Obama will consult with 20 CEOs of major U.S. companies today to get their
advice on how to stimulate U.S. economic growth and create more American
of these kinds of meetings is that the heads of American headquartered
companies like GE, Google, PepsiCo, and Motorola have a special concern for the
fate of the U.S. economy and useful advice on how to fix it. But do they? Are
these really American companies in any way other than that they happen to be
incorporated in Delaware of some other U.S. state, and do these CEOs have or
even can they have the best interests of the American economy at heart?
that most of these companies sell and produce far more outside the United
States than inside. They often have many more employees outside the United
States than inside and a large proportion of their shareholders are also not
American. They must deal in most cases with more than 100 presidents and prime ministers of countries in which they have major interests. In the case of the
European Union they must deal with officials in Brussels who are responsible
for an economy that is about a third larger than the United States. In
Beijing and New Delhi they must deal with governments that are currently
driving the development of economies that are almost surely going to become
larger than the U.S. economy in the next twenty to forty years.
that these companies have greater financial power and greater production
capacity than all but a handful of countries. They are quasi-sovereign entities
and their CEOs are in many respects more akin to powerful heads of state than
to your average everyday businessman. It is not a criticism of them to point
out that their interests may or may not be congruent with America's interests.
Motorola and Cisco, for example, do a large portion of their production in
China. They benefit from China's undervalued yuan that allows them to have
artificially low production costs. Obama badly needs China to stop manipulating
its currency to be undervalued if he wants to realize his goal of doubling
U.S. exports. But a halt to China's currency manipulation is not
necessarily in the interests of the companies that do a lot of their production
there. So what will the CEOs say to Obama about currency manipulation?
particularly troubling aspect of the global business situation is the affect of
the asymmetry of global political organization. In democratic Washington, for
instance, the CEOs of these companies are major political players. They have
their PACs, legions of lawyers and lobbyists, and ready access to the highest
levels of government. Moreover, they can take the U.S. government to court
anytime and win. In authoritarian Beijing, on the other hand, not only are the
CEOs not political players, they need to pay careful attention to which way the
winds are blowing. So in a funny way, they may have to be more responsive to
the wishes of the authoritarian governments than to those of the democracies.
And certainly it is easier for them to lay off workers and close facilities in
the U.S. than it is in most other countries in which they operate including the
EU and Japan.
This is not
to say that Obama should not be meeting with them. Some CEOs like GE's Jeffrey
Immelt seem to have had some second thoughts about off-shoring their production
and have even brought some production back to the U.S. from abroad. So it will
no doubt be informative for Obama to listen to what they all have to say. But he
must do so with a clear understanding of the fact that his problems are not
necessarily their problems and indeed may be the source of some of their
really help if the U.S. government had a clear articulation of the U.S.
national economic interest. But it does not, and this is all the more reason
for Obama to be non-committal about what he hears.
rather than listening too much, the President ought to use this occasion to act
like Chinese, Singaporean, Israeli, and French leaders and tell the CEOs that
they really need to invest in America. He could remind them that when they need
help in protecting their intellectual property and in protesting discriminatory
policies abroad, it is not to the Chinese or E.U. or South Korean or other authorities
to whom they turn for help. Rather it is to Washington. He could also remind
them that more of their innovation comes out of U.S. laboratories and universities
than anywhere else and that to keep it going more investment and U.S. based
production is also necessary. He should make it clear that he'll be watching
their investment announcements and that while he will strive to make America
more attractive for their investments, he also expects the companies to do
their best to make it or provide the service in America.
all, what America makes (including services provision) makes America.
Clyde Prestowitz is president of the Economic Strategy Institute and author of The Betrayal of American Prosperity.
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