FOREIGN STATE ENTERPRISES: A Threat to American Business

A new variation on the America-for-sale theme that sees a particular threat to U.S. business from enterprises owned or subsidized by foreign governments. By the numbers, Lamont (Dean of the Walter E. Heller College of Business at Roosevelt University) makes a persuasive case. Less convincing, statistically at any rate, is his corollary call for national economic planning. At the end of 1976, 59 state concerns--including the likes of British Petroleum, Renault, and Volkswagenwerk--accounted for almost 21%, or $185.4 billion, of the sales rung up by the 500 largest multinationals headquartered abroad. Further, 11 foreign state enterprises had invested over $1 billion in domestic concerns, notably via BP's acquisition of Soho and Canadian Development's court-approved takeover of Texasgulf. All told, he calculates, the current direct impact of state enterprise capitalism on the U.S. economy amounts to $50 billion, roughly 3% of the GNP. While these totals may not seem impressive, Lamont points out that there are real risks--given the permissiveness of American commercial law--in a failure to assess what has become a growing trend. For one thing, output of relatively abundant domestic resources like coal and oil could ""become geared to European and Japanese industrial needs."" For another, there is the danger of ""subordination of American economics to foreign politics."" Lamont recommends instituting and enforcing tough reciprocity policies--i.e., barring access to state enterprises from countries that in any way curb the commercial activities of U.S. corporations. Because the competition of foreign state multinationals is based so largely upon special privileges--ranging from low-cost loans to outright subsidies--he also urges that the federal government embrace state capitalism ""while we still have a chance to shape it for our needs."" Lamont's controversial endorsement of intervention--a form of national economic planning--promises to gain attention for his book, which represents a useful contribution to a subject overdue for marketplace debate.