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Time Machine Economics PDF Print E-mail
Written by Steve Dittmer   
Wednesday, 29 March 2006
AFF Sentinel Vol. 3 #7

When H.G. Wells wrote The Time Machine in 1895 he envisioned a device that allowed people to travel to the future. Today R-CALF, OCM and their Liberal Activist Group (LAG)* allies seem eager to buy a ticket for the return trip.

They decry trade with foreign countries apparently convinced that we will be overrun by the economic might of Central and South America. So, the solution I suppose is to ignore the realities of the 21st century, climb into a time machine and go back to 1607 before foreign investment made America. Keep the Dutch out of New York, the English out of Virginia, the Carolinas and New England, the French from financing and fleeting the American Revolution, and the Spanish out of Florida. Heck, once, most of the cattle in Wyoming belonged to English and Scottish investors.

In international trade and shipping, countries with big populations, smaller land masses and a yen to make money have been trading and investing worldwide for centuries. Think of the Dutch traders and investors or the British Empire. And America has been the place to invest for over 200 years.

"The larger truth is that the flow of foreign investment into the U.S. is a sign of economic strength, not weakness," the Wall Street Journal said in a recent editorial ("The New Protectionists," 3/10/06, OpinionJournal, "For 25 years, pro-growth economic policies including monetary stability, steep tax-rate reductions on capital and freer trade have created a giant in-sucking sound of some $4 trillion of global investment into America." Between 1992 and 2005, the "U.S. created four times the number of new jobs than Europe and Japan combined." Yet the LAG want to restrict growth through trade with foreign countries. They don't mind exporting if it's handy, but expect to keep out all imports and not suffer any retaliatory consequences.

The flip side of foreign investment and trade is, do we want a U.S. economy so weak or unpredictable that the rest of the world is afraid to invest here?

In a later story citing economists who believe the ports fiasco will dampen foreign investment, the Wall Street Journal noted that foreign investment in the U.S. in 2005 had jumped 20 percent, to $128 billion ("Foreign Investing in the U.S. May Slow," 3/17/06, p. A2.). That brings the total to $1.53 trillion (Commerce Department-Gazette, 3/20/06, p. 5). Do we have the spare change to buy them all out?

The Journal noted a study by the Organization for International Investment: over 5 million Americans are employed by foreign-owned firms, averaging a wage of $63,000/year, 50 percent higher than the U.S. average. "Foreigners ... are investing in ways that add to [America's wealth]."

Our Cold War victory proved international commerce could help protect us and defeat dictatorships. Coming from the other direction, as the Journal editorial said, "...the interdependence that comes with foreign investment also gives those investors a stake in both American success and security."

In our own backyard, should we have given up the new products and competitive pressures on our American-owned countries from foreign-owned drug companies?

Get more basic. Where would our economy be today if we had decided in 1859, when the first oil well went in at Titusville, that our economy would only run as far and as fast as our domestic supply of oil would take us?

The Journal noted that, while we may have a trade deficit because of all the inflow of capital from around the world, it has contributed to our rising standard of living. From 1976 ?til now, the U.S. net household wealth increased from $20 trillion to nearly $55 trillion. That rising standard of living is critical to increased demand for beef, especially the added value, branded and convenience items.

Investment, just like trade, is a two-way street. If we want to keep out foreign goods and foreign investment, we will have to prepare ourselves for a cataclysmic upheaval of divestiture, economic overhaul, massive depression and deprivation.

Or fire up the time machine.

* Liberal Activist Groups like Nader's Public Citizen, Carol Tucker Foreman's Consumer Federation of America and Consumer's Union allied with R-CALF, the Organization for Competitive Markets (OCM) and others.

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Last Updated ( Saturday, 24 June 2006 )
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