Bud Out, Foreign Investors
The $47 billion takeover bid launched by the world’s second largest brewer, InBev NV, for America’s biggest beer maker, Anheuser-Busch Cos., has sparked the latest silliness in an increasingly protectionist America.
Anheuser, according to its fans, is apparently a national institution that should be protected from those sinister Belgians who run InBev. Missouri’s Republican Governor, Matt Blunt--once praised by conservatives for his pro-growth economic agenda--has instructed state officials to investigate ways they could derail any deal. Meanwhile, U.S. Senator Kit Bond called the St. Louis brewer “an iconic symbol of the United States and our heritage” and urged Attorney General Michael Mukasey to closely scrutinize the transaction. Encouraged by the politicians, supporters of Anheuser rallied in St. Louis over the weekend, wearing T-shirts emblazoned with "This Bud's for U.S.A."
Even allowing for a certain amount of predictable chauvinism on the part of local politicians, the angry reaction to InBev’s bid is another example of how the public discussion in the United States about globalization seems increasingly to be a one-way debate—it’s almost all bad for us. U.S. companies are discouraged from outsourcing jobs and from importing too much cheap foreign merchandise to sell here. And now foreign businesses are to be resisted when they want to invest in the U.S. by snapping up a local company and in the process enriching shareholders and distributing our goods worldwide, as InBev wants to do. Indeed, even as InBev was launching its bid last week, U.S. Commerce Secretary Carlos Gutierrez was being excoriated on the opinion pages of the Washington Times for urging businesses in China to invest in America in the same way American firms are investing in China. For that, apparently, Gutierrez was deemed guilty of favoring “corporate globalism” over “economic nationalism.”
The good news is that the foreign investment boom in the U.S. is in full swing anyway. Earlier this month, the U.S. Bureau of Economic Analysis reported (virtually without notice by the press) that foreigners invested some $277 billion in the country in 2007, including $255 billion for acquisitions of U.S. businesses and $22 billion to start up new firms here. That was the second highest total ever and represented a more than five-fold increase since 2002, when investments in the United States slumped after 9-11.
Although some of the increase in foreign investment is attributable to the decline in the dollar, which has made it a bargain for foreigners to acquire American firms or start-up new businesses here, the real source of the gain, which included a 67 percent growth in investments in just the last year, is the long-term confidence that many foreign firms have in the U.S. economy. Even as our press and the presidential campaign are filled with talk that Americans are worried about their economic future, the BEA numbers show that overseas investors are betting heavily on the United States.
Some of the increase in investments is coming from companies in developing countries, like India, where economic growth has been so rapid that firms are now global players. Earlier this year, for instance, India’s Tata Group agreed to buy Land Rover and Jaguar operations from Ford Motor Co. for $2.3 billion, taking these troubled divisions off a struggling Ford’s hands. Tata’s purchase alone is more than double the total amount invested by Indian companies in the U.S. back in 2000, the peak year for overall foreign investment in America. This growth in Indian investment in the U.S. should be viewed as one of the payoffs of globalization.
Instead, the global economy is viewed here increasingly as a one-way street. While InBev’s bid for Anheuser is excoriated, the management at the American beer maker is cheered for considering buying up a controlling stake in Mexican brewer Grupo Modelo, which would create an entity too big for InBev to swallow. None of the opponents of InBev’s bid apparently see the irony in an American company resisting a Belgian firm’s takeover by purchasing a Mexican business.
I used to believe that opponents of expanding global trade wanted (unrealistically) to send us back to the 1950s, that brief period when American manufacturing reigned supreme in a world in which Europe was still recovering from World War II and developing countries lacked the wherewithal to compete globally. But the more the anti-global debate proceeds the more it seems like the ideal world for so many proponents of ‘economic nationalism’ is in fact a kind of 17th Century neo-mercantile environment in which America is free to export all it wants but wields a trade policy that discourages imports and foreign investment here. That would satisfy those who want their Bud to be home-grown, at the cost of a lower standard of living for most of us.