March 10, 2006
The other ports editorial
I mentioned two Dubai-ports-related editorials in the WSJ today and blogged on one.
The other, Not For Sale to Foreigners does not have a free link, but it is great as well. Written by Lawrence Lindsay, former Chief Economic Advisor the President Bush, it's equally un-sanguine about the mixture of government and trade -- here's the ending riff:
A given investment only rises to the attention of highest ranking political officials if there is any disagreement within the committee on whether there are substantial risks to our physical or economic security. In this case, none of the agencies involved had any concerns. So the security issue really is purely symbolic, not substantive. But it also symbolizes the chance that Congress could impose its judgment on other foreign investment projects any time an interested party (a losing bidder for example) raises a political fuss. The potential for a politicized breakdown in the global movement of capital is real.Economic history is not hopeful in this regard. Foreigners are always an easy target. In 1930, Congress legislated against the entry of foreign goods in the form of the Smoot-Hawley tariffs. Other nations retaliated and global trade and capital flows soon collapsed. Although the long-term consequences of Smoot-Hawley were unknown at the time, it is interesting that stories ran in the New York Times about the advances of the pro-tariff forces on the same days as the stock market crashed in late October 1929.
While most of the supporters of the tariff have faded from memory, Sen. Reed Smoot of Utah and Rep. Willis Hawley of Oregon have permanently earned their place in history. So did President Hoover, for not having vetoed the bill, even though he favored lower tariffs. President Bush: Take note.