Spooking Ourselves Out of Prosperity

Watch out for the Belgians.

If we let them get away with their sinister attempt to purchase Anheuser Busch and its iconic American brand -- Budweiser -- we may all soon be speaking Flemish and downing mussels by the barrel.

While nationalistic opposition to InBev's recent $46 billion bid for Anheuser Busch has been remarkable, it has also been predictable. The same kind of reactionary, anti-foreign sentiment has been rearing its head for decades at the intersection of American business and politics.

When the Mitsubishi Estate bought Rockefeller Center in 1989, there was outright panic in some quarters over the influence of Japan in the U.S. economy. Twenty years later, Rockefeller Center is back under the ownership of an American company, and the famous Christmas tree never missed a Season.

With U.S. investors taking advantage of every opportunity to buy up property and businesses overseas, resistance to foreign investment here is widely seen around the world as the height of hypocrisy. But today, beyond just the Budweiser uproar, economic jingoism stands in the way of American global competitiveness and poses yet more self-imposed damage to our economic security. This is particularly true for New York City, the heart of our nation's economic bloodstream, which depends heavily on international commerce and investment to retain its status as the world financial and media capital.

Last week, the Partnership for New York City issued a report titled Foreign Direct Investment: Bringing the Benefits of Globalization Back Home. It argues that anti-globalization sentiment in the U.S. is working against this country's economic interests. It urges those who are concerned about American jobs to speak out on the importance of foreign investment and on the upside benefits for the New York and U.S. economies that are generated from foreign-controlled businesses and sovereign wealth funds.

The report found that jobs and business operations of foreign companies account for more than 10% of the city's economic output, or approximately $58 billion annually as of 2006. It also found that foreign-controlled companies employ nearly half a million people in New York State and 193,000, or more than one in every 20 workers, in New York City.

The Partnership report is the first attempt to measure the economic impact of foreign-controlled business operations, known as Foreign Direct Investment or "FDI," in a U.S. city. The report defines Foreign Direct Investment as job-generating investment where a foreign owner has majority control. From 2002 to 2004, FDI created nearly one in every 7 dollars of new activity in the City. States benefiting most from FDI include California, New York and Texas, followed closely by Pennsylvania, Illinois, Florida and New Jersey.

The report confirms that New York has flourished over the past twenty-five years as a direct result of foreign investment -- in real estate, business and international tourism. London, New York City's chief competitor for status as the world financial center, has done even better -- with more than $104 billion attributable to FDI in 2006. As a result of U.S. policies and politics, many foreign business investors are looking elsewhere for investment opportunities, and jobs are following currency overseas.

Within a generation, the U.S. will no longer be the world's largest economy. Partnerships with foreign-controlled businesses and investors will be more important than ever. China will be larger and is already the most important market for U.S.-based international businesses. Chinese leadership is fed up with U.S. policies and politics that discourage foreign investment in business and real estate, at the same time their country is holding much of our national debt.

Locally, New York is trying to counter this negative sentiment by supporting investment by one of China's largest real estate companies in five floors of the Freedom Tower that is being constructed on the World Trade Center site. The Beijing-based Vantone Group will develop a 200,000 square foot business and conference center designed to encourage business ties between the two nations and to house the Western headquarters of Chinese companies that are going global.

But national attitudes and policies that would restrict foreign ownership and investment remain increasingly, and dangerously, in vogue. As a result, nearly half the foreign investors now operating in the U.S. say they will get better value by directing their resources into other countries. Foreign direct investment is a powerful antidote to the loss of jobs from globalization, bringing the benefits of a global economy back home. And there is a lot to be said for the quality of Belgian beer.

Kathryn S. Wylde is President & CEO of the Partnership for New York City, a non-profit organization of the City's business leaders dedicated to maintaining New York City as a center of world commerce, finance and innovation. The full report is available on the Partnership's web site at www.pfnyc.org.

Comments

[joebhed]

Dear Ms. Wylde,

First of all, congratulations on your stint with the New York State Commission to Modernize the Regulation of Financial Services.
Great work there, with all these modern, innovative financial services "thingies" that turn out to be the reason why even JPMorgan can't figure out what BS is worth.

Others have scribed on the corporate tax reductions that finance the offshoring of American jobs.
Meanwhile, the American taxpayers get burdened with the added cost of financing the deficits caused by the corporation's free ride.
We are not only paying with corporate tax cuts, we are also paying via our banking system lending the "leveraging" of those investment banks that are financing globalization.
All of that leveraging is done in US dollars payable to the holder by the American taxpayer.

So, one has to wonder about the impacts of all the global financial services policies.
Like, ain't it the job of the FED to actually keep Americans working?

After all the rip-off financial services innovation going on out there that threatens the solvency of our financial services industry, the FED decides to open up its investment 'window" to completely unregulated institutions.
All for the purpose of, what, again?

Sorry to let you know, Ms Wilde, but the American economy is about jobs, and not about some foreigners buying up a bunch of buildings.
Workers over assets.

[Cathexis]

If the Belgians buy that purveyor of cheap swill, they will be sadder Budweiser.

[Chavez08]

"Foreign direct investment is a powerful antidote to the loss of jobs from globalization, bringing the benefits of a global economy back home. And there is a lot to be said for the quality of Belgian beer. "

Ms. Wylde. You're not going to sell "Free Trade" to the American public until there are checks and balances in place to end the slave-labor practices of Asian and U.S. companies.

The American people prospered under Keynesianism but I guess the under-classes were never meant to retire, have health care or education or own our own houses.

"Free Markets" = "Enslaved People". We are working harder than any generation before us - for less. All we had saved for is disappearing to pay for $5 gasoline and treatments for the cancer created by the industrialization that made the wealthiest wealthier on the backs working class in America. (YOU GAVE US CANCER and now you DENY US HEALTHCARE)

To the establishment, the working-class is no more than a commodity to be used and abused until the productivity slows, then we are expected to die quickly, cheaply and quietly so the wealthiest 1% can replace us with younger slaves to maintain their "Market Utopia". It's Social Darwinism at it's worst.

The U.S. went from being the greatest country in the world to the worst in 30 years.

[SCG]

Wages = demand

[escobar]

After centuries of colonialism Imperialism proved to be more effecient.
Now there is Globalization.
It is a scheme to avoid accountability for the end results of a type colonialism.
There is nothing fair about exploiting cheap labor and resources and selling the stuff to others who can afford it since those who produce the junk and cannot.. Keeping them people in poverty doesn't justify the idea that they are used to being dirt poor, so it is o.k. because a dollar a day is big money to them.
It is all a big lie to make the rich richer and enslave the disenfranchised.

[Chavez08]

That's Capitalism in it's "true" form.

Neo-classic economics failed miserably time and time again but those who stand to prosper on slave labor come up with wild theories about "trickle-down" and 3rd-rate intellectual dishonesty about "free trade" and how Keynesianism was bad and this model is "good" though 3 economics professors couldn't chalk-talk to the pros and cons (...because it's just better, now shut up)

If working-class Americans had any guts or spirit of our founding fathers we'd be dumping all Asian imports in the harbor until we got a better trade deal.

[KillTheMessenger]

The American consumer has already sold out to the cheapest bidder. Asia's companies have found willing buyers in Americans since the 19th century. Globalization is not a new phenomenon. What is a new phenomenon is that we have been shipping core industries offshore and that we have become a nation of shoppers and shopkeepers. And that future has to be scary for all of our shopkeepers and those who lost their manufacturing jobs and did not even qualify for the shopkeeper positions.

[Herrington]

When the average American was under the impression that business had allegiance to America and/or its workforce, opposition to foreign investment made a certain nationalistic sense in terms of shared prosperity. And there was a time when that was true. Business was as concerned about the well being of this nation as they were profit because they rightly saw the U.S.A. as defending the kind of personal liberties that enabled business to prosper.

All that is pretty much up the tubes now. Globalization has reduced national identity to the point where it is a straightforward calculation of risk reward whether you care what happens to the U.S.A.

And on the other side of the coin, we as Americans, to brook foreign ownership of our economic engines, must trust that foreign owners are less interested in exploitation than they are the interests of the population that they will employ. If you buy that I have a bridge for sale.

There is a reason that countries limit foreign ownership of, at least, key industries. That reason is national security and control of and stability in the nations economy. If you want to wage war on someone, the strategic objective is to deny them the resources to make war. Destroy their economy.

[cylindar]

Well, nobody cares about the beer company because all they produce is piss water, hardly what you could by any stretch of the imagination call real beer. Now as far as globalization is concerned, that is a bunch of horse manure designed by multi-nationals who don;t give a damn about anyone but themselves. The US should guard it's holdings here, and not allow over a certain percentage of foreign investment. We have sold our country to the highest bidders and it needs to stop before it is too late. I think you will find an ever present and hefty resistance against the WTO and sales to foreign investors who could trash our economy faster than you can blink because they do not live here and therefore do not care what happens to the people here. It is all about self interest baby!

[escobar]

I could not agree with you more!

[Henry]

Trade deficits, a "give-away" money policy by the FED, and cartel price extortion by OPEC all lead the dollar to devalue. This is compounded by American firms shipping jobs abroad. The dollar is a steal to Europeans as a result. Beginning to feel a bit like the Weimar Republic here. If it continues inflation is exacerbated and the forest fires that are now controlled take off.
Sorry, as a policy, selling out is selling out. Not good by any measure.

[Rockwell]

When I buy my Amber Bock I like to think the profits and jobs are staying in the USA. Just because some foreign investments have positive impact doesn't mean every US business has to whore itself on the world meat market.

[klmebane]

i don't believe the author is saying that every business should be involved in FDI's... what she is saying is that this xenophobic fear of foreign investment (while at the same time we are investing billions in the economies of other countries) is hypocritical, and if it continues at this pace it will hurt our economy more than it is already hurting.

[Kassandra]

Sorry, Ms. Wlyde ( great name!) but this government has already sold toomuch of my country as it is. You can't take an isolated company takeover attempt and make a whole cloth of it as a "protectionist scheme".

The only reason America "needs" foreign investment is that Bush has bankrupted us. Why, he's even appealing to the Russians, who we bankrupted 10 years ago through the same overspending on military.

The US investors are buying overseas because America properties and companies are pretty much worthless anymore thanks to Bush economic policies. I see straight through you "globalism good!" message, madame

[Velocitor]

What a shame the title of this article was squandered on an article about beer. Spooking ourselves out of prosperity is the central theme of our age - that and spooking ourselves out of our freedoms.

[mamacat]

Good article.
I fail to see any harm in selling the infrastructure to Anheuser Busch to a Belgian company. (some people I know who actually like cr*ppy beer might complain)

The buildings and employees will stay here. Probably the quality of the product will improve. It will provide an influx of cash into the American market, and some fresh ideas.

BTW, the author mentions Americans investing heavily in markets overseas. Wasn't the whole idea of massive tax-cuts for the corporations and the super-rich so that they could invest the money in this country? I know the whole top-2% tax-cut thing was a scam to fleece the American people, but it is interesting to see how lame the logic of the neo-cons truly is.

Now, if only someone would buy out GM and Ford, maybe we could get them to revitalise the American auto industry.

[joebaggadonuts]

"Now, if only someone would buy out GM and Ford, maybe we could get them to revitalise the American auto industry."

They did that with Chrysler. How's that working out?

[joebaggadonuts]

You mentioned the Japanese purchase of the Rockefeller Center building. Funny. They got taken to the cleaners on that deal. Here it's just a bit different. Jobs is why. We need them to pay Americans in dollars for our economy to function. InBev needs to consolidate and disemploy the AB workforce. If I had my druthers I'druther they bought another piece of overpriced real estate.

[bgregs]

See I don't really CARE that they are trying to buy up Buttwider, I just found it really amusing that we were all set to allow the ports deal with Dubai, and we are allowing the UAE (I think) to buy the Chrysler building, but have some EUROPEAN company try to buy Buttwider!!?? NOT IN MY LIFETIME!!

Gotta love the people who think that way!!