“Before 1980, Wall Street had been the handmaiden of industry … after 1980, industry became the handmaiden of Wall Street”
~ Robert Reich
Why Should We Care About Multinationals?
Basically, multinationals rule the global market. We care because they also have great (if not overwhelming) influence in both the markets and governments of the world.
What is a Multinational?
A multinational (also known as a transnational) is a company (typically a corporation) that does business in more than one country. Some examples are Coca-Cola, Hewlett Packard, Microsoft, Apple, Google, Ford, Toyota, etc. In fact, most large American corporations are multinationals. By definition, every foreign country seeking to do business across borders is also a multinational.
Accountability and Behavior
People behave differently when they are not held personally accountable for their actions. Everyday Americans don’t have to worry about this; they are held accountable every day. If one doesn’t perform well, they are fired. If they break the law, they are arrested. If they don’t pay their bills, they go bankrupt.
What about multinational behavior? Corporate CEOs are typically not held accountable for their behavior and so we should not be surprised to see all kinds of ruthless decisions made with no regard for the well being of the public and oftentimes their own employees. We are to expect such behavior because they act in their own self-interest. If the countries they operate in are strong, a multinational must learn to follow the customs and laws of these countries in order to do business there. If the countries are weak or corrupt, they will use any means necessary to gain market share, including bribery. They may behave in a less than ethical manner because they are accountable only to their shareholders, not the public interests of any county, including the USA. The problem is that they are very powerful in that they have set aside large sums of cash to influence public policy. These people are not our friends. Does anyone see anything wrong with this? Why has this obvious conflict of interest been allowed? What were we thinking?
It used to be said that, “What is good for General Motors is good for the USA”
The idea here was that a large corporation can do no wrong. Everyone supposedly benefitted from the everyday actions of large corporations. They were stable, supplied jobs for Americans and paid handsome dividends to their stockholders. Implicit in these types of arguments is the notion that the “invisible hand” of economics somehow magically cured many social ills. Since large corporations can “do no wrong” and seem to do only good to the American public, why not advocate public policies that benefit large corporations, thereby indirectly benefiting all Americans? This was the original “trickle down theory” and to some extent it worked – as long as it operated in a more or less closed economy. What could go wrong?
Rigged Globalization plus Trickle Down = Gushing Out Economics
A more dubious case was made when it was said, “What’s good for Wall Street is good for Main Street.” So the same concept “went global” and the implication here being that “what’s good for the multinational is good for the USA”. Nothing could be further from the truth. In one sense, it could be good for those who held stock in successful multinationals, but there was a much larger negative affect on American labor and Small Business. The “trickle down” became “trickle out”, and as globalization accelerated, a “flash flood” of jobs “gushing out” of America began toward wherever there was lower labor costs. Not satisfied with decimating the American labor force, those that were left were then subjected to imported cheap labor sponsored by their own US government (see InSourcing on this web site).
When it comes to being thrifty, Multinationals operate like any other business – they seek to cut costs in order to maximize profits. We would expect no less from any business. The largest cost component of most any business is labor. In a closed economy, labor costs are subject to the same forces as any other cost, namely supply and demand. That’s fine, the incentive to cut labor costs is offset by the need for labor in that it is an asset. What the business is really after is productivity from their labor force, right? Americans believe in this natural competition and they understand that higher skilled labor gets paid more, etc. But when we “go global”, what happens to labor costs? What if a business can get the same labor for a fraction of the cost of an American worker? They outsource operations (see OutSourcing on this web site). In a very real sense, the multinational becomes just like a foreign nation trying to get into the American market with an unfair advantage – much lower costs. If a foreign government tried this, we would slap them with a tarrif (and we should). But in America ONLY, they are treated like an American company even though they clearly are not serving American interests in terms of labor and small business policy. Instead of global prosperity, we begin to see indentured slavery.
Government supported outsourcing is bad enough, but it gets worse. Not only have jobs been removed from America with outsourcing, jobs are now being “in-sourced” via H-1B programs (see InSourcing on this web site). Now that they have decimated the minimum wage and the blue-collar workforce, politicians have written laws allowing multinationals to import highly skilled labor (basically any foreigner with a degree) to replace all white-collar workers.
American Small Business is Being Systematically Eliminated
This rigged system (a very UN-FREE MARKET) is not only unfair to American labor; it is devastating to American Small Businesses. American Small Businesses compete very effectively with large corporations when it comes to a level playing field. But there is no way they can compete with big government and big business, especially when they collude together against small business to drive them out of the market with artificially low labor rates.
The Result? Lower Costs, but High Unemployment and Ultimately Civil Unrest
Unchecked, every job in the US will ultimately be replaced by a foreign job. That includes YOUR JOB. Further, there will be no small business in the USA. Is this in the best interest of the American people? Of course not! So why are we allowing it to occur?
Multinationals Are Cheating The System, and Your Politicians are Helping Them!
Multinational interests argue that this is all alarmist propaganda hiding policies of union supported protectionism. First of all, this has nothing to do with unions – the free market handles unions quite nicely. It is a form of protectionism in that the USA needs to protect its labor force and small businesses from the inequality in the medium of exchange in the global marketplace, just like every other nation (except the USA) does. The point here is that the medium of exchange is not equal! This is NOT free trade – it is rigging the game in favor of multinationals. They are cheating the system! And your taxes and politicians are supporting them in this effort!
Are Multinationals Evil?
Multinationals are not inherently evil they are just inherently self-interested. Just like people and just like governments. The difference is in who the “self” is. For the multinational it is their stockholders worldwide who are looking for the lowest labor costs they can find. For governments, it is supposed to be “the people”, and so there should be a built-in opposition of most governments to the economic policies advocated by multinationals. But what if the government instead behaves as if “self” is the multinational? That is what is going on in the United States. And it is the people’s fault for allowing it to occur. The solution? Term Limits, an outright ban on all forms of Lobbying and political contributions and the elimination of all so-called “Free Trade” agreements. All of these topics are outlined with proposals on this web site.
Some argue that economic theory postulates that multinationals will behave in the interest of the USA in the long run because the consumers will demand such behavior if it is important to them. Others believe it will all “balance out” in the long run. In the first place, consumers will never demand such behavior – they always seek the lowest cost. Secondly, if things “balance out”, it can only end up with a result that leaves the USA much worse off than it is today.
The plain fact is that economics was never intended to be a recipe for public policy. Remember it is quantitative in nature, not qualitative. Therefore we should be extremely leery of any multinational that claims to present policies that will benefit the American public. In fact, while corporations with operations only in America are usually “good” for America, the interests of the multinational are almost always the opposite of that of the American public – they are always bad for Americans.
Anonymous post found on a blog:
How to create a Third World nation:
- Allow the home market for your industries to be captured by foreign firms that aggressively protect their own home markets.
- Allow mass immigration that undercuts wages and overloads schools, hospitals, neighborhoods, infrastructure, police and the natural environment.
- Promote a popular culture that glorifies gangsters, pimps, drug addicts and strippers.
- Allow a parasitic “investment” banking cartel to dominate the economy and political system, while using as its propaganda arm the media and academia.
- Pursue a costly foreign policy that stations hundreds of thousands of troops overseas in order to defend economic rivals, allowing those economic rivals to spend very little on their own defense. Entangle your nation with alliances that are not in your national interest, putting the lives of your youth on the line for powerful and corrupting special interest groups or to secure loans made by bankers.
- Spend billions upon billions on foreign “aid” while your nation is running massive budget deficits and your own infrastructure is falling into disrepair, and poverty in your own nation is widespread and increasing.
- Create huge government debts that place a heavy burden on future generations and lower their living standards below that of previous generations, while enriching usurious and parasitic international bankers.
- Follow these simple steps, and Voila! A great nation and culture is reduced to a vast slum with small pockets of opulent enclaves.