on zombie economies

Michael Lind writes depressingly in Salon of the coming collapse of protected elite professional sectors and the likely rise of populist nativism. I don’t have a lot to add, and I’m not sure if I buy it or not, but it’s worth a read.

[I]f the crony capitalists of the right succeed in cutting back Social Security and Medicare, American wage-earners will be compelled to pay more of their stagnant incomes to private mutual fund managers and insurance companies. And if the green crony capitalists of the left succeed, working Americans will be forced permanently to pay artificially higher utility bills to subsidize politically-connected “venture capitalists” who will derive a permanent, rigged stream of income from zombie green corporations, whose uneconomical solar and wind energy will be purchased by utility companies under legal mandates written by green lobbyists.

… At some point, a national populist movement in the spirit of Ross Perot, Patrick Buchanan and Lou Dobbs will almost certainly reappear in the United States….

Protectionism and immigration restrictionism have been the typical responses of nations to depressions before, in the 1870s, the 1890s and the 1930s. These policies don’t work well, in the theoretical sense that they do not promote long-term global growth as well as would a combination of liberal trade and immigration policy with coordinated, demand-expanding Keynesian expansionary policies among all nations at the same time.

But protectionism and immigration restriction can succeed in the short run. If you preserve your domestic market for domestic producers, you encourage domestic investment and create domestic jobs, as multinational companies, whether nominally American or foreign, are forced to locate production in the U.S. in order to have access to American consumers. This assumes that many if not all customers will have no choice but to buy necessary goods from the protected national industries. Similarly, if you reduce the flow of immigrant labor, you create domestic jobs, assuming a fixed demand for necessary, labor-intensive services in sectors like healthcare. In the long run, your country and others will be worse off than they would be in an imaginary world without barriers to the free flow of goods, labor and capital. But that is like arguing that we would all be better off in “Star Trek’s” imaginary United Federation of Planets.

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