Tag Archives: corporatism

The Nation-State Versus Nationalism

Economics, In the News, Politics, Theory and History, , , , , , ,

In light of Brexit and election of Donald Trump, some have concern that nationalism’s on the rise. Although nationalism is related to the idea of nation-state, many who are comfortable with nation-states are wary of nationalism. These people associate nationalism with prejudice in its mildest form, and an aggressive foreign policy at it’s worst.

To many, President Trump’s controversial travel ban confirms these fears. Critics of Trump’s stance say his ideas run counter to America’s strong history of cultural assimilation. Ironically, Trump’s critics sometimes fail to point out that he’s consistently vowed to reverse the Bush and Obama pattern of using America’s military to help overthrow governments in the Mid-East. Although obviously questionable, Trump’s travel ban arose out his stated desire to reduce America’s military involvement in the Mid-East.

The dividing line between supporting a nation-state versus nationalism can sometimes be hard to determine. While some claim recent political events are nationalistic, others say these same events merely help preserve national identity. Highlighting the divide is how conservatives often support traditions of longstanding cultural preferences, while liberals sometimes view these traditions as discriminatory.

Since Neo-Liberal globalist policies have been dominant for some time, it’s inevitable a strong opposition movement to it would appear. As to where this movement leads is anyone’s guess. However…one thing’s for sure: many moderate voters who used to support it are questioning the Neo-Liberal dominance that’s held sway many years.

In light of the fact Brexit received over 50 percent of votes cast and Trump got over 46 percent, it’s hard to categorize all their supporters as racist and xenophobic. Interestingly, some supporters are moderates who’ve voted liberal in the past and are in favor of both free trade and equal opportunity for minority groups.

Regarding trade, many American voters adhere to Bernie Sanders belief in fair trade pacts negotiated more transparently. These moderates were attracted to Sanders and Trump since they were concerned that the current committee approach to trade pacts could result in job loss and weaken American sovereignty.

Contrary to the stereotype of the Trump voter, some of his moderate supporters adhere to liberal ideals of equal opportunity for all regardless of race, gender, and sexual orientation. These Trump voters broke away from Democrats in swing states due to disillusionment with both the economy, and the Clinton political dynasty.

In looking at recent political events it’s clear that the most powerful voting bloc in democracies are the unpredictable swing voters. Since the groupthink aspect of party politics doesn’t sway independents, they can influence political trends dramatically. Even if they don’t totally agree with a candidate or movement, swing voters will sometimes switch political allegiances if they feel one side of the political spectrum is becoming too powerful.

In line with this, conservatives need to also be wary of the unpredictable nature of the swing voter. If conservatives are perceived as over reaching as a result of Trump’s victory, they too will feel the wrath of the independent voter. Above all, swing voters vote their conscience as opposed to party line. This is why conservatives need to be careful about cutting social services, or following policies that are overtly nationalistic.

For 300 years the concepts of nation-state and nationalism have intermingled. Since nation-state refers to both a geographic and cultural entity, it’s understandable that the prideful aspects of nation-states can sometimes be interpreted as nationalism.

Interestingly, the concept of nationalism isn’t always viewed negatively. When Europe’s former colonies achieved nationalistic self-determination, this was often viewed as liberating. Unfortunately, one of the main reasons nationalism is viewed negatively is because it’s seen as contributing to World War 2. Although this is true, it goes without saying that a decrease in nationalism doesn’t always equate to less war. After all, although America’s been involved in many wars since World War 2, it’s rare that overt nationalism is cited as the main reason for this.

As we’re often told, globalism was looked at as an antidote to nationalism. Since World War 2, a multi-tiered globalist approach has sought to provide safety valves to the negative aspects of the nation-state. Although it’s fallen out of favor, modern globalism has undoubtedly helped temper rivalries between some nations. However, as with many successful ideas, an understandable backlash has developed to it.

Obviously, a form of globalist trade is here to stay. As the past 300 years shows, trade between nations is desirable and logical. After all, since different resources and skills reside in different areas, there will always be need to trade. What’s questioned these days isn’t free trade, but what the terms of agreement between trading nations are, and whether they’re transparent or fair enough.

The trade pacts and globalism of the past 25 years have led to major economic dislocations. As a result, a consensus has developed that globalist corporatism needs rethinking so each nation’s needs are respected. Currently, a school of thought says that if corporations have too much say on trade pacts, they may supersede nations in terms of power and influence. These concerns, in addition to job loss, are what led to Brexit and the atypical presidential campaigns of Trump and Sanders. Basically, these populist reactions are recognition of the problems posed with the current pace of globalism. Whether they provide clear solutions to the dilemma is debatable.

Many people dislocated by economic change realize there are no easy solutions. However, they tire of having gainfully employed experts remind them how a lack of good jobs is mostly due to automation, and how outsourcing gives them lower prices. Although it’s valid to point out benefits of globalism, it takes on a different look if one’s a member of the large pool of underemployed who inhabit many countries.

One of the most pressing problems facing the modern world is the jobs issue. Economists and social thinkers have predicted for years that automation and globalism will create chronic underemployment. For a temporary solution, progressive liberals such as Sanders and Elizabeth Warren have expressed willingness to work with President Trump on his plans to upgrade infrastructure. As we know, this will not only help America become up to date; it’ll provide many jobs that’ll stimulate the economy. In line with this, many economic thinkers are advocating a permanent infrastructure workforce to both lower high underemployment and provide maintenance.

Conceptually…a nation-state provides a sort of umbrella over a geographic area and culture. This umbrella gives each nation an air of distinction. In line with this, globalism can be viewed as a canopy that goes over all the nation-state umbrellas of the world. Basically, both Brexit and election of Trump were seen by many supporters as attempts to preserve national identity. Unfortunately, the awkward nature of both trends has led to fears of nationalism. Since many voters were concerned that globalist corporatism was moving too fast, they supported a new political movement that took a U-turn away from the road travelled. These voters were concerned that the conceptual umbrella of nation-state, could almost be replaced with the canopy of globalism.

Obviously, there’s a chance recent political events can degrade even more into negative aspects of overt nationalism or intense societal division. To avoid this, we need truly engaged citizens and leaders on all sides of the political aisle who are willing to try to understand each other.

 

 

 

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Towards a More Practical View of Economics

Economics, Theory and History, , , , , , , , , , ,

When some people hear the term economic theory, they often act indifferent or roll their eyes. This is because for years, many have equated it with a type of intellectual game playing.

Unfortunately, few modern theories have as much day-to-day impact on people’s lives as economics. Also, since economics is the silent partner of politics, few issues escape its grasp. In fact, when one applies a follow-the-money approach to political topics, they often find that across the spectrum, many issues have their origin in economic theory.

Because economics is misunderstood, it can be hard to discuss beyond the usual clichés. Therefore, when anyone mentions the possibility it can become more practical, many shrug and say, “Here we go again.” This confusion is compounded by how some theorists seem to setup axioms out of premises before all data is collected. As a result, economics is sometimes viewed as a statistical mishmash of competing ideas arranged in an arbitrary fashion.

But is economics really just a game? How can it be just a game when so much of what we do in life revolves around some kind of monetary exchange?

One of the reasons modern economic theory puzzles many is that much of it seems counter-intuitive. The abstract nature of modern economics, just like the abstract nature of modern physics, proves to be a barrier.

For instance, to the average American who’s struggling to pay down debt, the fact that our government can seem to function with a large amount of growing debt appears somewhat illogical. When politicians and economic experts talk about Debt-to-GDP ratios, and favorable levels of debt, many average Americans shrug as if it’s yet another example of political-economic gamesmanship.

In addition, to the average American that looks upon their family as a self-enclosed economic entity, the ever-present concept of globalism seems confusing. To many, the American nation is still the largest economic entity we envision. Therefore, getting used to the whole globe as an economic entity can appear abstract. Yes, most Americans understand globalist trade concepts and the importance of global trade. After all, since the days of Marco Polo and the Silk Road, individuals and countries have enriched themselves through trade. However, that’s not what creates confusion for many.

What puzzles many about globalism is how some American-based multinational corporations pursue loopholes to drastically lower their taxes. On occasion, these companies hint at the fact that such tax practices are a necessary part of globalist trade. Although the American corporate tax rate is high on paper, they often pay much less than what the official rate implies. Unfortunately, the reputation of corporations that pay taxes fairly is damaged by the tax avoidance pursued by some.

Adding to the bewilderment many have with modern economics is the fact that corporations are now viewed as people in legal terms. Therefore, many think that as people, corporations could pay a fair share for the roads, bridges, ports, and airports they use to conduct trade.

Probably the most confusing part of economic theory is how it’s used in the political arena. As is well known, both parties have economic experts and economists at their disposal who polish the rhetoric politicians employ. As most Americans attest to, there’s a tug-of-war between the Republican embrace of the more Free-Market approach of the Supply-Side revolution starting in 1980, and the more socialist Democratic approach of government-based Keynesian ideas used to maintain economic demand. 

In reality, although America has swung between Republican and Democratic directions the past 30 years, the economic dogma espoused by both seems to have resulted in the system that some call Corporatism. In a sense, Corporatism, as reflected in the political talk of Public-Private partnerships, has arisen since implementing the economic views of both parties in total has proven difficult. Therefore, the political-economic theorists that predicted Corporatism are correct to say this system could grow out of modern political rivalries. Although some say Corporatism resembles Socialism insofar as there’s a strong government hand in the economy, it differs by leaving the means of production in private hands.

As for developing a more practical economic view if indeed we’re living in the age of Corporatism, there are many proposals.

First off, since the post-Keynesian economic model has allowed for large amounts of unstable debt to accumulate in many advanced countries, there’s a need for debt limits that are achieved transitionally without imposing high levels of austerity. In line with keeping debt lower, the debt-risk posed by those wanting more finance deregulation needs to be recognized. After all, if another finance crash creates a freezing of liquidity assets similar to what we had in 2008, billions of dollars of outstanding derivatives contracts may trigger the need for another bank bailout. Obviously, another bailout would be added to our nation’s debt again.

Regarding debt reduction, we could actually increase tax revenue from corporations by both cutting their official tax rate, and then closing certain loopholes. This policy could help reduce debt, while also improving the negative public image many have of corporations due to how some pursue tax avoidance.

In addition, since many central banks have been pushing for lower interest rates the past 15 years as a means to stimulate certain areas of the business cycle, there needs to be recognition that we need to slowly allow interest rates to return to historic levels so the natural ebb and flow between saving and spending can be restored. As many economists note, such unnaturally low levels of interest rates, if continued, will make it hard for us to not only stimulate the economy for future growth, it’ll make it hard to stimulate the economy to reduce the chronically high levels of underemployment we now have.

Since chronic underemployment has become an outgrowth of globalism in many advanced countries, it’s apparent that relying on historically low interest rates as the main way to boost employment has led to a situation begging for creative solutions. As many have said, America could deal with its high level of underemployment by borrowing ideas from both right and left of the political-economic spectrum. These ideas include creating infrastructure improvement jobs and streamlining small business regulations to encourage true entrepreneurship. 

And finally, although globalism’s here to stay and has benefits, it’s obvious that although recent trade pacts reinforce large multinational entities, that the most important entity for each nation… remains that nation. Therefore, if politicians can honestly find ways to look out for all aspects of our nation more, America’s economic outlook could improve. 

Hopefully, with more involvement from ordinary citizens, economics will start to lose its reputation as a confusing line of thought, and become more an everyday part of everyone’s lives.