Samuel Johnson called patriotism “the last refuge of a scoundrel.” If that is true, what should we think of today’s mounting economic nationalism, sometimes euphemistically described as “economic patriotism”?
Indeed, economic nationalism is exceptionally vigorous at the moment. Vigorous popular opposition to a Dubai company’s plan to take over ports in the United States shocked the American government. Poland is witnessing a populist backlash against foreign ownership of banks. France is blocking the acquisition of French utilities by the Italian electricity company Enel. Together with other European governments, France is also agitating against the takeover of the Luxembourg-based steel company Arcelor by a Netherlands company largely controlled by an Indian steel magnate.
Defenders of these ill-fated cross-border takeovers worry that a sinister whiff of the twentieth century’s worst moments is in the air. An outraged Italian minister warned of a new mobilization of populist nationalism in an “August 1914” scenario. The better analogy is from the 1930’s: in 1933, the year in which Hitler came to power, the world’s most famous economist, John Maynard Keynes, produced a plea for “national self-sufficiency.”
Both the 1914 and the 1933 analogies point to the most striking characteristic of the current debate: the key role of security worries in justifying protectionism. Nobody worried about foreign ownership of US ports as long as the owner was a British company; the new fears reflect the belief that Dubai might be a channel for Islamic fundamentalism and terrorism.