Building An American Future Means Rejecting the "Davos Culture"

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."

What incentive would such a strategy have to make China behave any differently?

None.
China is a sovereign nation with the right to self-determination and peacefully pursue their own policies.
They are capable of changing their own behavior.
We can lead by example, not by coercive "incentives".

'regardless of country of origin' ?? What incentive would such a strategy have to make China behave any differently?

This peels away some of the financial advantage the PRC would have to continue their economic strip-mining operation. I personally believe that this a fair proposal, but I recommend a 25% general revenue tariff. And in tandem, eliminating the Income Tax (corporate and personal, and capital gains)...and we instead go with a parallel National Sales tax of 15% to replace it. This punishes consumption of the foreign manufactures, rewarding domestic production, and creating incentives for savings and investment here in the U.S.

Meanwhile, since China is scofflaw on so many areas of their requirements to the WTO, we should simply commence things with a bang with them, and simply remove MFN status. Now. No ifs, no buts. No talking about. Just do it.

The legal effect of that is the immediate application of the still-good-law Smoot-Hawley Tariff. Without MFN status of some kind they would have an automatic 50% tariff slapped on their goods. That should pretty much shut down most (not all of) the rush to go to China. In fact it might have the effect of returning about $600 billion of production outsourced.

Meanwhile, all IMF, OPIC and ExIm Bank U.S. government subsidies for all further China relocation / 'investment' activities by US firms would be immediately cancelled.

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