It has been discouraging to see that the lessons learned in the first half of the 20th century have now been forgotten, as nationalism is on the rise in many regions. And now we are seeing a repeat of the McCarthyism of the early 1950s. Here’s Foreign Policy:

Not so long ago, consultancies and other information brokers could work easily with different clients in different countries. Just as they talked to competing firms, they advised competing governments. In 2015, when senior McKinsey partner Lola Woetzel hoped the think tank’s book “provides useful input for the planning and development of China’s technology enterprises and government institutions,” she likely didn’t think she was making a controversial statement.

But what may have seemed banal then may now be depicted as smoking gun evidence that companies are helping the enemy.

Senators Marco Rubio and Josh Hawley have suggested that McKinsey has been aiding America’s enemies and should be barred from receiving federal contracts.  This is from Marco Rubio’s website:

While the report was written in the staid language of management consulting, ultimately it was an attempt to help the Chinese Communist Party (CCP) dominate the United States and other countries in cutting-edge fields, including cloud computing, the internet of things, big data, mobile internet, robotics, 3D printing, advanced materials, self-driving vehicles, artificial intelligence, nonconventional oil and gas, electric vehicles, energy storage, renewable energy, and human genomic technology. The implications go beyond economic competition. The report notes that technologies such as these “will have a great impact on future wars and the development of the national defense industry.”

The logic of globalization is that international trade and investment is a win-win process—both sides benefit.  But when globalization is replaced with nationalism, economics becomes a zero sum game.  Any improvement in the Chinese economy is seen as a negative for the US, as our relative position declines in international power rankings.  Thus any company trading with “the enemy” is in danger of being viewed as treasonous.

Ironically, Foreign Policy reports that the most inflammatory accusations against McKinsey relate to language suggesting that China would benefit by moving in a more communist direction:

The Financial Times reported that their China branch had boasted in 2019 of its economic advice to the Chinese central government, while a McKinsey-led think tank prepared a book which advised China to “deepen cooperation between business and the military and push foreign companies out of sensitive industries.”

In fact, China’s rise as a great power began when it abandoned Maoist era communism.  After 1978, China began allowing more foreign participation in its economy, and privatized many businesses.  If you are an American nationalist, you should welcome China moving back to a state directed model cut off from foreign investment.

But the bigger problem with this new McCarthyism is that it inevitably leads to an increased risk of war, as states stop viewing each other as mutually benefiting from economic growth.  Back in the 2000s, Chinese growth was viewed as good news for the US economy, and American businesses rapidly expanded sales in that fast growing economy. Today, many people in America view Chinese economic growth as a threat, and anyone aiding China’s economy then becomes seen as a traitor to the US.

I don’t accept the nationalist framing of international affairs.  But if the senators really believe their theory, then they might consider awarding the Congressional Medal of Honor to McKinsey executives, for encouraging China to move in a more statist direction.  Instead, they should focus their ire on people like me, who have given talks in China encouraging things like free market reforms, fiscal austerity and nominal GDP targeting.  These ideas actually would make China’s economy stronger.  If trying to improve the economy of a nation of 1.4 billion people makes one a traitor, then I’m guilty of treason.