Red, White & Grew Blog

In today’s global economy, what makes a product American, Japanese, or German? Blind nationalism is certainly not in any country’s best interests! Are US-based multinationals US companies? What about their products produced in Europe, Asia, or Japan? As the escalating cost of new wafer fabs forces AMD, Intel, Philips, Motorola, or Toshiba into partnerships with companies from outside their borders, what nationalities do they represent?

In sorting through what is key to any country and its economic viability, four considerations are primary:

* Employment — Do wages circulating in the local economy create more jobs?

* Taxes (local and federal) — Do you qualify for “local” status if you pay taxes?

* Value-added content — Do local materials, parts and/or labor contribute 60 to 80 percent of the product’s value?

* Social conscience — Does the company participate in local philanthropy and address safety, welfare, and environmental issues?

“Buying American” means selecting products that not only meet our standards for the classic criteria but also employ Americans, support our government, include value-added content (an investment of technology and locally produced goods and services, not just final assembly), and ensure the social welfare of our people.

Many in the United States support the buying of American-made products. We buy cereal from Pillsbury, gas from Shell Oil, and silicon from MEMC without realizing that all three of these companies have foreign parent companies. But the cereal, gas, and silicon we buy are made in the United States, using mostly American raw materials and employing a mostly American staff. The benefits these “American” companies provide to industry include continued product development, capital investment, and, as the companies grow, new jobs.

Consider Hoya Micro Mask, an American company that sells products in the United States. Hoya has local management and workers, over 80 percent US value-added content, and pays corporate, real estate, and social taxes to local and federal governments. However, our parent company is multinational. The benefits of this relationship include technological transfer from Japan to the United States to improve our mask-making technology. Hoya provides us with capital to enhance our processing and manufacturing equipment. It lets us create an environment of staff, equipment, and technology to meet our customers’ product needs and provide better service. Having Hoya as our parent company allows us to explore directions that might have been financially impossible before.

One goal of the Hoya USA companies is to benefit the US economy through local employment, taxes, capital investment, and technology development. Together, we and our customers become globally competitive with products and services that are superior worldwide. What the United States does not need now is for the new federal administration to unleash protectionism again. It is indeed time for an enlightened nationalism in our global community, where “local” reflects reality.

The U.S. economy’s restored health is the reason most experts give for President Reagan’s landslide victory in November. Just three years ago, the economy had struck bottom. Nearly 11 percent of the nation’s workers–more than 12 million people–were out of a job. The nation’s output of goods and services had dropped steadily for over a year. The nation was caught in the worst economic slowdown since the dark days of the Great Depression of the 1930s.

But tax cuts and increased government spending sparked a dramatic recovery in 1983. Unemployment plummeted, to 7 percent of the labor force by November, 1984. Employment soared, to about 107.5 million. More Americans had jobs than ever before in history.

Keeping this “incredible job machine” strong won’t be easy. The reason, experts point out, is that the economy is a delicate mechanism. Repairing one problem may worsen another one.

THE DEFICIT DILEMMA

Take the high cost of borrowed money, for instance. High interest rates make it more costly for businesses to finance expansion and for consumers to buy houses or cars. Lowering the U.S. budget deficit could bring down interest rates, experts say. But if the U.S. trims the deficit by raising taxes, consumers will have less money to spend. So, the cure for one woe, higher taxes, could make the economy sicker by cutting consumer spending.

The economic recovery has already slowed down since the summer. “We’ve been in a mild recession for almost six months and will stay athere for another three to six months,” says Roger Brinner of Data Resources, an economic forecasting firm.

Still, the slowdown doesn’t worry most economists. In fact, some say it’s a good thing, allowing the economy time to digest last year’s rapid growth. Others predict moderate growth in 1985 of at least 3 percent–the level that’s needed to absorb the flow of new workers into the labor force. And interest rates, though still high, are falling. So, the economic picture for the short term looks good. THE LONG TERM

Gauging the economy’s potential for long-term growth is harder to do, although analysts are watching two trends. One troubling trend is the creation of most new jobs in services–fast-food restaurants, computer repair, health care, and the like. Many of the new service jobs pay low wages, compared to manufacturing jobs. And they aren’t concentrated in urban areas, where unemployment is highest. “It’s made the problem of minorities worse,” Thomas M. Stanback, a senior researcher at Columbia University, told UPDATE. “There’s evidence a lot of these low-wage white collar jobs are really dead-end jobs.”

On the bright side, the number of young people entering the labor market is falling. The labor force exploded in the 1970s as the baby-boom generation–children born during the decade after World War II–began their careers, and more women sought jobs outside the home. With the labor force’s growth slowing down, competition for new jobs should ease.

Despite good economic prospects for 1985, “we really haven’t escaped from the basic problem,” Brinner told UPDATE. “President Reagan is determined to keep taxes low, Congress is determined not to give up its spending plans, and the Federal Reserve–the nation’s central bank–is determined to keep inflation low. We have to get some agreement among Washington policy makers.”