I came across this phrase in Steven Pearlstein's latest column, Getting Away From the Dollar. Pearlstein talks about how and why we need to shift away from the dollar as the world reserve currency. Then he says:
It would require the United States to take decisive and politically unpopular steps to bring down its trade and budget deficits, and to be willing to allow foreigners to continue buying companies, real estate, patents and other productive assets. (emphasis added).
The fact that a Pulitzer prize winning commentator would casually refer to an intangible assets in the same breath as traditional assets says a lot about how far we have come.
One other point - on the substance of Pearlstein's comment. If he is correct (and I believe he is), it means that the continued trade deficits will mean that we will have to sell off our assets--including intangible assets--to pay for our debt. Selling off our intangibles means that we get less royalty revenue, which means a higher trade deficit. It becomes a vicious circle. It also undercuts the argument that somehow services and "innovation" alone will save us--by allowing us to live on the fees and royalties. Innovation and intangibles help only if we use them to boost our productive capacity in all areas and industries. We can not continue to run huge trade deficits in goods (with more and more embody intangibles and innovation) and expect to live off the intellectual property.
Leave a comment