Facing America’s Social Crisis

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The shift in U.S. policy has been real. In the last two years, the Biden administration has invested heavily in the reshoring of American manufacturing industry, handing out tens of billions of dollars in subsidies to domestic and foreign chipmakers alike; blocked foreign investments in the U.S. (even by allies such as Japan); restricted growing areas of high-tech exports to China, including by Dutch and Japanese firms; and drastically raised tariffs on a wide variety of Chinese renewable-energy technologies and electric vehicles. (Tellingly, Biden has also kept in place many of the tariffs on China that Trump imposed.)

The Biden administration insists that these moves are necessary to defend against Chinese military and economic competition and do not preclude cooperation with long-standing allies. But Washington has also been defiant of international norms and institutions in the realm of sanctions and export controls more generally. U.S. controls on the exports of semiconductor technology to China began in 2022 as targeted measures, in line with a “small yard, high fence” philosophy. Two years later, the American garden is steadily expanding to include cutting-edge technology belonging to its allies, whether they agree with the U.S. stance on China or not. And U.S. trade representative Katherine Tai has dismissed the WTO as a group of “unelected, not really accountable decision-makers in Geneva.”

For the highly trade-dependent economies of Europe and East Asia, these are worrying developments. Small countries need a world in which international rules can be relied on, but it is clear that there are currently no meaningful guardrails on U.S. economic coercion, which continues to grow every year. On a recent trip I took to East Asia, a Singaporean interlocutor of mine described the Biden administration’s approach to the region as Trumpist but with better manners. No one can or should object to the United States spending lavishly to promote essential manufacturing industries at home. But it is one thing to boost one’s own industry and quite another to impose restrictions on the production and exports of other states. Europeans and Asians have plenty of reason to object to U.S. meddling with their economic sovereignty.

Neoliberalism has long been a bugbear of the left and of developing countries. Its rejection by the world’s hegemonic power is, in some ways, a cause for celebration. But whether or not the post-globalist turn in U.S. economic policy will take on a more progressive shape when molded by Democratic hands remains to be seen. Several of the key legislative achievements of the Biden administration—from the Inflation Reduction Act to the April 2024 Israel-Ukraine-Taiwan support bill that also expropriates TikTok’s Chinese owners by forcing them to sell the platform—have passed Congress not because of any novel consensus on the desirability of social reforms but because of the fear of China.

Some progressives, such as Senators Elizabeth Warren and Chris Murphy, seem to hope to use this national security panic as a Trojan horse for much-needed social reforms. The domestic losers of globalization obviously deserve help. Real wage growth for working-class families has been lackluster for decades. So-called deaths of despair—overdose deaths, deaths from alcoholic liver disease, and suicide—are at alarming levels. In avoidable mortality rate, the United States now lags Colombia, while its life expectancy rate is similar to that of Poland and Argentina. The American heartland, then, urgently requires major interventions to improve public education, health care, employment, and social cohesion. No democracy can ignore such a social crisis. Moreover, in many advanced economies, industrial policy has worked well to build and strengthen essential industries.

But as a strategy for regeneration, appealing to national security is a flawed approach. For one thing, it fails to address the source of the problems it purports to address. U.S. manufacturing as a share of nominal GDP has been declining. But its downward trend began seventy years ago, in the mid-1950s. Deindustrialization had already progressed quite far when Chinese goods gained access to the American market in the early 2000s. Several rich economies in northern Europe and East Asia that are more open to trade than the United States, and thus exposed to Chinese competition, were nonetheless able to preserve their manufacturing shares throughout the globalization of the 2000s. This suggests that what the U.S. faces is not a social crisis caused by foreign adversaries but, rather, one that is largely of its own making, a complex of human development disasters caused by the lack of a comprehensive social safety net, insufficient vocational education, excessive corporate power, and Gilded Age levels of income and wealth inequality. Responding to what are essentially internal problems with policies targeting supposed external foes is unlikely to fix the core troubles plaguing America.

For proof that what ails the American industrial base is largely self-inflicted, it is helpful to look at one of the country’s largest exporting firms: Boeing. Together with Europe’s Airbus, this giant of U.S. manufacturing has operated for decades in an exclusive sector—narrow- and wide-body commercial passenger jets—where it has, up to this point, faced no competition from Chinese firms. If the argument that American industry was hollowed out by the “China shock” had any merit, then Boeing, which was not exposed to it, should have been in a great position to continue to thrive. This is all the more true in light of the company having received staggeringly generous government support on a scale that would make any Asian producer jealous: since 2000, Boeing has gotten almost $75 billion in state and local tax breaks and federal loans, plus tens of billions more in federal contracts.

Yet instead of serving as a showcase of the best in American manufacturing, Boeing is in dire straits, as a string of bad decisions by short-sighted and self-enriching executives have done serious damage to its workforce, competitiveness, and reputation. Within a matter of months in late 2018 and early 2019, two of Boeing’s 737 Max airliners crashed, killing 346 people, and the firm recently pled guilty to one charge of conspiring to defraud the FAA about key software for that aircraft model. The 737 factory in Renton, Washington, billed by Boeing management as “the most efficient airplane factory in the world,” pays some of its workers (who are currently on strike) just four dollars more per hour than the local McDonald’s. Boeing’s crisis shows that the decline of American industry, the issues of American labor, and the nation’s subpar levels of public health and safety are, in large part, the result of corporations that grew too big and too powerful to fail, and that have maximized shareholder value at the expense of their employees and customers. Fixing this is both urgent and possible. But it has nothing to do with toughness against Beijing.

Although economic nationalism misdiagnoses the causes of decline, it might be justifiable if it could actually reverse national stagnation. But national security discourse is unlikely to prove a reliable vehicle for smuggling social reform into U.S. economic policy, since nationalism is so easily co-opted by the very vested interests responsible for the social crisis. Further, in a divided country, the political price that must be paid for instituting such measures often makes them so weak as to be pointless.

Judging from the evidence of global politics in the 2020s, nationalism has a robust future as an ideological tool for ressentiment entrepreneurs and large corporations looking for protection from global competition. From the point of view of humanity and economic and environmental progress, though, it is not clear whether nationalism should have a future at all. Of course, every country engages in a certain degree of harmless patriotic self-congratulation. But the nationalist reorientation of many rich and advanced economies—including the United States, the United Kingdom, Germany, France, Italy, and others—will not stem the fraying of their social fabric. Worse, the zero-sum logic of their nationalist policies has the dangerous effect of fomenting international rivalry and conflict.

A better approach would be to work toward a relatively open world economy in which national governments use their domestic powers to take a more active role in providing social security and adequate education and health care to their citizens—in other words, symbolic nationalism with globalist benefits, mediated by an active, capable state. This bears some similarity to the postwar consensus. But it would be radically different in two respects: first, the West has to face the fact that half of today’s global manufacturing base is located in Asia, which must be an equal partner in international agreements; second, we all face an ever-worsening climate crisis, which demands an increase in global cooperation precisely at a moment when our political instincts are moving away from it. “Humanity,” Mazzini declared in 1858, “is a vast army advancing to the conquest of lands unknown, against enemies both powerful and astute.” He did not know the nature of our planetary emergency, but his marching orders were spot on.