Put Money in Thy PursenIn 1967, The American Challenge by Jean-JacquesnServan-Schreiber predicted that by the 1980’s Americannmultinationals would have virtually bought up Europeannindustry. A decade later, there was another big scare — thenArabs were going to buy up all the US farmland (somenfarmers now wish this had been true, since the price ofnfarmland subsequently collapsed). A bit later, the big worrynwas that American companies were building too manynfactories in Asia, supposedly “exporting jobs” to tax havens,nor to places with “cheap labor.” Today, the latest anxiety isnnot that we are exporting factories, but that we are importingnthem!nAfter what may soon be the longest and strongestneconomic expansion in US history, it takes some ingenuitynto find something to complain about. The most frivolousncomplaint, surely, is that the US is “the world’s biggestndebtor.” After all, we used to be the world’s biggestnlender—to Argentina, Peru, and Poland — and look wherenthat got us. The difference between the value of foreigners’nsmart investments in the US stock and bond markets andnour own foolish loans abroad is the so-called “net debt”!nThe zero-sum notion that the stock of US capital is fixed,nso that if foreigners have more we must have less, is equallynabsurd. Those who sell shares in a US company tonforeigners don’t just burn the money they receive. Instead,nthey use the proceeds to provide equity or loans for anothernAlan Reynolds is chief economist for Polyconomics, Inc.nin Morristown, New Jersey.n22/CHRONICLESnThe Case For Foreign Investmentnby Alan Reynoldsn/^c^–nnnbusiness. The total of funds available to expand US businessesnor to build new homes thus expands by roughly thenamount of the foreign investment.nLand might seem to be a special case, because it is limitednin quantity. But the value of land is not limited, and it will benmost efiBciently used if sold to the highest bidders. Thenamount of real estate offered for sale at any one time is quitensmall relative to the total available. To arbitrarily restrict thennumber and class of people who would be allowed to bid fornthe tiny amount of land, homes, and buildings offered fornsale would reduce the market value of a vastly larger stock ofnUS land. The effect of keeping foreigners out of the biddingnprocess would thus end up making all US landowners andnhomeowners poorer. If someone wants to offer $500,000nfor my house, I won’t check his citizenship very carefully,nnor will I worry about ending up homeless. In any case, Inhave a right to sell my property to the highest bidder, and it’snnone of the government’s business.nTo place arbitrary limits on the uses to which foreignownedndollars could be put (such as restricting the foreignnuse of dollars for investment) would likewise diminish thenutility of dollars. Dollars simply become less valuable whennthey can only be used in certain limited ways. It is noncoincidence that the announcement on October 14, 1987,nthat Congress was merely considering restrictions on foreignninvestment was quickly followed by a crash in both the dollarnand the stock market.nIt is a myth, though, that the weak dollar made US assetsna bargain for foreigners. If foreigners thought the dollarn