If you’ve ever bought consumer products like a Frisbee or a Hula-Hoop, typical food products for your family like Pilgrim’s Pride poultry, or even an American-made Haier refrigerator, you’re a supporting participant in foreign investment in the American economy.
That’s because Frisbee, Hula Hoop, and Slip’N Slide brands are now owned by Chinese interests (U.S. parent company Wham-O was acquired in 2006), Brazilian-owned beef giant JBS SA bought Pilgrim’s Pride last year, Hong Kong-based Techtronic Corp. bought the Hoover vacuum cleaner company from Whirlpool in 2006, and the fact that you can buy an American-made refrigerator and still send your money to China (Haier is Chinese owned) highlights the need for a broader definition and understanding of what it really means to “Buy American.”
Do you plan to buy Selsun Blue shampoo, Gold Bond lotions or powders, Icy Hot patches or creams, Cortizone-10 ointment, ACT mouthwash, or Unisom sleep-aids in the near future? If so, you’ll be supporting a French company, because Tennessee-based Chattem, Inc., is now being bought out by French-owned Sanofi-aventis (announced last December). The products may be made here (for the time being) but the profits will go to France. How many jobs will be created with this “foreign investment?” Zero. How many jobs do we stand to lose in America as a result? Well, it’s all up to the French. They now have the ownership, and they now have control over the future fate of American jobs.
Buying American means more than just buying American-made products. To truly buy American in the purest sense of the term, we need to buy American-made products from American-owned companies with a high domestic parts-content. That keeps not only jobs in America, but also profits as well. And the taxes on the profits reaped by American-owned companies are paid to the U.S. Treasury, rather than the treasuries of foreign governments.
China first began making cheap toys for export to the U.S. market, and gradually over the years has evolved into a country that is actually buying the companies that make the toys. It does not bode well for the U.S. economy to switch from buying Chinese-made toys from American companies (as if that wasn’t bad enough) to buying Chinese toys from Chinese companies.
India is taking similar steps in the technology industry. Indian companies involved in technology outsourcing no longer want to serve the computing departments of their clients; they want to be the owners of the computing departments and companies as well.
Indian companies like Infosys Technologies Ltd. and Wipro Ltd. are competing for contracts that used to be reserved for U.S.-based rivals like IBM and Hewlett-Packard. The years of Indian firms positioning themselves only for tasks such as technical support, software maintenance, and database upgrades are long gone.
When we buy imports – and especially when we support foreign-owned companies – we send our dollars to foreign lands, which in turn use their new dollars (dollars that used to be ours) to acquire our existing factories, land, and banks. Then they get a seat at the table to tell us how our country and economy should be structured. Foreigners are doing this with dollars that used to be ours before we lost control of them under the belief that free trade, globalization, and foreign investment were not only good ideas but also all but inevitable anyway.
Contrary to what free trade-leaning economists will tell you, foreign investment does not create jobs in America – it destroys them.
For example, when British Petroleum bought U.S.-owned Amoco in 1998 to form Britain’s biggest company, it was trumpeted as a “merger of equals,” but Amoco’s executives found out differently as soon as the ink was dry on the deal. British executives made it clear that Amoco was to be run by British Petroleum’s structured management and culture, and anyone who felt uncomfortable about it could join the other 10,000 recently fired employees. Before the signing of the merger, it was estimated that only 6,000 jobs would be eliminated. Most of the newly revised 10,000 job losses would come from Amoco’s existing U.S. operations, which further documents why foreign investment is a job destroyer and not a job creator.
When foreign producers assume ownership of U.S. land and factories, they become our landlords and holders of the mortgage on our national treasury. They dissipate wealth instead of creating it since their profits return to foreign lands and the taxes are paid to foreign governments.
Friedrich List, a German economist who also lived in America for several years and wrote “The National System of Political Economy” in 1841 before he died in 1846, once said, “The power of producing wealth is infinitely more important than the wealth itself.” I would add that by keeping the ownership of our companies, we retain the power to create wealth.
Today, less than five percent of all so-called foreign investment goes to the establishment of new factory operations and new jobs in the United States. Paul Craig Roberts, who helped President Reagan construct his tax cuts of the 1980s, says that, “In 2000, 97 percent of direct investment by foreigners went for the purchase of existing U.S. assets,” and that, “we are not only losing our industrial jobs, we are losing ownership of our companies.”
If we love our country, and want to better be able to pay for the expense of preserving it, we should support not only the companies that produce in the United States, but also the American-owned companies headquartered here, since they pay the taxes that fund the cost of government and make preservation of our great nation possible.
The “Wall Street Journal” reported on Sept. 16, 2009, that a spokesman from China’s Commerce Ministry said, referring to the recent tariffs President Obama authorized on imported Chinese tires, “it is unfair for the U.S. to care only about U.S. jobs without considering effects of the (tire) tariffs on China’s employment.” Our U.S. Constitution, however, says we are to form a “more perfect union,” not a “more perfect global economy.”
Back in 2007 when we first learned about the diethylene glycol found in toothpaste that was exported to the United States from China, Zong Changbao, president of the one of the Chinese toothpaste companies involved in the controversy, stated his company had no plans to recall any toothpaste that already left his factory. According to Mr. Zong, “This problem doesn’t exist. It’s just a matter of U.S. standards, not a safety problem. The FDA standard is used as a reference in many countries. If China were as powerful as the U.S., we could set the world standard.”
With quotes like these, is there any more motivation needed to ensure that China does not become a greater manufacturing power than the United States? Or would we mind if China started setting world standards for us?
The answer to America’s economic problems is in our own back yard. The answer is to buy American. We may not be able to stop foreign-owned companies from investing in America, but we can stop giving foreign companies the money with which to do it. America needs more American investment, not more foreign investment.