In recent congressional hearings, senators lambasted Yahoo, Google, Cisco and Microsoft for giving in to demands of the Chinese government in their effort to restrict the kinds of information to which its citizens have access.
Restrictions on information are a bad thing, to be sure, but if the choice is between pulling out of a market entirely and restricting some of the information supplied, is the former clearly the better choice?
America has a tendency to prefer isolating regimes with whom it doesn't agree. Unfortunately, that policy is notable for its complete failure to change the behavior of the target regime. We've isolated Castro's Cuba for 40 years. We've isolated Iran for over 20 years. Has that policy resulted in regime change, vibrant democracy and a people plugged-in to the global economy?
Business contacts provide a different kind of knowledge, and help an economy to develop. Historically, the best force for change in a country has been economic development. That's why we need to let companies be flexible in their dealings with foreign regimes. The alternative is isolation, and that policy has never worked.