21 Comments

"Stupidity" is a foolish word choice by Robin, based on the examples in the article he cites. Robin says he's talking about trade, but he's really just talking about the special situation of trade with a would-be hegemon.

Even if we accept the idea that trading with a country means not just selling and buying goods but also companies, the CNOOC and Huawei deals are categorically different from most international trade deals. Give us examples about US refusals to sell companies to Mexicans or Germans or Canadians. And give us examples of China selling important Chinese companies to non-Chinese owners.

CNOOC is a branch of the Chinese government that wants to accomplish the Chinese government's goal of controlling more sources of energy for China. Huawei is an enormous telecom company that cannot operate and succeed without the continuing favor of the Chinese government. These have very little to do with Apple using Foxconn to build hundreds of millions of ipads, or Chinese parts suppliers making parts for Korean cars sold in the US.

CFIUS may or may not be the best thing for US citizens, but you need to address CFIUS and concerns that are specific to China. You've spoken before about how China is different and may very well come to dominate the world as the US did before. If the US thinks that CNOOC and Huawei's bids were a part of that effort, can you tell me why we're better off just going along with it? Can/should we require that China be willing to sell Chinese companies to non-US companies?

Robin, you need to explain why the best US strategy with China is to have no limits at all on China's purchase of any goods or companies anywhere.

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I think you are correct. The opposition against the buying and the opposition against the selling need not be the same groups.

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Britain & Germany traded during WW1:http://marginalrevolution.c...Specifically, they traded war materials, which seems rather strange.

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Alaric and Jonathan, neither buying goods nor selling firms directly increases debt. It all depends of course on what you were going to do instead.

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Robin's argument resonates with how I remember feeling in reading such stories. We understand that consumers are marks and producers their masters.

The world's love of U.S. music, film, and fashion (gradually eroded by recognition of actual cool stuff produced elsewhere, and alternative old-world cool-brokers like France) was quite a salve for U.S. citizens' egos.

Others are right about debtor=low status. Selling the seed corn, Esau selling his birthright to Jacob for some stew, etc.

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How about firms? Would there be American opposition to Americans buying CNOOC, for example?

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It's often illegal in wartime to trade with the enemy.

http://en.wikipedia.org/wik...

Do you think such laws are foolish, too?

Perhaps people reason by analogy to such cases, and perceive a taboo or faux pas in large deals with parties from countries that frighten them.

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At CafeHayek the often say that a trade deficit is the same thing as a capital account surplus. Back int he 80s people worried about the Japanese "buying up America". The question is whether people object to their countrymen buying up/investing in foreign companies or selling them regular tradeable goods. It could be that we think being in debt is very bad. At least, those of us who are not investment bankers.

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Another way of looking at this.

Being against a trade deficit is not being against buying things from China. Its against trading bond like assets for non-debt like goods.

How different is this from not wanting to trade assets such as firms for cash (reducing debt)?

Lets imagine that the bulk of the trade deficit is due to the purchase of consumption goods as opposed to capital goods used in production. Under these circumstances the first case is the sacrifice of future income flows for present consumption. The second case is the sacrifice of one kind of future income flow (firms) for another kind of future income flow (debt).

In this case it is not obvious that being against the first kind of trade necessitates being either in favour of or against the second kind of trade.

That they are not logically inconsistent policies does not of course imply that they are good policies. Government intervention in trade, particularly the American governments, tends to be driven by cronyism and lobbyists as opposed to concern for the well-being of the American public.

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I don't think this is particularly puzzling.

If there is concern over the relative power of other nations then not wanting to increase their power by running a trade deficit with them is not crazy (it might be wrong but its not obviously wrong). Not wanting to increase the other countries power by allowing them to control firms that are important to national economic or military security is also not crazy (I don't see that 3Leaf comes into that category.).

In the light of "real politik" concerns such as this it seems reasonable. However, the real politik concerns may or may not be reasonable; it is not obvious to me either way.

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You never do any kind of deal with the Devil. Whether he's buying or selling, his wiliness most likely means you are getting the crap end of the deal.

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If two people trade who are both Americans then the gains from trade go only to Americans. If an American and a Chinese person trade then not all of the gains go to Americans, regardless of who is buying or selling.

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Your argument is sophistical. You show that opposition sometimes takes the form of opposing specific instances of buying, sometimes of opposing instances of selling. Then you complain that they can't coherently oppose both buying and selling, but whether the transactions are cases of buying or selling is incidental to the motivation in the instances. .

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I think it may be the tendency to view physical goods and firms involved with the production of those physical goods as intrinsically more valuable than service or other intangible oriented firms.

We don't mind so much when foreigners invest with finance firms or when we're buying information, or outsourcing jobs like programming to foreign firms, but when a manufacturing company moves a factory offshores, we're up in arms.

We don't even mind so much, for instance, that Fiat bought out Chrysler because we're used to ownership shifting around in the auto industry without much change in where the manufacturing happens.

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Yes, those items are framed as causing the holder to have dominance.

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My guess: ideological differences and the "fact" that the one with the gold makes the rules.

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