“Where there is unanimity there is error or idiocy”
–an unknown early sage
From the Hollywood left to the neanderthal right, the news that Dubai Ports World had bought Peninsular and Oriental Steam Navigation Company of Great Britain was greeted as an Arabian nightmare. Goopy-dupes of every political persuasion joined in a unified condemnation of the $6.8 billion sale, which transferred the management of freight facilities in six major American ports to a company owned by United Arab Emirates. The emphasis goes on the middle word of the nation’s name.
After years of getting the stuffing beaten out of them for being namby-pambies on national security, Democratic politicians and their apologists could not forego the chance to give George W. Bush a dose of what he had been giving them for years. Bush or no Bush, bull-roaring Republican politicians were not going to let the Democrats turn their left flank and grab national defense away from them. The Republicans know that, regardless of how badly they cock-up everything else, as long as they are the anti-terrorist party, they win elections. Force-feed enough Arabs in Guantánamo and maybe you can carry Ohio.
There are only so many times the United States can cancel ordinary business transactions such as the Dubai deal and not pay for it. These self-indulgent jingoistic eruptions do come with consequences if done too often. Last year an uproar similar to the one going on now wrecked an attempt by the China National Offshore Oil Corporation (CNOOC), one of those state-owned half-commie/half-capitalist companies, to buy Unocal, a large American oil company. The commies, with their $18.5 billion offer, outbid ChevronTexaco, but the howls and yowls coming from the national security freaks killed the deal.
From a business point of view, the hollering and carrying on boils down to one kind of question: Are the dollars we pay foreigners for our imports spendable or not? Or, how free is the free market? When we buy and import the hundreds of thousands of items we are dependent on others to make for us, do we pay for them with dollars that say “only for use as specified by American politicians”?
The United States is in too precarious a condition to place such qualifications on the use of its money. We owe foreigners more than $7 trillion. That is a powerful lot of moola. We owe this titanic sum in the form of US government bonds, private bonds and bank loans and such. Foreigners lend back to us the money we pay them for what we buy. If they were to stop their lending because of restrictions we have put on those dollars, we would not be able to pay for the shirts on our backs or the shoes on our feet.
Thirty years ago, when oil prices had gone through the roof and the decline of America as a manufacturing nation first began to hit home, a wave of resentment against Arab oil money and Japanese manufacturing money washed across the country. The Japanese and the Arabs seemed to be using our money to buy up everything in sight. Their purchases ranged from golf courses to Rockefeller Center.
When times turned bad for the Japanese and the Arab “oil sheiks,” Americans bought back the same properties at fire-sale prices. The lesson to be learned from that experience is that it is better to get foreigners to buy our stuff than it is to be forced to borrow money from them. There is always a chance you can buy the stuff back, but the loans pose a serious problem.
If foreigners stop lending us money or insist on lending it to us at higher-than-current interest rates, we are going to be in a fix. The price of everything we buy is going to go up as our standard of living goes down. If we shake our lenders’ confidence to the point that they begin pulling their loans, we are looking at something close to disaster.
Fortunately, the odds are against their doing that, since they would injure themselves as well as us. But as China becomes rich enough to be a market for its own goods, and as other Asian countries, notably India, get rich enough to become major markets themselves, foreigners will have less need of us and less tolerance for our arrogant ways.
It is galling to think that we may have to accept the security risks–if they indeed exist–of having management of our ports in Arab hands because we cannot afford to say no. But we can’t.
We are not only foreign-oil dependent. We are foreign-underwear dependent, foreign-car dependent, foreign-machine-tool dependent. We would be a lot stronger if we were not, but we are–thanks to decades of pushing for low tariffs and no tariffs, of using all our power and influence to create a free-trade planet, a policy backed by the Democrats as well as the GOP.
Free trade is based on the free use of money, and that means people we may not like or trust buy things dear to us that we would rather they did not have. If we want to change the world order we ourselves created, it will take no little grit and hard work for about the next fifty years. In the meantime, as the young’uns say, deal with it.