Slaughter & Rees Report: Will the World Get a Vote in America?

Here in the United States, attention is increasingly turning to the November elections—and, all indications are, to the rematch election of incumbent president Joe Biden against former president Donald Trump. After former president Trump’s primary victories in Iowa and here in New Hampshire, his renomination as the Republican candidate looks extremely likely. In today’s average of national polls, Trump is leading former ambassador Nikki Haley 72.6 percent to 17.4 percent. And on the Democratic side, President Biden faces no meaningful challengers.

To us, one important question this prospective rematch begs is, “Will the world get a vote in America?” By this, we mean, “Whoever is the next U.S. president, who in Washington will articulate a vision for globalization other than building more walls?”

A few days ago, Jeff Stein, of the Washington Post, published yet another insightful story with the bracing headline, “Donald Trump Is Preparing for a Massive New Trade War with China.” Among other time-for-warm-milk-and-cookies revelations: “Trump has discussed with advisers the possibility of imposing a flat 60 percent tariff on all Chinese imports.”

Lest you dismiss this news as a partisan problem, we remind you that on many measures, President Biden’s collective policies toward globalization have followed much the same text as President Trump’s—albeit with a softer tone. Yes, President Biden is not calling for a massive new trade war with China. But all the basic components of the trade war that President Trump launched years ago have remained intact under President Biden today. Like Trump, the Biden administration has negotiated exactly zero new free-trade agreements or similar agreements to liberalize cross-border investment. And amidst the heartbreaking humanitarian crisis at the U.S.-Mexico border, there remains no meaningful momentum to rationalize and liberalize U.S. immigration policy. As the Wall Street Journal rightly summarized this week, “Instead of reversing policies driven by Donald Trump’s protectionist view, Biden has advanced many of them.”

Thus has America lost its place in the global economy. And in both parties at both ends of Pennsylvania Avenue, few voices are calling to find a way back. As a summary statistic for this sobering state of affairs, look no farther than the kerfuffle that arose several weeks ago and persists today surrounding Japan’s Nippon Steel offer to acquire U.S. Steel for $14.9 billion.

Democrats and Republicans alike assailed this offer as a threat to national security. But as one of us (Matt S) wrote in an op-ed column that the Wall Street Journal kindly published a few weeks ago, “The complaints are misplaced. Essential to national security is economic competitiveness, which is strengthened by global connections such as inward foreign direct investment.”

This column went on to share the latest statistics on the many benefits that FDI continues to bring to America—in particular, the FDI of Japanese companies.

Inward foreign direct investment by companies like Nippon Steel boosts America’s economic competitiveness. Although U.S. affiliates of foreign multinational enterprises comprise less than 1 percent of U.S. companies, in 2021 these affiliates in America accounted for 13 percent of business spending on research and development, 17.3 percent of investment in plant and equipment, and 23.6 percent of total goods exports.

All these activities contribute to successful businesses and high-productivity, high-paying jobs. In 2021 these affiliates employed more than 7.9 million U.S. workers, of which 35 percent were in manufacturing, far higher than manufacturing’s 9.7 percent share of all U.S. private-sector jobs today. Total annual compensation at these companies averaged $86,859 per worker—about 22 percent above the average for the rest of the private sector. Workers at globally engaged companies tend to earn more than comparable workers at purely domestic companies because global engagement fosters innovation and growth.

Foreign direct investment from Japan in particular has fueled economic dynamism across America. Forty-one years ago in Marysville, Ohio, Honda opened the country’s first automobile production plant owned by a foreign company. Today nearly 600,000 Americans work in foreign-owned transportation-equipment facilities, which are among the world’s most innovative. Across industries, more than 963,000 Americans work for Japanese companies like Nippon Steel, which itself has been operating in the U.S. since the early 1980s …

Global commerce needs checks to protect essential defense technologies and products. But beyond these, America can’t be fully secure without a globally competitive, high-productivity economy. International investment and trade strengthen America.

Nearly all Americans wish for a safer and more prosperous life for their children—and most of them understand that engaging with the world needs to be a piece of that. In recent surveys, 68 percent of Americans said immigration is a good thing overall for the country—and a similar 61 percent of Americans see trade as an opportunity for growth. Most Americans do not want to build more walls against the global economy. As we and coauthors have written over the many moons, most Americans want to build more bridges connected to the global economy—along with more ladders of opportunity to take advantage of global engagement. And that is what much of the rest of the world wants too. Instead, much of the rest of the world puzzles at America’s protectionist drift and mutters, “What the hell?”

But the rest of the world does not get a vote in America. So here we are. We two Matts remain optimists. We hope that new leaders will step up to voice a new vision for how America can reconnect to the world in a way that works all around: for American companies, for American families, and for American communities—and for the rest of the world as well. Scores of millions of voters in America—and hundreds of millions of like-minded people abroad—await.