Talk about Lou Dobbs' worst nightmare.
Not only do foreign companies have a record stake in the American economy, many people across the political spectrum are quite happy about it. That's the thesis of Micheline Maynard's new book on the state of foreign investment in the United States. Despite the alarmist sounding title, The Selling of the American Economy: How Foreign Companies Are Remaking the American Dream, is a mostly balanced look at the subject. However, in the debate on the virtues of foreign investment, Maynard is clearly a proponent of "the more the merrier," school of thought.
The scale of foreign investment is quite large and growing. According to the Treasury Department and the Organization for International Investment, the global payroll in this country is more than $365 billion. Further, in 2007 foreign companies paid $42.4 billion in taxes at all levels and $43 billion on research and development in the United States.
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Maynard, the senior business correspondent of The New York Times, uses her experience covering the automobile industry as a jumping off point for the discussion. Many of her case studies come from that sector of the economy, and she spends a great deal of time on Toyota, which is the largest foreign investor in the United States.
She praises the company's management and manufacturing techniques, which are characterized by input from rank and file employees and a well-organized supply chain that has an above-average track record of avoiding parts shortages and product defects. Maynard contends that "workers at foreign-owned plants are treated with a level of respect that has traditionally been absent at American ones. The respect is communicated symbolically as well, in everything from dining options to parking spaces."
This treatment is the major reason, she argues, that unions have made few inroads in the new foreign-owned facilities. But the downside of no unions is lower wages. She cites an analysis by her newspaper that concluded the average compensation at a foreign-owned factory is $10 per hour lower than at an American facility.
Maynard mentions this-and the fact that much of the job growth has been in right to work states-but doesn't spend a lot of time discussing the subject. She contends that the foreign investment is a necessary result of the globalization and of the failure of some American companies to reinvent themselves.
She uses interviews with workers who are happy with their foreign employers to bolster her case, but we don't hear from anyone who has had a negative experience in those workplaces.
While she spends a great deal of time on factories, she also deals with other aspects of foreign investment, such as buying a stake in American companies, the way Mexican financier Carlos Slim has done at Maynard's own paper.
She takes what could be a fairly dry subject and discusses it in a lively manner.
Her chapter on how states compete against each other for new facilities is eye opening. She made a good call in telling the story by recounting the experiences of Mississippi Gov. Haley Barbour and Michigan Gov. Jennifer Granholm. Because of the minimal union presence, warmer climate and lower taxes, Barbour has been successful in the job recruiting game. Granholm, who has been hampered by strong union resistance and a bigger and less agile bureaucracy, has had a much more difficult task.
Maynard brings the pieces of this complex topic together with great aplomb. If she had taken off her rose-colored glasses a bit more, the book would have been even better.
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