Buying into America: How Foreign Money Is Changing the Face of Our Nation.

ACCORDING TO its authors, Buying into America: How Foreign Money Is Changing the Face of Our Nation (Times Books, $19.95), by Martin and Susan Tolchin, had its inception in a conversation with Senator Jim Sasser (D., Tenn.), who had recently won reelection. An issue in the campaign had been a bill, strongly opposed by his Republican opponent, that would have required every automobile sold in the United States to contain parts manufactured here. Sasser's neutrality on this bill, he discovered, offended executives of Nissan, U.S.A. (a wholly owned subsidiary of a Japanese multinational corporation that operates a truck factory in Smyrna, Tennessee), who, after seeking advice from company officials in Tokyo and Washington, D.C., offered political and financial support to Sasser's challenger. "Nissan's entry into American politics," the Tolchins write, "intrigued us. We soon discovered that Nissan was not an isolated case . . ."

"In the most pragmatic nation in the world," they observe, "most Americans don't care where the money comes from so long as it provides jobs and stimulates economic growth." Similarly, most mayors and governors don't care who dumps out the cash flow that lifts their gashed and leaky economies from the mud and refloats them, however soddenly; nor do federal officials lie awake at night worrying over who buys the Treasury notes that finance the federal debt. And there are plenty of voices, in fact, to argue that they shouldn't. According to the optimists, the current flood of foreign investment is as American as the dollar bill. They talk brightly of freedom of opportunity, exalt the "global economy," and denounce "xenophobia." They cite the creation by overseas investors of three million jobs, the stimulation of the stock market, an increase in real-estate values, the preservation of agricultural land, the influx of new technology, and a positive effect on the balance-of-payments impasse. They are increasingly opposed in their Pollyannaism, however, by people like Paul A. Volcker, former Chairman of the Federal Reserve, who has said: "In a real sense we have been fortunate that funds have flowed so freely to the U.S. in recent years, reflecting to a considerable extent widespread confidence in our prospects. But it is clearly not healthy for the largest and richest country in the world-in its own interest or that of others-to use up so much of the world's savings to finance a budget deficit." These people fear, in addition, that the United States, through its addiction to foreign capital, is placing itself at the mercy of foreign investors who, by withdrawing their money of a sudden, have it in their power to wreck the American economy.

Estimates of the sum total of foreign investment in the United States vary considerably, owing to lax reporting requirements, hidden ownership, and other circumventions. A reasonable, often-cited figure, however, is $1.5 trillion, up from $196 billion in 1974. Approximately 80 per cent of this sum is in portfolio securities, and foreign investors currently hold over $200 billion (or better than 10 per cent) of the national debt; they also own 16 per cent of the country's bank assets. Foreign companies have bought heavily into American oil and gas companies, the auto and parts industries, real estate, and Wall Street itself, where "foreign bankers are playing an increasing role in setting the nation's priorities." After Britain, the Netherlands, and Japan, the countries that have invested most heavily in the U.S. are West Germany, Switzerland, France, Kuwait, Australia, and Sweden.

The optimists are quick to remind us that intensive foreign investment is historically the economic norm for the U.S. The Tolchins reply by pointing out that it is one thing for a growing young nation to build its industrial infrastructure with foreign money, and quite another for a mature, industrially developed giant to support its habit of overconsumption with that money. While most countries carefully screen investment and business activities from abroad, the Committee on Foreign Investment in the United States is a notorious paper tiger, which "has never, to anyone's knowledge, blocked a foreign investment." Meanwhile, delegations from all fifty states are busily running around in the foreign capitals, wheeling and dealing to make exorbitant offers to foreign companies to relocate or set up branches in the U.S. (at the American taxpayers' expense and often at that of American companies), cutting each other's throats, and effectively creating their own foreign policies. "Foreign firms that locate in the United States," the Tolchins claim, "can expect the same political benefits as American business-sometimes more. . . . There is little recognition that some of these foreign businessmen have hidden agendas, including the destruction of American competitors and the acquisition of American technology."

The Tolchins conclude, intelligently, that the "global economy" is by no means synonymous with tee trade, and that the American counterstrategy should be to beat foreign capital at its own game-that is to say, to make the most of its benefits, while substantially reducing the risks to national sovereignty that that capital at present represents.