Harold Meyerson on an increasingly important puzzle – international capital flows controlled by governments:
China just bought itself a $3 billion share in Blackstone, the U.S. private equity firm.
To be sure, the Committee on Foreign Investment in the United States has the power to nix such purchases if they compromise national security. But what is the proper response of laissez-faire advocates to this sudden wave of foreign government investment in non-security-related companies? It’s okay if the Chinese government owns a slice of our economy but not okay if our own government does? We trust every other government more than we trust our own?
I posed this question to William Niskanen, chairman of the libertarian Cato Institute and among the most principled ideologues on our political landscape. Foreign government ownership, he argued, shouldn’t pose a problem unless that government obtains a controlling interest. When I then asked whether it would be a problem for the U.S. government to buy into such a company, he answered immediately, “I don’t think I would want to be a shareholder in a company in which the U.S. government owned a good bit of the shares,” and then, pausing, continued, “I haven’t thought about this” — “this” being the distinction between U.S. ownership and, say, Chinese.
Niskanen is hardly alone. None of us have thought sufficiently about how the belief in untrammeled capitalism could lead to foreign governments, whatever their agendas, controlling more and more of the American economy.