The theory that we can somehow make ourselves better off by propping up uncompetitive corporations and industries is sometimes known as “economic nationalism,” and is very much in vogue on the left at the moment. Economic nationalism includes a spectrum of policies with the bailouts on the mild end, Hugo Chávez’s regime in the middle, and North Korea as its logically consistent final expression. All of them involve putting politicians in charge of private economic decisions, elevating political expediency over economic reality.
Economic nationalism is a deeply anti-humanistic tendency. The division of labor is what makes human life possible at a level of civilization higher than that enjoyed by Robinson Crusoe, and trade is how labor is divided across communities and across countries. Mitt Romney is too busy engaging in China-hawkery to say so, but trade makes us better off even when the trading partner on the other side of the exchange maintains restrictive economic practices such as manipulating its currency or maintaining an oppressive police state, both of which are true of China. (And trade makes poor Chinese people better off, too, something decent people would be celebrating rather than despairing over.) Comparative advantage and gains from trade are facts of economic life; those who would deny them are the economic equivalent of flat-earthers.
Economic nationalism is catnip to the Obama administration for the same reason that it attracts the small Buchananite faction of the Right: It provides a simplistic master narrative for explaining complex economic challenges to people not intellectually inclined to do the work necessary for understanding them, it is fueled by resentment and anxiety, and, most important, it gives politicians somebody to blame. As economics it is indefensible; as political rhetoric it is, unfortunately, immortal.