October 10, 2011
[Editor's note: Tim Staermose reporting]
I’m sitting on a train en route from the southwestern part of Denmark (near the German border) to Copenhagen. Across the aisle from me, a man is reading a book called The Post-American World.
Opposite him sits another fellow sipping a Starbucks coffee. And on my side of the aisle, a younger man is drinking a Coca Cola and listening intently to his iPhone through the headphones.
I can’t be certain, but chances are he is listening to the latest American music of some kind. That’s what remains the most popular music here in Denmark, at least if what my cousins were listening to over the weekend is any guide.
It’s a topic I’ve dealt with briefly once before, but it’s worth revisiting… while the fall of America’s global influence is starting to become a mainstream topic, many American companies have survived and thrived by internationalizing themselves, their production, and their customers.
Illinois and Florida may not be the growth markets they once were for John Deere and Pizza Hut, but Brazil and China more than make up for it; Pizza Hut is actually an interesting example as over 60% of the company’s revenue is already derived from overseas sales. In this respect, Pizza Hut isn’t even an ‘American’ company anymore.
It’s interesting to note, though, that the US tax system provides a strong incentive for companies to keep their offshore profits overseas. They’re not able to repatriate their offshore profits without heavy tax consequences… meaning less capital, less investment, and few jobs in America.
If the authorities in Washington are serious about generating new investments, jobs, and growth in the US, they could do a lot worse than making it easier for the champions of US business to invest some of their offshore profits at home. Indeed, the Danish paper I was just reading on the train carried a story about the Danish tax authorities pursuing a group of successful multinationals for more than ten billion Danish crowns (nearly US$2bn) in unpaid withholding taxes on dividends remitted overseas.
This is just bad practice… though unfortunately all too common as bankrupt governments seek their ‘pound of flesh’ from anyone they can get their hands on.
Multinationals realized this a long time ago… and that’s why so many of them have diversified around the globe to increase tax and operating efficiency. They’re out of government reach. Instead, more and more, it’s the little guy who is being squeezed by government.
Endless pedantic regulations, punitive taxation, and an alarming shift in attitudes among the middle and working classes, not to mention the enormous drag imposed by the incompetent and bungling ruling political class, have sadly made it very difficult for small businesses, entrepreneurs and ordinary workers who are the lifeblood of the US economy to make successful headway in today’s America.
That books like The Post-American World are being read in places such as regional Denmark tells me that the trend of America’s decline perhaps better known about, and further along, than even I imagined.