Mandel and Setser on intangible values

Here is their exchange.  An excerpt from Mandel:

It's a truism among trade economists that whether you run a current account deficit or a current account surplus matters less than what you do with the money. In that vein, pessimists have accused the U.S. economy of importing capital in order to fund consumption.

But according to my argument, that's not true. We seem to be importing capital in order to fund an enormous amount in investment in intangibles, including knowledge, training, brand equity and the like. Then U.S. companies are using those investments to maintain their competitive position in the global economy.

It's a virtuous circle, rather than a vicious one. What's more, it has the additional virtue of being consistent with the facts, including the much faster productivity growth in the U.S., that darned unwillingness of the dollar to drop, and the continued high rate of return of U.S. companies overseas.