Last month, the Organization for Economic Cooperation and Development released figures showing that last year for the first time, China supplanted the United States as the No. 1 destination for foreign direct investment worldwide -- that is, money that goes into factories, equipment, real estate or existing companies. And in a blow to fans of "freedom fries," No. 2 was France. Though other major economies also suffered a drop-off in this category, no nation fell as far in percentage terms as the United States.

While such numbers fluctuate and foreign direct investment is just one type of capital flow, this dramatic swing can be seen as further evidence that in the 21st century, America is going to have to fight hard for its piece of the global investment pie - money that translates directly into new jobs and the industries of tomorrow. Clearly, the world economy is shifting around us and our place atop it is being challenged.

Investment flows into emerging economies grew dramatically between 2002 and 2003, with investors pumping more than six times as much into developing markets as they did in the prior year -- nearly $200 billion. OECD analysts concluded that the primary reason for this redirection of capital was not simply that countries like China offer cheap labor; rather it was the size and promise of their markets. This is a big deal, because even when low wages in these countries go up, that will mean increased buying power -- so the attractive labor markets of today will gradually become the attractive consumer markets of tomorrow.

At the same time, the image the United States is presenting to global investors is increasingly tainted by our apparent disregard for both economic and diplomatic fundamentals. The message we have conveyed in recent years is that there is no economic problem we confront today - from gigantic deficits to huge under-funded liabilities - that we wouldn't prefer to have our children solve tomorrow. So, it should not be surprising that other important measures of investor interest have also taken a dramatic turn for the worse in recent months.

Let's start with the biggest domestic economic problems. Almost any one of them is a greater threat to the economy than virtually any imaginable form of terrorism. There is the record-breaking budget deficit that is likely to amount to $5 trillion over the next decade. Then there's the burgeoning trade deficit. And the $72 trillion in unfunded future retirement and health care obligations to our own citizens. And a record low savings rate, which suggests that we will need even more help with retirement funding. And the hemorrhaging of manufacturing jobs and the cost of fixing our dysfunctional health care and energy systems. Every one of these is a gigantic problem on its own. Taken together, they represent a series of bombs placed at the foundations of our society, and they are capable of exploding in ways that would touch more Americans than anything even the most sophisticated terrorists could devise.

Let's move on to the global economic threats. One, as I've said, is the erosion of American economic leadership and consequent disaffection of important classes of international investors. Another is our dependence on those investors, and still another is our addiction to foreign oil. Even more important is the growing tension between developed and emerging nations, as a billion new workers from the emerging world compete for their place in the global economy. Emerging economies depend on change. Advanced markets are comforted by the status quo. This is the bipolar reality that has replaced that of the Cold War.

The United States has no such formal strategy, nor any systematic process for devising one, and this is a mistake. There's little point in producing a National Security Strategy every year if we ignore the wellsprings of that security -- the economic might that underlies our military strength, our political clout and our internal stability.

Consider our broken health care system. Americans pay, on average, $4,000 more a year for the same or less adequate health care than citizens of other OECD countries; at General Motors the cost of employee health care now exceeds the costs of steel. That is the kind of labor cost that drives foreign investors (and domestic companies) overseas. So health care becomes a jobs issue; and the lost jobs are an economic security issue.

This is a cold, hard reality. And every minute we ignore the problem or fail to view it in strategic terms we are losing ground. In this light, health care should become a top priority in a thoughtful National Economic Strategy, as should education and investment in infrastructure. Addressing these areas would mean creating jobs -- and that is a much more positive, proactive approach to protecting workers than reactive, punitive trade strategies that produce tensions with our trading partners.