The Dangers of Anti-Americanism

The U.S.'s deteriorated reputation abroad has real economic and security costs, and businesses need to become active in improving it

Now that Al Gore's global-warming documentary An Inconvenient Truth has won its Oscar (see BusinessWeek.com, 3/20/07, "Hybrids Stuck in Neutral"), there appears to be room atop the list of the Biggest Problems No One Cares About. I'd like to nominate anti-Americanism.

It won't take too many slides to define the problem. Everyone knows the U.S.'s reputation around the world has never been more dismal. In fact, it has fallen to the level of an "ism"—"anti-Americanism," the principled distrust and dislike of anything that issues from the U.S. Unfortunately we can't show slides of Florida under water to convince people that anti-Americanism matters. The CEOs of U.S. companies with customers around the world don't consider anti-Americanism a problem. "We're not an American company," they declare. "We're global."

Americans would prefer that the world like them, but if it doesn't, so what? Wasn't it Machiavelli who said it was safer to be feared than loved? For his part, President Bush displayed new depths of cluelessness when he reacted to protests during his recent Latin American tour by saying, "I love freedom and the right for people to express themselves."

These days, those expressions include South African billboards touting the Smart car for its "German engineering," "Swiss innovation" and "American nothing." South Korean restaurants have hung signs in their windows advising "Americans Not Welcome." And Starbucks' very presence in China's Forbidden City brewed so much controversy the company may lose its lease.

The Cost of Anti-Americanism

Anti-Americanism does matter—to our economy, to our health, and to our safety. For the moment, the effect of anti-Americanism on U.S. companies' foreign sales is masked by a declining dollar. Skeptics point to a widely circulated study that compared the European sales of Coke, McDonald's, and Nike between 2000 and 2004. All three companies increased their European sales an average of 26%—even though anti-Americanism was at a fever pitch following the March 2003 invasion of Iraq. But it's important to note that the U.S. companies' sales were made in euros and reported in dollars, which fell by 31% in the period.

On the other hand, the U.S. share of the international tourism market, which should have benefited from the weak dollar, fell by a third from 1992 to 2006. The absolute number of foreign tourists to the United States didn't return to pre-9/11 levels until last year, and even then the increase was due entirely to visitors from Canada and Mexico. In 2006, overseas visitors to the U.S. declined by 1% from the prior year. Even taking into account the extra hassle of getting through stepped-up U.S. security post-9/11, the drop-off in overseas visitors to the U.S. is striking.

And expensive—according to the Discover America Partnership, the U.S.'s loss of market share in 2005 cost $44 billion in sales and taxes. Plus, every share point represents 153,000 U.S. jobs.

Finally, anti-Americanism costs the U.S. the cooperation of other countries in dealing with such global problems as terrorism, climate change, HIV/AIDS, avian flu, counterfeiting, organized crime, the trafficking of women and children, or the next security crisis, whether it breaks out in Iran, North Korea, or the Taiwan Strait. The list of problems that will yield to unilateral action is getting shorter even faster than the cost of going it alone is rising. None of that is good for business.

What Business Should Do

U.S. companies need to become as obsessed about their country's reputation around the world as they are about free trade. The Bush Administration's 2008 State Dept. budget request includes increases for proven programs such as language training, people-to-people exchanges, and targeted economic development. But it will be a long time before State catches up with the massive spending cuts that followed the end of the Cold War. U.S. business groups need to push those budget increases through a skeptical Congress as if they were tax cuts or curbs on trial lawyers.

Meanwhile, Defense Dept. spending in non-combat areas is growing even faster than State's, and the military is undertaking projects once reserved for civilian agencies, such as building schools, drilling wells, and even conducting public-information campaigns. Since the U.S. spends 14 times more on the military than on diplomacy and foreign aid, that shouldn't be surprising. As Indiana Senator Richard Lugar observed, the military is assuming tasks better left to professional foreign-service officers "simply because it has the money to do so."

No wonder that, for millions of people around the world, Americans are people in uniform. U.S. business groups need to call for the demilitarization of foreign relations. The U.S. military has been very effective in delivering assistance following natural disasters, but military leaders are the first to admit that winning hearts and minds is not their core competency. Psychological warfare tactics are not the way to build credibility around the world, and putting our diplomatic efforts in camouflage risks resentment and suspicion.

U.S. companies also need to recognize that no matter how "global" they are, their American roots show. That's not all bad. Despite recent accounting scandals, American companies have more credibility than the U.S. government in most corners of the world. They also have more feet on the street, and best of all, those feet aren't clad in combat boots. More than 6 million people work for U.S. companies abroad. That's more than 6 million potential ambassadors—not for U.S. foreign policies, but for the all-American values of fair play, equal opportunity, and respect for individuals. And those ambassadors will still be there after the next election.

As a practical matter, of course, real progress may have to await the next election. U.S. business leaders, who as a group contribute generously to both parties, should ensure that rebuilding trust in America is at the top of the candidates'—and the next president's—agenda.

There's more than an Oscar at stake.

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