Open Markets and Eric Cartman
I appeared on CNBC earlier today arguing in favor of sovereign wealth funds. (Which are foreign government-owned investment companies.) For whatever it’s worth, you can watch the clip below. Anyway, the political issue being made about foreign investment seems a bit odd to me.
Given that the United States comprises a bit more than 20 percent of world GDP, has the world’s largest domestic market, the best high-end labor force, and a bevy of other competitive advantages, it’s obvious that countries silly enough to think that their governments can invest citizens’ money better than the private sector will almost almost always invest in the United States. Private firms, of course, will do the same.
Unless we explicitly forbid such investment, it will happen.
Those who oppose foreign investment claim that foreign governments seek to invest in the United States for various sinister reasons. Personally, I’m not quite clear why nations bent on our destruction would place assets in a place where we can easily seize them if they do anything hostile. It would actually be a lot easier to tame countries like North Korea if they invested in the United States.
But even if they do have nefarious ends I don’t think it matters, in fact, because even jerks who act like jerks tend to have themselves done in by the free market. The best case I’ve ever seen for this proposition was made by the television show South Park.
In the episode Cartmanland, Eric Cartman (the evil, fat kid) gets $1 million and uses it to buy an amusement park. He decides that he will not allow anybody else in because he hates lines. Although many warn him that he’ll hate it, he actually loves having the park all to himself.
The logic of the market, however, makes the park a success (Cartman needs to hire security people and must let in visitors to pay them), turns Cartman into a miserable wreck, and eventually costs him his beloved Cartmanland. The message is pretty clear: Jerks who continue to act like jerks will almost always lose in the free market.