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The term “national champion” has long been used to describe companies such as Japan’s Toyota or Germany’s Siemens that operate as global export powerhouses but also serve the national interest of their home countries. Nations that use industrial policies cultivate national champions.
Sometimes, the coordination between major corporations, cartels, banking groups, and national planning agencies is deliberate and explicit. This is the history of the Japanese postwar economic miracle, as well as nations such as Brazil, South Korea, and Taiwan.
In other cases, the economic nationalism is more tacit. German top executives know, without being told by an economic commissar, to keep the high-end technologies and jobs at home, even as they have global partners and production sites. Germany has long been described as Deutschland AG (Germany Incorporated). France has promoted national champions since the days of Jean-Baptiste Colbert.
What of the United States? The U.S. government has long disdained national economic planning, and its corporations have been globalists first, patriots only when convenient.
When GM President Charles E. Wilson was nominated in 1953 to serve as President Eisenhower’s secretary of defense, he was asked at his confirmation hearing whether he could make a decision in the national interest that adversely affected GM. He famously responded that he had long believed “what was good for our country was good for General Motors and vice versa.”
Wilson was widely ridiculed. But in 1953, there was a lot more truth to the claim than in 2023. In the 1950s, there was no outsourcing and a very strong UAW. Though there were struggles over relative shares of gains, the interests of GM and other American corporations and that of the national economy did converge more than they do today.
Now, Joe Biden has finally embraced something that his predecessors long shunned—a series of deliberate industrial policies. And this raises thorny questions of whether the national home base of corporations matters as long as they produce here.
Take the case of autos and the conversion to electric vehicles. Under the Inflation Reduction Act, a purchaser who buys an EV assembled in the USA gets a tax credit of up to $7,500.
Ford is an American company in the sense that it is based near Detroit (in the Dearborn suburb to be specific) and its executives are mostly American, as are its shareholders. But Ford makes its electric Mustangs in Mexico.
We still need to defend U.S.-based corporations for reasons ranging from trade to technology to national security.
Conversely, the Japanese-owned Nissan Leaf is assembled in the U.S. Likewise the German-owned Audi Q5 and two BMW models. There are several EVs made in the USA with union labor, such as the Chevy Bolt, whereas the transplants have all resisted unionization.
Hypothetically, if the UAW can succeed in unionizing transplant factories, such as Honda, VW, and BMW, should we care about Ford or GM’s market share merely because they are “American” companies? The third of Detroit’s “Big Three,” Chrysler, is now part of Stellantis, which is based in Europe, following a merger with Fiat and Peugeot. Its largest shareholder is Italy’s Agnelli family. Its CEO, Carlos Tavares, is Portuguese.
One can tell a parallel story with semiconductors. The Biden administration is promoting and subsidizing more semiconductor production in the U.S. This includes American companies such as Intel, which also produces globally, as well as Taiwan’s national champion TSMC, which incidentally provides chipmaking equipment to its operations in China.
We need this domestic production both for security of supply and for national security. In practice, it’s easier for the U.S. government to insist that domestic companies, even those with global operations, not aid China.
And it gets still more complicated. For better or for worse, several of the most visible—and predatory—de facto national champions are the giant tech platform monopolies, namely Amazon, Apple, Facebook, Google, and Microsoft. Apple boasts that its products are “designed” in the U.S., but of course they are mostly made in China.
Is it good for America, in Charlie Wilson’s sense, that these are U.S.-based companies? It’s good that American engineers and designers are at the cutting edge of advanced technologies. But these are also companies that exploit their monopoly power, at the expense of both consumer privacy and of potential innovators who are their competitors.
Industry, in resisting regulations by the U.S. and other countries such as the EU and South Korea to rein in anti-competitive and anti-consumer practices, plays the national champion card. In response to efforts by the EU to limit their abuses in both areas (which are entirely in sync with lawsuits by the FTC and the Department of Justice), the tech industry has launched a counteroffensive, wrapping itself in the flag.
Even more preposterously, when the crypto industry began collapsing and regulators acted to save investors billions and the economy from wider damage, one of the tactics in the industry’s pushback was to claim that crypto was good for the U.S. because American financial entrepreneurs (and grifters) were the first movers and U.S. firms dominated crypto.
In 1990, the Prospect’s co-founder Robert Reich wrote an important and much-debated piece in the Harvard Business Review titled “Who Is Us?” Reich presciently asked whether “us” was American-based corporations (which were already producing all over the world) or American workers.
For Reich, the answer was American workers. If foreign-based companies produced good domestic jobs, their national identity didn’t matter. And domestic policy could help promote that outcome by investing in infrastructure, R&D, and above all in the skills of the American workforce. Then global corporations were more likely to beat a path to our door.
Reich was more of a free-trader in those days. Today, he is more of a lefty and more of an economic nationalist. I think his article was partly right. Yet there is still a residual case that domestic ownership as well as production matters.
What would be the consequence if all U.S.-based corporations went out of business or were acquired by their foreign competitors, such as Stellantis? Suppose Boeing lost all of its market share to Airbus and Embraer, and we had to import all of our jet aircraft. There would be consequences for U.S. employment and technological leadership, and the trade imbalance would only worsen.
As it happens, Laura Tyson, later Bill Clinton’s chair of the Council of Economic Advisers and among the first mainstream economists to challenge the free-trade orthodoxy, wrote a persuasive rebuttal to Reich, called “They Are Not Us.” It was published in a fledgling magazine called The American Prospect in 1991.
“The economic fate of nations is still tied closely to the success of their domestically based corporations,” Tyson wrote, with a great deal of data to prove it. And, she added, national economic policies are far from symmetrical. Then as now, many nations aggressively advantage their homegrown companies and the companies reciprocate. Yet Reich’s description of the global economy rings truer today than when he wrote it.
I contacted Reich to ask him how his views have evolved. He responded:
“It’s become more complicated since I wrote the HBS piece, obviously, because just about all big corporations, regardless of where they’re headquartered, are now global.
“Not only are they doing everything everywhere, but they’re actively and aggressively playing off countries against each other, including the U.S. China is the wild card here because there are legitimate national-security interests in keeping ‘critical’ technologies out of ‘their’ hands, but it’s a giant market to which every global corporation wants access. So Washington-based corporate lawyers for every giant corporation are doing cartwheels trying to figure out how to get some of Biden’s industrial policy lucre while maintaining manufacturing facilities and research labs in China.”
We still need to defend U.S.-based corporations for reasons ranging from trade to technology to national security. But this would be an easier sell if these corporations were better domestic citizens—if they didn’t bust unions and export jobs; if they didn’t collude at the expense of consumers; in short, if they gave more of a damn about America.
