Don't shed a tear over bid for beer

July 13, 2008|By John D. Burger

LEUVEN, Belgium - An unsolicited bid by the Belgian-Brazilian conglomerate InBev to take over Anheuser Busch has set off a backlash among the American public. Protesters of the proposed deal are relying on patriotic slogans such as "Keep Budweiser American" in an attempt to rally the masses against the originally friendly but increasingly hostile takeover bid. I find this reaction terribly embarrassing.

As an economist serving as director of a study-abroad program for Loyola College students here, I find myself in a unique position to observe and analyze the controversy. InBev has its global headquarters in Leuven, a university town east of Brussels. According to the company's Web site, InBev traces its roots back to a brewery that opened in 1366. (No, fellow Americans, that is not a typo. They've really been brewing the stuff here for more than 600 years.) The company has grown to become a global conglomerate, producing 200 beers and selling them in 130 countries. I have not tried all 200 beers, but I am working on it.

The American public's reaction to InBev's proposal was predictable, but some Belgians find it puzzling. They ask me: "Is this the America that prides itself as a bastion of free enterprise and competitive markets?" "Is this the America that chides Europe for its resistance to embracing free markets?" Yes, yes, I tell the Belgians - but you must understand that whenever our economy hits a bump in the road, we like to blame the foreigners.

Have you noticed the pattern? The anti-globalization backlash follows a distinct cycle. During the early 1990s recession, there was strong opposition to the North American Free Trade Agreement (recall the "giant sucking sound" warning from Ross Perot), but the treaty passed and the complaints faded away as the economy enjoyed a record 10-year expansion and remarkable job creation. During the 2001-2002 recession and the ensuing slow recovery, Americans aimed their complaints toward China and its "unfair currency manipulation."

Eventually, the Chinese currency was allowed to appreciate, but now the U.S. appears to be entering another recession, so we need a new excuse. In fact, the dollar has fallen against most currencies over the past couple of years. Maybe we will accuse Europe of an unfairly strong currency - the opposite story we gave China. It's not fair for InBev to use those big strong euros to buy our American brewery!

Allow me to ratchet down the cynicism. It is quite natural for people to be uncomfortable with the structural economic changes that accompany globalization. My wife's family is from St. Louis, home of Anheuser Busch, so I am keenly aware of how attached we can become to long-standing American brands and their role in communities.

But what exactly are we afraid of? I'm pretty confident that InBev is not offering $46.3 billion in order to shut down production of Budweiser. I can't see why this deal would have much impact on employment in the United States - after all, Americans consume about 25 percent of the world's beer production, and InBev would like to improve its access to our market. I imagine it might even begin producing some traditional Belgian beers in the U.S.

As I observe my American students here in Leuven, living in a residence with peers from 15 nations around the globe, it gives me hope. The students have embraced their international experience and are well prepared for an increasingly interconnected world. Perhaps this next generation of leaders will be better able to convince the public of globalization's benefits.

I know one lesson the students will be eager to share: Belgian beer is delicious, and any deal that brings more Belgian brew to the U.S. is a win for everyone involved.

John D. Burger is an associate professor of economics at Loyola College in Maryland and director of the Loyola International Nachbahr Huis in Leuven, Belgium. His e-mail is

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