Daniel McCarthy, writing in First Things, describes our current pollical and economic troubles in the article “A New Conservative Agenda, A Governing Philosophy for the twenty First Century.” He contends that our bipartisan credentialed class’s plan is to ensure its own privileges while placating the service class with divisive identity politics.
For those who are no longer productive, the elite offer “palliative liberalism;” a package of economic measures that stops just “short of restoring inherent dignity and power to work.” The elite class’s economic and cultural interests are “well-served by a completely atomized America, one in which states have not seceded, but individuals have.”
By the end of the Cold War in the early nineties, America’s rationale for a global economic order evaporated. Instead of promoting American workers’ economic interests, the leaders of both parties dedicated themselves to spreading ‘democracy’ across the world. Instead of recognizing “post–Cold War China as a rising rival, America’s elites saw the remaining communist superpower as a land of opportunity for themselves.”
In his article, McCarthy defines America’s political-economic problem, how the nation got into this situation, the elite’s abdication of their responsibilities to the rest of the nation, and, finally, how economic nationalism can revitalize the nation’s families through reoriented trade and immigration policies.
America’s political-economic problem stems from our leaders’ refusal to change how they operate under new economic and political circumstances since they stand to benefit while the rest of the country suffers increasing loss. Quoting McCarthy,
…The class compact that came out of the Great Depression and World War II stabilized many of the social tensions dating back to the very beginnings of industrialization. It has broken down. The welfare state is heading toward bankruptcy. Americans are increasingly working as contractors rather than salaried employees, with fewer benefits and less security. Industrial jobs are vanishing.
A family wage, lifelong work, retirement guarantees, and brighter prospects for one’s children and grandchildren are not part of the bargain anymore. Economic growth is concentrated in cities and college towns, leaving everyplace else to wither. If the country continues on its present course, all of this will get worse.
…The American economy has changed in ways that require a new choice about the kind of country we are… Up to now, the choice has been made by default. Leaders in both parties, in corporate America and in the academy and media, have assumed that what worked twenty or thirty years ago will continue to work today. [All that is needed is fine tuning.]
He goes on to detail how America’s successful class compact, struck after World War II, became strained in the seventies. Through conservatives’ initiative during the nineteen seventies and eighties, the nation’s economy was reinvigorated. This was done partly to contain the Soviet Union. When the Soviet Union collapsed in the early nineties, our leaders did not reconsider their globalist agenda but went on to make the world safe for ‘democracy’ through color revolutions. All the while, the elite were making American workers unneeded by offshoring their jobs to China (and other Greater Asian countries) in the name of economic efficiency. McCarthy says,
But the America of the twentieth century was a country in several ways profoundly different from the one we inhabit today. It had strong community ties supplied by religious and ethnic groups. It had a powerful private-sector labor movement. Its economy was localized, not globalized, where an industry was located mattered. America exported goods to the world—enjoying a trade surplus as late as 1975—and manufacturing was at the heart of the economy… In …America, the welfare state was secondary. More important was the reigning political economy’s promise of a vigorous private sector that would provide prosperity and continuous flourishing for all.
By the late 1970s, the postwar economic order was under obvious strain. Stagflation was one symptom; lagging American competitiveness against the allies we had rebuilt was another. The liberalization of the economy that started with conservatives in Congress under President Carter and expanded under President Reagan was necessary to restore the postwar promise. And it worked, in part by unleashing technological innovation that would be more creative than destructive over the next decade.
The 1970s and ’80s also saw the creation or expansion of international institutions that were viewed at the time (if not always explicitly acknowledged) as instruments of Cold War policy. Everything from the acceptance of China into the American-led world economy to the construction of a European union was part of a strategy aimed at constraining the Soviet Union in the long run. Only “the long run” proved to be much shorter than anyone expected. By 1992 the strategic environment was totally transformed.
Yet America’s leaders did not think through the implications. Free trade agreements that made sense as a component of Cold War strategy took on a logic of their own, with plenty of support from academic economists who dreamed of nothing but global efficiency. Instead of viewing post–Cold War China as a rising rival, America’s elites saw the remaining communist superpower as a land of opportunity for themselves.
The original rationale for America to pursue a global economic order had vanished. Yet instead of once again focusing on the economic interests of America’s workers, the country’s leaders committed themselves to universal liberalism. The result was a political backlash, …[but] the backlash was undercut by a decade’s worth of technology-driven prosperity, and rather than conceding that the critics had a point, the consensus in Washington pushed ever further ahead. That led to a plunge in American industrial employment after 2000, as China was fully welcomed into the world economy.
America’s elite, nostalgic for the early, carefree days of globalization, has abandoned their responsibilities to the rest of America,
Members of the credentialed class like to depict Trump’s voters as “nostalgic” for an America that is never coming back. If anything, it is our leadership that is nostalgic—for the 1990s—and deep in denial. Globalization was relatively pain-free during the 1990s because going into that decade Americans did not know what would happen next. The class compact of the past defined the public’s outlook and expectations more than the unknown future.
Now the future without a class compact is clear to everyone, even if many in the leadership class are reluctant to describe it in frank terms. It means an America broken into three relatively immobile classes: a credentialed and knowledge-based elite, a large service class that prepares the first’s food and tends to its children (also the class of the urban Uber driver and suburban Amazon warehouse worker), and a vast economically unneeded population in what used to be the commercial and industrial heartland…
As a sop to those robbed of their means for living, the elite offers a process of “creative destruction” leading to an efficient allocation of labor and return on investment in line with the arc of history,
…The bipartisan elite’s policy program for the near future amounts to shoring up its own privileges with respect to intellectual property and bureaucratic know-how, while fragmenting and buying off the urban service class with identity politics. For the unproductives, the elite prescribes what might be called “palliative liberalism,” involving wage subsidies, tax credits, and other measures short of restoring inherent dignity and power to work.
Palliative liberalism is not the same thing as the old welfare liberalism. The welfare state of the twentieth century was, at least in America, meant to be only an adjunct to a productive private economy in which almost all could participate. Palliative liberalism, on the other hand, aims not to repair labor-capital relations but to euthanize, as humanely as possible, millions of economically unneeded and politically retrograde Americans.
The justice of this euthanasia is said to be found in the laws of nature and the arc of history. The only nature that the prescribers of palliative liberalism recognize is the natural order of economics, whereby creative destruction applies not only to firms but to families, nations, and individuals. For the good of all, the inefficient must give way to the more productive.
[They maintain that] only selfishness and ignorance can account for the resistance of privileged (or formerly privileged) working-class or middle-class Americans to this “natural” process. They, unlike the entrepreneurial worthies of Wall Street and Silicon Valley, are not deserving of their status. They don’t “create value” and should in effect trade places with the poor of the developing world. This is what being on the right side of history requires. The injustices of Christopher Columbus and Jim Crow will be repaid by the desolation of America’s “red” counties.
Rather than changing course, or even managing discontent, the credentialed class has pursued a divide and conquer strategy of “atomization.” McCarthy warns that this approach may lead to violent revolution if not corrected,
During the earlier class-war phase of the modern economy in the nineteenth and early twentieth centuries, religion moderated the harshness of the struggle, as did extended family and, to some degree, national sentiment. The rich felt obliged to be locally charitable, not just abstractly “philanthropic,” and civil society provided means for self-help.
The irony is that the success of the twentieth century’s grand bargain—the welfare state and the middle-class growth economy—weakened family and religion, providing individuals unprecedented freedoms that, with the collapse of the bargain, have turned into unprecedented loneliness. The relief that church and family once provided is now supplied by fentanyl—another low-priced consumer product from China.
…Palliative liberalism and the rest of the political program of today’s leadership class hold little promise of keeping the country together. Whatever else it tries to do; an elite has to manage discontent. The rise of socialism and nationalism in American politics shows that already the effort is failing. The best-case scenario for the liberal elite is daunting to contemplate.
Their interests, economic and cultural, are well-served by a completely atomized America, one in which states have not seceded, but individuals have. A heap of loose economic actors who have lost their cultural bearings allows itself to be managed benignly, if contemptibly, by the wealthy and educated. The more likely scenarios, however, involve upheaval in the name of socialism or something like military-imposed order. Look to Latin America for the past as preview.
McCarthy, instead, offers an honorable and effective program, a better way to reconcile the credentialed, service, and displaced classes,
…The most effective and honorable way out of the dilemma we face is to embrace something like nationalism as an economic program… Economic nationalism is not just about tariffs. It is less about “economic” than it is about “nationalism”—that is, it takes account of the different needs of different walks of life and regions of the country, serving the whole by serving its parts and drawing them together. …All of this is for the sake not just of prosperity, in raw dollar terms, but of a national economy that provides the basis for a healthy culture in which citizens and their families can flourish…
This program restores American production and export and employs smart trade practices to protect the American worker,
… [The nationalist approach rejects] propaganda about the end of the export economy. World population is still growing, and growing wealthier, which means there are more people around the world increasingly capable of buying goods made in America. …Now [is] the time …to compete to the utmost, at once politically and economically, with our rivals, above all China.
That means driving bargains to open markets for our goods while permitting access to our markets—still the most desirable in the world—on terms favorable to our citizens in full, in their capacity as producers, not just as consumers. …We ought to minimize the loss of employment due to every factor not technologically inevitable, such as ill-conceived trade deals. Tariffs are not an end in themselves, of course: They are a defensive measure and a source of leverage.
McCarthy’s program also reforms immigration to support existing and new American families and enhance the elite’s patriotism,
…Immigration …[needs] reform that puts citizens first, with emphasis on supporting higher wages for workers. Less low-skill immigration puts upward pressure on wages. And what if there just aren’t enough American workers to fill all the jobs? That’s good, too, because other things being equal, it encourages larger family size.
…Shifting policy preference from low-skill immigration to high-skill immigration [provides not only] …more economic value per immigrant but also [puts] competitive pressure on the professional elite. The more the elite feels the same pressures as the working class—from technology and immigration—the more its attitude toward patriotism may improve.
Naturalization of high-skilled immigrants is preferable to the present H-1B visa program, which favors employers over native and immigrant workers alike by putting downward wage pressure on natives and making temporary immigrants effectively indentured to their employers.
Summing up his argument for economic nationalism, McCarthy says,
…The idea that economic nationalism is not compatible with free-market economics is absurd. …Its virtue is that it is good for labor and political stability as well. From growth, a contented middle class, and moderate political culture flow a strong country and stronger families and citizens. In the early decades of the twenty-first century, when nations and supranational institutions are in turmoil, those benefits are of existential significance.
…We need to accept the responsibilities of leadership… The way forward requires refocusing on the American citizen as the basic unit of the economy. This is the essence of a nationalist political economy, which we very much need if our country’s tradition of personal independence and limited government is to endure, a tradition in which government’s primary economic role is not to provide welfare but to safeguard the conditions that make productive work possible.
McCarthy’s thesis demands careful consideration. It rings true to the facts on the ground and explains, in stark terms, our current strife and our remaining choices. Though McCarthy doesn’t make explicit the ruling elite’s reasoning for such a heartless enterprise as “palliative liberalism,” we will see in subsequent posts that the reason is, as Solzhenitsyn quoted his countrymen in regard to Russia’s catastrophic experiment with ideology, “Men have forgotten God; that’s why all this has happened.” In keeping with this post’s theme, though not its conclusions, I offer a relevant clip from a contemporary allegory.