Synopsis
Book by Maynard Micheline
Extrait
Chapter One
Above and beyond the question of how to grow the economy, there is a legitimate concern about how to grow the quality of our lives.
—PAUL WELLSTONE
Americans would like to think of this country as the most self-sufficient place on earth, able to feed, clothe, employ, and educate its citizens—and those in need elsewhere—with no help from anyone else. To the most patriotic, there is no country on a par in any way with the United States, no matter the economic traumas it may encounter. "I do believe in American Exceptionalism," Senator John McCain said in September 2008, even as our credit system had collapsed, some of our biggest investment banks had fallen, and unemployment had reached a new high. If there was ever a time foreign investment was needed, it is now. Today, when the business world has lost its borders and companies are no longer bound by the nations in which they were founded, no one nation—no matter how exceptional—can sustain itself through homegrown investment alone.
In our increasingly interconnected world, one thing has become strikingly clear. Foreign investment is a necessary and positive force in the American economy, as long as those companies act responsibly, give back to American communities, and provide Americans with stable jobs for which they are fairly compensated. At a time when American companies have closed plants, laid off millions of workers, and ventured abroad in search of profits, foreign companies offer an attractive alternative—in some cases, the only one.
Many believe that foreign investment in the United States is a relatively new phenomenon, one that gained attention on the national stage as recently as the 1980s, when Japanese automakers opened their first American factories and when other Japanese investors went on a real estate buying spree. But in reality, foreign investment is older than our nation itself, dating back to the 1600s, when English and Dutch traders crossed the Atlantic seeking opportunities on our shores. In fact, the Jamestown colony, the first colony formed in the New World, was founded by British entrepreneurs from the Virginia Company. They manufactured soap, pitch, glass, and wood building supplies—some of the very first American-made products to be exported to Europe.
From the beginning of the republic until well into the late 1800s, much of the foreign investment that took place in the United States was from Britain, which is no surprise, since, of course, this nation began as a series of British colonies. But other countries—France, Germany, and Spain among them—soon sought their own investments in the United States, in some cases helping to create entire industries. During the Civil War, after President Lincoln ordered the blockade of Southern ports, crafty British blockade runners, operating in small, fast ships, helped sustain the economy in the South by bringing in goods from Bermuda, the Bahamas, and Cuba, sending illegal shipments of cotton and tobacco there in return. In Gone with the Wind, Rhett Butler made his fortune doing business with these foreign traders, earning the enmity of the proper citizens of Atlanta.
In more modern terms, foreign companies have been investing in America in earnest since the nineteenth century, when companies such as England's Lever soap company, the forerunner of the Anglo-Dutch Unilever subsidiary Lever Brothers, opened plants in Massachusetts and Mississippi. We can attribute a good portion of our nation's early infrastructure to foreign dollars; in the 1870s, foreign investors, particularly Dutch capitalists, bankrolled the expansion of the nation's railroad system. In fact, foreign players had a hand in just about every corner of our industrial economy during the nineteenth century, buying stakes in everything from the Pennsylvania steel mills to the copper mines in northern Michigan to the gold mines of Alaska and the West.
By the early 1900s, as the nation's immigrant population boomed, foreign investment became as integral to the U.S. economy as the coal and oil powering the plants and factories; while most new arrivals were poor, a number of deep-pocketed immigrants such as John Jacob Astor and Andrew Carnegie quickly joined the ranks of the most influential business tycoons of the era.
But Americans' reaction to foreign investment has always peaked and crested with political sentiment, and after 1914, the welcome mat was yanked away from the door. Once World War I broke out, German companies became, almost overnight, a target for angry Americans, who linked their presence here to the hostilities raging in Europe. Some German investors were accused of spying, and many even saw their American assets taken over by the government—an inherent risk for any company that invests abroad at a time of political conflict. It wasn't until the boom times of the 1920s, when the specter of the war had receded and investments from around the world flooded into Wall Street, that foreign investment resumed its prominent role in the American economy.
The flood of foreign money continued throughout the 1930s and '40s, as English, German, and Japanese auto companies began to build factories across the United States. Japanese factories in the United States are widely thought to be a product of the 1970s, but, in reality, Japanese and other Asian companies had begun to build plants in the United States before World War II, just as Detroit automobile companies had already begun to build factories in Japan—GM in Osaka, and Ford in Yokohama. After WWII, of course, this flood of capital came to a screeching, if temporary, halt, as our defeated opponents were forced to focus on rebuilding their own economies from the ravages of the war. Once they recovered, however, old grudges were forgotten, and investment, particularly from Asia, soon resumed, picking up in the 1970s when a confluence of events in the United States—the oil crisis and subsequent rise in demand for smaller, more fuel-efficient vehicles, as well as new protectionist policies limiting Japanese imports—compelled Japanese automakers and other producers to shift production to our shores.
During the past quarter century, foreign investment has become increasingly more prominent and more powerful in our economy and society, as countless companies from abroad have taken on the roles that once belonged only to homegrown players: creating American jobs, helping bolster American school systems, rescuing struggling companies, reviving stagnating towns, transforming states, and restoring vigor to entire regions of the country. The critical involvement of global companies and economies in our own has never been so evident as when the financial crisis shook the country in 2008.
Despite a $700 billion congressional bailout and drastic measures by the Treasury Department and the Federal Reserve, after the banking system collapsed that September, it became almost immediately clear that America could not solve its problems alone. It took a coalition of global efforts to stem the market crash that threatened not only the American economy but also banks and businesses abroad, as European countries, Japan, China, and other nations were forced to step in with their own rescue plans, hoping to ease a crisis that could take years to resolve.
Yet, despite the many benefits of a global economy—brought into even sharper focus during times of turmoil—foreign investment in the United States is often a trigger for resentment, fear, or, at the least, ambiguity about the role that outsiders should play. This is not a feeling held singularly by Americans, of course. The populaces of other nations, including Britain, have found themselves reeling when foreign companies purchased their icons, and protectionist sentiment continues to resound worldwide as companies from growing economic powers such as China, India, and Russia begin to expand farther and farther beyond their borders. But in spite of the visceral reaction so many of us have when foreign companies break ground or buy up companies on our shores, the fact remains that the global economy envelops us all.
To be sure, the presence of foreign investors in the United States today is formidable. Foreign direct investment, defined as spending by a foreign-owned company on company-owned ventures or investments in American enterprises, comprises 15 percent of the gross domestic product (GDP), according to the Treasury Department. More than 5.3 million workers are employed by foreign companies in the United States, akin to five companies the size of Walmart. What's more, those jobs have led to 4.6 million jobs in other parts of the economy, for a total of nearly 10 million people who owe their livelihoods to companies based abroad.
Think of it this way: If all those jobs disappeared and the people who hold them were not able to find work, the unemployment rate in the United States would stand at more than 13 percent, instead of more than 9 percent in 2009. The loss of jobs on such a scale would be a huge blow, sending ripple effects across the economy. Not only that, but the economy simply cannot sustain itself in the absence of foreign investment. Over the past twenty years, foreign companies have invested more than $2 trillion in the American economy, according to a report by Matthew Slaughter, a professor and associate dean at the Tuck School of Business at Dartmouth. In 2007 alone, those companies opened or expanded nearly 760 American factories, creating 52,000 new American jobs and $35.5 billion in capital spending. "The establishment and expansion of foreign companies in the United States has forced people to think harder about who we are economically," Professor Slaughter said.
JOBS ARE JOBS
In researching this book, I asked countless public officials, economists, and executives why investment from overseas is such a necessary part of the American economy. Each time, I received the exact same answer: jobs. Samuel Adcock, the senior vice president of government affairs for EADS, sai...
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