There’s a topic that I’ve been mulling over for some time now but haven’t been able to come up with enough of a handle to cobble together an intelligible post so I’ll just blurt it out.
I’m beginning to wonder if we should be concerned by the increasing power and influence of foreign-government owned companies in the world economy generally and our economy specifically.
I’m not concerned about foreign companies. Nestle, GlaxoKlineSmith, Bayer, Sony, and the like don’t bother me at all.
The sort of companies that concern me take a number of forms. First, there are the national oil companies, NOC’s. That includes not only companies like Saudi Aramco but Mexican Pemex and Venezuela’s Petróleos de Venezuela, S.A., which own Citgo. The holdings of these NOC’s dwarf those of the “Big Oil” but for some reason or other we don’t hear nearly as much complaining about them.
Another form that the companies I’m concerned about are the varieties of manufacturing and service companies that are substantially or completely owned by foreign governments (which could include local governments as well as national government in some cases). That’s the case in many foreign banks, lots of shipping companies, and a lot of aerospace companies.
One additional form that I think could use a lot more consideration if not scrutiny are sovereign wealth funds, state-owned funds that invest in U. S. (and, of course, other) companies.
If I were confident that all of these sorts of companies owned by foreign governments had only economic interests, I wouldn’t be concerned about them but states have a way of having interests other than economic ones. So my concerns are two-fold, I guess. I’m concerned that companies owned by foreign governments have leverage in their home countries to set the terms of competition, a non-competitive advantage, and that they may have interests that are the interests of their home countries governments rather than purely economic ones.
Should we be concerned? What, if anything, should be done? I’m open to suggestion here. I’ll continue to mull this over and I’ll present a few thoughts of my own on the subject later but I wanted to get the subject out on the floor first.
Interesting that you post this at this time. Just this morning, Pat Lang posted something in a similar vein.
I think there are some legitimate concerns and the problem will only become worse in the future.
Raise the US savings rate, increase the value of the dollar and decrease the current account deficit if you want to minimize foreign influence in the United States — that means raising taxes, running surpluses and decreasing expenditures at the federal level and probably serious tweaks on private sector spend v. save incentives.
As I noted in the body of the post, fester, foreign investment in the U. S. doesn’t bother me. I’m not so sure about foreign governments investing in the U. S.
The idea raises a host of interesting questions. For example, should the U. S. government be allowed to own stock in U. S. companies? I’ve heard all sorts of people argue against that. Isn’t it odd to be opposed to the U. S. government owning stock (which could include being the majority stockholdher) in U. S. companies but unconcerned about foreign governments owning stock in U. S. companies?
Why wasn’t a representative of Citgo called to Congress for grilling with Exxon Mobil, Shell, Chevron, ConocoPhillips and BP America?