Let the foreign money flow
A ROSY GLOW surrounds the memory of American economic dominance in the 1950s and 1960s, when US companies could invest easily anywhere there was an agreeable government, and few foreigners had the resources to buy American assets. Today the world economy is much stronger, and it is no surprise that foreigners are buying up American companies, several of them in New England. Individual purchases may be good or bad, depending on the new owners' intentions, but overall, foreign investment benefits this country.
Workers at GE Plastics in Pittsfield, for instance, shouldn't care where their new owners live, as long as they retain the workforce and invest in the business. The Saudi Basic Industries Corp. wants to do just that, by adding 75-100 employees at the renamed Sabic Innovative Plastics.
The US economy requires massive infusions of capital to keep growing, but many Americans don't save the money needed for these investments. The United States has one of the most favorable business climates in the world, however, and new centers of prosperity abroad can provide much of the capital needed for growth.
That's no comfort to people working at companies that have been downsized by foreign investors, but American acquisition specialists can be equally hard-nosed, and, overall, the churning makes the economy more efficient. The US government ought to make sure displaced employees retain the protection of health insurance and some income support while they seek new work.
New England companies bought by foreign interests this year range from Putnam Investments (Great-West Lifeco of Canada) to the Samsonite Corp. (CVC Capital Partners, from Britain). None appears essential to national security. The acquisitions did not cause the ruckus that greeted the proposed Chinese acquisition of the Unocal oil company in 2005, or the proposal by a company in the United Arab Emirates to manage six US ports in 2006. The companies both withdrew their offers amid congressional opposition.
Unocal is dwarfed by such US companies as ExxonMobil and Chevron (which bought it after the Chinese dropped out). And the Arab company never planned to assume total control over the six ports. Security would have been supervised by the Coast Guard and federal customs personnel. In both cases, fears of foreign control were overblown.
An interagency Committee on Foreign Investments monitors the purchase of essential US assets. In the wake of the Unocal and Emirates controversy, Congress took a look at the whole issue of foreign ownership, but this year passed a law that only tightened procedures a bit, an indirect acknowledgement that most foreign purchases do not have any strategic implications.
Yet Alan Tonelson, research fellow at the US Business and Industry Council, said in the Globe this month that "When they buy these companies, they're acquiring control over the most dynamic pieces of the American economy, and they're acquiring control over America's future."
This is hyperbole. Foreign investment ebbs and flows depending on the investment prospects in different countries.
The federal government should keep track to make sure that truly strategic assets are protected, but with a $13.768 trillion annual gross domestic product, the US economy will absorb a great number of foreign purchases. Rather than keep the foreigners out, the more pressing task for the US government is to make sure American investors enjoy the same freedom to buy companies in other countries.
