Joseph Stiglitz: How foreign governments are buying America
Big Think presents a short video of Columbia University economist Joseph Stiglitz explaining how foreign governments are buying America.
Big Think presents a short video of Columbia University economist Joseph Stiglitz explaining how foreign governments are buying America.
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Hey, remember back when everyone in the USA was afraid the Japanese were going to "buy up America"? If not, go rent the film adaption of Rising Sun.
Get a clue, you jingoists, commerce knows no nationality.
If they buy us, do we get health care and constitutional liberties from our new corporate overlords?
Because the government overlords aren't so keen on those.
Hail and well met, Lord Murdoch!
Thank you Jesus that I never had to take notes for a graded course exam from this man lecturing on this topic.
Well yes, and now China can't afford to let America fail. Behold global co-dependency!
The real story is how the Republicans sold America to the highest bidder.
Look on the bright side, they usually sell out to the lowest bidder.
uuuuuuuuuuuh.
Americans have a 0% savings rate because inflation makes holding cash a losing "investment". Plus they need a bigger car.
uuuuuuuuuuuh.
the title of this post is very misleading, stiglitz is talking mainly about his concerns over deregulated markets, not about foreign gov'ts buying america.
@ZUZU: Yes, the jingoism must be stopped! But the Djangoism is just beginning!
There's one bright aspect of having foreign buyers -- they think America is worth buying. It might sound a bit like a Republican quote (I'm not Republican), but it does mean we're doing something right. It'd be better if we had potential buyers beating down the door and we were turning them away.
"Dr, Evil. I spent 30 years of my life turning this two-bit evil empire into a world class multi-national. I was going to have a cover story in Forbes. But you, like an idiot, wanted to take over the world. And you don't realize that there is no world anymore. Its only corporations."
(Or, like the USA thought Iraq was worth occupying?)
Actually, word is that SWF are holding off serious investing in USA localized capital because things really do look that bad.
>>#12 posted by zuzu
SWF... Sovereign Wealth Funds?
Dbarak, yes, Sovereign Wealth Funds (aka "foreign investment"), not Single White Female or ShockWave Flash. :)
"Profit maximizing" sounds an awful lot like "whoring."
They're buying us for our freedoms.
I agree with Insomnia. The reason I struggled with Econ in college was because of teachers like this guy, who can't seem to say a sentence without a dozen uhhhs in it.
Hmmm... economists need to be forced to take classes in rhetoric. The reason we don't listen to them is they don't know how to sound interesting, even, surprisingly, when the audience is interested.
To wit: I turned this off after a minute or so; he's incapable of basic logical progression in a relatively straightforward path ~ put another way, he needs to study the economics of language.
English teachers should be the highest paid people in this country (disclaimer: I am an English teacher), or at least paid more than this guy. I ask: what good is brilliance if you can't tell anyone what you're thinking?!
Michael
@ ZUZU: Is that a movie, or a live feed from one of Tarantino's drug-induced fever dreams? Still, I simply must see it.
And your reply is proof that there is some sort of higher order to the universe. Observe: I post a seemingly random response to your post to get a chuckle. You post the awesomely absurd Sukiyaki Western Djangoism, which is just about as easy to follow as Stiglitz's rambling lecture. The gears of existence whirr reassuringly.
Yawn. I thought it was the Germans and Japanese that were buying us out? Oh wait, wrong decade.
Terror about foreign governments "buying" the US is silly. They are not buying the US, they are buying into US corporations that have to follow US laws. What does this mean from a practical point of view? Nothing. At the absolute worst, you might get some cross over culture from high level management if they company is fully owned by another nationality... and by "culture", I mean stuff boring corporate culture like engineering and quality practices.
If anything, it is foreign governments that are putting themselves at the mercy of the US. Imagine that China and the US go to war or suffer extremely strained relations. The US shrugs, says "no soup for you", and freezes all Chinese accounts, declares stock held by Chinese to be monopoly money, and suddenly a mind numbing amount of China's wealth is completely gone. Not only that, but all the other companies in the world (even one's that are neither US nor Chinese) can't trade with China. Sure, it would sting the US too and tank their economy, but the US would recover because the world has no great shortage of cheap labor. People really don't understand how much financial power the US has. The US can basically unilaterally make another nation utterly unable to operate in the world mark by simply declaring that US banks can't deal with them. It can take investments made by other nations and void them. If China wants to hurt the US, they are better off using nukes. At least in that case they will do some serious and lasting damage before being kicked backwards a 100 years.
A US corporation is pretty useless to a rival government for anything other than a money funnel. The best a foreign government can do is boost prices of US companies (by buying into them) and hopefully reap some of the profit. The price they pay for this is that they form an economic dependence on the US and can't harm the US without harming themselves. Further, whatever minor leverage they get over the US economy is repaid with interest by the fact that now the US can simply use the force of law to raid any investment they have made.
Rindan, ever heard the term "illusions of grandeur"? The US tried this policy with Cuba. While it certainly hurt them, it hasn't stopped foreign companies (mainly european, south-american), from investing there.
There's an irony here. Can you spot it?
Rindan overlooks much. The drill for a foreign takeover of an industry, as everyone who's ever had a US company buy them out knows, is to hollow out the purchase by moving all of the assets to your country (or colony thereof) and then shut down the remaining shell. You get the locals to train your nationals on how to operate the machinery and then move said machinery out in cargo container vessels. For example, Canada exports mountains of copper to the US and then buys it back at a markup once it's been turned into plumbing: the last copper extrusion machine was hauled away in the 80s.
Sometimes you can't even be bothered to do that: just buy out a rival and then shut it down to get a global monopoly. If you're a widget maker then buy US Widgets and close it down for the world-wide widget monopoly. That's easily worth the purchase price: especially in markets with overcapacity like auto or aerospace. Who needs Detroit when you have Honda?
In the case of natural resources, whose extraction you can't export, you buy to give your country priority. For example, the "proportionality" clauses in NAFTA say that Canada has to export all the oil that the US can buy even if that means Canada doesn't have enough fuel to run our hospitals or schools.
So that leaves the locals with job choices of coal miner, waiter at the resort or tourist attraction and maybe data-entry at the local admin office. And, of course, it would be pure hypocrisy for the US to object to these arrangements. Whenever anyone else has suggested that a goal of an economy might be to provide tolerable living conditions for the populace, well, that's Godless Communism and in goes the Marine Corps. For example, just about the only bone of contention with Castro was that he wanted to nationalise the Cuban sugar cane industry so that it was of some benefit to Cubans. It was only after Big Sugar told their buddies in Washington not to let that happen that Castro started asking his friend Che about that communism stuff.
ALOWISHUS said:
it's a real movie. it's the newest feature by the noted japanese director, Takeshi Miike.
Are you joking? Is there sarcasm here that is just flying over my head? Yes, if you want your nation to have the illustrious prosperity of Cuba, uh, yeah, go ahead and have the US turn its entire financial engine against you. Cuba is a country where their chief industry is US dollars sent by relatives... and this is AFTER the stringent limits placed by the US government on how much can be sent back to family. So yes, achieving the prosperity of Cuba can be yours if you turn the American financial system against you, but I am not exactly sure what you win.
China, while certainly having had the occasional bout of crazy in its past, is a mostly rational nation these days. They want wealth, prosperity, and stability. Getting into an economic pissing match with the US isn't going to produce either. As China invests in the US, it simply ties its own health to the US. The Chinese economy (and the world economy in general) is getting smacked around because the US economy is taking a beating. Like it or not, the US has made itself the heart of the world economy through its wealth and financial institutions, to say nothing of its other corporations. When the US feels pain, the world feels pain, and often times the pain the world feels is worse.
China investing in US companies isn't reversing the trend. It is in fact just making the economic integration tighter. China might as well ripe out their own heart before they try and inflict intentional economic pain in the US. The Chinese might be totalitarian ass holes, but they are rational. They realize that economics isn't a zero sum game. Their best bet is to invest in the US, hope the US does well, and collect the dividends when it does.
In an economic war, not only is China going to lose over the long term, but their own people are going to tear down the government. The Chinese people are happy right now because they are tearing along at a merry 10% growth rate. Go back to the good old days of Mao economic "prosperity" and the Chinese government can kiss itself good bye.
The best economic war with the US will net you is a little good old fashion M.A.D. that isn't all that mutual and that the US in the end is going to win. The US can tear the beating heart out of any economy and leave it a shattered hulk. The US can survive such fights, China can't. If irrational self destruction (something that China really shows no interest in) to hurt the US is your mission, seriously, do it the old fashion way... nukes.
Oh, and as a perfect example, the Shanghai stalk exchange is worth less than a third of what it was a year ago. This is economic damage that the US has inflicted on China entirely by accident. Ponder for a moment what would happen if the US and China went at each other intentionally. The idea is too laughable to even contemplate.
Rindan:
You know global markets. No question about that.
Good to know China won't nuke us. I wasn't worried about that before but I'm glad to know now that it won't happen.
How about, in the future, we manage our local markets so that they don't collapse. For the sake of investors in America? I realize that some people might be gleeful that we could take extreme risks and lose and we won't have to face the brunt of the consequences, but lets at least attempt to be better than that.
We should have a better sense of responsibility. If we have such a dominant position in the world economy, we should behave like reasonable stewards, not evil overlords. I'm afraid that deregulation under our current administration has turned our financial sector into a bunch of greedy assholes. Please don't try to pretend this crisis isn't a Wall Street circle jerk of greed.
Thanks.
Enjoy your money.
There was a theory that Al Quaeda's real goal was to have the US invade the middle east and get bogged down there enough to bankrupt the US (I think the Army even found evidence of that in some laptops in Afghanistan).
And I was thinking about how so many conservatives in the US are so paranoid about terrorism and Islam that they think "Europe is a lost cause, it's already overrun with Muslims."
And yet here is as great a threat to US interests and sovereignity and it was practically caused by conservatives with their insistence on deregulation.