CIAO DATE: 09/07
The National Interest
Escape From New York
Maurice R. Greenberg
Abstract
Politicians in Washington have a tendency to define “national security” in terms of external threats to the country, such as terrorism, and to think of U.S. power as primarily defined by military force. In so doing, they often neglect the economic component of national security. Moreover, they can be oblivious to their own complicity in passing legislation that ends up having a negative impact on the vitality and health of the U.S. economy.
Without a dynamic economy that creates jobs, generates tax revenues, fosters technological innovation and—very importantly—attracts both domestic and foreign investment, America’s ability to sustain its global position and competitiveness, including but not limited to its military superiority, is jeopardized. One cannot—and should not—divorce the health of the country’s economy from its national security.
However, a trend that seems to have gone largely unnoticed in Washington—although it is of great concern here in New York—is the increasing preference of companies to move out of U.S. financial markets for more attractive locations overseas in order to raise capital. In 2001, 36 percent of the world’s initial public offerings (ipos) were undertaken in American capital markets. Four years later, we had lost one-third of our share of the ipo market—the U.S. share in 2005 had fallen to 24 percent. More significantly, it is no longer automatic that the world’s largest ipos (in dollar amounts) occur within the boundaries of the United States. Increasingly, London and Hong Kong are seen as the premiere locations to do business. In 2005, of the 25 largest ipos worldwide, only one took place in America. Nine were listed on European exchanges; five others were in London; even Australia, a country we usually do not consider a center of global finance, had three.