Maybe we shouldn't be quite so smug about Trump's tariffs

Irish Times

4 hours ago

The hysteria surrounding
Trump's tariffs
prompted me to dust down my old economics textbook. I was reminded that tariffs are a legitimate, albeit imprecise and potentially counterproductive, tool used by governments to try to help grow domestic industries.
There was nothing in what I learned as an economics student at university to suggest tariffs were inherently evil. But then I was in college before neoliberalism really took off – under a succession of political leaders from Bill Clinton to Barack Obama – to become the world's ruling ideology.
The German sociologist Wolfgang Streeck has monitored this hardening of attitudes over the years, noting how 'protectionism' has become a dirty word. Under modern capitalism, 'protection of home populations and their way of life from economic subordination by 'free markets'', has become 'widely regarded as unethical', he writes in Taking Back Control?, his latest book.
Streeck is a European intellectual admired by nerdy sections of the left. He was called 'the Karl Marx of our time' in a
New York Times profile
last year, while
President Michael D Higgins
has
referenced his ideas
in past speeches. But Streeck (his name rhymes with 'cake') is also one of the left's chief critics, which may help to explain why he remains a fringe commentator in public debate.
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Before rushing to condemn
Trump
and his growing band of 'populist' imitators in Europe, Streeck encourages us to consider what their brand of politics hopes to achieve. The desire to protect national economic interests can be traced back to what he calls the 'dual crisis' of capitalism and democracy.
'First, the workings of international high capitalism, set free and financialised by neoliberalism, have increasingly become a mystery to the societies subject to it,' he writes.
'Second, the societies of developed capitalism are suffering from the way the internationalisation of the state system has become bogged down in a contest between the neoliberal internationalism of its elites and the newly emerging nationalism, or localism, of growing sections of their populations.'
There is a lot to unpack in those two statements – Streeck's love of compound sentences and his occasional over-exaggerations are other reasons why he remains a fringe commentator. However, there is an undeniable truth at the core of Streeck's thesis: the will of the people and the will of global markets are now at war.
A worrying feature in Ireland is the moral superiority that accompanies much commentary around Trump's protectionist agenda and, previously, Brexit. It is very easy for us to paint the Brits and Yanks as insular and jingoistic when our corporate tax policies have helped to create the conditions for both Britain and the United States to be resentful about globalisation.
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Corporate tax receipts drop 30% as Trump's tariffs bite
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There is further irony in the glee that generally accompanies news that Trump's efforts are being
stymied by the markets
. Since 'Liberation Day' on April 2nd, Trump has had to perform a series of U-turns over his tariff announcements due to bond market hostility. Democrats have begun mocking him with the 'Taco' slogan – short for Trump Always Chickens Out – which was
coined by Wall Street traders
.
Before chortling at Trump's discomfort, however, consider that the markets puncturing Trump's ambitions are the same markets which stopped Ireland from burning bondholders after the 2008 financial crash, and which today are threatening to dictate policy on Ireland's housing crisis. Rents in Ireland are already obscenely high and no political party has a mandate to make tenants pay more. Yet the Government looks set to weaken rent controls under pressure from global capital. Deloitte, one of the Big Four consultancy firms, told Ministers last month that current housing policies were deterring investors and
it warned
'the flow of private capital' will go elsewhere without reform.
Ireland has benefited more than most countries from globalisation, but at a cost. Increasingly we have had to cede sovereignty to gain the full benefits of international capital flows.
How can states 'take back control' from the markets? Streeck believes there are two options. First, to create a 'superstate' – or world government – that purports to regulate the markets in the public interest. Historically, however, 'there is no example of sovereign states merging voluntarily into a superstate', he notes.
The other option is 'to rehabilitate the nation-state as the main arena of democratic politics under capitalism'. Voluntary co-operation between nation states can be just as effective as a superstate in tackling issues like climate change and global conflict, he argues.
'A restored democratic nation-state ... could, and should, commit itself openly to economic patriotism, and even
protectionism
,' writes Streeck – he italicises the word to highlight its loaded use by neoliberals. 'There is no more important function for a democratic state under capitalism than the protection of its citizens from capitalism's risk and adverse side effects.'
That's not to say Trump's particular brand of protectionism is wise. But for Streeck it is understandable why a government acting on the will of the people would wish to 'separate the domestic economy from the outside world'.
It is a conversation we need to have here, with less smirking please over other countries' upheavals. Globalisation has brought Ireland huge economic benefits, but it is naive to think other states will prop up a system that benefits us more than them. Naive, too, to assume Ireland will benefit disproportionately from globalisation as time goes on.