STEVE INSKEEP, HOST:
The United States is close to blocking the sale of United States Steel. The Biden administration has expressed national security concerns about a proposed sale to Nippon Steel of Japan. U.S. Steel says stopping that sale would put thousands of union jobs at risk. It so happens this story is partly unfolding in the swing states that A just mentioned. I was talking to voters over the summer in Pittsburgh, Pa., and walked into this giant building to find a cup of coffee. And what do you know? It was the headquarters of U.S. Steel. So is it hazardous to sell a swing state company to a foreign enterprise? We've called up economist Matt Slaughter. He's dean of the Tuck School of Business at Dartmouth College. Good morning, sir.
MATT SLAUGHTER: Good morning.
INSKEEP: I just want to say at the beginning, I get the emotional argument here. I grew up in the Midwest in Indiana, where there's a giant U.S. Steel plant. United States is right in the name. A foreign sale doesn't feel right. But what is the national security argument that the government should block such a sale?
SLAUGHTER: It's difficult to understand what that national security argument is. I grew up in Minnesota. I'm currently in the Iron Range in northern Minnesota. I think what those complaints and concerns miss is that essential to national security is economic competitiveness, which, in turn, has long been strengthened by connections to the global economy through forces such as inward foreign direct investment.
INSKEEP: Inward foreign direct investment, meaning we attract money here, and it's used to hire Americans.
SLAUGHTER: Correct, meaning companies like Nippon Steel establish and expand operations in the United States. And the data show very clearly that these are just some of the best-performing companies in America. In fact, in the last year, we have data available for - from the government in 2021. These companies employed almost 8 million American workers. Over a third of those were in manufacturing, and the average compensation that these companies were paying was almost $87,000, which is about 22% above the average for the rest of the private sector.
INSKEEP: I'm trying to sort that out. You're telling me that good-performing companies attract foreign direct investment. Is that just because they are good-performing companies, so other people try to buy them, or is there something about foreign investment that improves the performance?
SLAUGHTER: It's both, actually, but the latter is very important. Globally engaged companies like Nippon Steel and like a lot of U.S. companies headquartered here that have operations abroad - they tend to be more productive. In fact, those companies in the United States, though they're far less than 1% of U.S. companies - they perform about 13% of total business investment in research and development, about 17% of the investment in plant and equipment, and they account for almost 24% of exports of goods out of the United States. All those things tend to be high-productivity activities that lead to those good-paying jobs.
INSKEEP: OK. So you've given me a lot of numbers there, but let me lay out the way that this national security argument is made. Steel is important. Steel is militarily important. You use it to make a tank, use it to make an artillery piece or any number of things. Steel was used immensely in World War II. Is there some reason to worry about the steel industry or a portion of it - not the largest steel company - falling under foreign control?
SLAUGHTER: Well, if we're concerned about having that steelmaking capacity in the United States, then I think what we really want to focus on is, do we have companies and operations that are able to sustainably, profitably make that steel? Nippon Steel, in particular, has been working in the United States since the early 1980s. And across all industries, almost 1 million Americans today are going to go to work for Japanese companies like Nippon Steel.
INSKEEP: Would you worry at all? I mean, there's 20-some thousand employees of U.S. Steel. A lot of them are union jobs. Would you worry at all that Nippon Steel, in trying to be efficient, might close some plants, move operations elsewhere?
SLAUGHTER: Well, thus far, they've said, actually, that they're going to do exactly not that, that they're aiming to keep open existing plants and maintain current jobs. That said, I think, Steve, you hit upon something that's really important, which is the dynamism of globalization or the dynamism of technological change are always forces that can lead to hardship for particular workers, for particular communities. And I think it's that disruptive dynamic pressure that we as a country have not done a good enough job taking care of. That's why I think there's a lot of concern about globalization and a lot of desire to build these walls.
INSKEEP: You're telling me that people really have been harmed by globalization, even if the big picture is better.
SLAUGHTER: Absolutely. Globalization has generated massive gains for the United States overall, but those gains have not always benefited every single American worker or every single company or every single community.
INSKEEP: Matt Slaughter is an economist and the dean of the Tuck School of Business at Dartmouth College. Thanks so much.
SLAUGHTER: Thanks very much. Transcript provided by NPR, Copyright NPR.
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