Nasdaq is not a Strategic Asset

Sep.23.07 | About: Nasdaq Inc. (NDAQ)

Matt Cooper today describes a 19.9% stake in the Nasdaq stock exchange as a "strategic US asset" – going even further than Chuck Schumer, the only lawmaker who seems to have any concerns about the deal at all, who said only that the deal "gives me pause". Still, the idea that a minority stake in the Nasdaq is in any sense a strategic national asset of the US certainly proves what the WSJ said this morning, that protectionism in the US is increasing:

The U.S. doesn't allow foreign companies to buy airlines, shipping firms, television networks and some security-related businesses. The U.S. has raised concern about the increasing acquisitiveness of state-owned firms from China, Singapore and Middle Eastern countries. Yesterday, the Bush administration said it would scrutinize Nasdaq's proposed deal, a transaction that would give the Dubai government a stake in the U.S. stock-market operator.

A quick look at the dollar is all it takes to show that now is emphatically not a good time to start putting up barriers to foreign capital. Richard Branson isn't allowed to start an airline here unless he owns less than half of it and doesn't control it? Dubai Ports World isn't allowed to buy US ports? CNOOC isn't allowed to buy Unocal, a company most of whose assets aren't even in the US? Rupert Murdoch can't buy Fox without becoming a US citizen? All of these artificial barriers are harmful to the US economy: they reduce competitiveness, they make it harder for businesses to realize their true value, and they contribute to the weakening of the dollar because foreigners find it that much more difficult to buy US assets.

In all of those cases, however, at least the case could be made that a foreign company was buying a domestic company. In the case of the Dubai-Nasdaq deal, we're talking about a stake of less than 20%. How anybody who believes in a market economy could object to this deal, I have no idea. And Schumer's comments just serve to make him look like someone pandering to anti-Arab prejudice. Last time I looked, Wall Street was in New York State: he really ought to know better.