Opinion Editorial | |
| Monday, May 18, 1998 | |
Chrysler-Mercedes Merger Good News for U.S. |
There is much hang-wringing going on about the merger of Chrysler and
Mercedes. Predictably, xenophobes like Pat Buchanan are bewailing the loss
of our national patrimony, the passing of "an industrial crown jewel"
into foreign hands. Henceforth, he warns, Germans in Stuttgart will dispose
of Chrysler's profits, decide the fate of its workers, and reap the benefit
of its technological advances. "The sale of Chrysler is a loss to
America," Buchanan believes. One would think that Mercedes planned to pack-up Chrysler's plant and
equipment and put it all on a boat to Germany, leaving Chrysler's workers
standing in the unemployment line. This is obviously ridiculous. In fact,
there is every reason to expect that the union of Chrysler and Mercedes
will be a net plus not only to Chrysler's owners and employees, but to the
United States as a whole. In the first place, Mercedes is not going to be transferring any autoworker
jobs to Germany. According to the latest data from the Bureau of Labor
Statistics, German workers make very substantially more than American workers.
In 1996, the average hourly compensation cost for a production worker in
manufacturing in Germany was $31.87--the highest in the world -- compared
to $17.70 in the U.S. If anything, Mercedes will probably be further expanding
its U.S. operations, because labor costs are lower here. Second, there is strong evidence that foreign ownership is beneficial
to workers. On average, workers in foreign-owned U.S. businesses make about
25 percent more than those employed in domestically-owned firms. Moreover,
foreign direct investment in the U.S. has tended to be concentrated in relatively
high-paid industries, such as manufacturing. Third, the flow of technology is likely to be as much from Germany to
the U.S. as from the U.S. to Germany. As a 1991 report from the National
Academy of Engineering concluded, "new knowledge or basic research
increasingly has become a 'global public good,' impossible to bottle up
within any one nation's borders." In other words, we cannot go it
alone and must learn to work with and learn from those in other countries
if we are to remain competitive. Finally, the evidence shows that foreign-owned firms contribute as much
to the U.S. economy as domestically owned firms. The domestic content of
output by foreign-owned firms is almost as high as that of domestically-owned
companies: 86.9 percent for the former and 92.9 percent for the latter in
1994. And in the auto industry the percentage has been rising in recent
years (see figure). Source: Bruce Bartlett (senior fellow, National Center for Policy Analysis),
May 18, 1998. Home | Support Us | All Issues | Social Security Debate Central | Contact Us |
