'The Indicator from Planet Money': The tensions behind the sale of U.S. Steel
MICHEL MARTIN, HOST:
The planned acquisition of U.S. steel by the Japanese company Nippon Steel has prompted alarm among some lawmakers, including Senator John Fetterman, the Pennsylvania Democrat.
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JOHN FETTERMAN: I just have to say, it's absolutely outrageous that they have sold themselves to a foreign nation.
MARTIN: His comments are reminiscent of things politicians were saying back in the 1980s. Our colleagues at The Indicator From Planet Money, Darian Woods and Wailin Wong, take a trip down memory lane to explain.
DARIAN WOODS, BYLINE: After the destruction of World War II, Japan's economy underwent what's called the Japanese economic miracle. Starting in the 1950s, the country went on a tear, becoming the world's second largest economy.
WAILIN WONG, BYLINE: And the U.S. played a role in making this happen. Kenji Kushida runs Japan Research and programming at the Carnegie Endowment for International Peace.
KENJI KUSHIDA: Japan was the closest ally to the U.S. in the Cold War in Asia. So the U.S. was very happy to help the Japanese economy grow.
WONG: By some estimates, the U.S. was buying more than a third of Japanese made stuff in the 1970s. This included consumer electronics, and it also included cars. High gas prices meant American car owners wanted smaller and more fuel-efficient vehicles. Those were the cars coming from Japan.
WOODS: And then in the late 1980s, the U.S. fell into a recession. Japanese exports were surging in the U.S. while the Japanese market remained more closed off to American goods.
WONG: The recession was especially hard on U.S. automakers, which were hit by plant closures and mass layoffs.
KUSHIDA: Why is it that you lost your job? Oh, it's your company, but your company let go of you because they were getting out competed. At the time, it was Japanese companies.
WONG: There were reports of bumper stickers that read Toyota, Datsun, Honda, Pearl Harbor. There were protests where people smashed Japanese cars with baseball bats.
WOODS: The backlash against Japanese companies made its way into policy. There was a flurry of trade restrictions and other agreements aimed at fixing the trade imbalance.
WONG: Two things happened that ultimately brought an end to this period of intense trade friction. Japanese real estate and stock prices had gotten very inflated by the late '80s. When the bubble burst, the Japanese economy entered a deep malaise.
WOODS: And the second thing that happened in the 1990s was the U.S. economy staged a comeback, powered by Silicon Valley and the computer industry.
WONG: This was the era of Microsoft Windows domination. The fear that Japan would take over the American economy receded.
WOODS: But today, with Nippon Steel trying to buy U.S. Steel, a new round of anxieties is coming to the surface.
WONG: U.S. Steel leadership wants to sell the company to Nippon Steel, but the steelworkers union says U.S. Steel is being greedy, and it doubts Nippon Steel will honor the commitments in its labor agreements. Meanwhile, President Biden's national economic advisor said the deal, quote, "appears to deserve serious scrutiny" end quote.
WOODS: Experts expect this deal to come under review by the Committee on Foreign Investment in the United States. This is a committee with representatives from departments like the Treasury, Homeland Security and Defense, and it looks at foreign investment deals that involve national security.
WONG: This review process could stretch on for months, and that could add delays to the deal in a year that's already complicated by the presidential election. U.S. Steel is headquartered in Pennsylvania, a key battleground state. This could make the fate of this storied American company and the state of U.S.-Japan relations into a political flashpoint.
WOODS: Darian Woods.
WONG: Wailin Wong, NPR News.
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