President-elect Trump abruptly claimed Tuesday, in an appearance at Trump Tower and on Twitter, that Softbank, a Japanese telecommunications group, had promised to invest $50 billion in U.S. businesses and to create 50,000 new jobs because of his victory.
But like other recent triumphant tweets from Trump, the underlying facts are not quite what the former businessman made them out to be, even if they are still flattering to his incoming administration.
Here’s what Trump claimed on Tuesday: That Masayoshi Son, the billionaire founder and head of SoftBank Group, had promised that the company would invest $50 billion in the U.S., with an eye toward creating 50,000 jobs. Furthermore, he added in a tweet, Son said that “he would never do this had we (Trump) not won the election!”
The $50 billion dollar figure appears to be correct, having been corroborated by Son himself in an appearance with Trump at the Trump Tower lobby.
It’s not as clear, however, that the $50 billion reflects a decision made by Son because of Trump’s election. The Wall Street Journal reported that the investments would come from an existing $100 billion fund that Son set up with Saudi Arabia’s sovereign wealth fund and other investors.
It’s possible that some of that money already was earmarked for investments in the United States. Son clearly is eager to invest in the country: He already controls Sprint, having acquired the telecommunications company for $22 billion in 2013. Softbank has also recently invested in the San Francisco-headquartered online lender SoFi and in the Bay-area biotech start-up Zymergen.
But it’s also true that Son himself gave some credit to Trump for enticing him to spend in the United States. He met with Trump in part to discuss Trump’s regulatory reform agenda, according to the Wall Street Journal, and after their meeting said that he expected a lot of “deregulation” under Trump, Reuters reported.
Less certain, however, is the claim that 50,000 jobs would result from Softbank’s investment.
Neither the Trump transition nor the business has provided a source for that figure.
An investment of $50 billion in start-ups would be a massive amount. Total venture capital investment in the U.S. was just under $60 billion in 2015, according to the National Venture Capital Association.
Investing that amount over a course of years would be difficult, and it likely be dedicated to firms without many employees, as is typical among tech start-ups. Instead, the Wall Street Journal reported, Son may pursue major acquisitions of established companies.
Whether that will create many jobs is an open question.
Foreign direct investment into developed countries boosts wages, a recent Federal Reserve Bank of San Francisco review of studies concluded, but has a mixed effect on employment. In the short-term, it may actually lead to job losses, as managers of newly acquired firms try to overhaul the company and boost efficiency.
Over time, though, if they’re successful, greater productivity and innovation should create new jobs. Those effects, however, are difficult to qualify.
