Democrats and Republicans alike are assailing Nippon Steel’s prospective purchase of U.S. Steel as a threat to national security. The complaints are misplaced. Essential to national security is economic competitiveness, which is strengthened by global connections such as inward foreign direct investment.
A more competitive economy is better able to fund the military and ameliorate the inevitable guns-for-butter trade-offs. Consider the Cold War. Fast labor-productivity growth after World War II expanded America’s tax base to fund investments in defense, science and space exploration. America eventually won the Cold War largely because the Soviet empire couldn’t deliver the goods. The Berlin Wall fell in part because people behind the Iron Curtain yearned for Mercedes sedans rather than Trabant beaters.
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