I think I will do an extended series this year on the topic of “economic nationalism.” I tried to begin this earlier, and stopped. One reason is that I felt that I should do some considerable research before opining on such a contentious topic. Another reason is that I thought that I would alienate most of my friends and allies, who are mostly free-traders. The former journalist Fred Reed once wrote a good piece on the practicalities of opinionating. (Unfortunately, I couldn’t find it.) Basically, he argued that, if you adopt one part of the party line, you are under pressure to adopt all of it. Taking something from here and something from there is treacherous.
Basically, “economic nationalism” is the idea that economic policies should benefit the nation; that is, the citizens of a state, such as the United States. If some sort of policy seems like a good idea “in principle” but it is not producing good results in real life, then it is suspect. This idea is easily abused; since it is very hard to justify any policy, no matter how stupid or destructive, with the argument that is it bad for people, ergo, all policies are justified by their promise that it is “good for the nation.”
In practical policy terms, “economic nationalism” tends to reduce to: limits on immigration, and tariffs. Occasionally, it involves a floating fiat currency, or a currency devaluation, which has been called a “nationalistic” policy in the past.
The United States was founded on the principles of free trade and immigration; and also, limited immigration and tariffs.
Part of the Constitution is free trade between States. States could not erect trade barriers between States. Also, people could move freely from State to State (except slaves). It is hard for us to imagine today a situation in which States would get into tariff wars with each other, or that someone living in Pennsylvania could not emigrate to Texas if they wanted to. Finally, we cannot conceive today of separate floating fiat currencies for each State, although this was common before 1780. We can see easily what problems all this would create, and how the economic success of the United States is certainly related to the fact that we did not have all these problems. These economic difficulties would soon lead to political difficulties: States that erected trade and immigration (and currency) barriers to each other might soon be engaged in either secession or military activity against each other.
But, these principles, which applied between the States, did not apply to the United States vs. the outside world. The first fifty years of US history (until the 1840s) did not have much immigration at all. Population growth arose from internal fertility alone. Immigration rose after 1840, but it was still limited until the 1880s-1890s, when a flood of European immigrants were allowed. Even then, however, this was not an open immigration policy. It was a strict quota policy, limited mostly to European Christian countries which were then part of the Developed World. The Naturalization Act of 1790 limited naturalization to “free white persons.” In 1880, 82% of all immigrants had come from Canada, Ireland, Britain, and Germany; the remainder were mostly from France, Norway, Sweden and Switzerland. Mexico has been South of the US for a long time, has always shared a long border, and has also been heavily populated since the Aztec period. Much of today’s United States originally belonged to Spain and Mexico. But, there was almost no Hispanic immigration until the Immigration Act of 1965. In 1847, during the Mexican-American war, U.S. troops invaded and occupied Mexico City, in effect conquering all of Mexico. Some in the U.S. thought that the U.S. should annex Mexico; but, this was an unpopular notion.
Tariffs were considered a primary revenue source for the Federal government from the Founding, and continued as such until after 1913. These tariffs were often very high, in excess of 50%. The Free Trade principles that were applied in their perfected form between the States, did not apply to external trade at all.
What was the difference? It was Nationality. Free Trade and Open Immigration applied among Americans only. It did not apply to non-Americans. But, it was not only Nationality, but the fact that we share a government with other Americans, and we do not share a government with non-Americans. In the era of the Nation-State, State boundaries commonly correspond with Nationalities. But, this is not always the case. Sometimes, Nationalities are split among various States, or a State may contain many Nationalities. So, an American today not only shares a Nationality, they also share a State, or, as it was known, a Commonwealth.
In practical terms: We care about the wellbeing of American citizens more than the wellbeing of Canadians or Chinese, because we have to live with them, and also, they vote.
Even today, I think most Americans would not have any particular disagreements about a wide-open Free Trade and Open Immigration agreement with Canada. Let’s go a step further: I think most Americans would not be very much opposed to making Canada part of the United States entirely.
But, these same Americans that would favor actually making Canada part of the United States, would fervently oppose making Mexico part of the United States, or even allowing a Free Trade and Open Immigration agreement with Mexico. This despite the fact that Mexicans are mostly Christian, and also, about 60% European by genetics. Why is that? It has something to do with Nationality, not only culture, but also the economic aspects.
