The Columbia Critic

A place to debate anything we want to. We'll talk Columbia campus issues. We'll talk up the homosexual problem. We'll talk China. And we'll talk without resorting to partisan rhetoric. We may be left. We may be right. But we aren't going to be quoting any party line. We're leading the discussion. But feel free to chime in. Hannity and Colmes this is not.

Sunday, February 26, 2006

Port deals and the global economy

Since the the beginning of the post-war era, the United States has been the premier example in setting foreign investment precedence and projecting outward into the global marketplace. Granted we have had our protectionist policies when it comes to agriculture and steel and cars, and even rising tech. But more often than not America has been willing to forego protecting much of its labor pool in order to promote policies of free trade and push our own production value upwards. In finding cheaper labor and resources, U.S. based companies have been able to produce better products for cheaper all the while allowing other nations to take part in the spoils (albeit meekly, one precious penny at a time). True this has resulted in the US abandoning many of the industries that long defined our labor pool, and the turnover rate has been enormous in the move from a hard industrial to a service-based economy. But it is a sign of our progress. So we have benefitted tremendously from overseas investing. And many other nations have benefitted as well. Indeed the world has benefitted. Not only through increased productivity but through decrease in violence. Thats right - worldwide conflict is at an all time low. You may not think it from watching CNN. But its true.
So the global economy has been a boone to productivity and to national security. Global exports then should play a key role in our national security strategy. And we should strive towards efficiency and towards stabilizing our continually developing interdependencies.
We want our trade partners to be successful. Why? Because this will enhance their productivity, thus granting us, the consumers, greater surplus. Ricardian economics states that nations should specialize in those areas in which they have a comparative advantage. So who has the comparative advantage in the specialized service of port administration? Those nations that most heavily depend on trade! Think HONG KONG, DUBAI, DENMARK, SINGAPORE, TAIWAN, CHINA, GERMANY. So when one of these nations offer a deal that will further their specialization, and increase their interdependency with us, it does two things. First it brings them more money, which in turn increases their productivity, which eventually returns to us in the form of savings and consumer surplus. Second, it requires them to beome increasingly dependent on the United States. The U.S. becomes a foreign interest of, as an example, the UAE. The closer trade partners are, the less likely they are to become belligerent towards one another. So one can see why the demands to renig against our port deals with the UAE are easily derided as hypocritical, when we spend so much of our time professing the need for free trade and the importance of globalization.
On the converse argument, it is easy to argue that the UAE poses a security threat. And I do think the deal will fail utterly. The lack of transparency on the issue doomed it from the beginning, and I think rightfully so. I certainly would want some very public and very clear assurances before handing over the control of 21 (!!) of our ports to a country like the UAE. Furthermore, 21 ports is a bit much, and screams of preferential treatment when we could easily generate deals with any number of other major port companies around the world with a slice of that number. Mistakes were made, and I am very critical of what has occured thusfar. But remember this: Al Qaida and the Islamists know well what they are doing when they target economic centers of trade. They fear and loathe the "connectivity" inherent in globalization, and it is their ultimate goal to disconnect Islamic society from the rest of the world. And whether the UAE is in charge or not we should expect more attacks on ports worldwide. Even so, the fact that we are willing to curtail connectivity and increased foreign investments out of simple fear proves that they have already had a marked effect. They've been able to further retard the integration of Arab economies into the global marketplace without even pulling a trigger. With nothing but simple fear and mistrust.
We must find a way to ensure our security without breaking our economic ties with the middle east, particularly the hopefuls, the non oil-dependent service industries. This is where the real battle against Al Qaida lies. The hearts and minds begin and end in the wallet.


  • At 2:35 AM, Blogger Wang said…

    I completely agree with you. I think the best idea in the journal is that increased economic ties is very closely related to less incentive for belligerance between nations.

    One thing though, I think you're thinking the same thing but you didn't explicitly say it is that regardless of our relationship with UAE, it is a security risk, especially given that we are talking about 21 ports.

    It wasn't hard for a few Saudi (right?) men to enroll in US universities and create the terrorism that really took this century off. They can have no criminal record and are influenced on the outside.

    How hard would it be for a middle eastern terrorist to infiltrate some level of Dubai ports? I think it wouldn't be that hard.

    It's not what UAE or Dubai Ports intentions are, it's just the sad situation of who they are the exposure that comes with it.


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