No to “Economic Patriotism”
Updated: Apr 24, 2020
Elizabeth Warren’s signature policy proposal, “A Plan for Economic Patriotism”, has struck a chord with people on both sides of the aisle. The underlying premise of her plan is this: “I’m deeply grateful for the opportunities America has given me. But the giant “American” corporations who control our economy don’t seem to feel the same way. They certainly don’t act like it. Sure, these companies wave the flag — but they have no loyalty or allegiance to America”. In short, Warren views firms that are based in the United States as economic actors with an obligation to serve the interests of the “national economic good” before those of investors and shareholders.
However, is it the job of the federal government to ensure collective economic security? Is it as Warren suggests, to “make American workers our highest priority, rather than continuing to cater to the interests of companies and people with no allegiance to America”? For those who value the American tradition of individual liberty and economic freedom, the answer is no.
Market capitalism enshrines the right of individuals to pursue material prosperity as long as that pursuit is done in accordance with the rule of law and respect for the rules of the marketplace. With this in mind, as a refutation of the sentiment put forward by Warren’s proposal, firms do not have an obligation to serve a “common economic good”. Patriotism is a cultural notion that should have no role in determining economic behavior.
Companies do not have a fiduciary obligation to domesticate all of their labor and production. Private sector entities have an obligation to serve the interests of those who took the risk of investing their capital in a specific business model. If the goal is to bring business back to the United States, more economic freedom and liberalization, as opposed to government intervention, would be the appropriate way to do so. Free-markets encourage individuals to develop revolutionary products and services that, materially speaking, change our lives for the better. The last three hundred years of economic advancement have proven that.
Market economics and free trade have lifted billions of people out of poverty and dramatically bettered the human condition. It is because of the freedom to conduct business internationally that 39 million American jobs are supported by global trade and the free-flow of capital. Globalization has not only allowed private actors to create more wealth for themselves but through market forces, do so for others. As Henry Hazlitt’s famous book, Economics in One Lesson, states, “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups”. In the context of Warren’s proposal, by using patriotism as the banner under which to pressure companies to remain in America, other economic participants will bear the brunt of inefficient capital investment, higher production costs, and more expensive products. Her economic intervention on behalf of American workers will only end up hurting other American workers.
Historically speaking, individuals in a free economy have provided more material prosperity for their countrymen than government ever has. It is the preservation of such freedom that has made the American economy the most powerful in human history. Individual liberty and free-enterprise are the backbone of this nation’s founding philosophy. Recognizing Warren’s plan as economic collectivism wrapped in a flag is crucial if we are to uphold this tradition.