From the Review section of the San Francisco Chronicle

Sunday, July 23, 1989

Selling Out: How We Are Letting the Japanese Buy Our Land, Our Industries, Our Financial Institutions, and Our Future by Douglas Frantz and Catherine Collins (Contemporary Books; 382 pages; $19.95).

The New Competitors: How Foreign Investors Are Changing The U.S. Economy by Norman J. Glickman and Douglas P. Woodward (Basic Books; 374 pages; $19.95).

Reviewed By Jock O'Connell

"Selling Out" is an exceptionally muddled and frequently inaccurate book obviously intended to alert us to an impending Japanese takeover of the U.S. economy. Mr. Frantz is a business reporter for the Los Angeles Times, while Ms. Collins used to be with the Chicago Tribune. Neither's career is distinguished by their authorship of this alarmist diatribe.

Although purportedly an examination of the implications of growing Japanese investment in the United States, the book devotes as much attention to Japan's aggressive export strategies and notorious barriers to foreign goods. It is often uncertain whether the authors are more upset with Japanese behavior or America's astonishing willingness to play the patsy.

It is also unclear why this book was written since much of the same ground was covered last year in "Buying Into America" by Susan and Martin Tolchin, which has just been issued in paperback.

The prose in the Frantz-Collins work is excessively breezy, almost to the point of suggesting the authors are trying to propel the reader through to the last page before the Japanese buy the last remaining piece of private property in America.

Still, the book has its moments -- as when it accuses the usually respected Washington trade expert Fred Bergsten and his Institute for International Economics of being in the pocket of Japanese business interests.

The book's inaccuracies are legion, however, and by themselves undermine the reader's confidence that the authors may know what they're talking about. For example, in discussing how the Japanese captured the color television industry from the US, Frantz and Collins relate that "[I]n 1966, Motorola unveiled a prototype for the world's first color television..."

Now it is quite obvious from the context that the authors actually mean 1966; it's no typo. I am therefore left to wonder what it was that turned up in our house in 1958 after the old Philco black-and-white model went blank. It certainly looked like a color TV.

Those really interested in a lucid and illuminating discussion of foreign investment in this country will find "The New Competitors" just what they are looking for. This is a scholarly but eminently readable study by two economists (Glickman teaches at Rutgers; Woodward at the University of South Carolina). It also calmly but forcefully demolishes much of the conventional wisdom regarding foreign investment in the United States.

Perhaps most notably, the authors demonstrate that foreign direct investment, widely regarded as a major source of new jobs, is really a very modest engine of job creation, accounting for probably no more than 15-20 thousand net new jobs annually in this country. One reason for this disappointing result is that over 85% of all foreign direct investment outlays in the past five years have involved the acquisition of existing American companies.

Glickman and Woodward also challenge the notion that foreign companies help reduce the U.S. trade deficit by supplying American customers with products manufactured here rather than imported from abroad. Citing U.S. government statistics, they show that foreign-owned companies import vast quantities of components for the goods they manufacture heres. As a result, they actually account for anywhere from one-third to one-half of the nation's trade imbalance.

While far from alarmist, Glickman and Woodward do make a very strong case for a thorough review of our existing stance on foreign investment. Unlike Frantz and Collins, they show that a book can be provocative and thoughtful at the same time.

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