Protectionist measure hinders investment

Whenever Congress passes something unanimously you can be sure it is either entirely innocuous or utterly stupid and harmful. In the case of a bill the House passed 423-0, to give the government broader powers to review foreign investments in certain kinds of U.S. industries and facilities, it is the latter.

The bill is a reaction to the six-week-wonder issue that emerged last year when a company based in Dubai sought to buy the right to manage certain operations at some U.S. ports. As it turned out, the buyout would have posed no particular security threat. The operations Dubai Ports World was proposing to handle had little to do with security and the company has a good track record.

But the emotional cry of “How can we turn our ports over to Arabs in this day and age?” trumped common sense, and the proposal was squelched rather quickly.

Unfortunately, the issue didn’t die there. The brouhaha put an obscure federal office, the Committee on Foreign Investment in the United States, or CFIUS, into the spotlight. The committee, which screens certain proposals from foreign companies seeking to invest in or purchase U.S. firms, had OK’d the Dubai Ports World proposal, showing economic common sense but a political tin ear.

In government, when an agency makes a mistake (arguable in this case) officials don’t take corrective action such as reducing its influence, as would seem sensible in real life. They give it more power. And that’s what this new bill would do. It would broaden the range of investment proposals the Committee on Foreign Investment in the United States is required to scrutinize, require it to notify Congress when it completes an investigation, and get more high-level officials and agencies involved in the process.

The result would be to make it more time-consuming and expensive for a foreign company to invest in the U.S. economy. It is a thinly veiled form of protectionism, making it more difficult for foreign companies who might be more efficient than existing U.S. companies to operate in the United States.

A more active role for Congress would open the way for decisions based more on political considerations than economic or security issues. Taxpayers and consumers would pay, in taxpayer money wasted and higher prices.

But Congress can crow that it has “done something” about a problem that didn’t exist, and economic freedom shrinks a little more.