Faced with stubbornly high unemployment and a steady drip of dispiriting news about the economy, the Obama administration has embraced a new strategy to try to generate jobs at home (or at least make it seem like that's what's happening): Invite the rest of the world to show up with business plans and paychecks.
The President on Friday issued a formal declaration affirming his administration's welcoming posture toward investment from abroad, what seemed a clear bid for more of that money.
"My Administration is committed to ensuring that the United States continues to be the most attractive place for businesses to locate, invest, grow, and create jobs," the President said in a written statement. We encourage and support business investment from sources both at home and abroad. Investments by foreign-domiciled companies and investors create well-paid jobs, contribute to economic growth, boost productivity and support American communities."
That statement followed a press briefing earlier in the day with Austan Goolsbee, chairman of the President's Council of Economic Advisers, who reported that foreign direct investment into the United States surged by 49 percent last year compared to 2009, reaching $228 billion.
Both Obama and Goolsbee highlighted the benefits of foreign investment as a source of high-paying jobs, noting that overseas firms with operations in the United States now employ 5.7 million Americans. A recent report from the Commerce Department asserted that foreign companies investing in the United States tend to pay wages as much as 30 percent higher than average jobs, a claim that provokes debate among economists.
The new push from the White House to extract the benefits of trade is politically risky. It will almost certainly provoke the anger of labor unions, who tend to portray foreign investment as a threat, making American employment ever more susceptible to changes in the global economy. When foreign companies own American plants, domestic paychecks no longer hinge on decisions made only in Washington or Detroit or Los Angeles, but in boardrooms on the other side of oceans, in Frankfurt, London and Seoul.
Not lost on those tasked with securing Obama a second term: Union power and campaign money is more important than ever, particularly amid signs that the President is likely to have a difficult time raising the vast stores of Wall Street cash that helped him get to the White House in the first place.
But the upside of this new strategy is considerable as well. From a crudely political standpoint, leaning on trade tends to win support from industry -- not a bad move as the administration continues to try to shake off its anti-business label. Obama's affirmation of an open door to foreign investment earned swift praise from the National Association of Manufacturers, a leading industry group whose members are dependent upon exports. As the logic goes, if the White House puts out the welcome mat for foreign investors, that should make it easier for American manufacturers to sell their wares abroad.
Indeed, the administration's emphasis on foreign investment comes just as it is seeking Congressional approval for three long-stalled trade agreements with South Korea, Panama and Colombia. The administration has been demanding that Congress first approve the continuation of a program that assists American workers who lose jobs in the course of expanding trade by preparing them for new careers in faster-growing industries. That is the proper tack: accept the inevitability of globalization and extract the benefits for American companies, while also cushioning affected workers against the painful reality of lost jobs.
The administration's new course is a welcome indication that Democrats are moving away from the politics of blaming foreigners for our troubles -- mostly home-cooked troubles, by the way -- to a position that emphasizes our core strengths in the global economy. Despite the Great Recession and an economy that has long operated like a giant Ponzi scheme, gorging on unsustainable bubbles in technology, housing and finance, American companies remain eminently capable of producing goods and services of intrinsic value, if they are only given the chance to sell them to the world.
Foreign investors accelerate that process, connecting skilled workers in the Rust Belt to global supply chains that need the piece parts of industry that can still be produced efficiently in this country and enabling creative American minds in entertainment, architecture and law to reach far broader marketplaces. The United States has millions of hard-working, skilled hands in need of a paycheck. What we lack is money. Courting foreign investment is a way to get some.
We have stumbled in this process of engaging with the world during the past few decades, struggling to make peace with the reality that globalization is not a synonym for Americanization. It is a two-way street. We demonized Japanese purchases of American corporate icons two decades ago. More recently, we blocked the purchase of Unocal by a Chinese company, CNOOC, that was willing to pay a huge premium, ginning up bogus claims of national security problems (though Unocal controlled a minute fraction of the American energy supply).
Perversely, Americans mostly remained mute as Japanese and Chinese central bankers bought trillions of dollars worth of our federal savings bonds -- a slow, steady process that effectively handed influence over American monetary policy to foreigners.
At any moment in time -- a panic prompted by rumors that the Saudis are about to unload dollar assets, say, or a sudden hunger for Euro bonds in Beijing -- these foreign holders of American debt can click a computer mouse and sell Uncle Sam's bonds en masse. That threatens enormous consequences, sending the dollar plunging in value and American interest rates skyward. This has always been a low-likelihood scenario and it remains so, yet it has become more likely with every additional purchase of new treasury bonds by foreign players.
Not so in the case of American businesses purchased by foreign investors -- an auto plant in the south owned by a Korean manufacturer; a German-owned factory in Michigan that makes waste water treatment equipment. These are investments in every sense of the word. They cannot be unloaded quickly or easily, making them far more productive for the American economy than the foreign purchases of our debt.
And yet, the embrace of the latest strategy for job creation from a White House sinking in the approval ratings raises a question that has dogged the administration for many months: What took you guys so long?
If this is the right move on the merits, why wasn't it the right move a year ago, when we were still being told that the economy would recover and employers would soon hire anew, if we were merely patient? Why weren't the trade agreements front and center then, along with advertisements about the merits of working for European and Asian employers?
It is a testament to just how badly this administration has botched the employment crisis, how little it has been willing to advocate for job creation, that now that it finally trots out a decent message, it seems cravenly political.