April 10, 2006
Pendulums and Protectionism
Slate has a piece about the link between the Bush Administration's failure in Iraq and a Congressional rush to protectionism by Ian Bremmer, President of the Eurasia Group (a firm that advises about political risk in a globalizing world). Bremer suggests that as the presidency weakens under dialy reminders of it's mendacity and incompetence, politicians in both parties race to top one another in assuring potential 2006 voters of the politicians' bona fides in protecting the United States. National security widens from narrow questions of physical and human security to include economic security. Bremmer objects to this, suggesting that somehow the economy is off limits to questions of real security.
He overstates his case. Not about the theater that has become our national politics. Senators and Congressman (and their challengers) are being themselves -- their overheated, irrational, all-advertising-all-the-time selves as they take full advantage of events such as the Dubai Ports acquisition, the attempted purchase of Unocal by a Chinese oil company, and other cross-border transactions to proclaim "U.S. First" to voters.
Bremmer, however, too easily dismisses the economic aspects of national security as well as the paltry safegaurds of an incompetent administration -- perhaps because he makes a living as a political risk consultant and writes in Slate to establish his firm's own bona fides to attract as clients companies seeking cross-border transactions. He's too intelligent a person not to see that economic security is every bit as vital as physical security in our new world of markets, networks, organizations, friends and families. It's surely fair for him to advocate a globalizing economy. But he moves too fast in his Slate piece in making a mere assumption that every reader will easily and instantly agree with him, even in the absence of any explanation for his position. There are severe dislocations, for example, in the policy he claims is best -- dislocations that matter to a sense of security. Indeed, such dislocations are themselves sources of the 'political risk' about which Mr. Bremmer advises his clients.
Moreover, he merely assumes that processes and procedures currently at work sufficiently safeguard our national and economic security -- a laughable claim in light of the routine incompetence and ideological fervor of the Bush Administration. Mr. Bremmer might argue that the design of current approaches and reviews of cross-border transactions are sufficient. But he cannot accurately claim that the implementation of those designs are sufficient. They are not.
Look only to one fact in his piece. Many of the chest-beating congressional figures are taking aim at the approval process within the Committee on Foreign Investments in The United States -- Exhibit A for what Mr. Bremmer calls the 'greatest protectionist threat' currently in play. He then goes on to cite statistical evidence for the effectiveness of the CFIUS process: Only 1 time in 1600 has the Committee rejected a proposed cross-border transaction.
This is exactly the upside-down thinking Mr. Bremmer warns can happen when elected officials play politics with national and economic security. 1 in 1600 is Exhibit A for why the process OUGHT to be reviewed -- not the reverse. It is remarkable testimony to a process that has become routine and automatic instead of thoughtful. Indeed, the ridiculous lack of attention by this Committee and it members to the Dubai Ports deal signifies the flaccidity of automatic -- and thoughtless -- approval.
Is heavy Congressional involvement the best reform of this process? Perhaps not. But, Mr. Bremmer beats his own chest instead of posing a more reflective stance on how best to judge and review cross-border transactions in a globalizing world economy when he applauds instead of questions a process that has become all hat, no cattle.