The Freeman 1989 - The Ludwig von Mises Institute

12 THE FREEMAN. JANUARY 1989What of the fourth argument of the Tolchinsas seen in their plaintive if not disingenuousquery: Are we becoming a nation of tenants?The query seems odd in light of the fact thatmost Americans-practically two out of every"When goods-andcapital~an'tcrossfrontiers, armies will."three-own their homes. Yet practically everyfirm in the Fortune 1,000 is a commercial tenantin one degree or another.So I ask: Landlord or tenant, to own or torent, what's the better option? It all depends, letme respond, on the firm or the individual-hisage, income, credit rating, etc.-and on thegeneral situation, including location availability,the height of mortgage interest rates, andso on.In any event, landlords, foreign or domestic,are hardly privileged. They must compete.They can face onerous property taxes, bewilderingzoning restrictions, confiscatory laws.Some landlords, for example, face local rentcontrol laws stretching from New York City toLos Angeles, although I concede the foreignrealty investor usually, and most understandably,avoids rent-controlled properties.And from the viewpoint of the American tenant,commercial or residential, does it followthat his foreign landlord is any less competitiveor any less concerned for tenant welfare than hisdomestic counterpart? The Tolchin query, inshort, does not appear germane. Again, it reflectsxenophobia.The fifth Tolchin argument on reciprocityalso does not seem overly germane. For all toooften such reciprocity becomes a cloak for continuinga policy of protectionism. To reiterate:Says Congress, bolstered by a host of protection-mindedindustries, unions, and other lobbyists,to foreign investors, "If you don't openyour market for our wares and investments,we'll not open ours. ' ,But who's hurting whom? On whose side isCongress? What of those Americans who wishto sell-and of their constitutional right tosell-their property, shares, firm, patent, invention,and so forth to foreign investors? Whatof American consumers who benefit, inexorably,from such general optimization of capitalinvestment?I contend that protectionism betrays morethan xenophobia, that, whatever its formtariffs,quotas, licenses, embargoes, exchangecontrols-it reflects a hidden agenda of:• constricting consumer choice,• infringing on constitutional rights oflife, liberty, and property,• jacking up domestic prices,• suppressing competition,• rejecting foreign technology,• excluding foreign management skills,• setting back job creation,• restraining economic growth,• impeding peaceful international cooperation,and• rebuffing constructive people-to-peopledivision of labor.All ofwhich would otherwise flow from freedomof trade and investment.True, ideally, free trade and investmentought to be worldwide. But we don't live in anideal world. We, critics included, should faceup to the fact that imports finance exports, thatprotectionism breeds protectionism, that economicretaliation can even breed military reaction.In this light, the massive Smoot-Hawley Tariffof 1930 went beyond, quite conceivably,triggering and exacerbating the Great Depression;it contributed to the frictions ultimatelyhelping to ignite World War II.To paraphrase nineteenth-century Frencheconomist Frederic Bastiat: When goods-andcapital---can't cross frontiers, armies will. Unilateralfree trade and investment are still betterthan no free trade and investment.Besides, the Tolchins and other critics of foreigninvestment in America are late in thegame. For, not so long ago Americans werebeing warned that our uncaring multinationalcompanies were heartlessly shifting, productionand jobs to foreign low-wage lands.Indeed, in 1964 French journalist Jean­Jacques Servan-Schreiber made an internationalsplash with his own xenophobic book, TheAmerican Challenge, describing in dire terms