Economic patriotism

Conservatives spend a lot of time belly-aching about “patriotism.” (Actually, they’ve been pretty effective at it and have pretty much owned the word. More work for liberals to do…)

But what counts as patriotic is not that simple, especially in a globalized economic age.

The bailouts of the auto industry being managed by the Obama administration might end up being good for “General Motors,” the entity that just happens to be headquartered in Detroit, but as William Greider points out in the Nation, it’s important to remember that some American citizens are being thrown under the bus:

So this is how the auto bailout will work. American taxpayers pump tens of billions into rescuing General Motors from bankruptcy. Then GM pays us back by shipping more jobs overseas — the equivalent of four assembly plants.

The United Auto Workers sent a letter to Capitol Hill the other day that revealed the terms. GM’s restructuring plan envisions a doubling of the vehicles it will import from overseas factories, from 372,000 to 737,000, in the next four years. GM’s imported cars — already 15.5 percent of its domestic sales — will rise to 23.5 percent. “The overall number of vehicles GM will be importing in 2014 represents the production of four assembly plants, the same number that GM plans to close in the United States,” UAW legislative director Alan Reuther noted.

Now, personally, I’m for globalization and trade. I think the general benefits of trade are well-proven, and I think that, ultimately, humanity will benefit from becoming more interconnected, not less.

However, that does not mean we should sacrifice people in the short-run.

And since we still have nation states, it certainly begs the question of why our national trade policies would be run to the detriment of its citizens. William Greider:

Other nations like Germany, Japan, France and of course China impose national obligations on their producers and multinational corporations–demanding that companies retain their highest value-added production and best-paying jobs in the home country. The US gives its multinationals a free ride–even assisting them in dispersing production and capital to low-wage economies while keeping open the US market for their imports. Our own companies game this system endlessly–producing cheaply abroad, then selling the “US brands” back into the home market.

Economic entitites, like corporations, really have moved beyond the nation state, playing in a global economic system. Nations, meanwhile, have remained, well, national. And as long as we have national governments, they should serve their citizens – all of their citizens. That would be true economic patriotism.

Update: This isn’t just an American issue. And it’s not just for auto workers.

At the Wall Street Journal, Robert Frank runs a great blog called “The Wealth Report.” He tracks the lives of the truly wealthy – people that live in a different world he calls “Richistan.”

The other day he had a post about how some wealthy Brits are threatening to leave the country (take their toys and go home) because the U.K. government was considering raising the top tax rate from 40% to 50%:

“I won’t pay. I’ll leave,” British entrepreneur Peter Hargreaves told the Times. “Why wouldn’t I? If I stay I’ll pay half a million more a year in tax. If I leave the country I can save [three million pounds] a year. It’s almost like the government is offering me a bribe worth [three million pounds] a year to go and live abroad.”

The actor Michael Caine has voiced similar concerns.

Quite some British patriotism there.

I’ve seen this “flight of the rich” argument in different places before. If ever there was a time for public shaming, this would have to be it. How strong could your patriotism really be if you just run away from your country because of policies you don’t like? I’d like to see some conservatives stand up rake these kind of “patriotic” rich people over the coals, but of course, they won’t.

And this brings up another point related to my comment on corporations in the original post above. The truly wealthy have already gone “post-national,” just like corporations. The world is truly their oyster, while the rest of us are left “patriotism” and “nationalism” – both “isms” that must seem like sucker’s games to them.

Frank continues in his post with an interesting conclusion. The rich might complain about higher taxes, but really, they “have no where to go:”

Almost every developed country in the world is raising taxes on the wealthy. Germany is boosting its capital-gains taxes. Other European countries also are turning to tax the wealthy. The U.S., of course, is likely to raise taxes on the affluent. Many states, from California to New York, already have imposed a “millionaire’s tax” that hits nonmillionaires.

Sure, they wealthy could move to Monaco or the Caymans or any other tax haven. But the fact is, the wealthy like to be at the center things–of ideas, culture, finance and socializing. After three months of coconut drinks, even the Caymans would get tiring. Not to mention the bad PR that comes from living in a tax haven, as with Johnny Hallyday in France.

At the same time, the U.S. and other governments are making it harder for people to use offshore tax havens. If they earn money in the U.S., it is going to be harder to shield it from the authorities.

In other words, the wealthy may grumble but they may have few options other than paying up.

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