December 8, 2022

Michael Lind’s address at the Miami National Conservatism Conference on September 11, 2022.

The most concise description of the original american system was provided in 1832 by a 23-year-old candidate for the illinois state legislature who belonged at the time to henry clay’s wig party and was a lifelong admirer of clay fellow citizens i presume you all know who i am i am humble abraham lincoln i have been solicited by many friends to become a candidate

For the legislature my politics are short and sweet like the old woman’s dance i am in favor of a national bank i’m in favor of the internal improvement system in a high protective tariff these are my sentiments and political principles if elected i shall be thankful if not it will all be the same between the civil war and the new deal lincoln’s republican party

And the hamilton was the hamiltonian heir to the pre-war whig party and also to anti-slavery jacksonian democrats the republicans and and they had democratic allies presided over what might be called the first american system most of the goals of the hamilton clay lincoln american system were achieved national banking laws rather than a single national bank of

Role played later by the federal reserve system internal improvements in the form of railroads paid for in many cases by federal land grants to railroad companies and high protective tariffs that sheltered american infant industries from british and european import competition rather than breaking with the hamiltonian developmental economics of the republicans

Of that era the new deal of the 1930s and 1940s built upon it even as new deal democrats who were dominant in that period paid lip service to the democratic party’s heroes thomas jefferson and andrew jackson under franklin roosevelt and his successors including the republicans eisenhower and nixon who ratified much of the new deal and modified it the federal

Government created what might be called a second american system this one based on the technologies of the second industrial revolution like the internal combustion engine and electricity they used methods including federal subsidies for highway construction and rural electrification they were also not afraid to use what might be called state capitalism as

Assistant secretary of the navy under president woodrow wilson uh at the end of world war one young franklin roosevelt at wilson’s direction allocated navy funds to subsidize the creation of a national wireless monopoly the radio corporation of america you may have heard of it rca which later spun off the three major networks which you may have heard from as

Well abc nbc and cbs rca in the 1920s and 1930s played a major role in the development of television and other innovative technologies during the new deal era from the 1930s to the 1980s the federal government used air mail to subsidize the development of a domestic u.s airline industry and later created the national aeronautics and space administration nasa

To develop rockets and satellites and send astronauts to the moon federal state capitalism in the service of american national industrial policy mainly took the form of defense department spending during the cold war which subsidized much of the development of satellite technology the computer industry and the global positioning system gps the internet began as

Darpanet a pentagon funded research project linking researchers who had defense department contracts in the last part of the 20th century came the third industrial revolution based on information technology technology which as we have seen was developed largely by contractors to the u.s military in the middle of the 20th century uh and indeed a third american

System has been constructed based on the technologies of the third industrial revolution and the way that the new deal’s second american system was based on the electromechanical era and the way that uh lincoln’s first american system was based on steam power this third american system has been constructed between the 1970s and the 2000s with the bipartisan support

Of reagan republicans and clinton democrats in many ways it has been a success particularly in the realm of infrastructure since we have a fairly good wireless uh wi-fi capacity now and a number of new businesses whose business models would have been inconceivable without the internet so to that extent uh it’s been a success unfortunately today’s third american

System as i call it is based on neoliberal globalism rather than economic nationalism which was the basis of the previous two american systems if we want to use that metaphor so-called free trade treaties like nafta and the wto were not really about free trade in the sense of increasing the number of products that were made in america that were sold to foreign

Consumers the actual goal of these treaties for the most part has been to make it easier for u.s corporations to transfer manufacturing and some services from well-paid american workers to poorly paid and in some cases unfree foreign workers in 2007 president alan garcia of peru during a speech to the u.s chamber of commerce made an offer to american businesses

Of a kind made by many other leaders of low-wage nations garcia said come and open your factories in my country so we can sell your own products back to the u.s uh some american corporate capitalists and executives made it clear that the american national interest was of no particular interest to them walter riston the chair and ceo of city corps and author

Of a neoliberal manifesto entitled the twilight of sovereignty in 1992 was quite candid when steel mills can move to more hospitable climates they no longer present a stationary target for government or union control unquote just as honest was jack welch the ceo of general electric who declared in 1998 quote ideally you’d have every plant you own on a barge

These american capitalists had plenty of cheerleaders among pundits and policy makers from the 1980s to the present robert bartley the long-time editor of the wall street journal repeatedly proposed a constitutional amendment limited to five words there shall be open borders the new york times columnist thomas friedman declared i wrote a column supporting the

Cafta the caribbean free trade initiative i didn’t even know what was in it i just knew two words free trade in the first and second american systems the purpose of infrastructure was to create a single continental u.s market to the benefit of producers in u.s manufacturing industries with increasing returns to scale whose profits could then be shared with american

Workers in their communities in today’s third american system of neoliberal globalism the united states is viewed as a giant consumer market for manufactured goods made elsewhere mostly in industrial asia to add insult to industry the asian manufactured goods are carried to the us in container ships most of them made in three asian countries china japan and south

Korea by removing u.s federal subsidies designed to neutralize foreign subsidies the free market ideologues in the reagan administration completely destroyed the american civilian shipbuilding industry in the 1980s it just collapsed within a decade today china enjoys 45.2 percent of the global shipbuilding market which is a great high-tech manufacturing market

Like aerospace and automobiles the u.s share of global ship building any guesses one-half of one percent the greatest beneficiaries of america’s neoliberal globalist third american system it can be argued has been the hereditary communist princeling ruling class in china and the business executives at home and abroad whom they favor during the 1970s and 1980s as

My some of my colleagues can attest i was an ardent coal warrior and i wouldn’t have believed it if anyone had told me that after the cold war america’s capitalists would go into business with china’s communists at the expense of workers in both countries today a single chinese company dji produces more than half of all civilian drones that are purchased worldwide

As well as the majority of drones used in u.s domestic law enforcement meanwhile in the last three decades the u.s has lost 70 percent of its semi-conducting manufacturing industry to other countries and in particular taiwan in 2020 china made 76 of the world’s lithium-ion batteries necessary for electric cars and all sorts of devices the us made eight percent in

The 1990s the us led the world in mining for rare earths essential for batteries and many products in 2019 however china produced 62 percent of raw rare earths while the us produced only 12.2 percent 36.7 percent of the world’s reserves of critical rare earths are held today by china the u.s share of global rare earth’s reserves is drum roll please 1.1 percent

Compared to china’s 36.7 uh and we saw in the coved 19 crisis the extent of the dependence on chinese manufacturers of the us for for basic medicines and that includes antibiotics 97 of the u.s market from china ibuprofen 90 hydrocortisone 91 acetaminophen seventy open so one can go on and on and on the point is that alexander hamilton henry clay abraham lincoln

Franklin roosevelt and dwight eisenhower and richard nixon among many others would be appalled at america’s self-inflicted deindustrialization it took two centuries for the u.s to build up the most advanced and dynamic manufacturing base in the world in a few decades for u.s corporations to dismantle much of it in their scramble for higher short-term profits

In cheap labor this brings us back to the question that i like to to ask uh back in the 1980s and 1990s when senator al gore was running uh for office he let it be known that with every issue he asked did wwjd what would jesus do so in this case i think it would be helpful to ask wwhd what would hamilton do or rather what would the entire cumulative wisdom of

The hamiltonian tradition have us do today the way forward is clear we need to replace the neoliberal globalist third american system with a fourth american system the fourth american system will not resemble lincoln’s first american system or the roosevelt eisenhower second american system in detail but a few generalizations are possible and i look forward to

What my colleagues on the panel in addition to johnny have to say about it one is that the invented here make it their model of neoliberal globalization must be scrapped at least in the case of strategic industries r d and skills education are enough but not enough not sufficient the u.s cannot be a major military power if it loses essential manufacturing we

Need to invent it here and make a lot more of it here at the same time this means there must be some limits on the ability of corporations to offshore production from the u.s to other countries in strategic sectors local content rules should be imposed and enforced by tariffs or encouraged by subsidies in the most defense critical industries the government should

Consider simply nationalizing u.s factories or mines uh and removing uh them from commerce altogether if these measures raise the price of certain consumer goods or business inputs in the u.s then so be it national security and national independence cost money and all benefits come with trade-offs the goal of u.s industrial policy should not be autarky it’s not

To have a self-enclosed north korean type economy it is merely to replace or rearrange a limited number of important but privately created corporate global supply chains to better promote the interests of the us and its allies while leaving other supply chains untouched neither national security nor national prosperity require us to make all goods in completely

In the united states from raw materials to the finished product in the fourth american system the federal government will need to work with private industry and capital and state and local governments as well as foreign governments to create the infrastructure needed by new technologies in business systems last but not least the next american system should compel

American companies large and small to share their profits with their workers in the form of living wages and adequate social benefits thank you for your attention you

Transcribed from video
Michael Lind | What Would Hamilton Do? American Economic Strategy After Neoliberalism | NatCon 3 By National Conservatism