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.