Pat Buchanan and others are wringing their hands over the merger of Chrysler and Mercedes. Buchanan warns Germans in Stuttgart will dispose of Chrysler's profits, decide the fate of its workers and reap the benefit of its technological advances.

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.

• According to the latest data from the Bureau of Labor Statistics, the average hourly compensation cost for a production worker in German manufacturing in 1996 was $31.87 -- the highest in the world.

• Given the $17.70 an hour average in the U.S, Mercedes will probably be further expanding its U.S. operations, because labor costs are lower.

• On average, workers in foreign-owned U.S. businesses make about 25 percent more than those employed in domestically-owned firms, and foreign direct investment tends to be concentrated in relatively high-paid industries.

The flow of technology is likely to be as much from Germany to the U.S. as the other way. 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."

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.