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… is from page 316 of UCLA economist William R. Allen’s 1989 collection of the transcripts of his marvelous radio addresses, The Midnight Economist [2]; Allen often couched his addresses as a conversation between two mice, Adam and Karl – and the source of today’s quotation is one such conversation; specifically, it’s Allen’s October 1988 address “Mouse Wisdom: Foreign Investment in America”:
“We are losing control of our economic destiny,” growled Karl. “Americans are becoming dependent on foreign landlords and foreign employers – and vulnerable to their diabolical whims.”
“Foreign investors have little of either power or incentive to harm us,” corrected Adam. “Indeed, foreigners are staking their wealth on American workers and customers and their productivity and prosperity. If foreign-owned buildings are not to lose money, they must be rented to American tenants. If foreign-owned firms are to flourish, they must hire American workers and sell to American consumers. This is mutual dependence for mutual benefit.”
“I understand the interdependence,” said Karl thoughtfully, “but I don’t see the mutual benefit.”
“Foreign direct investment invigorates our economy with new investment, technology, and management. We obtain more goods and services, more jobs, and more income. And foreign investors obtain a higher return on their investments.”
DBx: I offer, for clarification, one small correction (that I’m certain Bill Allen will agree with): foreign direct investment in the U.S. enables Americans to obtain better, rather than more, jobs. Or, alternatively, foreign direct investment in America offers Americans more job options. Foreign investment – as with market-driven competition in general and with imports in particular – does not change the number of overall jobs in the economy; it simply improves these jobs over time.