Doomed-to-repeat-it Watch 2008

These two posts presented themselves one after the other in my Google Reader stream this afternoon.

In the first link, Prof. Rodrik notes French President Sarkozy’s new plan to buy shares in French companies to protect them from “foreign predators”. On Prof. Rodrik’s planet this is a good idea because “the acquisition of controlling stakes in domestic companies by foreigners at fire-sale prices is an unnecessary transfer of wealth outwards”.

That Rodrik, so insightful. Such a maverick! Except what if all countries followed this policy? Given the earth’s economy is a closed system, there’s no transfer of wealth outwards off the planet. The only effect would be to have more of the economy concentrated in the hands of people that care next to nothing about efficiency (government), i.e. lower economic growth.

To coin a phrase, I’d call such policy “beggar thy neighbor”. But my concern is purely speculative and theoretical, right? Surely, there’s no cases in history where such policies were implemented before.