Letter: US multinationals are unlikely to fall in line – Monetary Instances


Rana Foroohar, in her highly perceptive column “Consciously decoupling the US economy” (December 2), asks big questions about US multinationals falling in line with a US decoupling from the global economy. The answer is surely “no” if the self-interest apparent in this Unctad data is anything to go by: of $19tn of world trade all but $4tn is linked to multinationals at one or both ends of it, with US multinationals dominant among them.

Before shedding a tear for the US, know that according to the OECD the US is a net importer of enterprises from countries such as Germany (1,780 US enterprises in Germany, 4,070 German enterprises in the US), similarly with France and Japan. And, while it is true that the US multinationals support more jobs abroad (13.8m) than any other country (France 5.8m, Germany 5.3m, and Japan and the UK 4.9m each), these countries’ multinationals support a lot of jobs in the US.

Moreover, Ms Foroohar is so right to ask whether US multinationals will be willing to transfer profits back to the US and invest them in the US economy (rather than just in share buybacks) to the benefit of US workers; and whether US taxpayers will support the higher taxes needed to train US workers. I think not, and I thought I detected a touch of scepticism on Ms Foroohar’s part. After all, higher taxes and higher costs are the antithesis of American capitalism. “Please go away, Donald Trump,” I hear it said, “but not until you have cut our taxes and deregulated our economy some more.”

At the very most, US multinationals will support their own deglobalisation to the same extent that US banks supported increased bank regulation after 2008 — that is, not so much.

Prof Paul Hallwood
Dept of Economics,
University of Connecticut, US



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