I know we're all supposed to hate those nasty foreigners who are buying up our country, but I have a little trouble feeling totally hostile to people who have more faith in the future of the American economy than we do.
Rather than just grumbling, it might be useful to take a moment to ponder why - at a time when the gloomsters are again in the ascendancy at home - Matsushita has just agreed to Japan's biggest investment ever in the United States ($6.13 billion in cash for MCA Inc.) and, amid widely publicized cutbacks by Detroit's automakers, Toyota has just announced plans to build a second factory here.Part of the reason, to be sure, is that our own government has participated for the past five years in a worldwide hara-kiri attack on the American dollar, cheering its descent to ludicrously low levels, on the bizarre theory that the weaker your currency, the stronger your economy.
In the real world, this has merely created a fire sale of American-owned assets. Compound that with all the fashionable pessimism crowding the domestic media reports, plus a tax system that (unlike the Japanese code) seems almost willfully antagonistic to speculative private investment, and what you see is what you get: foreigners smell a long-term bargain in America, created by Americans, and move in to take advantage of unduly low prices here.
The next question is how Americans should feel about these new overseas proprietors, and the answer to that is more complicated than it first appears. The initial reaction is certainly negative; the typical American views with some degree of horror the mushrooming of foreign investment in the United States from $54.5 billion to $401.1 billion in the 1980s alone.
But was that really all bad? Not according to former Commerce Secretary Elliot Richardson, who notes that foreign capital helped significantly to fuel the eight-year expansion, allowing the U.S. to meet its private investment needs and governmental borrowing without higher interest rates.
And not according to the 3.5 million Americans who now work for foreign-owned companies in the United States, a factor that more than offset the decline in jobs at U.S.-owned manufacturers during the past decade.
Moreover, for some U.S. firms starving for capital to modernize plants and remain competitive, being acquired by a foreign company has meant the difference between bankruptcy and survival.
One example is Materials Research Corp., which makes semiconductor manufacturing equipment for companies like IBM. It desperately needed capital in 1989, found no help from Wall Street or U.S. banks, and ended up being acquired by Sony.
Or take Chicago Pneumatic Tool Co., an 89-year-old maker of power tools for assembly line use, which was bled dry for its cash throughout the 1980s as part of a U.S. conglomerate (Danaher Corp.). With little capital to modernize its aging plant or to develop new products, the company stagnated, worker morale fell and the firm's reputation among customers went downhill. But rather than investing in the company, the U.S. parent sold it to Sweden's Atlas Copco, which was already in the power tool business.
This was like a new birth for Chicago Pneumatic. Atlas Copco invested heavily in the operation, allowing its U.S. management to introduce a range of new products and increase its manufacturing jobs by 20 percent. As Chicago Pneumatic's American CEO, Richard Besser, happily put it to me, the Swedes were far more willing to take a long-term view and understand that "return on investment can only be achieved by reinvestment."
Ironically, it is we Americans who used to preach to the world about the benefits, in terms of jobs and higher living standards, of the free flow of international capital. Now that we are the object as well as the instigator of such investment, we grow a bit uncomfortable. A more sensible reaction would be to figure out why the British, Japanese, Dutch and Canadians refuse to share our dour outlook about America's future - and what we can do to get Washington to start encouraging more of that same investment faith within our own borders. The booming foreign investment may not be a fire alarm for Americans, but it surely should be a wake-up call.