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The Economic Nationalism of Donald Trump

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Donald Trump has hardly taken his hand off the Bible upon which he took the presidential oath to preserve, protect and defend the U.S. Constitution, and he has already radically and rapidly begun to transform the direction of the American government. Taking up (at least metaphorically) Barack Obama’s pen, he has signed a series of executive orders. Several of them, I would suggest, demarcate the underlying premises and principles guiding much of his policy decision-making: political and economic nationalism.

One of these executive orders declared that the United States was formally withdrawing from any intention of participating in the Trans-Pacific Partnership (TPP), which had the stated purpose of reducing trade barriers among 12 countries, while specifying a variety of requirements for the members nations to fulfill as part of the agreement.

Another executive order called for expediting the approval and construction of the Keystone and Dakota Access Pipelines, to enable the transportation of crude oil from Canada to refinery facilities closer to the Gulf coast.

Still another one authorized the building of his promised “Wall” along the U.S.-Mexican border, along with additional personal to be hired for border security, and eliminating federal money to “sanctuary cities” protecting illegal immigrants.

And most recently, there has been his executive order that places a temporary hold on refugees arriving in the United States from a series of seven countries declared to be security risks to the safety of the American citizenry. This latest executive order has set off an especial firestorm of controversy and opposition.

The Meaning of Economic Nationalism

What they all have in common is a devotion to a conscious ideology of political and economic nationalism. How may we define political and economic nationalism? We might, perhaps, use a definition offered by the Swiss classical liberal and free market economist, William E. Rappard, from his 1937 essay on “Economic Nationalism” that was written at the time between the two World Wars when an aggressive nationalist creed was endemic around most of the world. Rappard said:

Nationalism, then, is the doctrine which places the nation at the top of the scale of political values, that is above three rival values of the individual, of regional units and the international community . . .

If we wish to define economic nationalism by its underlying purpose, we should say that it was a doctrine destined to serve the nation by making it not richer, but freer, by promoting not its material welfare, but its independence of foreign influences. Economic nationalism is the policy of national self-sufficiency . . .

First, economic nationalism seeks to limit the nation’s consumption to those goods which are the fruits of its own soil and labor . . . Secondly, economic nationalism seeks to promote the domestic production of all those commodities for which the national needs are imperative . . . Thirdly, when these efforts also prove vain . . . economic nationalism is apt to raise the cry for more space, that is for annexation of neighboring or colonial territories . . .

As no measure of restriction of imports, of stimulation of home products, and territorial expansion, can possibly make any state entirely self-sufficient under modern conditions, economic nationalism seeks, fourthly, to secure a positive balance of trade . . . It is here that the policy become internally self-contradictory. It is here also that rival economic nationalisms must necessarily clash.

In order to secure for itself a favorable balance of payments, a state dominated by this doctrine must inevitably seek to inflict on its neighbors the very treatment against which it seeks to protect itself. If all countries endeavor to develop their exports while restricting their imports, to attract capital and foreign tourists, while prohibiting external loans and discouraging travel abroad, to expand their shipping, banking, and insurance services beyond their frontiers while monopolizing them at home, general failure, strife, and chaos cannot fail to be the result.

And inescapable in such a drive for political and economic nationalism, William Rappard emphasized, was “the subordination of the individual to the state.”

Now certainly the world in which we live today is fortunately not suffering, as yet, from the dire nationalist circumstances of the 1930s, when Rappard was offering his definition of economic nationalism in the context of the hyper-collectivist epoch in which he was living at that time.

Trump’s Fallacies and Ignorance on Foreign Trade

Yet, its genus can be seen in the worldview in terms of which Donald Trump looks at domestic and foreign affairs. The essence of this perspective is that international interactions occur in a zero-sum world. This comes out clearly in his rhetoric about how America has been taken advantage of in its trade deals and dealings with other nations. Whether it be North American Free Trade Agreement (NAFTA) or the proposed TPP agreement, in Trump’s mind other nations are “destroying” American manufacturing, “stealing” American jobs, “weakening” American standards of living, and “taking advantage” of America’s openness to trade, investment, and migration.

It is also seen in his insistence that any balance of trade deficit suffered in its trade relationships with other countries is a demonstration of America’s loss for the benefit of other nations. Thus, the United States must enter into bilateral, politically negotiated trade deals with each and every other country to balance America’s trade ledger book with them. This is not only a throwback to the Mercantilist ideas of the past, but one of the crudest versions that fails to think of even looking at the overall ledger book rather than a country’s balance of trade with each separate country. Not even the Mercantilists of the seventeenth century were that economically illiterate!

Manipulating the Business Climate for “National Greatness”

Many conservatives and some libertarians have hailed Trump’s decision to allow the Keystone pipeline to go forward or his promise to reduce the tax and regulatory burdens on American businesses. But the question is, why is he implementing or proposing to introduce these economic policy changes? Is it because he believes that government, as matter of principle, should leave individuals free to make their own decisions in their personal lives as well as in the competitive marketplace?

Clearly this is not the case. Exhibit one: phone calls and meetings with corporate executives before and after assuming the presidency in which he called for them to keep their manufacturing facilities in the United States, insisting that they should focus on creating more jobs in America for American workers, and threatening heavy fiscal penalties for any private enterprise that attempts to move out of the United State and reimport goods produced outside of the country

Trump’s vision is not that of individual freedom and economic liberty. No, it is the collectivist ideal of restored “national greatness” for which all Americans should participate and for which all Americans will be made to confirm, if necessary, through the fiscal and regulatory hand of the government.

Trump’s desire for the Keystone Pipeline to be constructed is for America to be “energy independent” Corporate taxes are to be lowered and regulations reduced so business will have more a flexibility and financial capacity to invest in America and create “good jobs” for Americans. To the extent to which businesses keep more of their revenues and have reduced regulatory hurdles to overcome, these are means to the end of restoring that American greatness.

If tomorrow Trump decided that “making America great again” necessitated new and different regulations or new and different fiscal burdens on businesses and the American consuming public, then for their own collective national good, individuals would have to bear the regulatory and tax burdens.

Sacrificing American Consumers and Taxpayers for “the Wall”

This is clear from Trump’s executive order concerning the building of “the Wall” on the Mexican border and how it will be paid for.  In his mind, cultural and social dangers and depravities are coming over the border from Mexico, from which he must protect the American people.

For all his talk about making Mexico pay for its construction, the fact is the American taxpayers will pay for the Wall. They are the ones who will have to be taxed, either through taxes in the present or taxes in the future when borrowed dollars (plus interest) will have to be paid back for its expense. The proposal to impose a 20 percent import tax on Mexican goods entering the U.S. does not change that outcome. Import taxes add to the cost of bringing those goods to American markets and will be reflected in higher prices paid by American consumers, plus a likely reduction in the quantities and qualities of Mexican made goods that then will be profitable to import into the United States. The interests and desires of individual American consumers and import businesses will have to be sacrificed for the higher good of restored national greatness.

Individuals Sacrificed on the Altar of “National Safety”

The latest furor over the new restrictions on refugees or immigrants from a variety of Muslim countries bears the same mark of national collectivism. If individuals from some Muslim countries already possessing permission to enter the United States are denied that entry, well, their needs must be sacrificed to the national interests of America.

If some American enterprises find it difficult to employ or retain the employment of talented and qualified foreign workers, say in the tech-industry, well then, their innovative and competitive edge must be foregone for the common good of the nation as a whole. In addition, and as a part of this, if more calmer and deliberative practices of the rule of law as well as senses of common decency toward those who have born difficult hardships in their home countries abroad must be bent or set aside based on Donald Trump’s conception of “national safety,” that, too, is part of the price of restored national greatness.

But, surely, we have not descended so far into that older aggressive form of political and economic nationalism that America would seize the territory of other countries in the name of national interest or economic self-sufficiency, would we? It was Donald Trump who said that having invaded Iraq and overthrown Saddam Hussein, the United States should have “kept” that country’s oil fields to prevent “enemies” from using them and as a means of keeping America energy independent as payment for our liberation of that land. The logic follows from the premise.

A dark time is threatening America with the Trumpian ideology and implementation of his vision of political and economic nationalism at the expense of individual liberty, private property rights, rule of law and constitutionally limited government.

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    Dr. Richard M. Ebeling is the recently appointed BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel. He was formerly professor of Economics at Northwood University, president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).