Rising economic nationalism

"I read a very good piece on the psychology of economic nationalism by SocGen 's Dylan Grice earlier today. Because of some relevant thoughts from a reader regarding austerity, I wanted to pass on my thoughts on what he wrote in the context of the present economic situation.
This is going to be more a 'political economy' post than an economics or financial one. I take an extremely negative view on economic nationalism; and it would probably take too long to explain why here. But I will lay out the arguments as neutrally as I can so you can see what is happening.
Here's what Grice wrote that I found insightful (hat tip Scott):

Many smaller eurozone countries have seen extreme political parties now either on the fringes of – or set to enter – coalition governments (e.g. the Netherlands, Austria and Finland). But the trend is growing. A recent article in 'The Economist' reported that a Catalonian politician, Xavier Garcia Albiol who is running for mayor in Badalona, just north of Barcelona, is gaining local support and national notoriety for his hard-line stance. He told the newspaper, "Wen people stop me in the street, 80% of the time it is to do with immigration or crime."

Let's see how this plays out in the laboratory. Grice writes:

['In-group bias' researcher Henri Tajfel's] most famous experiment demonstrates how easy it is to create real divisions within groups where none previously existed and how those divisions can soon lead to discriminating behavior. Bristol schoolboys from the same year in the same school were given sheets of paper with dots on them and asked to guess how many dots were on each sheet. The boys were told the test was intended to assess their visual abilities and that they’d be split into groups according to performance. In fact, the schoolboys were split randomly.
Tajfel then asked each schoolboy to independently allocate rewards to other schoolboys. But the other schoolboys were to remain anonymous, and the allocator was told only which group the other schoolboy belonged to. Famously, Tajifel discovered that the vast majority of subjects allocated significantly more reward to their in-group, at the expense of the out-group. His theory that discrimination against outsiders was to do with hardwired systematic processing errors rather than a few rogue personality types was vindicated.

When times are tough, people start looking for someone to blame. This is a universal truth. And usually it is not the In-group which gets the blame but out-groups like minorities, immigrants and foreigners. The case against immigration in the U.S. during the Great Depression is instructive:

When the United States last experienced an economic downturn greater than the present day depression, immigrants were often seen as a problem more than a solution because of high unemployment. As a result, Herbert Hoover authorised the Mexican Repatriation Program, which was the removal - by force if necessary - of both American Citizens of Mexican descent and Mexican immigrants from American soil..."

at http://www.creditwritedowns.com/2011/04/rising-economic-nationalism.html#ixzz1JQxAdiUE