The Sell-Off of America: With Ownership Comes Control

Free trade cheerleaders casually dismiss concerns about a trade deficit. “No need to worry,” they reassure us. “All that money is reinvested back in America!” With a patronizing smile on their faces, they pat us on the head and send us off like little children, too unsophisticated to understand the complexities of trade and globalization. They are very much like the accountants at Enron.

 What they’re talking about is the way in which the trade deficit is financed. Yes, all that money returns to America because, ultimately, America is the only place where dollars can be spent. So those dollars come back to purchase various investments, of which there are several kinds: U.S. treasuries, stocks and bonds in publicly traded companies, equity in private companies, and direct investment in the construction of factories and other facilities. The latter category is the only one that actually creates jobs, and such investments are quite small. The vast majority is spent on treasuries, stocks and bonds. In effect, we are selling off American assets to finance the trade deficit.

In the past, I’ve warned of a sinister consequence of this sell-off. (See “The United States Corporation.”) With ownership comes control. As an ever-greater percentage of America falls under foreign ownership, our owners gain more control over our companies and our public policy. I think we’re seeing a perfect example of the latter playing out in the debate over the auto industry rescue plan.

Isn’t it interesting that all of the foreign auto manufacturers have concentrated their assembly plants in the Southeastern states? Every time a new plant is proposed, every state has competed vigorously for the business, yet they end up in a Southeastern state without fail. Is it mere coincidence that they have located where the “Big Three” are not? They knew that by relentlessly attacking the American market with more and more brands, while virtually barring the export of American cars to their own markets, GM, Ford and Chrysler would eventually be driven to the point of needing the government’s help. Now that that time has arrived, we can see how their strategy is paying off with the influence they’re exerting through their block of southern senators, preventing any rescue of the domestic automakers. A whole block of senators, bought and paid for by Japanese, Korean and German automakers, has been turned against the best interests of the American economy, workers and taxpayers in a clever plan to destroy the industry and achieve total market domination.

Take away the Big Three and watch what happens to wages in those foreign plants as millions of additional workers are unleashed to compete for those jobs. Take away the competition of GM, Ford and Chrysler and watch the price of foreign cars soar. And with unemployment high back home, there will be great political pressure to shut down American operations and bring those jobs back.

If they successfully block the rescue of the domestic auto industry, Senator Richard Shelby of Alabama and his fellow stooges of the foreign automakers may be remembered as the traitors who kicked the American economy off the cliff and drove us into the 2nd Great Depression. But, of course, they’ll be hailed as the heroes of free trade and globalization.

6 Responses to The Sell-Off of America: With Ownership Comes Control

  1. ngoldfarb says:

    I like your blog!

    Care to exchange reciprocal links?

    Obama has started arresting people for not carrying out his orders.

    Read the true meaning of “Change You can believe in.”

    • Pete Murphy says:

      No thanks, Nancy. Although I supported Obama in this presidential election, I try to maintain an independent approach here. Your blog seems quite anti-Democrat. That’s OK. Just not the kind of blog for which I provide links. Hope you keep stopping by, though, for more takes on how trade and population growth are wrecking our economy.

  2. Randy says:

    To what extent does Volkswagen benefit Germany in regards to employment, tax revenues, etc? The green car of the year, the 2009 Jetta TDI is manufactured in Mexico and the chief of design for VW is Walter de Silva, an italian. Maybe research and development takes place somwhere else too. And so on…

    Virtual companies are a fact of life today and the roots of power are hard to decipher so if I buy an American car, what exactly does that mean?

    • Pete Murphy says:

      Randy, you singled out one car made in Mexico. But VW is a significant contributor to Germany’s trade surplus with the U.S.

      If you buy an American car, you’ve reduced the trade deficit by $20,000, prevented the sell-off of another $20,000 of American assets, saved American jobs and, in so doing, have prevented the ranks of the unemployed from growing a little more, thus preventing more downward wage pressure in your own job. Think about it.

  3. Clyde Bollinger says:

    The sell-off of ownership of US businesses is a greater cause of concern to me than is the foreign lending. Defense contractors come to mind as a logical foreign toe-hold target. Wouldn’t it be just ‘ducky’ to have to depend on China or an Islamic terrorist backing country for our military equipment?

    We can take action (drastic for certain, but possible) at the government level to make all or a significant portion of the debt go away. Our credibility goes with it, but it is doable. I suppose nationalizing the foreign owned businesses would be doable as well as a way to eliminate the foreign control. Heck, we’re doing it with domestic companies, why not foreign?
    Either action is extreme and should only be considered as a last resort but if nothing is done to turn the deficit around, we will be down to the last resort with no options.

    With respect to cars, it was openly acknowledged that Toyota subsidized the Lexus to the tune of several thousand dollars per car when it was introduced. The same was true of Nissan with the Infinity. They may still be doing it for all I know.
    The only bright spot in the transplant car manufacturing is that most of the assembly is now done with domestic labor and the payroll stays here.

    • Pete Murphy says:

      Clyde, you should live here in the Detroit area and see the news coverage of the failure of the rescue plan. This region is facing a depression that will make the first one look like child’s play, and it’ll be a cancer that spreads across the whole country.

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