A DISTURBING TREND: A WARNING TO OUR LEGISLATORS AND LEADERSHIP.

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Dear Friends:

I have always viewed net inward FDI (foreign direct investment into the United States, reduced by the amount of any U.S. outward investment into other countries), and the trend of net inward FDI over time (e.g., its growth or decline) as a reliable long-term leading indicator of several important areas of the United States' international standing and domestic economic tendencies:

1. If net inward FDI is rising, it is evidence of the perceived power, by other nations, of the United States' economic and political stability, and of their continued need for U.S. products, technology, and economic output in general.




2. If net inward FDI is rising, it foreshadows increased employment opportunities for the domestic labor market, as well as increased capital availability (both equity and debt) and liquidity for entrepreneurship and growth in business capacity.




3. If net inward FDI is rising, it creates an interest, on the part of the investing nations, in working peaceably with the United States, if only for the purpose of protecting their own investment in the fiscal and political well-being of this country.




4. If net inward FDI is rising, it stimulates and supports the market for U.S. exports.




5. If net inward FDI is rising, it represents that U.S. businesses are being supported and endorsed by the domestic economy, and that U.S. businesses have faith in the strength and resiliency of the U.S. consumer market as well as the U.S. economy, taken as a whole.

Thomas Palley, in his article titled ABANDONING AMERICA: CORPORATE FOREIGN DIRECT INVESTMENT (visit www.thomaspalley.com) informs us that inward FDI is declining, as outward FDI is increasing. His article is very well-written, and his points well-made. The sobering fact of the matter is that net inward FDI is decreasing. And with its decrease, all of the indications for the future fiscal well-being of the United States (at least the ones which I have cited above) are decreasing as well. This bodes very ominously for the future of The United States' domestic economy, as we import more and export less; as we outsource more work and eliminate domestic jobs; as we essentially ship America's wealth, and possibly its future, to a variety of overseas countries which are able to provide either capital, labor or goods at costs that are significantly either cheaper or of better quality than those from domestic sources. This is almost palpable when one views the dramatic increase in the number and promotion of various financial investments (particularly publicly-traded shares or units in international investments) which select adversely against domestically available investments, and the domestic capital markets.

If I were in a position to make economic policy at this moment (thankfully, I'm not, as you can still feel your wallet in your back pocket as you are reading this), I would endorse vigorous, aggressive incentives to U.S. companies that export to other countries. Some of these incentives, which would have to be substantial, might include tax credits, greater availability of government loan guarantees and government-supported trade financing to businesses, and perhaps domestic job creation credits or tax reductions. To secure its position in the global marketplace, the U.S. must support incentives for exporters and employers. While many perceive the United States as the strongest and richest country on the planet, that perception, unless supported by fundamental, measurable economic reality, will soon change. Global markets are highly competitive, and easily accessible to domestic businesses through internet technology. Barriers to Internationalism are fast crumbling, and the U.S. legislators and leadership are morally obligated in the interests of their constituents to support export and support domestic employment; further, I do not think I would be going too far by saying that we should consider converting our role as the world's biggest talker to the world's most aggressive promoter. And this does not happen through a military operation, or an embargo -- it can only brought about by aggressive promotion of the U.S. as a good, long-term investment to the global investment community. Our international Public Relations machinery needs some significant re-tooling if the United States is to remain a great nation.

You can be a patriot and an Internationalist at the same time and without conflict. In dealing with the current status of FDI, the U.S. legislators and leadership should brush the pride aside, stop consuming their own bombastic and xenophobic rhetoric, and start promoting domestic employment and export. Can you hear me now? Is anybody out there?

Faithfully,

Douglas Castle, Internationalist