, in the last 40 years, is how little the economic elite cares for our interests. That’s what Globalization is all about. Think about it: for the first time in human history, due to advancing technology, firms could send work overseas. Capitalists, whose main focus is on making money, had their first opportunity, to do so, with the rise of China. And without hesitation, they did so, devastating millions of lives.
And capitalism is something I am very much in favor of. Socialism doesn’t work. But does capitalism? Given the first chance to make more money, the capitalist class threw the American worker under the bus, didn’t care at all, about his interest. The great thing about capitalism is it doesn’t care. It goes where it can make the most money. This has helped create the most prosperous world ever. But the worst thing about capitalism, is it doesn’t care. It goes where it can make the most money. This means that people with money, given a choice, will gladly take their manufacturing overseas, if they can get richer in the process. It’s a fairy tale that everyone wins, in capitalism.
For the past 4 decades, the standard of living for the American middle class, did not rise at all. We continue to have better and better technology, but our standard of living did not rise for the American middle class. But the standard of living for the average Chinese during that same time period, had a remarkable improvement. Due to globalization of labor, they won, most of us lost.
Ask yourself a question: Who is looking out for your interests?
And the corporation is a fantastic human invention. But written into the DNA of how corporations are designed, they are legally designed to make money. Period. And that’s great except, that very process can ruin countries, the well-off can take control of all the new technology, and it can end up benefiting only a few people. And that has been the pattern for the past 40 years. That’s what I am worried about, as all the new amazing technology rolls out.
As a result of these forces playing out in the world, China got rich, the American middle class lost, the middle of America lost, and the very well off in America won. You can see that in the chart above. What troubles me is that we have an amazing variety of new technology, which will be steadily rolled out, in the coming decades. We can look back at the amazing rollout of new technology in the past few decades, and we can see a pattern: Capitalism creates wealth, but sometimes whole groups of people get devastated in the process. And without nationalism to stick up for the interests of it’s people, it’s people who run successful corporations who run the world, have all the power.
Who will benefit? Who will lose? Who will get most of the wealth? Will we have people starving in the street, while we have the technology to easily feed the whole world, give everyone an education and good standard of living? Economist Mark Blythe calculated that, based on our current levels of technology, it would only take 10% of the current population of the world working, to actually produce a fine standard of living for everyone on the planet….we have the technology, but we don’t have a good economic theory, to pull it off.
And the technology will only get better and better. The challenge will be, upgrading capitalism, testing out new ideas, see what works, pushing for social change, while not ruining the system which gives us the best standard of living ever. Can we do it? I hope so. It will take the rest of this century to find out, and it won’t be easy. It won’t be easy because we don’t have any idea how to do it. Capitalism works, because it evolved over hundreds of years, much like a biological creature evolves. Many things were tried, many failed, a few succeeded. We are not at the end of the evolution of capitalism. But I continue to guess that one fundamental principle going forward, will be the very strong rise in nationalism, for decades to come. It’s the only thing that makes sense. Strong voter control over elected officials, to get our government to plan things so that most people get the advantages of our wealth and technology, while not ruining the system, will be the challenge of our time.