Building An American Future Means Rejecting the "Davos Culture"

AmericanEconomicAlert.org ^ | Wednesday, February 01, 2006 | William R. Hawkins

[Willie Green]

For education and discussion only. Not for commercial use.

In his State of the Union address, President Bush unveiled his "American Competitiveness Initiative" (ACI) that is meant to encourage innovation and strengthen the nation's ability to compete against foreign rivals. The strategy calls for an increase in Federal research programs and a push for students to do better in math and science. The commitment of only $136 billion to this effort over 10 years, most of it beyond his term in office, raises questions about his sincerity, especially measured against his past record of indifference to the challenges posed by overseas competitors, who have been ravishing the U.S. economy for a decade.

The trade deficit topped $750 billion in 2005, doubling since Bush took office, but there was nothing in the president's speech that directly addressed that problem. While it was good to hear the White House acknowledge that as other countries become more advanced, they could pose an economic threat, Bush's rhetoric was still much too soft and ambiguous as to the U.S. response. Indeed, his early denunciation of "protectionism" in the speech indicated that he still doesn't understand what is happening in the global economic struggle.

In terms of the timing of Bush's address to Congress, a number of high ranking U.S. officials and members of Congress had just been to the World Economic Forum in Davos, Switzerland. This forum was founded in 1971, but did not become a major force until after the Cold War ended. It then became a great social whirl based on the illusion of a harmonious world conjured up by transnational business elites under the rubric of "globalization." Its real purpose, however, is to use private wealth to corrupt national leaders into betraying the interests of their people.

Harvard University Professor Samuel Huntington in his acclaimed book The Clash of Civilizations called the resulting set of values "Davos Culture." It's a view of the world united in the pursuit of mass consumption and popular entertainment, orchestrated by a global elite of merchants, media moguls, and bankers. Huntington, drawing on wisdom solidly grounded in the study of history and human nature, is disdainful of this group for presuming that their naive liberal outlook will supercede traditional cultural values and the normal imperatives of national needs in a competitive world.

Businessmen are well aware of competition within their own sphere. Waged today on a global scale, business's cutthroat nature is more intense than ever. What many of these elites do not want to acknowledge is that these commercial battles have wider consequences for the national societies within which most people live. That the WEF meets at a luxury mountain resort in "neutral" Switzerland is symbolic of how far removed its philosophy is from the real world. The eminent sociologist Peter L. Berger has described these supposed citizens of the world as "people who move with the greatest of ease from country to country while remaining in a protective 'bubble' that shields them from any serious contact with the indigenous cultures on which they impinge. The bubble also shields them from any serious doubts about what they are doing."

Davos Culture is the creed of a self-imagined, cosmopolitan, jet-set elite. But according to UNESCO, only about three percent of people worldwide live outside the country in which they were born. The percentage is higher, about five percent, in the advanced industrialized countries, and higher still in the United States (about nine percent). This means that nearly everyone is dependent on how well their own societies fare. A prosperous, secure, and growing national economy provides more opportunities for its citizens than one that is being beaten down by foreign rivals or menaced by violence. This is common sense.

Historians have also noted that a spirit of nationalism – the very attitude that Davos Culture deplores – is very helpful in creating a successful society. Peter Turchin, in his new book War & Peace & War: The Life Cycles of Imperial Nations asks the eternal question, "Why did some – initially small and insignificant – nations go on to build mighty empires, whereas other nations failed to do so? And why do the successful empire builders invariably, given enough time, lose their empires? Can we understand how imperial powers rise and why they fall?"

Turchin, a professor at the University of Connecticut, comes to the study of history from a background in ecology and mathematics. His focus on "empires", which he defines as any large, multiethnic territorial state, is more manageable than Huntington's study of entire civilizations. Turchin grounds his theory in the Arabic concept of asabiya, meaning a society's capacity for collective action. Empires germinate, he contends, when defined groups come into conflict along "meta-ethnic frontiers" that foster the social solidarity and discipline that empire-building requires.

Though diverse in individual makeup, the members of a successful society can put their own differences aside long enough to defeat those "outside" its national community, whether it be in trade or war. When a society loses its capacity for collective action, as he believes has been the case in the United States since the 1960s, then the long cycle of decline sets in. Davos Culture is very much in tune with the rise of the egocentric "60's generation" whose vaunted "idealism" has turned out to be hedonism and decadence.

In her thought-provoking history, The Spirit of Capitalism, Boston University professor Liah Greenfield argues that "the factor responsible for the reorientation of economic activity toward growth is nationalism." This 2001 book is based on her research of a decade earlier that looked at England, France, Russia, Germany and the United States [Nationalism: Five Roads to Modernity]. "The sustained growth characteristic of a modern economy is not self-sustained; it is stimulated and sustained by nationalism," she writes. Natural resources, technology, even wealth accumulated in the past, is not enough. There must be a desire to put these factors to work to advance the common good, which happens "when economic achievement, competitiveness and prosperity are defined as positive and important national values."

Greenfield does not just look at rising states, but declining ones as well in her second book. The Netherlands was once the dominant economic power in Europe, with a world-wide empire. But its time at the top did not last long. Between the 1660s and 1740s, Dutch living standards did not just fall in relative terms as other empires and nation-states advanced, there was an absolute decline in per capita income. "There was no national consciousness among the Dutch," argues Greenfield, beyond the initial desire to win independence from the Spanish Hapsburgs. The Dutch elite were merchants, not patriots; and central authority was very weak. "They remained economically rational instead, embodying the ideal of Homo economicus so rare in modern economic reality and so dear to economic theory. In other words, they were not a nation." They could not compete against states energized by nationalist drives.

In a recent Oval Office interview with The Wall Street Journal, President Bush demonstrated his "Dutch" penchant for economic theory over economic reality when he said General Motors and Ford should develop "a product that's relevant" rather than look to Washington for help with their heavy pension obligations, and hinted he would take a dim view of a government bailout of the struggling auto makers, who have been devastated by foreign rivals that do have the full backing of their governments.

Today, the United States faces challenges from a horde of trading "partners" where the embrace of nationalism by elites is far stronger than in America. The United States runs its largest trade deficit with China, clearly an imperial nation by Turchin's definition and one animated by a particularly strong nationalist fervor that seeks redress for past grievances. "The crucial national narrative of the 'Century of Humiliation' from the mid-nineteenth century to the mid-twentieth century is central to Chinese nationalism today," writes University of Colorado professor Peter Hays Gries [China's New Nationalism: Pride, Politics and Diplomacy ]. This spirit has infused Chinese society with energy and ambition on an awesome scale.

The superficial materialism seen in Beijing, Shanghai, and elsewhere in China is not proof that Davos Culture has infected the Chinese people, let alone the Communist regime. As noted by UCLA anthropology professor Yunxiang Yan (who as a child lived through the horrors of the Cultural Revolution), when Beijing students protested the 1999 NATO bombing of the Chinese embassy in Belgrade, "many young protestors were drinking Coca-Cola as they chanted 'down with American imperialism' in front of the U.S. embassy."

Some corporations understand the value of loyalty. According to the Financial Times, Roger Martin, dean of the Rotman School of Management at Toronto University, led a discussion on this topic at the WEF. He argued that "companies would have to provide compelling reasons why their most talented employees should keep coming to work. This would not just be about money; chiefly it would be about building socially valuable corporate communities. Martin is quoted as saying, "Finding community-building talent is the single most precious resource in the modern world." The problem is that corporations are not communities. They have none of the enduring qualities of a nation, and cannot engender (or give) the kind of loyalty a society needs to survive. Just ask any of the millions of Americans who have seen their jobs moved overseas. Americans salute the stars and stripes, not corporate logos.

It is the duty of national leaders to muster "community-building talent" to bolster U.S. competitiveness in world markets and to assure dominance in the home market. It is the same spirit to which President Bush appealed when calling on the country to be less "addicted" to imported oil and more aggressive in defeating Islamic terrorism. Effective trade policy is not about being "free" or "fair." It is about creating advantages for those who invest and produce in America, against those who work anywhere else. This is the only way to provide maximum opportunities for Americans to prosper and to assure that "the state of the nation is strong."

[Willie Green]

ping

[johnny7]

The Davos diplo-babblers are nothing more than globalist weenies who want to curb American success and prosperity, cutting us down to their size.

Remora's in checkered-pants.

[A. Pole]

"Building An American Future" bump.

[ConservativeDude]

the essence of this article is giving some real underpinning to economic nationalism, or, rather, explaining how patriotism is critical to an economy.

i am not a big fan of Pat Buchanan economics (to say that is an understatement). however, I think this article is outstanding and it shows that we really need to think about these issues a bit more.

there is still a pretty big problem of how one picks winners and losers in the marketplace...indeed, that problem is probably insurmountable. GWB is right in what he says about the auto industry....Even so, the author of this piece is on to something.

thanks for posting the article.

[Alberta's Child]

The Netherlands was once the dominant economic power in Europe, with a world-wide empire. But its time at the top did not last long. Between the 1660s and 1740s, Dutch living standards did not just fall in relative terms as other empires and nation-states advanced, there was an absolute decline in per capita income. "There was no national consciousness among the Dutch," argues Greenfield, beyond the initial desire to win independence from the Spanish Hapsburgs. The Dutch elite were merchants, not patriots; and central authority was very weak. "They remained economically rational instead, embodying the ideal of Homo economicus so rare in modern economic reality and so dear to economic theory. In other words, they were not a nation." They could not compete against states energized by nationalist drives.

Good article, but I think the author makes the decline of most European empires more complicated than they really were. I believe simple geography -- and its relationship to international trade and military affairs -- played a far more important role in this decline than most people realize. The Romans were the dominant civilization for hundreds of years because their ability to extend their influence and project force throughout the Mediterranean Sea was unparalleled. They were less successful in projecting force to the east over land, since technology (i.e., maritime vessels and the associated military/trade applications of such) was far less important in land-based movement than in water-based movement.

Spain, France, the Netherlands, and Great Britain became the dominant colonial forces that grew out of the remnants of the Roman Empire because their exposure to the Atlantic Ocean made them better-suited for expansion over long distances across wide bodies of water. And Great Britain eventually dominated the North American colonial scene because as an island nation in the harsh waters of the northern Atlantic Ocean and North Sea their superiority on the high seas -- in terms of raw seamanship and maritime skills -- was unparalleled.

[meadsjn]

Excellent article. If America ever recovers from this ongoing economic treason, it will probably be after many tons of Free Traitors have been ground up for dog food and fertilizer.

[Euro-American Scum]

Globalist, one-world, multi-national corporate bump for future reference.

[ARCADIA]

Effective trade policy is not about being "free" or "fair." It is about creating advantages for those who invest and produce in America, against those who work anywhere else.

It sounds simple; yet all who disagree with this are traitors to this nation and will some day be expunged.

[Dat Mon]

Great article and post.

Its time IMO for what Richard Feynman would call...'getting back to first principles'.

And so we consider Adam Smith, a Professor of MORAL PHILOSOPHY when he wrote his noteworthy Wealth of Nations . Smiths critique of the then common practice of Mercantilism was done within a moral, philosophical, and a logical framework. Which tells me that any economic policy or practice which is ultimately derived from Wealth of Nations , including Ricardo's Comparative Advantage theory, and its applicability to todays Global Marketplace, must also be judged, ultimately, within a framework of practicality, logic, and morality.

Its high time also, IMO, for Economics to acknowledge, that if it claims to have any pretensions of being a 'science', its theorems and models must be continually examined, critiqued, and then modified if necessary, to insure that mathematical models fit in with new, emerging empirical (experimental in the case of science) data.

I don't sense a healthy skepticism in economists (particularly those dealing with Macro or Global economics issues) that is present in contemporary scientists. Perhaps economists should stop and read some History of Science, particularly the history of the New Physics in the early 20th century, to gain an appreciation for how established 'classical theory' gets modified or replaced when new data comes in which cant be explained.

There seems to be a certain aloofness or perhaps smugness in some contemporary economists, which may mask either an inherent underlying uncertainty (in denial), or, an 'answer in search of a question' mindset.

A perfect example is Paul Krugman , a principle architect of the contemporary 'Davos mindset', and a man who literally wrote the book (several key college textbooks on economic theory) on International or Global / Macroeconomics theory. Read one of his essays which I have linked to here. (note also with amusement his stated admiration for then President Clinton).

Paul Krugman Essay on Ricardo's Theory

I intend to study this article very carefully, and read Ricardo and Smith over time (dont have time now for exhaustive study), with the hope of understanding the underlying logical assumptions or premises to their work. I also intend to read essays and discussion on their works. I note here, for example, one key passage from Krugmans essay on Ricardos theory...

"The basic Ricardian model envisages a single factor, labor, which can move freely between industries. When one tries to talk about trade with laymen, however, one at least sometimes realizes that they do not think about things that way at all. They think about steelworkers, textile workers, and so on; there is no such thing as a national labor market. It does not occur to them that the wages earned in one industry are largely determined by the wages similar workers are earning in other industries. This has several consequences. First, unless it is carefully explained, the standard demonstration of the gains from trade in a Ricardian model -- workers can earn more by moving into the industries in which you have a comparative advantage -- simply fails to register with lay intellectuals."

I question this somewhat elitist principle of considering labor merely as a Commodity. Its better, IMO, to consider labor as a Resource...most contemporary management theory would agree with me.

After all, to become productive at what you do requires a certain underlying talent or aptitude, coupled with interest, coupled with years of learning how to do what you do with knowledge, best practices, and efficiency.

Applying a cookie cutter mindset to labor leads to a downward migration of levels of aptitude, worker motivation , and ultimately, loss of productivity....factors which Krugman deosnt consider in his simplified model. Krugman and his contemporaries have, IMO, no idea what makes up a trained, motivated, skilled, and ultimately...productive worker...they seem to know only what makes up a trained and skilled ZEN like Economist.

A commodity labor practice, wherein labor migrates to the nations with the lowest infrastructure levels, which also happen to be those with the lowest production costs (particularly if they are also totalitarian slave states, another factor Krugman and co ignore), leads IMO, to instability in societies. This problem will then call out for a Big Government type solution...one in which the Feds provide for basic subsistence needs, and constant job training and retraining for all these displaced workers.

Another result of this labor migration policy, (which is what optimistic macro economists would call Vertical Specialization) is Societal Stratification...IMO the prototypical 'Unintended Consequence' of a Capitalistic system which is intended to provide the most benefits for the greatest number of people, in accord with the goals of Smith.

Krugman epitomizes, IMO, the elitist Third Way Progressive .

[Paul Ross]

Bump.

Impressive analysis. He is really pulling it together.

[Paul Ross]

You may also want to dig into the primary sources relied upon by the author. Another source that should be also considered, paints an even larger group than the political 'leadership' but an entire set of "enablers" categories amidst our body politic. See, the late Christopher Lasch's Revolt of the Elites: And the Betrayal of Democracy."

Here is a useful review:

	THE REVOLT OF THE ELITES AND THE BETRAYAL OF DEMOCRACY By Christopher Lasch W.W. Norton & Co., 1995, 276 pages Christopher Lasch was one of those rare figures in American public life who was respected by people on both the left and the right, among scholars as well as ordinary folks, in intellectual circles as well as among those who have no patience for abstract ideas. As a historican and cultural critic, he was perhaps best known for The Culture of Narcissism, which became a bestseller in the late 1970s. The Revolt of the Elites and the Betrayal of Democracy, a collection of essays that was published after his recent death, represents Lasch at his best -- timely, perceptive, and intellectually uncompromising. The book brings together thirteen essays (ten of which have been adapted from previously published articles) on what Lasch describes as America's "democratic malaise." The book is divided into three parts: the first looks at the "intensification of social divisions" in the nation; the second surveys the degradation of contemporary public discourse; and the third offers Lasch's reflections on the spiritual predicament at the heart of America's social and political crisis. The book's title is a take-off on Jose Ortega y Gasset's The Revolt of the Masses, a reactionary work published in 1930 that ascribed the crisis of Western culture to the "political domination of the masses." Ortega believed that the rise of the masses threatened democracy by undermining the ideals of civic virtue that characterized the old ruling elites. But in late twentieth-century America it is not the masses so much as an emerging elite of professional and managerial types who constitute the greatest threat to democracy, according to Lasch. The new cognitive elite is made up of what Robert Reich called "symbolic analysts" -- lawyers, academics, journalists, systems analysts, brokers, bankers, etc. These professionals traffic in information and manipulate words and numbers for a living. They live in an abstract world in which information and expertise are the most valuable commodities. Since the market for these assets is international, the privileged class is more concerned with the global system than with regional, national, or local communities. In fact, members of the new elite tend to be estranged from their communities and their fellow citizens. "They send their children to private schools, insure themselves against medical emergencies ... and hire private security guards to protect themselves against the mounting violence against them," Lasch writes. "In effect, they have removed themselves from the common life." The privileged classes, which, according to Lasch's "expansive" definition, now make up roughly a fifth of the population, are heavily invested in the notion of social mobility. The new meritocracy has made professional advancement and the freedom to make money "the overriding goal of social policy." Lasch charges that the fixation on opportunity and the "democratization of competence" betrays rather than exemplifies the American dream. "The reign of specialized expertise," he writes, "is the antithesis of democracy as it was understood by those who saw this country as the 'last, best hope of earth'". Citizenship is grounded not in equal access to economic competition but in shared participation in a common life and a common political dialogue. The aim is not to hold out the promise of escape from the "laboring classes," Lasch contends, but to ground the values and institutions of democracy in the inventiveness, industry, self-reliance, and self-respect of working people. The decline of democratic discourse has come about largely at the hands of the elites, or "talking classes," as Lasch refers to them. Intelligent debate about common concerns has been almost entirely supplanted by ideological quarrels, sour dogma, and name-calling. The growing insularity of what passes for public discourse today has been exacerbated, he says, by the loss of "third places" -- beyond the home and workplace -- which foster the sort of free-wheeling and spontaneous conversation among citizens on which democracy thrives. Without the civic institutions -- ranging from political parties to public parks and informal meeting places -- that "promote general conversation across class lines," social classes increasingly "speak to themselves in a dialect of their own, inaccessible to outsiders." In "The Lost Art of Argument," Lasch laments the degradation of public discourse at the hands of a media establishment more committed to a "misguided ideal of objectivity" than to providing context and continuity -- the foundation for a meaningful public debate. In a final section titled "The Dark Night of the Soul," Lasch examines what he considers a spiritual crisis at the heart of Western culture. This crisis is the product of an over-attachment to the secular worldview, he maintains, which has left the knowledge elite with little room for doubt and insecurity. Traditionally, institutional religion provided a home for spiritual uncertainties as well as a source of higher meaning and a repository of practical moral wisdom. The new elites, however, in their embrace of science and secularism, look upon religion with a disdain bordering on hostility. "The culture of criticism is understood to rule out religious commitments," Lasch observes. Today, religion is "something useful for weddings and funerals but otherwise dispensable." Bereft of a higher ethic, the knowledge classes have taken refuge in a culture of cynicism, inoculating themselves with irreverence. "The collapse of religion," he writes, "its replacement by the remorselessly critical sensibility exemplified by psychoanalysis, and the degeneration of the 'analytic attitude' into an all-out assault on ideals of every kind have left our culture in a sorry state." Copyright by Scott London | www.scottlondon.com

[GOP_1900AD]

RE: "Huntington, drawing on wisdom solidly grounded in the study of history and human nature, is disdainful of this group for presuming that their naive liberal outlook will supercede traditional cultural values and the normal imperatives of national needs in a competitive world."

Words to live by.

What happens when you allow naive, utopian intellectuals to hold the levers of power, simultaneously, in both the public and private sectors? We are on the verge of finding out, and that picture ain't very pretty. Huntington knows this, since he is not an historical illiterate, unlike said utopians.

You know, there was a better time in the business world, previous to the ranks of management being flooded by overeducated painty waist globalony spewing theoreticians. As much as folks may critique them, the old so called "Robber Barrons" were, in contrast, real men. They were brash, bold and grounded in reality. They were colorful characters, with the spirit of the American frontier holding strong sway. And of course, today, no such real man would survive one week as even a first level manager in most of today's corporations. He'd be fired for being too non PC. I miss that archetype and meanwhile am nauseated by the Davos Culture.

[VoodooEconomics]

Effective trade policy is not about being "free" or "fair." It is about creating advantages for those who invest and produce in America, against those who work anywhere else. This is the only way to provide maximum opportunities for Americans to prosper and to assure that "the state of the nation is strong."

... Hmmmm just wondering who decides what, which and how these 'advantages' will be chosen ... and then to whom/how should these objectives then be offered and to (which) investors? And who decides which current domestic producers get nationalistic protection?

Oh! And nationalism in general is such a great thing! The Dutch get mentioned - perfect! I think the low lands have been Europe's battle field for centuries...and mostly between nation states!

Free trade is more antidote to war than economic nationalism.

[ConservativeDude]

thank you.

outstanding post.

[Paul Ross]

Free trade is more antidote to war than economic nationalism.

So when is this purported 'healing balm' going to be enforced against the PRC and its manifestly unfree-trade ways which the free traders cast blind eyes upon?

The fact is, fire needs to be fought with fire.

[WilliamofCarmichael]

The Davos World is the New Democrat Third Way progressives' world of "rules-based free trade." See ndol.org.

It is the "free trade" herein defended by some by hurling invective and insults at "protectionists," by demanding that we "protectionists" take a course in Econ 101.

Well, I went back and re-read the entire chapter on "comparative advantage" and at the end Professor Paul Samuelson says "all Ricardian bets are off" if wage differentials are too great and if one country's currency ends up at the wrong level. Comparative advantage retains its "vital social relevance" only when exchange rates, prices, and wages are appropriate.

The Davos World's "rules-based free trade" is not about economics, it's about redistribution of wealth. IMO it is a Marxist revolution from the top down and our corporations are the useful idiots who will be stripped of all their investments in Red China and elsewhere and placed on a slow boat back to America. It's what commies and com-symps do.

[indthkr]

An excellent article, and analysis by you as well.

Thanks for the ping!

There are good reasons why Economics is called the "dismal science". Perhaps more rigorous approaches by folks such as the Econophysicists (see link) will overcome some of the claptrap shoveled-out by the so-called "Political Economists".

www.unifr.ch/econophysics