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For many years, the American political and economic catechism has included the line "What is good for General Motors is good for America." Politicians and CEOs recite this line like a mantra, hoping that repeating it enough will make people believe it. This liturgy of corporate greed and political self-delusion was dubious even in the 1950's when large American companies created high paying, high benefit jobs; in the 1990's, the era of corporate downsizing and the global economy, it has become a blatant falsehood. More and more, the interests of multinational corporations are becoming antithetical to the interests of most Americans, and to most citizens of the world.
At the same time, large corporations are wielding ever more political power: the death of Clinton's health care package at the hands the medical industry testifies to this. Despite these disturbing facts, the public dialogue regarding mega-companies remains impoverished; not since the days of Franklin Delano Roosevelt has there been a serious discussion about the role of big business in public life, and of its responsibilities to the country within whose borders it operates. This dialogue must be revived if we are to find a place for the vast majority of people in the world's economic future.
Perhaps the most disturbing evidence of the damage multinational corporations can do is the increasing income gap betwenn rich and poor. In the end of 1994, 358 individuals had a combined net worth equal to that of the lowest 45 percent of the world population, according to Richard Barnet, fellow at the Institute for Policy Studies in Washington. The average CEO receives 149 times the average factory worker's pay. In 1994, at least 18 percent of American workers with full-time jobs earned a salary placing them at or below the poverty level. Paul Krugman, Professor of Economics at Stanford, finds that between the 1970's and the 1990's, "the real wages of low ranked workers like janitors fell 15 percent or more, while the real earnings of high-end occupations like doctors and corporate executives rose 50 percent or more." I find myself shocked to be in agreement with Pat Buchanan, who claims that the underlying reason for the dissatisfaction of Americans is the stagnation or decline of real wages and the loss of job security for the vast majority of workers.
Multinationals bear most of the responsibility for this decline. During the 1950's and 1960's, organized labor was able to use the strike as a real threat to win decent wages and safety conditions. In the 1990's, less than 12 percent of the American work force is unionized, a smaller percentage than in 1936. The American government allows corporations to get away with union-busting practices like firing workers involved in union organizing; permanent replacement of striking workers is still perfectly legal, and corporations use it.
The most effective technique used by multinationals against labor, however, is the power to pull up anchor and leave the area altogether. Modern technology makes it possible for a company to move all of its production operations overseas in just a few years. The costs of the move are quickly offset by reduced labor costs in more poorly developed countries. Barnet estimates that "About a third of the jobs in the United States are at risk to the growing productivity of low-wage workers in China, India, Mexico, and elsewhere, and this new reality exerts a downward pressure on wages and working conditions for millions of Americans who still hold jobs."
The negative effects of huge, international corporations are two-fold: first, they strip jobs away from first world countries because the higher wages demanded by workers, as well as the higher safety and environmental standards required by governments, raise production costs. In response, multinationals move their operations to underdeveloped countries where labor is available at slave wages. Second, safety and pay standards are depressed worldwide since corporations can always threaten to move away whenever regulations become too "stringent." Management's threat to move to the lowest bidder nation has lead to an international race to the bottom in terms of worker pay and benefits. Referring the labor conflict with the Caterpillar tractor company, the United Auto Workers noted that "CAT would like to force workers in different countries to compete with one another to see who will work for the lowest wage." Unless corrective action is taken, the glut on the labor market will continue to drive benefits and pay further into the basement. Meanwhile, the CEO's who succeed in downsizing their companies are richly rewarded: a study conducted by Sarah Anderson and John Cavanagh of the Institute for Policy Studies found that in 23 of the top 27 job-eliminating companies, CEO's received raises averaging 30 percent.
Economic globalization does not even provide the benefits of lower prices and bigger markets that its advocates claim. The mega-corporations have increasingly more power to set prices at will, because they are both the primary consumers and producers in the new global economy. Barnet finds that "More than a quarter of the world's economic activity now comes from the 200 largest corporations. Up to a third of all world trade takes place among different units of a single global economy. This means that prices are set not by the mystical forces of the free market but by corporate administrators who can arrange to have profits show up in tax havens and accomplish other miracles of creative accounting that improve the global bottom line." Market expansion is similarly a myth: as real wages decline around the world, the majority of workers become less able to pay for products produced by the multinationals. Instead, those at the top of the economic ladder consume more resources, while average workers are able to consume less. Even when multinationals increase productivity, the majority of workers don't see the benefits.
Workers are not the only victims of economic globalization: the environment also pays the price. Jeremy Brecher and Tim Costello, authors of Global Village or Global Pillage, note that "According to the logic of global competition, [countries] should compete with each other to attract capital by providing the cheapest environmental, social, and labor conditions." The effects of globalization show in the skies and rivers of South America. One example is the San Marcos free trade zone, where factories not only employ laborers at less than subsistence wages, but also spew forth contaminants in amounts forbidden in the United States. These toxic emissions have a definite effect on world environmental conditions: it doesn't matter where greenhouse gasses come from. Their effect is felt worldwide. Furthermore, local environmental laws are undermined by globalization because stricter environmental laws tend to drive off potential employers. The Sierra Club published GATT Double Jeopardy, a study on how GATT is likely to undermine local environmental and consumer safety laws. It concludes that politicians, eager to bring jobs to their constituency, are likely to compromise environmental standards in order to lower production costs for the corporations doing business in their area. Environmentally as well as economically, transnational mega-corporations encourage a race to the bottom.
Multinationals have also parlayed their economic might into political power. Through a combination of creative accounting and political influence, multinationals often avoid a large part of their fair tax burden. Countries and states are forced to engage in the race to the bottom in terms of taxes as well as environmental laws and worker protections; the people have to carry an extra tax burden because multinationals escape from paying their share. Barnet points out that "According to a 1993 study by the General Accounting Office, more than 40 percent of corporations doing business in the United States with assets of $250 million or more 'either paid no income taxes or less than $100,000.' In the 1950's, corporations paid 23 percent of all federal income taxes. By 1991, it was down to 9.2 percent, while the corporate share of state and local taxes stayed about what is was in 1965." This shortfall is often made up in regressive sales and property taxes, laid disproportionaately on the average citizen. Thus, workers are doubly victimized by multinationals: once in their paychecks, and a second time when they must pay higher taxes because the company got a tax break.
Nor does this race to appease corporations stop at lower taxes: it often extends to outright gifts to companies by states seeking to keep jobs. Illinois gave Sears $240 million of land to keep it from moving out of the state; Alabama gave Mercedes-Benz $253 million to open a plant employing 1,500 people, a cost of about $170,000 per job. Multinationals are able to cow politicians into obedience because they control the economic lifeblood of the politician's constituents; the "gifts" they receive are little more than extortion payments, funded by the taxpayers in an attempt to keep as many jobs as possible. However, as taxpayers' pockets drain, they will have less money to pay off the mega-corporations, who have no qualms about moving out of town as soon as it becomes profitable to do so.
Many voters are aware, at least unconsciously, of the power the transnationals wield over their lives. However, they often see corporate boardrooms as beyond their power to influence; consequently, their anger tends to be directed towards the government, a much easier target. Politicians themselves are unwilling or unable to take on big business, since big business writes the campaign contribution checks that keep the politicians in power. The heart of the problem is that, unlike America's government, companies are not subject to democracy or majority will. When corporations answerable to no one are wielding as much power as the government in deciding the economic future of many voters, feelings of powerlessness inevitably result. So far, they have been very few successful attempts to thwart the will of the modern day robber-barons. Even the early victories of labor and environmental movements against the multinationals are now in jeopardy, as operations relocate to whatever countries are willing to have their people and their environments exploited the most.
The solution to this international problem must take the form of an international effort. As long as the multinationals can play country against country, forcing workers and governments into a bidding war for a few underpaid jobs, the situation will continue to deteriorate. Brecher and Costello suggest what they call "Lilliputian Thinking." Gulliver, from Gulliver's Travels, was big enough to crush any single Lilliputian who opposed him; together, however, they were able to tie him down with a thousand threads. There must be a similar international grass roots effort to bind the multinationals. The first step in this program is the linking of local to global interests. Too often, unions fall into nativism and protectionism when faced with the threat of having their jobs shipped to a cheap labor market in Asia or South America. This strategy is ultimately counter-productive: as long as there are people willing to work for less than subsistence wages, no worker will be able to make a decent living. As long unions see underpaid laborers as enemies rather than allies, the multinationals win because the bidding war is on. Making workers realize that their interests are linked, that the abuse of workers anywhere is a threat to workers everywhere, is the first step in overthrowing the economic tyranny of the mega-corporations.
The next step in Lilliputian Thinking is using global support to help solve local problems. Once American workers recognize that they can't compete with cheap, non-unionized labor in places like the San Marcos Free Trade Zone, American workers have to use whatever political power they have left to try to improve the quality of life of workers everywhere. The only way to make sure that no one is willing to work for less than subsistence wages is to guarantee that no one is so desperately poor that they have no other option. A first step towards this goal would be putting pressure on the US to ratify the International Labor Organization's 175 Conventions for basic labor rights and standards, which include freedom of association, minimum wages, and minimum standards for worker health and safety. Several unions, including the Oil, Chemical, and Atomic Workers, are pushing for the US to ratify these conventions. If successful, the conventions could eliminate some of the worst practices of businesses in the US, such as the firing of workers who try to organize. This move would send a signal that America takes workers' rights seriously, and it would be a useful start.
The final step in any attempt to transfer economic power from CEOs to workers must be a democratization of business. Big business does not pay attention to the wishes of workers; international agencies like the World Trade Organization, the World Bank, and the International Monetary Fund are little better, often marginalizing or completely eliminating any form of popular control. This trend must be reversed by increased popular control of the economy. If the vast majority of people do not attempt to retake some control of their economic life, the spiral of the rich getting richer, the poor getting poorer, and the middle class getting torn in two will continue.
Workers feel powerless because very often they are powerless against the
money and power of corporations; indeed, any single worker is effectively
powerless. The only solution is an international movement recognizing that
transnational corporations must be opposed by transnational unions and
transnational environmentalists. Management seeks to divide, playing on
nativism and jingoism as weapons against any form of organization. If this
stratagem succeeds, then workers will lose what little power they already
have. The only alternatives for the workers of tomorrow are solidarity or
servitude
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