Today, I read a column by Pat Buchanan entitled The SWFs are Coming. These are are investment funds controlled by foreign governments desiring to invest money in the US and elsewhere. Pat is worried about these sometimes hostile foreign governments getting control over strategic assets- defense industries, banks and the like. Is this more chicken little stuff, or is this something of potential concern? Cordially, Larry

The answer is yes and yes. Buchanan oversells the danger but there clearly is risk. This is new territory: unprecedence piled on unprecedence (SWFs based on reserves stockpiled in response to the 1990s currency crises: what was a solution to a problem we feared was out of control--but obviously now isn't--created a new positive possibility for higher returns and more FDI in the system but likewise raises new concerns and the need for new rules). Buchanan puts it all too simplistically in mercantilist terms, which some states will definitely display at first in their immaturity but eventually will move beyond in a maturation process we need to encourage. So upshot is: sure it's a new danger, but every fix of an old problem will generate both a new danger and a new opportunity. The mutually-assured destruction dynamic of today--as Summers constantly notes--is financial, not nuclear (yet another reason why our fixation on global gun control is quaintly anachronistic), so we must tread carefully, but not out of fear so much as hopeful opportunism: What influence is to be wielded through this new interdependency? That's what Buchanan, in his zero-sum mindset never appreciates. He sees only vulnerability in connectivity, never opportunity much less power. He has lived beyond any critical utility, so he masks his analytical impotence with sheer fear-mongering. Sad, but effective with many who crave such fear in their lives (How else to confront this complexity!).