Security Threatened by Protectionistic Leanings

Fire of Liberty
The Wall Street Journal has a good editorial(Free at OpinionJournal- registration required) out today on Dubai Ports World decision to sale off its North American ports to stave off the protectionistic rhetoric that has erupted in D.C. Just read what the folks in the "House that Bob Bartley Built," had to say about this whole fiasco:

Going well beyond Dubai, House Armed Services Chairman Duncan Hunter (R., Calif.) says he wants Congressional oversight of all foreign purchases of "critical infrastructure." Mull over that one for a minute. If you think corruption on Capitol Hill is bad now, wait until foreigners need approval from Congress for every multi-billion-dollar investment. The current investment review process was designed by the Reagan Administration to be discreet, and to keep Congress out, precisely to avoid such politicization.

In recent weeks Members of Congress have suggested that the foreign-ownership ban should apply to: roads, telecommunications, airlines, broadcasting, shipping, technology firms, water facilities, buildings, real estate, and even U.S. Treasury securities. If this keeps up, we'll soon arrive at France, where even food and music are "protected" from foreign influences as a matter of national survival.

The larger truth is that the flow of foreign investment into the U.S. is a sign of economic strength, not weakness. 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. Economist David Malpass of Bear Stearns recently calculated that U.S. GDP grew by 100% between 1992 and 2005 while world GDP growth measured in dollars grew by only 70%. Over that same period, the U.S. created four times the number of new jobs as Europe and Japan combined.

Now the board says that hopefully this fuss about the ports was just one of those quirky "hallucinations" that happens from time to time but I'm betting its a calm before an enormous protectonistic storm due to the fact that a lot of the folks in Congress like Duncan Hunter and Chuck Schumer keep on yammering about keeping things "American" or preventing foreign entities from owning US entities. Even worse I think that such protectionistic rhetoric and actual legislation could launch the American economy into a tailspin because putting barriers up against foreign ownership/investment/participation within the US economy might convince these countries/businesses to take their massive sums of money out of our economy and put it elsewhere like China(They might be Red but the Chinese welcome venture capitalists from all over the place). Like I said before, it's alright to want nationally based companies to prosper and remain "King of the Hill" but when folks start suggesting legislation that would harm the dynamism of the US economy(protectionism eventually makes you soft by eliminating competition from other players, just look at has occurred France and Spain of late)and stray away from your core principles of free market capitalism and limited government just to assuage the "Jacksonian" impulses of America and ensure their political future they've gone too far. Thankfully folks like John McCain and President Bush seem to have still retained some of the same principles and core beliefs(McCain seems to be regaining his limited government/free market legs after his campaign finance reform days- He needs the GOP faithful for his 2008 run.) that they came to D.C. with many years ago, lets hope others in the nation's capital return to this view pretty soon. No matter what, a strong and dynamic economy is probably the greatest form of security that we can have (More money to spend on National Defense and Homeland Security).