For the past 20 years, I've heard Republican, free-trade, free-market hacks talk endlessly about Adam Smith and global economics. They've been big on talking about how countries should specialize in 'what they do best' in much the same way that different departments in a factory specialize in different tasks, and how these efficiencies maximize production. I had one Republican teacher who told me that this doctrine would mean that some countries should focus on cars, others on airplanes, others on gold production, others on coffee production, others on banana production, others on cotton production and so on.
Feeling brave, I once asked him, "well, what if a country only gets a certain, limited standard of living from such an arrangement? I mean, if all you're doing is growing and processing coffee, your citizenry may not make enough money to create a viable middle class. They might be paid so little that the government can't sufficient taxes to create a viable state necessary for solid infrastructure, health care, education and the like. What's your take on this?"
The professor answered more or less in this way: "certain countries should stick with what they do best in the international economic system. We need to maximize efficiencies. If Costa Rica is best at banana production, then they should only make bananas. That's how they will fit best into the global economy. This may mean that their people may be poorer than Canadians, because they're agricultural, but this is far better and more stable for them, and the global economic system, than if they tried to diversify their economy by focusing on science, industry and the like. Besides, they have a healthy tourism industry, fueled in large measure by Europeans and Americans, and this helps them make more money. Being relatively underdeveloped helps Costa Rica maximize their efficiencies. They should keep doing what they're doing and not do anything else." There was something fatalistic here that made me uneasy---in this free-market system, countries would not be allowed to change their economic base. If they are the best at ABC during a given decade, they would be strongly discouraged from ever doing anything else. How could countries progress if they were forever kept in a single economic state? And why should a country willingly do this for the sake of the "economic order?" Whose economic order was this, anyway?
That's when I started to question the premises of any and all doctrinaire, one-size-fits-all approaches to economics and politics. Princes back in the days of Henry VIII lacked such dogmatic approaches to politics and economics, and I was curious as to why ideological canon and rigid dogmatism so riddled statecraft in the modern age. Further, I was skeptical that free-trade was being used "to maximize benefits for all" in the way that many of its adherents proposed.
Many free-traders (most of whom came from the West) hated governmental interference in the economy, through either tariffs, subsidies or infrastructural investment. That said, many of these countries developed, went through an industrial revolution, and became first-world economic powerhouses through the utilization of tariffs, subsidies and infrastructural investment. Once they reached G7 Status, and created a global economic system, it seems they decided that they would deny developing nations the use of these same tools. Rather, they seemed like they wanted to relegate them to the status of permanent suppliers of raw-materials, labor, or low-cost goods which were imported into the G7 nations for purposes of refinement, processing and higher-level manufacturing and industrial production. And if this wasn't the conscious intent, it was at least an unintended side-effect and consequence of the wishful idealism and doctrinaire economic canons espoused by the G7.
On another day, I asked my Republican economics teacher why we should be outsourcing and off-shoring industrial and manufacturing capacity to other countries? My worry was that, if America lost its manufacturing base, we would be at a disadvantage in some future geopolitical conflict. Being a student of history, I knew that these happen with great regularity and that the newfound "Pax Americana" of the 1990s (when I was in college) would be short-lived. As Confucius said, "All things that are unified, eventually fall apart. And all things which are apart, eventually come together."
My professor told me that off-shoring helped cement US alliances abroad, reduced the power of organized labor within the United States, maximized profits for job-creators in the United States, and the lower-cost goods brought into the country by way of free-trade agreements would ensure that the lower wages created by the emasculation of organized labor would not have any detrimental impact on consumption and consumerism in the United States. He said that even if such things happened, that it would be short-term and that credit cards and financial instruments would ensure that consumption and consumerism continued unabated.
I asked him if it was a good idea to send our most advanced industrial and manufacturing techniques and processes to China? I told him that they might duplicate our industrial practices and techniques, gain needed experience, and start beating us at our own game at some point in the future. He assured me that this was a way to control China, and that the Chinese, because they were communist, lacked the inherent ability (due to their governmental structure) to compete with the United States industrially, or pose a real threat to the world in terms of military power. Ever. He told me that the Chinese may be good at manufacturing low-cost pencils and toys, but that they would never have the ability to manufacture high-grade electronics, compete with us in terms of computers, biology, chemistry or anything of the sort. He said that Western nations have a longer history of academic freedom and intellectual inquiry and that China was a closed society that focused on rote memorization and that they lacked the ability to compete with us, long-term.
I told him that Hermann Goering once said that "America can make good refrigerators, but they'll never make good fighter planes." I told him that Goering was a fool, because he failed to realize how top-notch consumer manufacturing directly influences top-notch military manufacturing. And how, during WW2, all of our weapons production was carried out by businesses and factories which had, only 2 years prior, been wholly devoted to consumer products---Ford, GM, Chrysler, etc.....An Ivy League educated economist (a modern day Mandarin or Brahman)---he was naturally dismissive and did not consider my concerns.
Well, more than 20 years have passed and history has proven me right. America's problems right now are wholly of our own doing.
China is about to become a Superpower of a kind the world has never seen---far more powerful than the United States ever was. And it will upend the world-order and help further erode the legitimacy and endurance of liberal democracy throughout the world. I do not foresee major world war with China. Rather, I see her becoming so mighty that her size and wealth alone not only deter any and all challenges, but ensure a state of economic and political subservience among all other powers, even members of the G7.
Our leadership class has utterly and absolutely failed us in almost every conceivable way.The Republicans failed America by putting the interests of their financial contributors above the interests of America. And the Democrats, in the past, failed us by not doing enough to fight the GOP in the most important forums, and on the most important issues. That they ceded the "high ground" on so many important issues in the 1990s continues to astound and befuddle me.