We’ll take more of that foreign cash, please

The tiny southern Wisconsin city of Monroe (pop. 11,000) virtually pulls visitors aside and insists they learn its history.

Sitting at the center of the city is the historic Green County Courthouse, a stately building constructed in 1891 that now pumps out loud classical music to the huddled pedestrians walking around the square. Restaurant menus tell the story of the city’s history of cheese production; one local tavern brags about inhabiting a structure known in 1854 for selling “furniture, coffins and cheese tubs.”

Two blocks off the square sits America’s second-oldest brewery (and oldest in the Midwest), the Minhas Craft Brewery. Originally formed in 1845, the former Huber brewery filed for Chapter 11 bankruptcy protection in 1995; in 2006 it was purchased by Canadian sister and brother duo Manjit and Ravinder Minhas, who had succeeded challenging Canadian giants Molson and Labatt by undercutting them on price.

Since the Minhas’ investment, the brewery has taken off. The facility cranks out more than 320,000 barrels of beer a year, making it one of the largest craft breweries in America.

Often times, the words “foreign company” are used as a political cudgel, meant to devalue investment made in America by outside businesses. When Wisconsin worked its way through the plan to subsidize Taiwanese-owned Foxconn, for instance, state politicians in opposition to the plan repeatedly knocked the technology giant as a “foreign corporation,” implying profits will go to “boost the bottom line” of companies overseas.

This economic protectionism is also given voice by President Donald Trump, who, while taking credit for luring Foxconn to America, routinely decries the U.S. trade deficit as hurting American consumers. But what Trump fails to recognize is that a trade deficit of merchandise sent to other countries is offset by an inflow of capital from other companies.

“When the United States buys goods and services from other nations,” noted Harvard economist N. Gregory Mankiw in The New York Timesin 2016, “the money Americans send abroad generally comes back in one way or another.” Mankiw notes that as the trade deficit has grown, foreign investment in America has ballooned, up to $8 trillion from just $2.5 trillion in 2010.

So the current $450 billion trade deficit is responsible for Foxconn having the capital to invest back into Wisconsin.

And that foreign investment can have ripple effects throughout local communities. The Minhas Craft Brewery purchases its bottles from a company in Burlington and buys its labels from a printing company in La Crosse.

Of course, the primary difference between Foxconn and other types of foreign investment is the enormous public subsidy the Taiwanese company is receiving from the state. Whether the benefits of the taxpayer boost ultimately outweigh the costs will only be known with time.

But what we already know is that Foxconn’s status as a “foreign corporation” shouldn’t be a reason to be skeptical of its entrance into Wisconsin. As can be seen in places like Monroe, the influx of cash from other countries can keep people employed in good jobs and resurrect local communities. As it turns out, new investment from foreign companies can be a key to preserving a historic Wisconsin way of life.

Email Christian Schneider at christian.schneider@jrn.com. Twitter: @Schneider_CM