Globalization, Xenophobia, and Donald Trump

Fear of the foreign

Views that fuel Donald Trump’s Campaign
Image Credit: Licht,

The political reactions working in favor of Donald Trump, or for that matter, Bernie Sanders have been a long time building. I realize to say any movement has been building for a long time is true for almost any social movement and might seem somewhat trite. Nevertheless, it is especially true for the political movement that has seized on both Trump and Sanders, no matter what their characters are like or how outlandish their beliefs might be, to smash the repressive political elites holding the citizenry down. 

The Superiority of Democracy Over Autocracy

What we are now witnessing is a full blown revolution against the ruling elites. In forms of government other than republican democracy, it would result in the shedding of blood and the loss of a great many human lives. The ability of the people to stage a revolution without a great deal of material damage and loss of life is probably the single most important advantage democracy has over any type of autocracy. When ancient Chinese emperors lost the “mandate of heaven”, there generally was no recourse for the people other than armed revolt, and so it is for other forms of autocracy. This may yet be the fate of the current Chinese “emperors”. Nonetheless, for a republic all that is required to stage a revolution is to hold an election in which the majority of people support the changes.

In addition a representative democracy affords citizens opportunities short of revolution to inform their representatives of their unhappiness on any particular issue, giving those representatives a chance to address the problems before the people give them their walking papers in an election. Unfortunately for us, the lawmakers in Congress and the President have not been able to steer us from danger, or even to cooperate in solving the smaller problems, like keeping illegal aliens out of the country. As a people, we are very, very unhappy.

Causes of the Revolt

So what are the causes of our unhappiness? The ones upon which Donald Trump originally fastened were the fears we had of foreigners: fears of their taking our jobs, fears of a sudden flood of them submerging our culture, fears of Islamic jihadists taking a great many of our lives. Many of these fears are quite rational, nonetheless some blame the wrong source.

It is surely rational for us to fear the military threats of Islamic jihadists. They have declared undying hostility toward the West because they believe Allah wills it. The United States has more than enough military power to obliterate local gatherings of jihadist power as they arise, but instead of its  overwhelming application, we see its ineffective and piecemeal deployment that allows those who would kill us future chances to do just that.

It is also quite rational to fear what might leak through our sieve of a border, both North and South. Trump is certainly correct in declaring our government servants have been very lax in allowing a great many illegal aliens to reside within our borders. How many of them might be agents of ISIS or other jihadist organizations? How many are imported criminals? Do we not have the right to determine the quality of people we allow to immigrate and to deport the rest? By being lax in defending our borders and defending us overseas, the current ruling elites have allowed a vast xenophobia to blossom among Americans.

Such xenophobia helps create convenient scapegoats to answer for our economic troubles, particularly the blame given to some countries for “stealing away” American jobs. Trump, Hillary Clinton, and Bernie Sanders have delighted in crying out to the world that foreign trade is destroying American jobs. Nevertheless, we know from Ricardo’s law of comparative advantage that so long as country A (say China) has a comparative advantage over country B (the United States) in producing a good, then both countries will profit if country A sells the good to country B. This is the only law of economics of which I know that can be proved mathematically. Click here to see that proof in a PDF. If country A has the comparative advantage, country B profits from buying the good from A in two ways. First, B gets the good at a lessor cost than it would otherwise have to pay if B had to produce the good itself. Second, it can save all the capital it would otherwise have to expend for producing the good, and use that capital to produce something for which B does have a comparative advantage.

So how can Trump, Clinton, and Sanders get away with their deception? They can do it by claiming transient effects to foreign trade being fundamentally the fault of the trading itself. If American factories are shut because we no longer produce the good we import from China or from any other country, is not the resulting unemployment caused by that trade? Not if the U.S. government allowed companies to rapidly redeploy their capital saved by the trade to more profitable endeavors! The problem is not with the foreign trade, but with the highly hostile business environment the U.S. government has erected against business activities, making impossible a rapid capital redeployment that would employ displaced workers. You can find the evidence for this hostile environment in the posts The Burden of Economic Regulations, The Debilitating Effects of Obamacare, Economic Effects of the Dodd-Frank Act, The EPA, CO2, Mercury Emissions, and “Green” Energy, and Economic Effects of Current Tax Policy. In fact the environment has grown so hostile that American corporations are fleeing the U.S. in increasing numbers. See the posts Beware BEPS!The First of the BEPS Refugees, and Big Corporations Abandoning the U.S. at an Increasing Rate. Those who might be succumbing to the siren song of protectionism would do well to review the history of the Smoot-Hawley Tariff, and its worsening of the Great Depression.

In fact almost all of the economic problems hurting the American people have been created by American governments, particularly by the federal government, which includes the Federal Reserve. Evidence for this can be found in virtual any of the posts in my State of the Economy post theme and in many of the posts of The Federal Reserve System and Central Banks theme. It is the malfeasance of U.S. government that deserves the electorate’s revolt, not foreign trade and foreign trade agreements, and not the globalization of the world economy.

Unrealistic Expectations of the People

Yet, our political elites, complemented by media and academic elites, are not the only generators of our unhappiness. To complete the list of malefactors, we would need to look in the mirror. We have expected compromise to solve problems between the Left and the Right when such compromise is manifestly impossible. The disagreements between the two sides are too stark, the views of fundamental political and economic reality too incompatible to have any hope for meaningful compromise. For a conservative Republican to compromise with a progressive Democrat, or vice versa, would mean for the Republican (or Democrat) to agree to something he believes is profoundly destructive to the country. For either side to compromise would be a profound and fundamental betrayal of the country, given their beliefs. The electorate’s expectations for such compromises are then greatly unrealistic. There will be a resolution only when a majority of the electorate decides on which side understands reality the best.

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