Are We the Greatest Threat to Global Prosperity?

Of course, investing overseas entails political risk, such as the uncertainty of what governments in far-flung locales such as China or Russia will do. Of even more concern, however, is the uncertainty as to what our government, supported by our fellow citizens, will do to hinder the prospects of global capitalism.

The spread of global capitalism (read: globalization) is the adoption of greater economic freedom around the world. From Estonia to India to Vietnam, global capitalism has benefited all. Wealth, jobs, opportunity and quality of life has risen in these "emerging markets," along with the stock portfolios of those of us who've invested in their growth.

Here's the rub: Most people support global investing but are uneasy about globalization. And it's not just the stoners throwing rocks at a World Bank protest: Presidential candidates and elected officials from both parties are critical of globalization. Witness the popular campaign rhetoric that we should "buy American," stop the "offshoring" of American jobs and seal the borders from illegal immigrants.

All questions about globalization come down to one issue: Do we as Americans have a right to do business with anyone we choose, from a Japanese auto manufacturer to a Mexican immigrant housekeeper to an Indian accountant to an investment prospect in Singapore? And, is global trade productive or destructive for Americans and our trading partners?

The answer is that the spread of global capitalism is 100% good. We should have completely unrestricted trade between our nation and other nations — the only exception being nations that pose a threat to us, such as Iran.

The moral right to trade is rooted in the principle of individualism: the American idea that we have the unalienable right to our own lives, liberty, property and pursuit of happiness. Individual rights imply a responsibility for preserving your own life — the same responsibility you would have if you were alone on a desert island. Whether you want a potato or a Porsche, you have to earn it — either by producing it yourself, or more likely, producing the equivalent in value and trading for it.

Of course, if a business wants your money, it has to earn it as well — by producing something that you want to buy instead of all the other things you could buy.

But our freedom to trade applies internationally as well, which includes investing in a Chinese company or "offshoring" data processing to India. Free trade means your trading partner's skin color and geographic location are irrelevant. We should want as many participants in the global economy as possible. The more there are, the wealthier and more prosperous the entire world will be.

Suppose we did live on a desert island with just a few thousand of us. Do you think you'd still be able to buy an Apple (AAPL) iPhone, be treated with Novo Nordisk A/S (NVO) insulin or shop at Whole Foods (WFMI)? Hardly!

The more people participate in an economy, the more wealth can be created. Instead of picking corn all day, people who specialize in something can spend their time creating products that make the rest of us far more productive — from the plow to the reaper to the tractor — from the transistor to the pocket PC. Just think about how much difference a Bill Gates or a Steve Jobs has made in all of our lives.

Now, in the short run, a linesman at General Motors (GM) who loses a job or steelworker who takes a pay cut at U.S. Steel (X) can say that global capitalism is harming him. But he's ignoring the vast increase in wealth, often reflected in lower prices, that's taking place because all the fields, including his, are continually evolving and improving.

In a free market, the proper response to losing a job or not being able to command a higher salary is to improve one's skills. But if you just keep doing the same thing while others are improving, nobody is going to pay as much for your products and services. And they shouldn't.

This applies directly to global investing. As investors, we should put our capital where we can make the most profit, whether that is in Dearborn, Mich., or New Delhi. When we create and trade, we are engaging in mutually beneficial activity. It's always win-win. That's wealth creation.

Because you probably drive a foreign car and have a foreign television set, you should understand the economic point: Global trade is good. Even more importantly, you should understand the moral point that you have a moral right to trade with anyone you choose, and nobody has "first dibs" on your money or business.

In an increasingly shrinking world, we Americans face a choice: Are we traders who seek to offer the market the best we have, or are we protectionists who want to get rid of new traders for fear they'll out-compete us? The choice is between justice, growth and prosperity, or slavery, stagnation and poverty.

Our lives — and our portfolios — demand that we be traders.

Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC.