Posts Tagged ‘Multinationals’

A few days ago, President Obama gave a speech at MIT during which he reiterated the need to switch to green energy in order to preserve the environment.  He also said that the use of fossil fuels, particularly foreign oil, places the country in a precarious situation. If a foreign country cuts off our oil supply it could cause great hardship in the U.S.  He also said that a massive effort to create a green energy industry will be a significant stimulus for our economy. Speaking about the worldwide competition to create new sources of green energy he said, “The nation that wins this competition will be the nation that leads the global economy.”  I’m not so sure of that.

As usual, isolationist Americans tend to be unaware of advances made in the rest of the world.  Ever since we won World War II we have had a tendency to view ourselves as the world leader in anything technological. It might then come as a surprise to many Americans that the call to action for the creation of green energy has been heard a long time ago in Europe – while Americans were happy to drive their gas guzzling SUVs and Hummers and heat their homes with fossil fuels and generate electricity with coal.  While Americans were comfortably cocooned in their homes watching football on their widescreen TVs, Denmark was busy building gigantic windmills for the generation of electricity. Today, Denmark is the world leader in wind-produced electricity, a result of a National plan developed in 1976.  They make some mighty large and mighty efficient windmills in Denmark. It’s not clear to me that even MIT can overtake the Danes anytime soon in this type of technology.  Do we really think we will be producing next generation windmills anytime soon and be selling them to the world?  The world already has significant wind generation capability.

What about solar power?  Surely the world needs that. True, but the world has been working on that for quite a long time – while we were driving our SUVs around town trying to find houses we could flip.  Germany is the world leader in solar technology and has been for quite a while. The Germans are currently building a 40 megawatt solar power plant for their own power generation needs. I doubt that the Germans will be one of our customers for solar power technology. Germany is the world leader in producing solar power.

OK, so what else is there? Nuclear? Whoa, hold yer horses, fella. What do you mean “nucular”?  That’s dangerous. Don’t you know they make bombs out of that stuff?  We Americans don’t want that! (Just disregard our stockpile of thousands of nuclear bombs.) Meanwhile, the French – actually not “meanwhile”, ever since the Arab Oil Embargo in 1973  the French decided that they would never again be held hostage to foreign oil.  So they built a bunch of nuclear power plants all over France.  France is the world leader in nuclear power plant technology, not the U.S. I don’t think they’ll be lining up to place any orders from the U.S. even if we do decide to resume nuclear power research.  The leading institution in the world for the future of nuclear energy, i.e. nuclear fusion, is called ITER. It’s in France.  Under the Bush administration the U.S. had all but dropped out of this research effort. Our country stopped paying its dues and had almost zeroed out all funding. Meanwhile the other six members of ITER: China, European Union, India, Japan, Korea, and Russia have made great strides toward the production of power from controlled nuclear fusion – a process that produces very little radioactive waste. Recently the U.S. chipped in a little money that helped to make back payments that the Bush administration failed to make. Even so, we are hardly on the cutting edge of nuclear science compared to the rest of the civilized world.

The fact that President Obama wants to spend a lot of money on energy projects in America is good news. It’s about time. But let’s not kid ourselves. The rest of the world is way ahead of us.  The Obama plan will undoubtedly create more jobs in the U.S.  for people who will be engaged in energy research. It is something we need to do.  It is also something the rest of the world realized they needed a long time ago.  It is unlikely that we will find a large foreign market for our energy technology, whether it is solar, wind, nuclear, or anything else in the near future.  We have too much catching up to do. Because of that, it is unlikely that launching a massive energy research and development project can be the near term solution for our economy. We won’t be exporting windmills to the Danes, solar panels to the Germans, or coals to Newcastle. They have enough, thank you.

The fundamental problem with our economy is not that we don’t do energy reserach, it is the outsourcing of people’s jobs by multinational companies.  We simply cannot go on having our multinational companies make everything in China and then sell it to us in Wal-Mart stores while we get the money to pay for all this stuff by playing economic bubble games and getting home equity loans.  Green energy research is good. It’s good for the scientists and engineers who need jobs. It’s good for the environment. But let’s not kid ourselves, it’s not going to be the solution for the much deeper problems of our pathetic economy.  The solution will only come by tackling head on the iniquities of multinational economics and the exportation of American jobs and manufacturing capabilities to foreign countries.

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In 1776, a group of revolutionary minded people, many of whom were Freemasons, created the United States of America.  This new country was to be a break from the past. The leaders of the movement: George Washington, Thomas Jefferson, Benjamin Franklin, John Hancock, and many more were Freemasons.  They were informed and inspired by some of the tenets of the Freemasons, tenets that were at odds with the established manner of world governments at that time.  Many of the governments of various European countries had a long established and close relationship with one branch or another of the Christian church.  Most of the governments had kings or queens, whose right to rule was based upon their ancestry.  The American revolutionaries had a different concept in mind – a democratic, elected  government that had no association with any religion.  It was a daring concept, and a complete break from the European view of government.  These Freemasons even documented this break from traditional government when they made the Great Seal of the United States and when they printed the one dollar bills that we have today. One each of these bills are printed the words: Novus Ordo Seclorum, i.e. A New Order of (0r for) the Ages.

The New order that was founded by these Freemasons created a Republic where the principal ideas and visions were centered on individual liberty.  A key concept was that the government was not made up of the elite or the wealthy or the influential or the religious leaders. The government was changed regularly, based upon a schedule of elections, and anyone could become a member of the government – as long as they could convince their friends and neighbors to vote for them.  This concept of a republic also implied something else, there would be a distance, a division, between the will of the wealthy and the will of the government, i.e. the will of the people.

Today, as our economy lurches towards a dubious recovery from a worldwide economic meltdown, we can observe that there has been a key change in the Novus Ordo that was created by the Freemasons.  There is no longer a distance between the government and the wealthy. Indeed, it was the closeness of the wealthy to the government that directly led to the meltdown.  It was the money in the pockets of the our governmental representatives that led to the relaxation or the complete annulment of laws that had protected us from nefarious economic practices by the banking industry.  It was the government’s Securities and Exchange Commission that looked the other way when Bernie Madoff ran his gigantic Ponzi scheme.  Over the years, the wealthy had established a cozy relationship with the representatives of our Republic – all for the purpose of gaining more money for themselves and less for the average citizen.

Today, the wealthy have almost a stranglehold on our government.  Some would say it is more than that.  They say we have an oligarchy – a situation where hidden, wealthy people rule through a puppet government and all laws are made to benefit the small, wealthy elite.  All you need to do is look.  Our American companies have become multinational. Our once good paying jobs have been moved to other countries where the cost of labor is much less.  Our government has “reformed” our tax laws allowing millionaires and billionaires to pass on their fortunes from one generation to the next while not a cent of tax is imposed on this transfer of wealth.  The wealthy have used the government to create income tax cuts for themselves and income tax increases for the middle and lower class.

The New Order created by the Freemasons is fast dying.  Today, our multinational companies, owned by the wealthy, fabricate our goods in China- creating no jobs for American workers – except those who work for Wal-Mart.  Our multinational companies pay little or no tax to our country, because they are officially located in the Bahamas or some other idiotic legal location.  And our government just winks and says, “OK”.  Our country has been transformed without our even realizing it.  We have a new world order that we never saw coming.  In this new world order, it is the wealthy who rule and it is the poor who pay taxes.  In this new world order everyone can vote, but it hardly matters who you vote for. Money flows like water from the mighty Mississippi into the pockets of our Congressional representatives who pretend to ask for our opinions but then vote the way they are told.

The Novus Ordo Seclorum of the Freemasons has gone, and we didn’t even see it go.  We can only sit and watch, dazed, as the government tires to stimulate a dying economy, knowing in our hearts that we are only surviving on financial life support.   How can our economy ever rise again when the wealthy have sent all our jobs to China?  How can our children ever compete again when our schools can’t compete with those in Malaysia or Norway?  How can we lead and inspire the world when so much of our television and radio news is now filled with the lies of the wealthy media owners, propaganda, and gross distortions of truth?

The new order of the world is here.  It is the multinational companies of the world who now make the economic rules. It is China that will be the world’s supplier of almost everything anyone needs.  We are to be the consumers, borrowing money from banks in order to live – while living forever in debt.  Meanwhile the people of the wealthy class return to their rightful place: Rulers of the World.  And the elected leaders of our Republic grovel before them and do their bidding – all for a pocketful of change.

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Of course they are, and therein lies the problem for the U.S.  A great many of the world’s multinational companies were at one time American companies.  They were located in America, they manufactured their goods in America, they hired American workers to make those goods, and they sold their goods in America.  Not any more.  It’s hard to find a large, completely American company these days – there are better profits to be made elsewhere.  So, the question that needs to be asked is this: are these formerly American companies helping or hurting America?  Does America benefit from their existence or does their existence harm America?

If we go back to the beginning, it is easy to see that the multinational companies arose out of two desires on the part of the owners: 1) a larger market and 2) a cheaper labor force.  Fifty or a hundred years ago this desire was satisfied by the movement of American companies from the industrialized north to the agrarian south.  Everything was still in the family, so to speak, and because these companies were still entirely contained within the boundaries of the U.S. no one could say they were un-American.  On the other hand, there were a lot of confused people in the north staring at vacant factory buildings, slowly being covered by weeds and blowing dirt, who were wondering only one thing: “Now what do we do?”

In time, the costs of labor in the American south became a burden to the business owners and they began looking for other, even less expansive ways to manufacture their goods.  Sure, they turned to mechanization, and that certainly eliminated a lot of jobs – thus increasing profits.  But machines can be expensive too.  And they break.  And they get outdated.  So the business owners began to look further afield and soon saw that there was a semi-infinite supply of extremely cheap labor in the developing world. These people would work for next to nothing compared to American workers. All that was needed was some sort of legal framework to enable the companies to exploit this newfound source of labor.  In time, with the help of the U.S. government obligingly creating favorable tax legislation and foreign governments doing the same, a new mechanism was created where companies that were based in the U.S. could manufacture their goods someplace else, but still sell them in the U.S.  Of course their American workers lost their jobs as a result, and therefore couldn’t buy their products – but that wasn’t a problem, there were plenty of other Americans who had jobs, and they could buy the foreign made products.  And they did – gleefully – because the products cost much less than they used to.  The company owners had passed on the savings to the customers (well, some of it anyway, they of course pocketed a lot of it too).

It wasn’t long before a lot of other companies caught on and a slew of multinationals were born, giving rise to the Celtic Tiger in Ireland, the Asian Tigers in the Southeast Asia, and the Hidden Dragon/Crouching Lion we call The People’s Republic of China – or just China Inc for short.  Everybody got into the act and what had once been American companies established roots all over the world.  And then a transformation happened. These corporations began to look at themselves and found a new identity – they weren’t American, nor were they Irish, nor were they Chinese – they weren’t anything except corporations.  And with this internal revelation they realized that they owed nothing to any country.  They no longer had any allegiance to any flag.  They had no responsibility for any particular population group.  Their only “raison d’etre” was to make money – profit actually – for their owners, and they did.  Lots of it.

It is now becoming clear that all the favorable tax treatment the multinationals have received from the U.S. and other countries has been shortsighted.  Sure, there was a temporary benefit for a lot of people when U.S. jobs were exported. A lot of stuff became cheaper to buy for those Americans who still had jobs, but eventually the whole thing caught up with us. We’ve exported way too many jobs and now we can’t afford to buy even the cheap imported stuff that comes in.  So we use our credit cards. And we get home equity loans. And we play financial roulette, buying and flipping houses.  Now, as our economy lies a smoking ruin, we look to the multinationals for help.  Will they hire us?  Will they create new jobs for Americans?  Hardly.  These stateless entities care only for themselves; they have become parasites rather than good citizens. They are by definition un-American.

So what can be done to save the American economy from being completely bled to death by these heartless leeches?  Tax reform.  Of course that takes a government that isn’t being paid by lobbyists for the multinational corporations, but that is our only hope.  The cure for the multinational problem is simple: give huge tax incentives to truly American companies, i.e. companies that hire Americans, manufacture in America, and sell their products in America.  As for the multinationals – tax the Hell out of them.  Then send every American a check (sort of like how the State of Alaska sends every citizen of Alaska a check based upon oil company revenues) – their share of the tax on multinationals. We could then use that money to buy goods made by truly American companies.

Oh, by the way, that’ll never happen…

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What is the real value of a gallon of gas? In Venezuela you can buy a gallon of gas for about 11 cents. In Saudi Arabia it will cost you 45 cents. In the U.S. it’s about $3.70 and in Germany it’s about $9.20. You can do the same cost comparison for pretty much any product, whether it’s coffee, bread, milk, or TV sets and you will find a wide distribution of prices. What does this say then about the value of something? Is there any way to say what the actual value of a product is? The answer, of course, is no, there isn’t. The value of anything more or less corresponds to the amount of work needed to make it. So if you have crude oil bubbling up out of your back yard you would probably sell it for less than if you had to dig for it a couple of miles straight down through solid rock.

So it is that in any part of the world, certain things are cheap and other things are more expensive and when you live in any particular place you adjust to the local conditions and values. That’s why Americans have had a long love affair with gargantuan gas-guzzlers and the Japanese buy those strange looking little boxes with tiny wheels. For a long time, in fact up until maybe thirty or forty years ago, everyone in the world lived in accordance with the realities of their local economies and each nation’s economy was more or less successful, depending upon its own resources. Eventually, some bright people realized that a profit could be made if you bought eggs in East Podunk, where people would sell you an egg for a nickel, and then you sold the eggs in West Podunk where people would pay a dime for an egg. Since it only cost a penny to drive from East to West Podunk, it was a surefire way to make a ton of money.

About a month after this discovery the great multinational companies were created and the world was changed overnight, more or less. Now you can buy the same gas that costs 45cents in Saudi Arabia and pay $3.65 for it here. If you figure in the shipping costs for getting the gas here, I suppose it does eat into the profits a bit, doesn’t it? However, since Exxon Mobil just posted the largest profits ever in the history of any American company I don’t suppose their management is crying in their oil barrels are they? The secret of the whole thing is this: Exxon Mobil isn’t an American company anymore – not really – it’s what they call a multinational company. Just like the East Podunk Egg Company, they’ve expanded beyond their borders.

In any economic transaction there are only two types of outcomes: Case 1. There is an even trade, like when you trade a bowl of corn for a bowl of peas, or Case 2. Someone gains and someone loses, like when you sell your used car for $1,000 when you know it won’t last another month. The multinationals are experts in the type 2 transactions. They buy their products cheap and sell them for as much as they can. They have found they can make zillions of dollars by exploiting the difference in the regional value of things, like oil, labor, or anything else that can be bought and sold. This all started back in Podunk, as you recall. Then it expanded within the U.S. when the great industrial firms of the northeast moved to the cheap labor market of the south. It wasn’t long afterward that these companies were in Mexico looking for even cheaper labor. Somewhere along the line, the best and brightest of the leaders of these industries figured the whole thing out and in a heartbeat they formed multinational companies that had no allegiance to any country. Their only allegiance was to themselves and making a buck. Their “country” had become just another potential customer or source of things to buy and sell. Their countries’ workers were just another commodity to hire and fire as costs went up and down and less expensive workers became available in other countries. The multinational executives sort of became citizens of the world, so to speak, but, perhaps for tax purposes, they found it advantageous to belong to one country or another.

Just for kicks I thought I would look up the largest multinational companies. Here are the top ten according to Forbes:

  1. HSBC Holdings
  2. General Electric
  3. Bank of America
  4. JPMorgan Chase
  5. ExxonMobil
  6. Royal Dutch Shell
  7. BP
  8. Toyota Motor
  9. ING Group
  10. Berkshire Hathaway.

In case you are not familiar with HSBC, they used to be called Hong Kong and Shanghai Banking Corporation. When England turned Hong Kong over to Chinese rule they pulled their bank back to Scotland and renamed it HSBC. It’s the largest company in the world. Other U.S based companies in the top 20 are: AT&T (12), Wal-Mart (16), Chevron (17), and American International Group (18).

All of these companies have one thing in common: they exploit the regional differences in the price of commodities to make a profit. In order to do this they have to give up a sense of allegiance or responsibility for the people who live in their “home” country in order to succeed financially. Thus when your labor becomes too expensive and they can find a guy in Costa Rica who will do the same work; they dump you and hire him. Until, of course, the Costa Rican guy starts living a little to well and then they dump him and hire some guy in Tibet to do the work. It’s like that with every commodity they deal with, not just labor, so don’t be angry – it’s nothing personal, it’s just business – multinational business.

So, while you are sipping your latte during your ten minute break from your job at Starbucks, think about this: your government does nothing to regulate these activities or to protect the export of your job to another country. It does nothing to ensure that you can find new work in your local economy. Your government doesn’t care that you are not a multinational citizen; you are a local citizen at the mercy of a grand scheme run by people of enormous wealth who are sucking the lifeblood out of your economy so that they can enrich themselves by taking advantage of regional differences in the value of things. You can’t stop this yourself. Only a government can regulate this, and ours won’t. In fact it encourages it.

The solution to this problem is to make it less advantageous for multinational companies to exploit us, maybe by punitive taxation, maybe by legislation making such practices illegal, maybe by breaking up these companies as the government did with Ma Bell. There are a lot of ways to find a solution to the problem, but it needs to be done. This is Step Two in the repair of our economy.

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