It's Time to Ask "Borderless" Corporations: Which Side Are You On?
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Source: Common Dreams
It's
Time to Ask "Borderless" Corporations: Which Side Are You On?
Published on Friday, October 26, 2001
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.
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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.
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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.
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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.
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