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Date: Sat, 27 Oct 2001 10:27:04 EDT
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Subject: [Spy News] It's Time to Ask "Borderless" Corporations: Which Side Are
You On?
http://www.commondreams.org/views01/1026-12.htm
Published on Friday, October 26, 2001
Pro Patria, Pro Mundus
It's Time to Ask "Borderless" Corporations:
Which Side Are You On?
by William Greider
A recent New York Times headline asked an insinuating question: "After the
Attacks, Which Side Is the Left On?" The Times should find the nerve to put
the same question to the major players of business and finance. Which side is
Citigroup on? Or General Electric and Boeing? Where does loyalty reside for
those American corporations that have rebranded themselves as "global firms"?
Our resurgence of deeply felt patriotism, with official assurances that
Americans are all-in-this-together, raises the same question. At a deeper
level, the patriotic sense of unity collides with familiar assumptions
advanced by the architects and cheerleaders of corporate globalization. The
nation-state has been eclipsed, they explain, and no longer has the power to
determine its own destiny. The national interest, they assert, now lies in
making the world safe for globalizing commerce and capital. In these
threatening times, such claims sound suddenly unpersuasive. Frightened
citizens turn naturally to their government for security--the original
purpose of the nation-state--and business enterprises do the same. The global
corporation, however, intends to have it both ways: American first when that
serves its interest, but otherwise aloof from mere nationality. Since these
companies are busy waving the flag at the moment, one needs to recall how
they described themselves during the past decade, as they dispersed
production worldwide and planted their logos in many distant lands. "The
United States does not have an automatic call on our resources," a
Colgate-Palmolive executive once explained. "There is no mindset that puts
this country first."
The much-admired CEO of General Electric, Jack Welch, portrayed GE as a
"borderless company," and he brutally enforced the logic. When GE wanted
additional cost savings on turbines, jet engines and appliances, it told its
US suppliers to pick up and leave, or else--that is, move the jobs to Mexico
or other locales where the labor is much cheaper, or GE would find different
suppliers. A GE executive in Taiwan once remarked, "The US trade deficit is
not the most important thing in my life...running an effective business is."
An aerospace executive who supervised McDonnell Douglas's production in China
told the New York Times: "We're in the business of making money for our
shareholders. If we have to put jobs and technology in other countries, then
we go ahead and do it." A few years later, McDonnell was swallowed by Boeing,
which likewise subscribes to an unsentimental view of national identity.
Boeing's on-site manager at the Xian Aircraft Company in China, where
$60-a-month machinists make tail sections for the 737, told me, "We've got
suppliers that we've dealt with for fifty years, and we're asking all of them
to offload production to China." In addition to the low wages, American firms
trade US jobs and technology for access to such burgeoning markets. The US
government looks the other way or sometimes even facilitates the
transactions.
Then there is Citibank, a pioneer in global banking and now part of the
mammoth financial conglomerate called Citigroup. John Reed, Citibank's former
CEO, used to complain regularly about the stultifying bank regulations
imposed by the United States, and he often threatened to relocate Citibank's
headquarters to a more banker-friendly nation. "The United States is the
wrong country for an international bank to be based," Reed asserted (though
the US government more than once bailed out his bank when it was on the brink
of failure). Citibank, it happens, is also a notorious channel for wealthy
autocrats trying to spirit ill-gotten fortunes (including drug money) out of
their home country ($80-100 million for Raul Salinas, the corrupt brother of
Mexico's corrupt former president). Citigroup has lobbied to weaken the new
regulatory rules required to halt the flows of terrorist money in the global
financial system.
Which side are you on? In the aftermath of September 11, the question was
swiftly resolved by the multinational lobbyists who mobbed Washington for
handouts. Boeing, the second-largest military contractor, expects to be a big
winner from the crisis (never mind the 30,000 workers it is laying off)
because Boeing agents, in and out of Congress, are pushing for huge new
orders of modified jetliners and cargo transports for the Air Force and Navy.
IBM, though the majority of its work force is now non-American, has lined up
at the trough with Silicon Valley's high-tech firms to lobby for new
government subsidies. American International Group, the world's biggest
insurer and a leading apostle of unfettered global markets, is out front
promoting a new federal safety net for the insurance companies--a bailout
that will compel US taxpayers to share in the industry's risks. GE,
Citigroup, AIG and other financial-services firms persuaded House Republicans
that the US economy should be stimulated by giving them a $21 billion tax
break for their overseas operations. When the going gets tough, these guys
turn out to be real, red-blooded Americans.
Other Americans will be rightly infuriated as they see the urgent need for
national unity exploited for private gain. Activists associated with the
Seattle movement might devote some energy to educating other citizens who
don't yet grasp the contradiction. But this new crisis exposes much more
fundamental issues than corporate hypocrisy. It upends the fictitious
premises used to sell the supposed inevitability of corporate-led
globalization. Nation-states, at least the largest and strongest ones, have
not lost any of their powers to tax and regulate capital and commerce, to
control international capital flows and other globalizing practices. In the
face of market pressures, major nations simply retreated from exerting those
powers. The United States, as principal promoter and defender, led the way.
Other advanced economies gradually followed, often reluctantly. Poorer
nations, of course, did not have much choice but to go along if they wished
to attract investment capital from the wealthy economies.
Now, crisis requires leading governments, especially that of the United
States, to do an abrupt about-face and begin to employ their neglected
sovereign powers, that is, to intrude purposefully in the marketplace and
impose some rules in behalf of society. The most compelling example is the
need for new regulatory controls on capital flows in the global financial
system in order to smash the terrorists' critical support base--the
secretive, cross-border access to money. The global bankers, led by
Citigroup, resisted, claiming it's too complicated to trace movements of
illicit money. Complexities do exist, but the plain truth is that the United
States, joined by a handful of wealthy nations (Germany, Japan, France,
Britain and a few others), has the power to shut down any subsidiary banking
system in the world that refuses to cooperate--simply by rejecting all money
transfers from that country.
Citigroup and other major banks want weak enforcement not because they are
soft on terrorism but because they recognize that policing terrorist money
can lead to tougher enforcement aimed at their own activities--their
profitable role serving wealthy clients in money laundering and the massive
tax evasion that occurs through offshore banking. The evasion of national
laws is a principal hallmark of the laissez-faire global system, one that
governments have lacked the will to confront. The Bush Administration's
sincerity will be tested on this issue since it must choose between defending
the privileges of international banking and protecting the security of
American citizens.
Imposing new forms of accountability on global finance leads ultimately to a
much larger question--how to exert moderating controls (and taxation) on the
destabilizing surges of capital that have ignited recurring financial crises
(and led to massive bailouts by unwitting taxpayers). Only nations have the
power to solve this problem. "At some point, we have to ask whether utterly
free capital is a benefit to everyone," a financial economist with a leading
hedge fund once told me. "Free capital is certainly a benefit to people who
own the capital. But they couldn't exist if these governments did not exist
to protect them. No one wants to locate the Chicago Board of Trade in Bangkok
or Jakarta."
The logic of globalization has led, in fact, to a redefinition of national
interest, at least for the United States, in which government policy assumes
that advancing the well-being of shareholders and global firms--as opposed to
the general population, workers and communities--provides the highest overall
benefit. This preferential order is never frankly acknowledged, of course,
but it has been embraced by both Democratic and Republican Presidents. The
contradictions for the nation have long been visible, but they were explained
away with propagandistic economic claims (much the way authorities ignored
obvious contradictions in the stock-market bubble). Over the past twenty-five
years, for instance, the wage levels of ordinary working people have been
stagnant in real terms as the prime manufacturing jobs moved offshore. Partly
in consequence, the United States became a debtor nation--buying more from
abroad than it sells and borrowing the money to do so--with accumulated
indebtedness that has surpassed 20 percent of GDP. The multinationals claim
US trade deficits don't matter--for them, they don't. For the rest of us,
this condition has led to a deepening dependence on foreign investors and the
potential for an eventual breakdown of the global system itself, when the
proud leader and principal consumer in global trade someday taps out.
My point is this: The patriotic tensions generated by war and recession can
spawn a rare clarifying moment--the political opportunity to educate and
agitate Americans on these deeper contradictions in power between the
nation-state and the global system. Inattentive citizens are no longer so
passive, but suddenly paying attention to world news. The Seattle movement,
as Kevin Danaher of Global Exchange observed, has a potential to connect with
a much broader audience, now ready to listen and learn. The teach-in
curriculum should begin closer to home, not for narrow nationalistic purposes
or to stop globalization but to build support for fundamental change in how
globalization proceeds. If the global system is to be reformed--made more
humane and democratic, more equitable and respectful of each society's
values--the power to achieve those goals belongs only to national
governments, not to remote international institutions. For obvious reasons,
that power resides especially in the politics of Washington, DC.
An important first step is to re-establish the nation's sovereign prerogative
to legislate its own standards of decency as governing values in global
trade. The exercise of national legislative initiatives is not as remote as
it may sound. Bipartisan legislation is pending, for instance, to close US
markets to goods exported by Burma until that notorious regime halts its
forced labor practices (American-in-name-only companies like Unocal are
complicit). The measure's leading sponsors are ideological
opposites--Senators Jesse Helms and Tom Harkin--who share outrage over the
trading system's laissez-faire tolerance of gross human abuses. Their
measure, on its face, seems to violate World Trade Organization rules; in
fact, the advocates actually hope it will provoke the Burmese generals into
filing a formal complaint with the WTO. If the WTO upholds the US law, it
would open the way for broader measures of social reform. If the WTO rules
against the United States, the indifference to brutality will further
discredit the WTO.
Another, similar measure is "right to know" legislation that would require
multinationals based in the United States to report the location and
conditions of their overseas factories--everything from toxic pollution to
health and safety standards to the status of labor rights. The bill does not
attempt to set standards of behavior for foreign countries but requires US
companies to report the facts to local workers and communities as well as to
the US government--information that can stimulate grassroots agitation for
change. The measure would establish an important principle: Congress cannot
impose American values on others, but it does have the right to impose them
on multinationals that call themselves American.
A more ambitious project would be to confront US multinationals on the
ambivalent nature of their own patriotism. Air the facts and name the names.
If the companies are truly global and without responsibility to this
particular nation, then why are US taxpayers expected to subsidize their
success and bail them out of failure? The legislative vehicle for forcing a
debate on these questions would be recurring amendments to cut off the firms
unwilling to accept explicit obligations to nation and citizens. One might
describe these measures as "homeland security."
Critical questions about global corporations are no longer abstract
propositions. As is already clear from recent actions in Washington, some
Americans are regarded as special in crisis--and awarded billions of dollars
in protection from malign market forces. Other Americans are told to keep a
stiff upper lip. This malformed definition of national unity is ripe for
attack by the true patriots.
William Greider, a prominent political journalist and author, has been a
reporter for more than 35 years for newspapers, magazines and television.
Over the past two decades, he has persistently challenged mainstream thinking
on economics. For 17 years Greider was the National Affairs Editor at Rolling
Stone magazine, where his investigation of the defense establishment began.
He is a former assistant managing editor at the Washington Post, where he
worked for fifteen years as a national correspondent, editor and columnist.
While at the Post, he broke the story of how David Stockman, Ronald Reagan's
budget director, grew disillusioned with supply-side economics and the budget
deficits that policy caused, which still burden the American economy. He is
the author of the national bestsellers One World, Ready or Not, Secrets of
the Temple and Who Will Tell The People. In the award-winning Secrets of the
Temple, he offered a critique of the Federal Reserve system. Greider has also
served as a correspondent for six Frontline documentaries on PBS, including
"Return to Beirut," which won an Emmy in 1985. Raised in Wyoming, Ohio, a
suburb of Cincinnati, he graduated from Princeton University in 1958. He
currently lives in Washington, DC.
� 2001 The Nation Company, L.P.
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