For U.S. jobs, it pays to look overseas by Nina Easton @FortuneMagazine August 10, 2011, 9:41 AM EST E-mail Tweet Facebook Google Plus Linkedin Share icons Our best future growth prospects are overseas — and I say this as an agriculture company based in the Midwest.” So says Chris Policinski, president and CEO of Land O’Lakes, a name that conjures up Norman Rockwell images of milk cows and butter churns, not village markets in Malawi (which is what he has in mind). Policinski’s declaration, made at a recent meeting of the U.S. Global Leadership Coalition, echoes what we are hearing from growing numbers of American CEOs these days — and goes to the heart of a truism that has largely escaped the attention of Washington’s myopic political leadership: U.S. companies are giving up on the American consumer as a catalyst for growth, preferring instead to bet on emerging markets overseas. In other words, one key for U.S. job growth lays in selling more of our stuff to a non-American middle class. The profligate American buyer, long the driver of the global economy and the engine behind booms (and busts), is taking a big break from spending. Gallup reports a “new normal” of everyday spending far below 2008 levels. A July 2011 Harris Poll shows more and more people skimping on everything from electronic goodies to haircuts. Personal savings rates are up. And with down payments on mortgages back at 20% levels, it’s hard to afford a home, let alone use it as a credit card to buy boats and flat screen TVs. Business strategists increasingly recognize that not only are 95% of their potential consumers living outside U.S. borders, they are living in high-growth developing countries — places like Asia and Latin America (where the World Bank forecasts 4.5% economic growth this year) and Africa (where total household spending already exceeds that of India). Tapping into those markets will help produce needed jobs. But the three trade agreements designed to put an American toe in those kinds of waters continue to languish in Congress — largely because of spurious union demands. And while the White House gives lip service to expanding exports, it’s instructive to listen to Ohio Republican Senator, and former U.S. Trade Representative, Rob Portman, who uses World Bank statistics to offer this observation to Fortune: “We are tied with Ethiopia in terms of our exports as a percentage of GDP, well below any of the other developed countries we trade with and well below China and Korea and countries we hope to trade with more through the Korean trade agreement.” Certainly part of that is history and geography: America’s own massive consumer market, and lack of regional integration (like Europe). But even countries like Canada rank far higher in exports as a percentage of the economy. That leaves a lot of potential business on the table. “There are places where American companies can be very, very competitive,” says Robert Zoellick, former U.S. trade ambassador and now president of the World Bank. “I can’t go anywhere without [local] people asking how to get private capital into infrastructure projects” — like health care systems. Germany’s small and medium sized engineering firms are adept at tapping those markets, he notes as an example. International sales, domestic jobs Instead of encouraging multinational business, President Obama and his advisers offer their now familiar tirade against companies “shipping jobs overseas.” In fact, companies do build overseas operations, and hire foreign workers, to tap offshore markets. But those operations also produce jobs here at home. William Melick, an economist at Ohio’s Kenyon College, notes that the 3.8 million offshore jobs created between 1997 and 2007 were complemented by 2.1 million produced by those same firms inside American borders. Melick calculated that for two-thirds of U.S. based multinationals, jobs in foreign affiliates and the U.S. parent company move up and down together; only in a small minority does foreign employment rise at the expense of U.S. jobs. The federal international affairs budget — funding everything from agencies supporting U.S. exports to aid to poor countries — faces sharp cuts from Congress this fall. Part of that is a natural, and necessary, part of any serious effort to rein in government spending. But there is also the temptation — at a time of economic crisis — for lawmakers to turn inward rather than seek economic opportunity in continued American leadership abroad. Part of the international affairs budget (which, contrary to public perception, is only 1.5% of the budget) supports exporting companies, like the Overseas Private Investment Corp., providing risk insurance and capital, the Export Import Bank to help finance exports, and the U.S. Trade and Development Agency that hosts trade missions. And humanitarian aid can redound to America’s benefit. “If done right, it spreads American influence in a positive way,” Florida Senator Marco Rubio told a recent town hall, citing the widespread goodwill in Africa that resulted from President Bush’s anti-AIDS initiative, credited with saving 4 million lives. Despite comments like those from a popular Republican tea partier, parochialism is settling in on Capitol Hill. “I go to the Hill and ask what they’re doing to make America more competitive,” Zoellick says. “They’re not looking beyond our borders. The private sector is so much farther ahead than the public sector in recognizing what’s happening.” And there’s someone else that’s farther ahead on that score: China.