So what does it mean?

Economics has been called the dismal science and when you hear all the commentary from a lot of folks who worry about this or that, it is, indeed, dismal. The Wall Street Journal had a chart on Wednesday which computed the amount of money that companies in the Dow earn from global revenue. The number is, on average 43%. So what does it mean? Some worry about our companies having a "dependency" on foreign sources. But that is silly. Isn't it good to diversify markets?

Over the past couple of years I have become acquainted with the Treasurer of one of the Dow Component stocks. His job is an increasingly complex one. Not only does he have to worry about which markets the company is participating in but he also has to think inventively about the relative value of the revenues he earned in each country. The success of the company depends in part on the relative value of the Euro to the Yen to the Dollar to the Peso. The interesting thing about these discussions has been not the increasing attention that my acquaintance spends on arbitrage but that the company still cares first about the products they offer.

Cafe Hayek, did a post on the chart today and also made the suggestion that those who worry about the problem of dependency are not mercantilists but supporters of Msilitnacrem - mercantilism backwards. Don Boudreaux's poston this is worth the read.