One more major American company has been acquired by foreign interests. As Anheuser-Busch has agreed to being purchased by InBev, we see the relentless march to foreign ownership proceed. While the turmoil in the financial markets and the ‘bail-out’ of Fannie Mae and Freddie Mac dominate the headlines…reverse globalization takes over the United States.
I call what is happening ‘reverse globalization’ because, for Americans, globalization was a good thing when the United States was dominating the world, spreading into more and more corners of the globe, and investing in more and more foreign companies. Now, the shoe is on the other foot and the question of concern is over American attitudes to world trade…to further globalization.
We see trade agreements are in danger in Congress. We hear Presidential candidates claim that firms that transfer jobs off shore will be punished. And, we see more and more American Companies being purchased or invested in by foreign companies or national wealth pools. The question is how long will the voters in the United States support open trade and world economic evolution?
The problem is that in an inter-dependent world, countries cannot act as if they are isolated from other nations and international financial and economic markets…even if they are the sole remaining superpower. And, as we see in economic affairs, what has been started and supported historically must play itself out. It has taken us a long time to arrive at the situation we are now in and there is plenty of blame that can be passed around to all who have been involved.
The fact is, we are in the situation we are now in and we must deal with it in the best way we can. And, whether we like it or not…we must accept the fact that the current administration in Washington…the “Gang that couldn’t shoot straight”…is going to play a role in how we get to the future. The sad thing to me is that both candidates for the presidency are concentrating on programs that they are going to put into place once they are elected…and fail to recognize that the situation is not one in which they are going to be able to enact any of these programs.
Furthermore, more and more people are beginning to realize that the situation is continuing to unfold…the economy has not felt the full impact of the financial upheavals and the collapse of the housing market…and, that Americans are not just “whiners” who have a mental depression.
The good thing is that things are proceeding and being dealt with. There are going to be more assets written down. There will be more losses. There will be more financial institutions taken over by the regulators. But, situations are being identified and people are moving to resolve the problems. I believe that this will continue, if we can just keep attention-seeking Senators from sending out letters that set off panics at financial institutions.
It seems to me that two major changes in the way the United States does business is needed in the current situation. First, we need to make sure that the world does not dive into a ‘protectionist’ shell. That is, it is best for all to keep trade open, to allow purchases of assets go ‘both ways’, and to facilitate the evolution of world trade integration rather that arrogantly stand above the fray and maintain the superiority of the anyone country.
Unfortunately, this is going to result in some pain because of the policies and programs that have been instituted in the past. The rest of the world owns a lot of America’s financial assets. With the value of the dollar being so low, it makes sense for these wealth interests to convert their financial assets into United States physical assets. This is something we are going to have to live with. The alternative, too, is painful…a protective world where trade is reduced and trust and cooperation is minimized. I believe that it will benefit more people to reach a balance closer to open trade than it will be to ‘close down the shop’.
Second, international communication and cooperation must be promoted on a greater scale. An article in the Financial Times has argued that the G-8 is really inconsequential any more and that the world stage must be broadened to at least the G-20. The point is that there are many more nations that play a significant enough role in the world that they must be included in any discussions taking place. Things just won’t get done if the circle is not widened.
But, even more important, the arrogance of the United States must be minimized. The United States must play by the rules of inter-dependent nations. The United States must become one among many and cannot appear agreeable to what others want when they are together and then go home and undercut the whole process.
This, too, will be painful. The consequences of the monetary and fiscal policies of the last seven to eight years must be reckoned with and this is going to hurt. But, the United States has to bring itself more into line with the rest of the world. Its policies are already hurting enough countries, countries whose currency is tied to the value of the dollar. And, the United States must accept the fact that because it did not play by the rules in the past that the nations and areas that did work hard to establish discipline and market confidence over these years must not now abandon their efforts in order to help out ‘good old America’.
As I have suggested before…the United States is at a ‘tipping point’. The country that we have known over the past forty years or so is rapidly receding. We are struggling to gain the future.
I have gone through another ‘tipping point’ in my life. My children have asked me over the years…”what was the big deal about Viet Nam?” This, I have found, is a difficult question to answer in a simple way. Perhaps the most relevant thing I have said about this period is that life before the 1960s was quite different from life after the 1960s.
I firmly believe that life after the 2000s will be considerably different than life before the 2000s. How so? No one has an answer for that at this time! But, we all must be flexible in our commitments and return to the principles of sound financial and economic programs and policies and cooperation and openness with others in building the world community.