Global Corporations; Global Solutions

Radical Centrism Policy Papers 2

 

sadie-frankie-mike-1957.jpg

1957 Sadie, with family, living life to the fullest on a daily basis… RIP with love. 

I’m sure my three week absence of posts about politics, history and culture has been devastating to my devoted audience. My deepest apologies to both of you. My darkness of the last few weeks was due to the loss of my closest cousin, Sadie. Our love for each other, fostered by our common age, interests, and close connection many times during the seventy years our lives intersected, seems to have drained my energy to continue. However, she found it quite humorous and fun that I was blogging. I suspect she would have wanted me to continue to share my thoughts and our family history with a larger audience. So I continue…
I promised “reader feedback” post to my early January posts. Instead, I will start anew with an issue that stokes my fires — “globalism.” My reader feedback post will appear soon. 


Last week in Davos, global economic powers gathered to promote trade and global corporations in the world economy. By all reports, the President did “well” there.

“He made no controversial statements. He was talking to the crowd of people that he’s been brought up to be part of,” said Ishmael Sunga, chief executive of the Southern Africa Confederation of Agricultural Unions. I’m concerned that his success here represents some serious backtracking in one area of his campaign promises where I tend to see eye-to-eye with his supporters. That is the pernicious effects of what they call “globalism,” and what I call “global corporatism.”

It’s a matter of accepted wisdom in the US, that all small businesses want to grow up to be big ones. I have not found that particular truism to be true. Many business owners I know have chosen to remain at a reasonable size, turning profits, nurturing a pleasurable if not luxurious lifestyle, and providing an important service or product to their communities.

In gaining such size and reach, their (global corporations’) vision of humanity seems to go in the opposite direction: it appears to shrink to a single-minded focus on amassing the capital to grow into monopolistic control.

Liberals make the mistake of not making a clear distinction between these local everyday “business heroes” and large multinational corporations, which are entirely different critters (See my earlier post “Open for (Small) Business“). Conservatives make an equally grievous error by accepting global corporations’ masquerade as “small business — just a smidge bigger.” That is not true either. Let’s face it. Their enormous size, narrow economic interest, and befuddling bureaucracies make them more like competitor nations than mom and pop businesses.

To their credit, global corporations succeed because they are proficient at their specialty. They develop consistent, popular products and services at competitive price and product quality. Then they achieve a scale to deliver them to literally billions of people! In gaining such size and reach, however, their sense of responsibility to their communities seems to shrink. To satisfy shareholders (and superstar salaries for executives), they retain a laser focus on monopolistic control of the markets where they participate. In particular, they become:

  • Rootless: Their contributions to local communities are pro forma, budgeted, unlike local business owners who are willing to commit money and heart to their own communities’ special needs and assets. As global corporations gather strength and size from establishing markets throughout the world, it is safe to speculate they outgrow loyalty their national origins, too. They play states against states, nations against nations, for the benefit of executives and shareholders.
  • Ruthless: Large corporations tend to see their customers as statistics, their needs as driven by marketing and focus group research, and they tend to act as foreign, amoral agents in the communities where they operate. Strong CEO’s and individual owners can create corporate behaviors that more closely resemble morality. They appear to be the exception rather than the rule.
  • Poor Job Creators. Large corporations do, by definition, have a lot of employees. But studies show that the larger corporations become, the worse they are at creating new jobs (at least in the industrialized world).  They tend to create profit by labor efficiency — offshoring, automation, mergers. They use capital to directly influence laws intended to govern their impacts. These are strategies that, by and large, are not available to locally-based businesses, and are a major reason why global corporations become different in kind, not just in scale.

Here, I would encourage Radical Centrism to get, well, radical. Global trade agreements and global corporations of this level of market reach and dominance are a new phenomenon in our citizens’ lives. Centrists need to honestly examine what we have learned about the benefits and dangers of this emerging breed of global capitalism. Even people at the fringes of the political spectrum (who often are the first victims of new dangers) should support de-rigging of our economy. Trumpists’ anti-globalist fervor is based on their perception they have ended up in the crosshairs of the global trade agreements. They blame governments, including our own. But isn’t organized labor’s critique of current global trade agreements very close to the same perception? That international trade agreements to incentivize global corporations to offshore to countries with the most lax labor and environmental laws create a subsequent threat to the economy of the U.S. (and other similar nation-states).

This should be a consensus concern. Indeed, it seems likely that the rise of populist nationalism in western democracies may be a direct response to the current global economic system. Proponents on left and right on this issue have not yet been fully appreciated their commonality because, well, hyper partisanship.

The answer to this global sickness probably doesn’t lie in pretending that we as a nation (or indeed any nation) are able to assert an “America First” priority for these corporations. In fact, it’s a global problem; and is likely to be solved primarily with global coordination. Some level of baseline consistency of financial, environmental and labor regulation should be negotiated (or re-negotiated) among nations as part and parcel of the lowering of trade barriers.

Here are few suggestions about where to start negotiating common standards, laws, and governments’ legal standing in the globalized economy:

  1. Examine and limit market consolidation as necessary to protect competition and limit barriers-to-entry for new businesses,
  2. Impose moral corporate behaviors where there is little financial incentive,
  3. Require the highest environmental responsibility of the largest corporations, and
  4. Create tax reforms relatively consistent across national boundaries that require larger corporations to contribute appropriately and generously to the countries and labor force that help them make their profits.

I want to take a moment to recognize, too, the value of freer trade in the world so we don’t make the mistake of throwing the baby out with the bathwater. It must be admitted that Second- and Third-world economies have seen significant benefit and stabilization by the very actions which have created such political havoc in the First world. First world economies are surpassing all expectation as well. It’s just that in the industrialized world, the benefits of that economic growth has been so narrowly focused on the already rich. The dreams of free-traders are very close to coming true… and with a few tweaks and some absolutely ground-breaking changes, they might yet be able to.

The most important tweak is to recognize, and control global monopolies. In the past, monopolies have been treated as an aberration of capitalism. In the US., the Antitrust Division of the Justice Department has a legal authority to approve mergers and acquisitions, which conglomerate of dozens of companies under a single ownership group. This was a powerful tool for the Trust Busters of the Roosevelt era, which put an end to the Robber Barons of the late 19th Century. This type of aggressive action would be perfect for the current crisis of globalism.

The Antitrust Division has, however, recently been given to looking the other way when confronted with developing national or regional monopolies in media, internet services, pharmaceuticals, etc. The answer to the question “Why?” unfortunately resides in the increasing flow of lobbyist influence, and political financing offered to both political parties by the very industries we are supposed to be regulating.

The anti-trust power not only needs to be resuscitated in the U.S., it needs to be replicated consistently on a global basis — as consistently as global trade agreements can be renegotiated. Some structures are already in place, but all are used inconsistently and the most powerful businesses dominate local government deliberations, because citizens are so poorly represented in trade negotiations. We must recognize that bringing the largest multinationals to heel may — in fact must — be an additional result of cooperative actions and citizen inclusion within the very trade and political organizations that we tend to lump with “globalism” generally.

Here’s a final rationale for insertion of citizen interest in the global corporatism debate: the devastating impacts of the stubborn wealth disparities in our democracies are likely to be revolution, labor disturbance, immigration prejudice, authoritarianism. These will fall not on the corporations that may be the root cause, but on the very governments that have decided they are powerless to regulate those corporations. So we need to get our acts together — and get started on this! The longer-term challenge for our younger generations is to assemble the power and advocacy to turn what are essentially global business organizations into coordinating organizations for trade, regulatory and tax policy consistency, and the reins on monopolistic organizations. There, we have hardly begun.

However much we may longer for the simpler past, globalism is probably inevitable as electronics, media and travel shrink the world. But as the global corporations enabled by global trade agreements expand beyond local and national boundaries, they become a different animal that the world has yet to tame — that animal is wild, it’s huge, it’s driven by a simplistic focus (making money). Governments and citizens need to work together to identify the habits of this new animal and work to corral its most destructive tendencies.  Radical Centrism at work!

As for fleshing out the rest of the radical centrism’s view of global corporatism, I’m waiting for suggestions from my readers.  Are there books out there already that could form a guide? Do you have other ideas that might work? Do you agree that the rise of grievous international wealth disparity is a motivating condition for the rise of populist nationalism throughout the west? You help.

 

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