The Art of the New Cold War Newsletter

Patriotic Capitalism and National Power

Welcome to the The Art of the New Cold War Newsletter.

In this edition, we explore Patriotic Capitalism and National Power.

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Topic: Patriotic Capitalism and National Power

Many years ago, it was famously said that what was good for America was good for General Motors, and vice versa. Meaning that the success of the country and the company were inextricably linked. They succeeded and prospered together.

Since the onset of globalization, however, this has not been the case. Indeed, U.S. corporations increasingly do not even view themselves as American. But instead, as global citizens and brands of the world, belonging and loyal to no single country, i.e. multinational.

Now large US companies are divorced from America, viewing it simply as another market for their goods and services. Albeit still a relatively important one given its size. But any loyalty is reserved solely for their shareholders around the globe, and any desire to see America excel as a nation goes only so far as the company’s ability to make profits there are concerned. The link between country and company has been severed. And while America still needs its largest companies to produce jobs, products, and overall economic activity in the country, companies, by contrast, increasingly no longer depend upon America or its market in nearly the same way they once did. For as Intel’s former chairman Craig Barrett once put it bluntly, “Intel can move wherever it must to thrive, but I sometimes wonder how my grandchildren will earn a living.”

This change has profoundly impacted the power dynamics and relationship between US companies and America. Whereas before there was an alignment of interests in many respects, even a shared pride in “Made in America”, this is often no longer the case. If anything, there is increasingly a divergence of interests, as America is forced to compete for its own companies’ business with other countries, creating a proverbial race to the bottom. America now gives away massive tax breaks and other costly incentives just for the privilege of having its own companies locate plants and operations in their mother country. This has provided capital and corporations with tremendous leverage, to the point of even making them masters over the state.

It has also caused significant strategic issues for America’s national defense and foreign policy. Especially relating to its biggest geopolitical competitor: China.

US companies lust after the massive Chinese market. And not only do they kowtow to the CCP and its wishes, but also transfer key technology and intellectual property to Chinese companies and make significant investments in China to ensure access to the Chinese market continues. They also act as the CCP’s de facto agents and lobbyists in Washington blunting and undermining America’s attempts to combat China. Recently, they strongly advocated for the removal of all US tariffs on Chinese goods, and unblocking of the sale of technological components to Chinese companies. Measures critical to US efforts to win The New Cold War, and ensure overall national strength.

China’s ability to commandeer US companies for its purposes and divide their loyalty has provided it with significant strategic advantages against America in the New Cold War, which the CCP continues to fully exploit. And, unlike US companies, Chinese companies remain completely loyal to their home country, and are fully invested in fulfilling the CCP’s national strategic goals. Indeed, Chinese companies are intended to ultimately serve China, not the other way around. And China demands their patriotism and loyalty.

To that end, as recently reported by the incomparable China expert Bill Bishop in his excellent Sinocism newsletter, at a July meeting with Chinese business leaders and entrepreneurs, President Xi was quoted as follows:

“First, I hope we will enhance our patriotic feelings. Enterprise marketing knows no borders, and entrepreneurs have their motherland. Excellent entrepreneurs must have a high sense of mission and a strong sense of responsibility for the country and the nation, and closely combine the development of their enterprises with the prosperity of the country, the prosperity of the nation and the happiness of the people, and take the initiative to bear the responsibility and share the worries for the country. Patriotism is the glorious tradition of excellent entrepreneurs in China in recent times.”

China’s ongoing crackdown on tech and other sectors—documented extensively in previous editions of this Newsletter—have further emphasized this point, in conjunction with an overall push driven by the CCP and captured by the catchphrase, “common prosperity,” now appearing everywhere in China.

But while investors complain, even file lawsuits, when America seeks any sort of similar loyalty from its own companies, these very same investors readily accept this in China. Even rewarding Chinese companies that tightly align with the CCP and its goals. In fact, as reported recently in the Financial Times, foreign investors are now following Beijing’s lead by investing heavily in the CCP’s favored sectors, like Chinese chip, software and biotech groups, viewed by the CCP as vital to national strength, while eschewing those unproductive sectors, like gaming, e-commerce, and social media platforms, that the CCP sees as sapping national strength. The CCP is therefore successfully driving foreign investment where it wants for the overall benefit of the nation.

Furthermore, while consumers in America hardly punish US companies for disloyalty to America (in fact sometimes they even reward them for it) Chinese consumers, often encouraged by the government, severely punish Chinese companies for showing insufficient patriotism.

To illustrate this point, take Nike for example. Once an emblematic US company, Nike recently announced that it was now a brand of China and for China. This shocking announcement, however, has not hurt Nike a bit with US consumers who continue happily buying and wearing its products. Consider if the opposite had occurred. If an emblematic Chinese company publicly announced it was a brand of America and for America. That company would be thoroughly boycotted in short order by Chinese consumers and out of business; or, at the very least, forced into an expensive and humiliating apology, accompanied by public shaming and firing of company executives.

While much is made these days in America about capitalism versus socialism, or communism, and a great deal of discussion had about such things as “stakeholder capitalism” and ESG (Environmental, Social, and Governance) investing, there has been far too little emphasis on the allegiance US companies owe to their home country of America. Or what I have come to term Patriotic Capitalism.

And while I want to believe that US companies are—at least in some cases anyway—led by patriotic Americans who want to see America prosper and win the New Cold War against China, short term economic interests will undoubtedly act as a gravitational force against it. A fact the CCP is well aware of.

Therefore, the US government must forcibly seek to realign the economic interests of US companies with the nation’s through a robust pro-America industrial policy to create patriotic capitalism utilizing a wide variety of carrots and sticks.

For example, by making it far more expensive and onerous for US companies to outsource American jobs and manufacturing, especially in strategically important industries, while at the same time providing financial advantages, like reasonable tax incentives, for those that do not. America should also enact punitive measures for outsourcing companies including being barred from accessing taxpayer funding or financing, and curtailment of the ability to transfer data through data privacy laws. While federal pension and public investment funds should be required to invest in America and American companies, whether exclusively, or at a very high percentage, and the Buy American Act further strengthened. These actions will not only serve to level the playing field by taking away competitive cost advantages of outsourcing but make it more advantageous and profitable to hire U.S. workers. 

In short, US companies that align with Pro America policies should be provided every economic advantage to succeed, and those that do not should be burdened with every disadvantage possible.

To add additional pressure on U.S. companies to align with pro-America industrial policies, the American public should be enlisted by appealing to their sense of national pride and patriotism. As consumers the American people can exert tremendous influence on companies and drive economic behavior towards a more patriotic capitalism. America should also create an investment fund, which I call in my book the Patriot Fund, to invest in and alongside private capital in promising U.S. industries and technologies, akin to a venture capital or sovereign wealth fund. Shares of which should be issued directly to the American people across all income classes, so they have a direct financial stake in its success and broadly benefit from the wealth of the nation.

Finally, America should take pages out of China’s playbook by directing companies and investment in the strategic sectors that benefit the nation. This can be done by ensuring certain supply chains and technology remain in America. Including if need be through the Defense Production Act, which President Trump used to speed U.S. production of medical supplies amid the COVID-19 pandemic, and subsequently to speed development of mines of strategically important rare earths vital to new and existing technologies. Use of the Act should be expanded to other essential industries and supply chains as well.

The goal of these actions, and many more like them which I detail more fully in my book, is to bind US companies once again to America’s national interests and prosperity, rebalance the power of the relationship, and return to the mentality exemplified by what is good for America is good for General Motors, and vice versa.

It is also intended to make US companies strategic assets in the New Cold War, and not liabilities. And not only will it greatly enhance America’s ability to win against China, but also enhance the lives of everyday Americans and nullify growing calls for socialism or worse, communism. Most Americans don’t really want either, but are desperate for a better form of capitalism, one that works for more people and fosters greater social cohesion and love of country.

Patriotic capitalism is the answer.