Where Would The US Be If Foreign Investors Pulled Out?

There has been a rising nationalistic negative attitude against foreign companies investing in and owning property in the US. I’m not going to make a final judgment on whether this is good or bad, just examine what would happen if those countries pulled their investments out or sold/abandoned their properties.

The nationalistic attitude toward foreign investors owning manufacturing locations in the US is pure folly. The negativity comes from those who make the false assumption that if foreign investors moved out, that domestic investors would increase production.

First thing to note is that in recent years, foreign investors have probably been more aggressive in investing in capital investments in the US than domestic investors have been. Toyota, Hyundai, mining companies have been building factories here. Chinese investors, as well. Have you noticed these companies have not been announcing mass layoffs while Ford, GM, GE, etc have been?

While US corporations took the bipartisan tax break handed to them and used that money to buy back their own stock and fatten the wallets of corporate executives and major investors, it has been left to foreign investors to expand manufacturing and create jobs.

This also means that if and when the stock market crashes, domestic companies will be laying off and closing factories. The only jobs with a chance of stability are going to be the ones owned primarily by foreign investors.

Under Trump, we stand the extreme chance that foreign investors whom he welcomed with open arms will either be forced out or will voluntarily pull up stakes as soon as they recoup their investments. If that happens, we have problems.

Some may believe that American investors would step in and simply take over the existing factories. It’s not that simple. First, there is the problem of establishing entirely new supply lines. Then there is the even bigger problem of intellectual property. An American company could not simply take over and produce the exact same products. They would have to come up with entirely new product designs. Then the factories would have to be retooled. Employees may have to be retrained. If they tried producing the same product, there would be legal challenges and the likelihood that other countries would boycott or ban the products due to those challenges.

Then there would be the problem of having a market to sell to. Depending on the product, like vehicles, with employment and wages taking a large hit, that would mean the market would not be open to new products enough to warrant that much of an outlay. In addition to whether consumers would spend money on major purchases on entirely new product lines meant to replace established product lines. There is a reason that you see vehicle models bearing the same name which have existed for decades. Those are product names that consumers are loyal to.

Last but not least this brings new problems and dimensions to how well American manufacturers and possibly even retailers are welcomed in other countries. One can say all they like about China’s trade policies but their policies are extremely well defined, so US corporations have not done business there and been caught off guard. They knew exactly what they were getting into before they got into it.

Personally, I’m not against each country doing their own manufacturing in their own country. I think that’s the way it should be. However, with the way things have been conducted for so many years, changing suddenly, unilaterally, in mid course will absolutely do damage to our trade agreements globally. Some will say it doesn’t matter because we can produce everything we need. Maybe you’re right, maybe not but that is not the point. If other countries choose to reduce or end trade with us, that does damage to the value of the dollar against other currencies, which will result in runaway inflation. Restoring trade deals under such circumstances would take decades because trade is built primarily on trust. Considering how many agricultural producers, retailers and manufacturers rely heavily on international trade, no small number would go out of business entirely. Don’t forget there are some items we can only get through international trade. Like rare earth minerals, most coffee and all chocolate.

Of the top 500 most profitable companies globally, 129 are in China, 121 in the US. Of the top 10 largest banks by deposits, 4 are in China, 3 in the US, 1 each in the UK, Japan and France.

Too many Americans think the rest of the world cannot survive without us. We comprise only 5% of the world’s population. We account for over 1/3 of all national debt globally. Some sources state that our private debt equals 150% of GDP. In all honesty, if other countries, especially China, decided they wanted to obliterate us economically, it would not be that hard to do at this point. They are not far from getting angry enough at us to do exactly that. With other countries deeply in debt as well, they would not be able to support us in that level of a trade war, even if they wanted to. It’s doubtful they would want to by now. So it is time to rethink this isolationist, nationalistic, arrogant attitude. Put the steroids down and start thinking rationally.

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