Trade and National Greatness

I think and hope that Andrew Sabl overshoots in his criticism of what sounds to him a lot like mercantilist jingoism in Obama’s speech.

Andrew Sabl takes issue with President Obama’s argument that we should be at the forefront of green product innovation, and that we should be ashamed that American hybrid cars need batteries from South Korea.

Sabl is right of course that we cannot expect to have all leading-edged products supplied domestically.

But Obama is right if he meant that the stupid and inconsistent energy policies of the Reagan/Bush/Bush period, only partly remitted under Clinton/Gore, left us in a vastly less competitive position on green technologies than we could otherwise easily have had. The Harvard Business School Professor Michael Porter (not a flaming liberal) in the Competitive Advantage of Nations (1990) makes it clear domestic market conditions influenced by government tax structures, regulation, and R&D investments can make a real difference in the competitive position of various industries. This is not protectionism, nor is it “picking winners and losers.” It’s establishing conditions where effective competition can occur. Sort of like affirmative action –and over the long term creating better K-12 education in disadvantaged communities — rather than quotas for college admissions.

This is not just 20-20 hindsight. Even I wrote such policy proposals in 1991-2.

Now it is true that the Obama’s rhetoric did overshoot at times — as for example his claim that Americans invented the automobile. And the phrases Sabl quotes are more jingoistic and less precise than I would have liked. But I think there is an interpretation that makes them respectable intellectually and as a matter of policy. And I hope this charitable interpretation is the correct one.