June 28, 2005
First Unocal, then the world!
When I was a teenager I got into a little anonymous war with one of my neighbors over the pros and cons of Japanese investment in America. This was at a time when tension with Japan was pretty high -- people were literally burning Japanese cars in the street -- and while my part in the the global economic debate wasn't anything spectacular, it was probably the first instance of my taking a political stance somewhere away from our kitchen table. It came down to this: he kept putting signs on his garage that said "Park your Toyota in Tokyo bay" and I kept tearing them down. Eventually the signs vanished, so I either convinced him that he was in the wrong or he ran out of paper.
I was reminded of this after reading Paul Krugman's column on the Chinese bid for Unocal, a column which has set off a little firestorm in the world of economic blogs. Count me among the anti-Krugman camp, I suppose -- I see no particularly strong reason to block the bid. Sebastian Mallaby makes a fine economic argument for why the noise about the takeover is just a lot of hot air, but my reason has little to do with the economics of it. That the takeover most likely won't harm us does little to fend off, after all, the criticism that it won't help us either, and there simply isn't enough good will towards China these days for people to be making rational decisions based on sound economic principles.
The fact is our reluctance to allow an up and coming global competitor to play the same game we've been playing for decades comes less from some deep-seated xenophobia on our part than it does our inability to see past an oil based economy. Think about it this way: suppose at the very beginning of the industrial revolution, just as coal as an alternative to wood was making its way on to the horizon, France had started buying up forests left and right. How different would the world be if England, instead of making the switch from a wood based to a coal based economy, had devoted all of its resources to preventing France from cornering the virgin forest market? Would we have had the industrial revolution? Would England have remained a world power?
China's attempt to purchase Unocal is a wake up call, sure, but not to the emergence of another global competitor. It's a wake up call to the fact that we have got to move past an oil based economy. Let China have Unocal. While they're pumping oil, I say we buy Iceland
Posted by matt at June 28, 2005 05:19 PM
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