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| Whose national security is it anyway? |
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Friday, September 28th, 2001
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Operational note: Eamonn Fingleton is currently traveling. Normal service will resume from October 9.
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One of the consequences of the trade deficits is that more and more American industries are coming under foreign ownership. The events of September 11 have underlined that point. By Eamonn Fingleton.
Washington, DC. As America recovers from the shock of the September 11 atrocities, the media are rightly taking stock of the security weaknesses the terrorists so effectively exploited. In all the thousands of words expended on the topic of security, one fact jumps out: the strange matter of the ownership of America�s airport security industry. Virtually the entire industry is owned by foreign corporations, most notably Securicor of the U.K. (parent of Argenbright Security), and Securitas of Sweden (parent of both Pinkerton and Burns International). Why does this matter? Because the industry�s foreign owners seem prepared to cut corners on quality in the United States in a way they would be ashamed to do in their home countries. Recruiting mainly minimum wage workers who typically stay barely a year, the American industry has been caught numerous times in short-changing the American public�s safety. Argenbright, for instance, has pleaded guilty to employing untrained staff and even people with criminal records at airport checkpoints in the United States. As reported by Time magazine, the industry typically pays airport security workers in the United States less than one-half the wages of equivalent workers in their European operations. What is so startling about this is, of course, that wage levels generally in the United States are generally considerably higher than in the United States.
Let�s be clear. We are not suggesting that business ethics are necessarily lower in Europe than in the United States.That is beside the point. Our point is simply that companies generally behave more responsibly at home than abroad. The reason is simple: they feel far more accountable. If the top executives of a company cut corners in their home country, they can expect to hear about it from friends and neighbors. Their spouses will ask tough questions. Their children will be embarrassed at school. By contrast, ethical lapses and violations that take place abroad result in far less blowback for top executives. In such cases, it is easy for the ultimate bosses to pass the buck or otherwise escape responsibility.
This pattern of irresponsibility abroad is abundantly apparent in the behavior of companies of all nationalities. Even American corporations, though their overseas operations are subjected to more home country scrutiny than those of other nations, are often noticeably more lax in their standards abroad than at home. How else do we explain the horrific Bhopal disaster in India in the 1980s? The company responsible was Union Carbide, which not only stood charged with major safety lapses but dragged its feet in compensating the thousands of victims. It is a fair bet that a similar tragedy was far less likely in the company�s American facilities than those in remote Bhopal. It is also a fair bet that had Union Carbide been responsible for any similar disaster in the United States it would have felt much more pressure to compensate the victims fairly and promptly.
For those of us who warn about the dangers of globalism, the story of the airport security industry is a telling lesson. Quite apart from the fact that it highlights the dangers inherent in foreign ownership of a sensitive business, it illustrates the degree to which, unbeknownst to Americans, foreign ownership is now spreading rapidly in the American economy. All this reflects the fact that misguided globalism has greatly inflated America�s trade deficits, which in turn has led to increasing foreign ownership of American industry. Remember that every dollar of current account deficit the U.S. incurs must be financed by a dollar of foreign finance � either in the form of foreign lending to the United States or foreign purchases of American businesses or other assets.
The airline security industry is just one of the more extreme examples of the degree of foreign penetration in major industries. Other industries that have come heavily under foreign ownership in recent years are finance and book publishing. But almost right across the waterfront � from computers to oil � foreign ownership is now a fact of life in American industry. While a certain percentage of foreign ownership may contribute to the cross-fertilization of ideas that is important in economic progress, there are limits. Just ask any nation that has had serious experience with foreign ownership.
America is still a rich and powerful nation but the trend is now extremely worrying. A nation that does not own its own industries cannot claim to be an independent nation, let alone a superpower.
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American patriotism, courtesy of Chinese manufacturing
The star-spangled banner is prominently on display everywhere you travel in the United States these days � over buildings, extending from car windows, and even on people�s lapels. But for those familiar with the decline of the U.S. textile industry, there is a bitter irony in all this flag-waving. The point is that the industry has become so hollowed out that these days virtually all U.S. flags are imported. According to a top textile industry executive, most of the supply comes from � where else? � China.
Eamonn Fingleton is the author most recently of In Praise of Hard Industries: Why Manufacturing, Not the Information Economy, Is the Key to Future Prosperity (Houghton Mifflin, 1999).
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