Economic nationalism. From Karl Marx’s copybook

Efforts to block foreign takeovers rest on a deceit about ownership and interests

PATRIOTISM, said Samuel Johnson, is the last refuge of a scoundrel. That may be unfair to the proper sort of patriot, but it would be an entirely valid comment about politicians today who make a fuss about foreign takeovers in their countries, in the name of "national interests". The truth is that they are not defending their nations' interests at all. They are defending their own interests and (often) those of their cronies.

Such selfish populism has become increasingly popular. Recent weeks have seen American politicians attacking the purchase of a port management firm by DP World from the United Arab Emirates (see page 70) and proposing new barriers for state-owned buyers to jump; the French prime minister, Dominique de Villepin, hastily arranging a merger between a state-owned gas firm, Gaz de France, and another big utility, Suez, in order to see off an Italian bid for Suez (see pages 39 and 69 ), and proposing other anti-takeover measures; the Spanish government trying to block a German firm's bid for Endesa, a Spanish utility; the Polish government hindering an Italian takeover of a German bank because it involves Polish subsidiaries; South Korean politicians yelling foul at an American-led attempt to buy KT&G, formerly the state-owned tobacco and ginseng monopoly (see page 73); and the French and Luxembourg governments both trying to discourage a takeover by the world's biggest steel firm, Mittal, for the Franco-Belgian-Luxembourgeois Arcelor.

From the point of view of those who favour open markets for goods, services and capital it is possible to see these political reactions as good news, not bad (see page 46). They imply, first of all, that there are a lot more cross-border mergers and acquisitions going on than before, notably in Europe, as otherwise there would be nothing to complain about. They may also imply that other refuges of political scoundrels aren't as useful as they once were: trade barriers are hard to erect, especially within the European Union but also more widely thanks to the World Trade Organisation, and the use of public spending to rescue or "create" jobs runs up against state-aid rules, budget-deficit limits and the awkward practical fact that such subsidies don't work for very long. The forces of globalisation, moreover, look much stronger than the measures currently being deployed against them.

Commanding heights

To be entirely sanguine about this spate of economic nationalism could well, however, prove a mistake: it needs to be seen in the wider context of China-bashing in America's Congress, anti-enlargement feeling and even growing racism in some European Union countries, and the continued frailty of the Doha round of trade-liberalisation negotiations. Globalisation is a human construct, after all, not some force of nature; it can be reversed, as has happened in previous bouts of beggar-my-neighbour politics. But even if these anti-takeover movements do prove futile, and don't trigger a broader move to protectionism, that still doesn't make them benign. They introduce distortions and impose costs on the countries that deploy them. And they are, at bottom, corrupt.

The idea that it is somehow in the French national interest that a utility should not become owned by an Italian firm, or in the American interest that ports be kept out of Arab hands, is one to gladden the heart of Karl Marx. His view was that ownership, and hence the power to exploit, was all; hence socialist governments' fateful desire to nationalise the "commanding heights" of their economies. Does Britain suffer because French firms (eg, EDF and Suez) already own large British electricity and water utilities? No: they are subject to exactly the same regulations and labour laws as any other utilities. Would the management of six American ports give DP World control over security there? No: as with any port or airport, it is controlled by the government. The laws of the land and the reach of state or federal agencies are unaffected.

What is affected, however, is the ability of governments and of individual politicians to use patronage at favoured firms to help their friends, to get favours in return, to support special interests such as trade unions, and, in broad political terms, to paint themselves as patriots. Consumers aren't helped, living standards don't rise, the nation as a whole is not better off. But the political and corporate elite may well be.