The Competitiveness of Nations in a Global Knowledge-Based Economy
Robert B. Reich
What Is a Nation?
Political Science Quarterly, 106 (2)
Summer 1991, 193-209.
History is replete with examples of people wishing to
secede from alliances with certain other people. In the nineteenth century, the American
southern states tried to secede from the
Something of this sort has been occurring in the
once did, on the economic performance of other Americans. Symbolic analysts are linked instead to global webs of enterprise to which they add value directly as engineers, lawyers, management consultants, investment bankers, research scientists, corporate executives, and other deployers of abstract analysis.
The secession is occurring gradually, without fanfare. For many symbolic analysts (including me and, perhaps, you), it has been taking place without explicit knowledge or intent. While symbolic analysts pledge national allegiance with as much sincerity and resolve as ever, the new global sources of their economic well-being have subtly altered how they understand their economic roles and responsibilities in society.
One form of secession takes the form of a decreasing tax burden on symbolic analysts and an increasing tax burden (including Social Security payroll taxes, sales taxes, user fees, property taxes, and lottery fees) on lower-income Americans. Corresponding with this shift in the tax burden has been a withdrawal of government funding from programs that would make the less fortunate four-fifths of the population more productive by improving their skills and helping them transport themselves and their products to market.
The two phenomena - the shift of the tax burden from wealthier to poorer Americans and the withdrawal of public funding - are of course related, since poorer Americans cannot afford to pay more taxes to support public programs even if the programs would improve their earnings over the long term. Tax revolts by middle and lower-income Americans whose real earnings have slowly declined are only to be expected when tax burdens shift further in their direction.
In the early postwar years, government expenditures on education, training, highways, and other “public improvements” were justified to the more fortunate by pointing to their salutary effects on the nation as a whole. Alexis de Tocqueville’s logic of “self-interest properly understood” lay behind many of the initiatives of the era. But in more recent years, as symbolic analysts have come to depend less on other Americans, the traditional justification has apparently lost some of its potency.
Consider infrastructure. Many of
Transportation estimated that simply to repair the nation’s 240,000 bridges would require an expenditure of $50 billion; to repair the nation’s highways, $315 billion. Spending on new infrastructure has fallen even more dramatically, from 2.3 percent of GNP in 1963 to only 1 percent in 1989. 
The federal government’s withdrawal has been especially
precipitous. By the end of the
Expenditure on public elementary and secondary education has shown a similar pattern. Many politicians, business leaders, and many average citizens are quick to claim that the crisis in public education is unrelated to a lack of public funding. A premise of their argument - that there are many means of improving American schools that do not require large public outlays - is surely correct. Pushing responsibility for what is taught and how it is taught down to teachers and parents, and away from educational bureaucracies, is one such step (analogous to the shift in responsibility within the corporation from high-volume hierarchies to high-value webs). Giving parents some choice over which school their child attends is another, so long as the poorest children, whose parents are least likely to be able or willing to shop, do not get left behind in the worst schools. But to claim that these types of reforms will be sufficient is being less than ingenuous. In order to have smaller classes and attract better qualified teachers, more money is also necessary. 
Controlled for inflation, public spending on primary and secondary education per student has increased since the mid-1970s, but not appreciably faster than it did during the fifteen years before. Between 1959 and the early 1970s, annual spending per student grew at a brisk 4.7 percent in real terms - more than a full percentage point above the increase in the gross national product per person.
1. See calculations by Brian Cromwell, “Corporate
Subsidies and the Infrastructure Crisis,” Economic Review, Federal
Reserve Bank of
2 Figures from David Aschauer, “Is Public Expenditure
Productive?” Journal of Monetary Economics 17 (March 1989): 177-200; and from Alicia
Munnell, “Productivity and Public Investment,”
3. That smaller classes and better qualified teachers
result in a better education is one of the few propositions on which most
educational researchers agree. See,
for example, David Cord and Alan Krueger, “Does School Quality Matter? Returns
to Education and the Characteristics of Public Schools in the
Since 1975, annual spending per pupil has continued to
rise about 1 percent faster than the rate of growth of GNP per person. But there are several reasons for
believing that the more recent increases have been inadequate. First is the comparative measure of what
other nations are spending. By the
late 1980s, ]
Comparisons aside, the demands on public education in the United States have significantly increased during the past fifteen years due to growing numbers of broken homes, single parents, immigrants (both legal and illegal), and poor children. There is also the undeniable fact that talented individuals are no longer drawn to teaching as readily as they were two decades ago. Previous generations of American school children benefited from limited career options available to talented women, other than teaching. By the late 1980s, that free ride was over. Talented women (and men) were in demand in a wide range of occupations. The law of supply and demand is not repealed at the schoolhouse door: if talented people are to be attracted to teaching, teachers must be paid enough to attract such individuals. Yet average teacher salaries in 1990 (adjusted for inflation) were only 4 percent higher than in 1970, when career choices were far more limited.
Finally the average figures on per-pupil expenditure in
Meanwhile, even as tax-free day care for children of symbolic analysts has become a de rigueur provision of law firms, management consulting companies, and investment banks, public funding for preschool education for poor children has appreciably dwindled. In 1989, fewer than a fifth of poor three and four-year-olds were able to participate in Head Start - a pre-school program costing approximately $4,000 per child - whose graduates are more likely to gain a high
4. International comparisons are hazardous, not only
because of differences in the measurements used by different countries, but also
because different societies may have different objectives for their educational
systems. There is also the question
of how the measurements are to be done, given different exchange rates. Using a 1985 exchange rate, when the
dollar was at its height in comparison with the currencies of other
industrialized nations, puts the
school diploma, attend college, and find employment than comparable children not enrolled in the program.  By contrast, nearly two out of three four-year olds whose families have incomes over $35,000-a-year attended preschool in 1989.  In 1991, the Bush administration proposed increased funding to permit most poor four-year-olds to participate in Head Start. This is a welcome initiative, but even with this boost the program still will serve less than a third of all eligible children. 
Also because of government cutbacks, many capable young
people in the
In 1965, the nation decided that all students qualified to attend college should have access to higher education. The resulting Higher Education Act established a system of grants and loan guarantees for low-income students, thus increasing from 22 to 26 percent the portion of university students from families with incomes at or below the median. But by 1988, with grants and loan guarantees drying up, the proportion of low-income university students fell back below 20 percent.  For the first time in the nation’s history, the proportion of the population attending college has begun to decline; younger men, aged 25 to 34, are now less likely to have completed four years of college than were the baby boomers just ahead of them. The high costs of education have helped push them out. 
Public funding to train and retrain workers, meanwhile, dropped by more than
5. For an assessment of the Head Start program, see R. Darlington and T. Lazar, “The Lasting Effects After Preschool,” U.S. Department of Health and Human Services (Washington, DC: United States Government Printing Office, 1979).
6. Figures from the Children’s Defense Fund,
7. See “Competitive Assessment of the President’s Fiscal
Year 1991 Budget,” (Washington, DC: Council on Competitiveness, May 1990), 6-7.
Where preschool programs for poor children have had more teachers and social
workers than in the typical Head Start program, children have shown even larger
gains. See Jean Layzer, “Evaluation of
8. Data from the American Higher Education Research Program, American Council on Education, 1989. See also, Barbara Vobejda, “Class, Color, and College: Higher Education’s Role in Reinforcing the Social Hierarchy,” Washington Post Weekly Edition, 15-21 May 1989, 6.
9. Until the 1990s, each generation of Americans had been better educated than the generation preceding it. In 1980, 25 percent of men age 35 to 44 had completed four years of college; by 1990, 31 percent of men within this age group had done so. But by 1990, younger men were less educated than the generation before them: 25 percent of them had completed four years of college, compared to 27 percent of the same age group in 1980. Younger women were becoming slightly better educated, however: in 1990, 24 percent of women age 25-34 had completed four years of college; 23 percent of women age 35-44 had done so. Ibid.
50 percent during the 1980s from $13.2 billion to $5.6 billion.  Private training, the costs of which corporations deduct from their taxable income, has hardly made up the difference. American corporations claim to spend some $30 billion a year training their employees, but most of these funds have been used on what is termed, euphemistically, executive training.  Such training is, of course, available only to the most dedicated and already valuable employees. College graduates are 50 percent more likely to be trained by their corporations than are high school graduates; employees with post-graduate degrees within high-tech industries are twice as likely as mere college graduates.  Training, then, is typically provided to those who need it least.
The official reason given for why
In 1989, Americans had about $3,500 billion to spend after paying taxes. The lower four-fifths of the population received a little under half of this sum (about $1745 billion), which did not permit them any more consumption than a decade earlier; their belts were as tight as before.  The top fifth of the population, mostly comprising symbolic analysts, received the rest (about $1755 billion) - more than the other four-fifths of the population combined. Accordingly, symbolic analysts loosened their belts considerably. Their incomes have been increasing on average by 2 to 3 percent a year after inflation (and if they are in the most fortunate tenth of earners, faster than this), even as the incomes of other Americans have stagnated or declined.
10. Figures from “Unprotected: Jobless Workers,” Center on
Budget and Policy Priorities,
11. While the precise content of this elusive process is difficult to determine, I have personal experience that may shed some light. On more than one occasion I have been hired to lecture to a group of executives who, after two intellectually strenuous hours with me, proceed through a similarly rigorous day-long schedule: a sumptuous lunch, followed by an afternoon of tennis and golf, culminating with top-shelf cocktails and five-course dinner.
13. Contrary to popular wisdom about Americans saving too little and spending too much, actual consumption by the bottom four-fifths of the American population hardly increased at all during the 1980s. Only the fortunate fifth of households experienced growth of real consumption during these years. See Robert R. Blecker, Are We On A Consumption Binge? The Evidence Reconsidered (Washington, DC: Economic Policy Institute, January 1990).
While average working Americans may justly feel that they have been surrendering a larger percentage of their earnings in taxes (including Social Security payroll taxes, sales taxes, and property taxes), tax burdens on Americans overall have not increased since the mid-1960s. Total tax receipts amounted to 31.1 percent of gross national product in 1969, 31.1 percent in 1979, and 32 percent in 1989. It is just that the burden has been shifted from relatively wealthier Americans to relatively poorer Americans.
Were the tax code as progressive as it was even as late as 1977, symbolic analysts would have paid at least $93 billion more in taxes than they in fact paid in 1989.  Between 1990 and 2000, they would have contributed over a trillion dollars more. This tidy sum, when added to the money released from making relatively modest cuts in defense spending  would yield approximately $2 trillion - a significant down payment on the productivity of the rest of the population. 
I am not aware of a groundswell of support among
business leaders or politicians for increasing the taxes on the top fifth of
American earners. In fact, the
administration currently in
What is the role of a nation within the global economy? Rather than increase the profitability of corporations flying its flag or enlarge the worldwide holdings of its citizens, a nation’s economic role is to enhance its citizens’ standard of living by increasing the value that they add to the world economy. The concern over national competitiveness is often misplaced. It is not what we own that counts; it is what we do.
14. Almost all of this sum would have been paid by the top 10 percent of income earners. Calculations from Inequality and the Federal Budget Deficit (Washington, DC: Citizens for Tax Justice, March 1990).
15. Were military spending steadily reduced through the decade of the l990s by about 50 percent, the total savings by the year 2000 would come close to $1 trillion.
16. I have not included the costs of the current savings and loan bailout in my calculations, since the bailout is nothing more than a huge transfer of money from American taxpayers to other Americans. The bailout does not actually use up scarce resources.
Viewed in this way,
History rarely proceeds in a direct line, however. Those who project that today’s steady improvement (or deterioration) over yesterday’s will become even more pronounced tomorrow often end up embarrassed when the future finally arrives. In the intervening moments a new leader will come, or an earthquake, a potent idea, a revolution, a sudden loss of business confidence, a scientific discovery - reversing the most seemingly intransigent of trends and causing people to wonder how they could ever have been deluded into believing that any other outcome was ever remotely possible. The predictable failure of all prediction notwithstanding, the public continues to pay attention to stock analysts, trend-spotters, futurologists, weather forecasters, astrologers, and economists. Presumably, such respect is due less to the accuracy of their prophesies than to their bravery in making them.
The reader of these pages is duly warned. A simple extrapolation of the past into
the future would show a continuing rise in the fortunes of symbolic analysts and
a steady decline in the fortunes of almost everyone else. The costs of world-wide transportation
and communications will continue to decline and create an ever larger market and
burgeoning demand for the services of
The fortunes of the most well-off and the least will thus continue to diverge. By 2020, the top fifth of American earners will account for more than 60 percent of all the income earned by Americans; the bottom fifth, for 2 percent. Symbolic analysts will withdraw into ever more isolated enclaves within which they will pool their resources rather than share them with other Americans or invest them in ways that improve other Americans’ productivity. An ever smaller proportion of their incomes will be taxed and thence redistributed or invested on behalf of the rest of the public. Government spending on education, training, and infrastructure will continue to decline as a proportion of the nation’s total income; any savings attributable to a smaller defense budget will result in further tax reductions and the diminution of the fiscal deficit. Poorer cities, townships, and states will be unable to make up the difference.
Distinguished from the rest of the population by their global linkages, good
schools, comfortable lifestyles, excellent health care,
and abundance of security guards, symbolic analysts will complete their
secession from the union. The
townships and urban enclaves where they reside and the symbolic analytic zones
where they work will bear no resemblance to the rest of
It is not that simple, of course. Other events will likely intervene to set this trajectory off course. Not the least is the inability of symbolic analysts to protect themselves, their families, and their property from the depredations of a larger and ever more desperate population outside. The peace of mind potentially offered by platoons of security guards, state-of-the-art alarm systems, and a multitude of prisons is limited.
There is also the possibility that symbolic analysts will decide that they have a responsibility to improve the well-being of their compatriots, regardless of any personal gain. A new patriotism would thus be born, founded less upon economic self-interest than upon loyalty to nation. What do we owe one another as members of the same society who no longer inhabit the same economy? The answer will depend on how strongly we feel that we are, in fact, members of the same society.
Loyalty to place -to one’s city or region or nation - used to correspond more naturally with economic self-interest. Individual citizens supported education, roads, and other civic improvements, even when the individual was unlikely to enjoy but a fraction of what was paid out in the short term, because it was assumed that such sacrifices would be amply rewarded eventually. Civic boosterism, public investment, and economic cooperation were consistent with Tocqueville’s principle of “self-interest rightly understood.” As one group of citizens grew wealthier and more productive, the other citizens benefited by their ability to give more in exchange for what was offered them. And as one group resisted opportunistic behavior, so did the other, with the result that all benefited. The resulting networks of economic interdependence induced the habits of citizenship.
Between 1950 and the early 1970s, the American economy as a whole began to exemplify this principle. Labor, business, and the broader public, through its elected representatives, tacitly cooperated to promote high-volume production; the resulting efficiencies of scale generated high profits; some of the profits were reinvested to create even vaster scale, and some were returned to production workers and middle-level managers in the form of higher wages and benefits. As a result, large numbers of Americans entered the middle class ready to consume the output of this burgeoning system.
But as the borders of cities, states, and even nations no longer come to signify special domains of economic interdependence, Tocqueville’s principle of enlightened self-interest is less compelling. Nations are becoming regions of a global economy; their citizens are laborers in a global market. National corporations
are turning into global webs whose high-volume, standardized activities are undertaken wherever labor is cheapest worldwide, and whose most profitable activities are done wherever skilled and talented people can best conceptualize new problems and solutions. Under such circumstances, economic sacrifice and restraint exercised within a nation’s borders is less likely to come full circle than it was in a more closed economy.
The question is whether the habits of citizenship are sufficiently strong to withstand the centrifugal forces of the new global economy. Is there enough of simple loyalty to place - of civic obligation unadorned by enlightened self-interest - to elicit sacrifice nonetheless? We are, after all, citizens as well as economic actors; we may work in markets, but we live in societies. How tight is the social and political bond when the economic bond unravels?
The question is, of course, relevant to all nations
subject to global economic forces, which are reducing the interdependence of
their own citizens and simultaneously separating them into global winners and
losers. In some societies, the pull
of the global economy notwithstanding, national allegiances are sufficiently
potent to motivate the winners to continue helping the losers. The we’re-all-in-it-together nationalism
that characterizes such places is founded not only on enlightened self-interest
but also on a deeply ingrained sense of shared heritage and national destiny.
The Japanese, Swedes, Austrians,
Swiss, and Germans, for example, view themselves as cultures whose strength and
survival depend to some extent on sacrifices by the more fortunate among them.
It is a matter of national duty and
pride. Partly as a result, the
distribution of income within these nations has been among the most equal of any
countries, although the global division of labor is driving a wedge between
their rich and poor, and testing their commitments to equality. These nations, incidentally, experienced
during the decades of the 1960s and 1970s among the most spectacular records of
economic growth of all industrialized nations, benefiting all their citizens.
Could such sentiments be nurtured in
17. Much has been written about the developmental state
played such virtue and solidarity as when they fought
History offers ample warning of how zero-sum nationalism - the assumption that either we win or they win - can corrode public values to the point where citizens support policies that marginally improve their own welfare while harming everyone else on the planet, thus forcing other nations to do the same in defense. Armaments escalate; trade barriers rise; cold wars turn hot. National allegiances, once unleashed, can lead to much worse. The same social discipline and fierce loyalty that have elicited sacrifices among Germans and Japanese have also in this century generated mind-numbing atrocities.
Unbridled nationalism can cause civic values to degenerate at home. Nations grow paranoid about foreign agents in their midst; civil liberties are restricted on grounds of national security. Neighbors begin to distrust one another. Tribal allegiances can even tear nation-states apart. The violence that periodically erupts between Greek and Turkish Cypriots, Armenians and Azerbaijanis, Albanians and Serbs, Flamands and Walloons, Vietnamese and Cambodians, Israelis and Palestinians, Sikhs and other Indians, Tamils and Sinhalese, and Lebanon’s Christian and Moslem sects is grim evidence of the costs of tribal loyalty.
The argument against zero-sum nationalism, and in favor
of a larger and more cosmopolitan perspective, seems especially strong in light
of the growing inequalities in the world. The gap between the top fifth and bottom
four-fifths of incomes within the
their number is expected to reach 8 billion by 2025, and
16 billion by the end of the 21st century. The number of impoverished people has
grown dramatically in
A focus on national well-being is also dangerously narrow in relation to other problems on which global cooperation is essential: acid rain, the depletion of the ozone, the pollution of oceans, the use of fossil fuels and global warming, the destruction of species-rich tropical rain forests, the proliferation of nuclear weapons, the assimilation of refugee populations, the drug trade, the spread of AIDS, international terrorism. Nationalist attitudes render solutions to these and other transnational crises all the more difficult to achieve.
Zero-sum nationalism also endangers global economic prosperity. The neomercantilist premise that either they win or we win is simply incorrect. As one nation’s workers become more insightful and educated, they are able to add more wealth to the world. Everyone on the planet benefits from smaller and more powerful semiconductor chips regardless of who makes them.
It is true, of course, that the nation whose workers
first gain the insights are likely to benefit disproportionately. This advantage may cause other nations’
citizens to feel relatively poorer, notwithstanding their absolute gain. Sociologists have long noted the
phenomenon of relative deprivation, whereby people evaluate their well-being in
light of others’ wealth. The
average citizen of
Economic interdependence runs so deep, in fact, that any zero-sum strategy is likely to boomerang, as the members of the Organization of Petroleum Exporting Countries discovered in the 1970s when their sky-high oil prices plunged the world into recession and reduced the demand for oil. Today no nation’s central banker can control its money supply or the value of its currency without the help of other nations’ central bankers; nor can a nation unilaterally raise its interest rates or run large budget surpluses or deficits without others’ cooperation or acquiescence. These days, every advanced nation depends on others as a market for and
source of its goods. The Japanese need a strong and prosperous
But what if foreigners dominate a major technology, as
it seems likely the Japanese soon will with advanced semiconductors, high
definition television, and dozens of other gadgets? Again, we should beware zero-sum
assumptions. The Japanese mastery
of particular technologies will not foreclose technological progress in the
The cosmopolitan man or woman with a sense of global citizenship is thus able to maintain appropriate perspective on the world’s problems and possibilities. Devoid of strong patriotic impulse, the global symbolic analyst is likely to resist zero-sum solutions and thus behave more responsibly (in this sense) than citizens whose frame of reference is narrower.
But will the cosmopolitan with a global perspective choose to act fairly and compassionately? Will our current and future symbolic analysts - lacking any special sense of responsibility toward a particular nation and its citizens - share their wealth with the less fortunate of the world and devote their resources and energies to improving the chances that others may contribute to the world’s wealth? Here we find the darker side of cosmopolitanism. For without strong attachments and loyalties extending beyond family and friends, symbolic analysts may never develop the habits and attitudes of social responsibility. They will be world citizens, but without accepting or even acknowledging any of the obligations that citizenship in a polity normally implies. They will resist zero-sum solutions, but they may also resist all other solutions that require sacrifice and commitment. Without a real political community in which to learn, refine, and practice the ideals of justice and fairness, they may find these ideals to be meaningless abstractions.
Senses of justice and generosity are learned. The learning has many roots, but significant among them is membership in a political community. We learn to feel responsible for others because we share with them a common history; we participate with them in a common culture; we face with them a common fate. “We think of ourselves not as human beings first, but as sons, and daughters… tribesmen, and neighbors. It is in this dense web of relations and the meanings which they give to life which satisfies the needs which really matter to us.” 
19. Michael Ignatieff, The Needs of Strangers (New York, Viking Penguin, 1985) p. 29
That we share with others nothing more than our humanity
may be insufficient to elicit much sacrifice. The management consultant living in
Cosmopolitanism can also engender resignation. Even if the symbolic analyst is sensitive to the problems that plague the world, these dilemmas may seem so intractable and overpowering in their global dimension that any attempt to remedy them appears futile. The greatest enemy of progress is a sense of hopelessness; yet from a vantage point that takes in the full enormity of the world’s ills, real progress may seem beyond reach. Within smaller political units like towns, cities, states, and even nations, problems may seem soluble; even tiny improvements can seem large on this smaller scale. As a result, where the nationalist or localist is apt to feel that a sacrifice is both valorous and potentially effective, the cosmopolitan may be overcome by its apparent uselessness. 
The reader has only to reflect upon personal experience. Nothing more surely stills reformist zeal than a faithful reading of The New York Times or other great newspapers of the world, in which the global dimensions of hunger, disease, racism, environmental depredation, and political injustice are detailed daily. It should not come as a surprise, then, that all great social movements have begun locally. Those who aim to reform the world in one great swoop often have difficulty signing up credulous recruits.
In short, while a cosmopolitan view provides a useful and appropriate perspective on many of the world’s problems and avoids the pitfalls of zero-sum thinking, it may discourage the very steps necessary to remedy the problems it illuminates. It is not clear that humanity is significantly better off with an abundance of wise cosmopolitans feeling indifferent or ineffective in the face of the world’s ills than it is with a bunch of foolish nationalists intent on making their society Number One.
But must we choose between zero-sum nationalism and
impassive cosmopolitanism? Do these
two positions describe the only alternative modes of future citizenship? Unfortunately, much of the debate we hear
20. Jonathan Glover, “It Makes No Difference Whether I Do It Or Not”, Supplementary Proceedings of the Aristotelian Society, 1975.
American openness, gaining competitive advantage, ultimately robbing Americans of control over their destinies. On the other side are laissez-faire cosmopolitans, usually representing the views of symbolic analysts, arguing that government should simply stay out. In their view, profit-seeking individuals and firms are far better able to decide what gets produced where; governments only mess things up. Free movement of all factors of production across national boundaries ultimately will improve everyone’s lot.
What is being lost in this debate is a third, superior position: a positive economic nationalism, in which each nation’s citizens take primary responsibility for enhancing the capacities of their countrymen for full and productive lives, but who also work with other nations to ensure that these improvements not come at others’ expense. This position is not that of the laissez-faire cosmopolitan, because it rests on a sense of national purpose - of principled historic and cultural connection to a common political endeavor. It seeks to encourage new learning within the nation, to smooth the transition of the labor force from older industries, to educate and train the nation’s workers, to improve the nation’s infrastructure, and to create international rules of fair play for accomplishing all these things. The sources and objectives of such investments are unambiguously public.
Neither is this the position of a zero-sum nationalist: here the overarching goal is to enhance global welfare rather than to advance one nation’s well-being by reducing another’s. There is not a fixed amount of world profit to be divided or a limited market to be shared. It is not their corporations against ours in a fight for dominance of world commerce. We meet instead on an infinitely expanding terrain of human skills and knowledge. Human capital, unlike physical or financial capital, has no inherent bounds.
Indeed, these nationalist sentiments are likely to result in greater global wealth than will cosmopolitan sentiments founded upon loyalty to no nation. For like villagers whose diligence in tending to their own gardens results in a bounteous harvest for all, citizens who feel a special obligation to cultivate the talents and abilities of their compatriots end up contributing to the well-being of compatriots and noncompatriots alike. One nation’s well-being is enhanced whenever other nations improve the capacities of their own citizens. To extend the metaphor, while each garden tender may feel competitive with every other, each also understands that the success of the total harvest requires cooperation. While each has a primary responsibility to tend his own garden, each has a secondary responsibility to ensure - and a genuine interest in seeing - that all gardens flourish.
Thus positive economic nationalism would eschew trade barriers against any workforce’s labors, as well as obstacles to the movement of money and ideas across borders. Even were such obstacles enforceable, they would only serve to reduce the capacity of each nation’s work force to enjoy the fruits of investments made in them and in others. But not all government intervention would be avoided. Instead, this approach would encourage public spending within each nation in any manner that enhanced the capacities of its citizens to lead full and productive lives - including pre- and postnatal care, preschool preparation,
excellent primary and secondary education, access to college regardless of financial condition, training and retraining, and good infrastructure. Such investments would form the core of national economic policy.
Positive nationalism also would tolerate - even invite -
public subsidies to firms that undertook within the nation’s borders high
value-added production (complex design, engineering, fabrication, systems
integration, and so forth), so that the subsidy-granting nation’s work force
could gain sophisticated on-the-job skills. But it would draw no distinctions based
on the nationalities of the firm’s shareholders or top executives. To ensure against zero-sum ploys in which
nations bid against one another to attract the same set of global firms and
related technologies, nations would negotiate appropriate levels and targets of
such subsidies. The result would be
a kind of GATT for direct investment - a logical extension of the General
Agreement on Tariffs and Trade that the
Other kinds of subsidies would be pooled and parceled out to where they could do the most good, as the European Community has begun to do regionally. For example, nations would jointly fund basic research whose fruits were likely to travel almost immediately across international borders - projects such as the high-energy particle accelerator, the human genome, and the exploration of space. (Single governments are unlikely to support many of such projects on their own, given that the entire world so easily benefits from them.) How such funds were apportioned and toward what ends would of course be subject to negotiation.
Positive economic nationalism also would ease the transition of a work force out of older industries and technologies in which there was worldwide overcapacity. This might take the form of severance payments, relocation assistance, extra training grants, extra unemployment insurance, regional economic aid, and funds for retooling or upgrading machinery toward high value-added production. Since every nation benefits when overcapacity anywhere is reduced, these subsidies might come from a common fund established jointly by all nations. Payments into the fund could be apportioned according to how much of that particular industry’s capacity lay within each nation’s borders at the start.
Finally, positive economic nationalism would seek to
develop the capacities of the work forces of the
safely extract raw materials and sell products within
them - but as a means of promoting indigenous development and thereby enhancing
global wealth. To this end, the
shift of high-volume, standardized production to
The pressures of global change have fragmented the
American electorate. Blue collar
and local service workers - tending toward zero-sum nationalism - fear that
foreigners, the Japanese in particular, are taking over the nation’s assets and
secretly influencing American politics. They resent low-wage workers in
Neither constituency, in other words, is naturally disposed to positive nationalism. Those who are threatened by global competition feel that they have much to lose and little to gain from an approach that seeks to enhance world wealth, while those who are benefiting the most from the blurring of national borders sense that they have much to lose and little to gain from government intervention intended to spread such benefits.
The direction we are heading is reasonably clear. If the future could be predicted on the
basis of trends already underway, laissez-faire cosmopolitanism would become
The forces of history have presented us with a rare
moment in which the threat of worldwide conflict seems remote and the
transformations of economics and technology are blurring the lines between
nations. The 1991 Persian Gulf war
is notable for not aggravating global tensions or extending beyond