This chart, produced by Goldman Sachs and reproduced by FT Alphaville and Barry Ritholtz, shows how world trade has grown in the past half-century.
In 1960, a quarter of world output was for export. Now it is well over half.
There is a benefit in being able to buy things that are produced in distant lands. There also is a risk in depending on long and vulnerable supply chains for what you need. We the people and our governments need to think about what balance to strike.
Writer Paul Street reported for Counterpunch on his experiences working alongside Congolese and Sudanese immigrant workers in a Procter & Gamble factory in Iowa.
Here in and around the liberal bastion of Iowa City, a university town where wage-earners’ working class lives are all but invisible to a large local cadre of privileged and mostly white academicians, the lower end of the workplace and the job market – the factory and warehouse positions filled by temporary labor agencies, custodial jobs, taxi drivers, etc. – is crowded with immigrants.
Paul Street
It is chock full of nonwhite people who feel fortunate to have any kind of job that helps them escape danger, misery terror, and oppression in far-away places like the Democratic Republic of the Congo, Rwanda, Sudan, Honduras, Mexico, and Haiti.
Does anyone really believe that Iowa City’s giant Procter & Gamble plant – my low-wage, finger-wrenching workplace between from September of 2015 through February of 2016 and the origin point for many of North America’s leading hair-care products – is crawling with Congolese and Sudanese workers, along with a smattering of Central Americans, Caribbean islanders, marginal whites, Black Americans, and Africans from other states, because P&G (the nation’s 25th largest company and its top consumer packaged goods firm by far) is nobly committed to racial and ethnic diversity and a world without borders?
Of course it isn’t. P&G reserves its better paid and more “skilled” and secure “career” production jobs almost completely for non-Hispanic whites. These “plant technician” jobs require no more than a GED (high school equivalency) degree and start at around $20 an hour.
Street said P&G relies on Staff Management / SMX, a temporary help agency, to provide its lowest-paid workers. They get $10 to $11.85 an hour. SMX gets an additional fee—Street heard that it was $6—on top of that.
The work includes filling boxes on rapidly moving assembly lines with shampoo, conditioner and mouthwash bottles, building and wrapping pallets at the end of never-ending packaging-assembly lines, putting stickers on one shampoo or conditioner bottle after another, and more and worse.
It’s all performed in exchange for inadequate wages (far lower than they ought to be thanks to the SMX rake-off) and at constant risk of being sent home early and without warning since there’s often “no more product today” (that’s called “labor flexibility” and it’s no small problem for workers who already paid for a full day’s worth of child care).
He himself quit because, he found after five months of pulling apart tightly glued boxes, he could no longer clench and un-clench his fists. The function in his hands returned after a week off the job.
In the USA, government serves the needs of business. In China, business serves the strategic aims of government.
No foreign corporation is allowed to operate in China without conceding something of long-term benefit to China. That can be manufacturing operations in China, transfer of technological knowledge or a Chinese stake in the company’s ownership. It goes without saying that the CEOs do not criticize Chinese foreign policy.
Cartoon by Xu Jun for Economic Observer
Barry C. Lynn, writing in the November issue of Harper’s, said that some American corporate executives have even submitted to Communist-style self-criticism sessions, in which they volunteer confessions of misdeeds without being accused.
As China becomes more powerful, and the United States becomes more dependent on the Chinese for finance and for critical manufactured items, the leverage of Beijing over the United States becomes greater. Lynn explained the reasons:
First is the fact that so many U.S. companies now depend on China for the products they sell. For Walmart, it’s barbecue grills and shoes. For Apple, it’s assembly work. For Pfizer, it’s chemicals.
And while foreign companies have talked a lot about reducing their reliance on China, they nevertheless keep upping the ante, year after year. Just last April, General Motors announced plans to pour another $16 billion into China. In September, Dell pledged a whopping $125 billion over the next five years, with an ominous promise to “closely integrate Dell China strategies with [Chinese] national policies.”
A second reason corporations are so willing to accede to Chinese diktats is the allure of Chinese markets. For General Motors, China already accounts for roughly a third of the cars it sells. For Qualcomm, China accounts for roughly half its business. For Rio Tinto, China accounts for considerably more than half its output of iron ore.
Chinese sales of Apple’s iPhones topped U.S. sales in 2015 — and when global markets were tanking in late August, Tim Cook helped arrest a rout in the company’s stock by publicly assuring investors that the Cupertino giant had “continued to experience strong growth for our business in China through July and August.”
Source: Harper’s Magazine.
Chinese investors own the AMC Theater chain of movie theaters in the United States, and also are major investors in American-made movies. China also is the world’s largest market for Hollywood movies.
The result: Chinese are never the foreign villains in American movies—Russians, Arabs, Colombians, North Koreans, anybody but Chinese.
Double click to enlarge.
Some giant corporations are larger than small countries, but that is not the source of their power.
The source of their power lies in the fact that if a large corporation doesn’t like a government’s policies, it can take its money to a nation more to its liking.
International treaties, as well as organizations such as the World Trade Organization and International Monetary Fund, insist in the right of money to migrate wherever and however its owners wish.
Individual human beings do not enjoy the same right. Large and sudden shifts of money and population both can be disruptive, but the migration of money is considered a right and the migration of people is considered a problem.
International treaties and agreements such as the World Trade Treaty, North American Free Trade Agreement and the proposed Trans Pacific Partnership Agreement give international corporations a legal status equal to sovereign governments. If corporate executives think a government’s laws or policies are unjust, they can appeal to a business-friendly tribunal to overturn the law or penalize the government.
The important thing to remember about all this is that none of this is the result of impersonal workings of the laws of economics.
It is the result of decisions made by governments, which could have decided otherwise.
Corporations are created by law. Any powers they have come from charters by a state or local government which define what the corporate body can and cannot do.
Without legislation allowing such charters, corporations would simply be collections of individuals. There would be no corporate structure to stand between them and their liability for debts and criminal penalties.
The power of international corporations to shift capital from one country to another exists only because there are laws that allow this to happen. The power of international corporations to override national sovereignty exists only because nations give up their sovereignty.
It’s possible to imagine a world in which things are different—in which international treaties set standards to require corporations to treat workers decently, sell non-toxic products and refrain from damaging the local environment.
That’s not the world we live in right now. But it is a world that we the people have the power to create.
The Obama administration is engaged in secret negotiations of new trade agreements that would limit the power of national governments to control international corporations.
The proposed Trans-Pacific Trade Agreement (TPP) is one; the proposed Trans-Atlantic Free Trade Agreement (TAFTA) is another. Less well-known is the proposed Trade In Services Agreement (TISA), which is being negotiated among 50 countries, including the United States.
If the President were trying to negotiate agreements for control of global climate change, or nuclear disarmament, or standards for protecting labor and the environment, I would support him. Even in these cases, though, I would not favor “fast track” procedures which force an up or down vote without full debate.
But, thanks to disclosures by Wikileaks of the financial services portion of the proposed agreement, we know that TISA would limit the powers of government concerning:
- limits on the size of financial institutions too big to fail;
- restrictions on activities, e.g., deposit taking banks that also trade on their own account;
- requiring foreign investment through subsidiaries regulated by the host rather than branches regulated from their parent state;
- requiring that financial data is held onshore;
- limits on funds transfers for cross-border transactions e-finance; authorisation of cross-border providers;
- state monopolies on pension funds or disaster insurance;
- disclosure requirements on offshore operations in tax havens;
- certain transactions must be conducted through public exchanges, rather than invisible over-the counter operations;
- approval for sale of ‘innovative’ potentially toxic financial products;
- regulation of credit rating agencies or financial advisers;
- controls on hot money inflows and outflows of capital;
- requirements that a majority of directors are locally domiciled;
- authorization and regulation of hedge funds; etc.
In other words, TISA would handcuff governments in doing precisely those things that are needed to prevent the next financial crash.
And that’s just the financial services part. Among the other topics of negotiation are telecommunications and e-commerce, domestic regulation and transparency, professional services, maritime services and international movement of people, and this may not be a complete list.
I would like to see a world at peace, and I would like to see international institutions capable of settling disputes and addressing global problems such as climate change and nuclear arms. Unfortunately these are not the kinds of international institutions that we the people are being asked to support.
The most powerful global organizations, with the possible exception of the Roman Catholic church, are international banks and corporations. International institutions such as the World Trade Organization, the International Monetary Fund and the European Central Bank enforce rules that serve the interests of banks and corporations.
The proposed Trans Pacific Partnership Agreement and similar proposals would give the world’s corporate and financial elite new tools for enforcing their agendas. While there is urgent need for international agreement and institutions to deal with climate change, TPP-type agreements actually would give corporations the right to appeal national laws and local rules aimed at limiting greenhouse gasses.
What makes the banks and corporations powerful is that money can go anywhere while most people are stuck where they are. Migrant money is treated with deference. Migrant Mexicans in the United States, migrant Uzbeks and Kazakhs in Russia, and migrant Filipinos in the Persian are treated like dirt.
The European Union’s current austerity program is an example. The well-being of Europe’s people is being sacrificed to ensure that Europe’s banks never suffer losses. I’d guess this is the main reason for the success of Europe’s nationalist right-wing parties in the recent elections to the European Parliament.
The proposed new 50-nation Trade in Services Agreement now being negotiated is the latest in a series of proposals in create international structures to lock in corporate agendas and neutralize government regulation. It would, among other things, prevent municipal governments that privatized public services from taking them back if privatization didn’t work out.
I learned about TISA through a report published by two Canadian academics, Scott Sinclair of the Canadian Centre for Policy Alternatives, and Hadrian Mertini-Kirkward of the Institute for Political Economy of Carleton University, and commissioned by Public Services International, an international federation of public sector trade unions. What follows is based on their report.
Formal TISA negotiations began early in 2013, and negotiators hope they can finish up by the end of 2014. There’s a round of negotiations now going on in Geneva. The Chinese government reportedly wants to join, but the U.S. representatives aren’t sure the Chinese are committed to the goal of the agreement.
The basic idea of TISA is that foreign companies should be able to compete to provide services on the same basis as domestic companies. Hence there “standstill” and “rachet” clauses to make current and future privatizations of public services a one-way street, so that foreign companies don’t lose their right to bid on them.
There are provisions for governments to carve out exceptions in the agreement, but if there is something they fail to think of, they are out of luck. Even if you think privatization is a good idea in general, you might admit that municipal governments should have the power to make decisions based on individual circumstances.
The agreement would forbid governments to restrict movement of corporate employees, such as construction workers or nurses. Corporations would be allowed to bring in their own workers, without having to check on whether local workers were available to do the work.
However, there is no provision to give these employees resident or immigrant status. When and if they lose their jobs, they’d be kicked out of the country immediately, so that they would not be in a position to complain or join unions.
Another provision would restrict governments’ authority to set rules for licensing clinics and medical laboratories, water and sewerage plants, power plants, for broadcast licenses and for accreditation of schools and universities.
There seems to be no end to these agreements. First there was NAFTA, the North American Free Trade Agreement, which I was foolish enough to support, but which never delivered on its promises.
Then came the proposed Trans Pacific Partnership Agreement, which in the name of international trade would restrict governments from regulating corporations, and create an unelected tribunal to which corporations could appeal decisions that unfairly deprive them of “expected profits.”
I’d written and published a good many posts about the TPP when I learned there was another international agreement in the works that was just as bad, the Trans-Atlantic Trade and Investment Partnership.
Now this. I wonder what else is being cooked up that we the people don’t know about.
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Click on Secret trade negotiations undermine public services: study for the press release by the Canadian Centre for Policy Alternatives.
Click on The Trade in Services Agreement and the corporate agenda for the complete report.
The World Trade Organization, International Monetary Fund and World Bank act in many respects like a quasi world government, imposing corporate views of economic policy on weak nations. Now a series of international treaties are being proposed that would give pro-corporate policies the force of international law.
The net result of all these treaties would be to weave the whole developed world except for China into a network in which international tribunals would have authority to override national law in favor of corporate interests.
The links below give details.
Hat tip for this chart to Inspired Acceptance.
About two-thirds of the world’s estimated 29.8 million slaves are forced laborers, working for private employers to supply materials and components for products sold in world markets.
Tim Fernholtz of the Atlantic gave some examples.
This summer, an Australian man imprisoned in China reported that prisoners were making headphones for global airlines like Qantas and British Airways. Some 300,000 sets of the disposable headphones were made by uncompensated prisoners who were forced to work without pay and regularly beaten. The index says that there are about 3 million slaves in China, in state-run forced labor camps, at private industrial firms making electronics and designer bags, and in the brick-making industry.
Companies like Apple, Boeing and Intel—among thousands of others—have been under pressure to document that the tin, tantalum, tungsten, and gold they use aren’t being mined by slaves in the Democratic Republic of Congo, where a civil war has led armed groups seeking funding to force civilians to work. The U.S. Securities and Exchange Commission adopted a rule forcing American firms to trace the minerals they use to their origins, and while business lobbies have sued to overturn it, industry leaders have begun planning to file the first required reports in May 2014.
In the Asian seafood industry, migrant workers may become forced laborers who harvest and prepare mackerel, shrimp and squid bound for markets around the world.
Côte d’Ivoire is the world’s leading supplier of cocoa—some 40 percent of the global supply—and much of it is grown and harvested by some children engaged in forced labor. In 2010, Côte d’Ivoire said 30,000 children worked on cocoa farms, although Walk Free’s index estimates as many as 600,000 to 800,000. While this has been widely reported on since 2000, and the global response has been strong, compared to that of other allegations of forced labor, the problem has not really been solved. As of 2012, 97 percent of the country’s farmers have not participated in industry-sponsored campaigns against forced child labor. Mondelēz International, the world’s largest chocolate producer, which owns brands such as Milka, Toblerone and Cadbury, has struggled for years to take forced labor out of its supply chain. It committed $400 million to a program aimed at creating a sustainable cocoa economy last year, but its efforts have been ineffective so far.
The best way for us Americans and citizens of other wealthy countries to promote freedom and democracy is to stop our corporations and governments from supporting slavery and autocracy. This seems do-able to me.
The secret Transpacific Partnership Agreement negotiations aren’t being covered by the mainstream U.S. press, that I know of, so I have to rely on Al Jazeera English for in-depth coverage.
Representatives of 11 Pacific nations are currently meeting in secret in Auckland, New Zealand, from Dec. 3 through Dec. 12 to negotiate a new “free trade” treaty called the Transpacific Partnership.
Leaked information, including documents obtained through Wikileaks (thank you, Julian Assange), indicate that the TPP would set up an international organization with power to override national governments in environmental, health and labor regulation, and in copyright and patent law. If private businesses don’t like the laws and regulations of the countries in which they operate, they would be able to file suits claiming these laws violate the TPP. If they win, they could collect damages from taxpayers of those countries.
Congress has been denied information as to what is being proposed or the U.S. negotiating position, but roughly 600 business representatives have been allowed in as so-called consultants. The Electronic Frontier Foundation and other public interest organizations sent representatives to the meeting, but they were barred, except to deliver brief statements of their views.
One nation that is not invited to participate is China. This may backfire. Forced to choose, Japan and other Pacific nations might prefer to join a Chinese-supported trade grouping called the Regional Comprehensive Economic Partnership.
For background, click on Will the RCEP Kill the TPP? And Why You Never Heart of Either One and Will China Kill the TPP (the secret fair trade treaty you never heard of)? for a two-part series on the Corrente web log,
Click on Digital Rights Groups Shut Out of Secret TPP Negotiations for a report from the Electronic Frontier Foundation.
Charles C. Mann in his new book, 1493: UNCOVERING THE NEW WORLD COLUMBUS CREATED tells of how today’s unified, globalized world originated with the voyages of Christopher Columbus and how contact with the Americas changed Europe, Africa and Asia. As in his earlier book, 1491, he made me see that the world’s history was different from what I thought it was.
In 1491, Europeans lived in Europe, Africans lived in Africa, Asian Indians lived in India and Chinese lived in China, and they had little contact with each other. The exception was the civilization of Islam, located in the center of the Eastern Hemisphere, which traded with all the others. The Spanish and Portuguese sent out explorers to find routes to India and China that bypassed the Muslims.
The Portuguese reached India by sailing East, but had little impact because in fact they had little of value to offer in trade. The Spanish sought to reach the East by sailing West, and ultimately were successful, establishing settlements in the Philippines in the 1570s. Unlike the Portuguese, they did have something the Chinese needed in exchange for their silk, porcelain and other manufactured products—the silver of the New World.
By 1650, according to Mann’s account, the center of the world economy was the city of Potosi in what is now Bolivia, at the foot of an extinct volcano where there was a mountain of nearly pure silver. Mann wrote that it was bigger than London or Amsterdam, or any other city in the Western Hemisphere.
The silver was transported up the west coast of South America to Panama and Mexico. Some of it was shipped to China, which at that time was the largest, richest and most advanced country in the world, according to Mann. The Chinese did not go on voyages of discovery, but they engaged in world trade because the rest of the world came to them. But China was poor in precious metals, and an earlier experiment with paper money led to a ruinous inflation. So the Spanish were able to obtain their manufactured products at a bargain rate.
Routes of the Spanish galleon trade to Asia
Most of the silver went to Spain itself, which at that time was the dominant power in Europe, thanks to its New World riches and the valor of its troops. In the 17th century, the Spanish peso was the world’s preferred currency, much like the U.S. dollar in the 20th century. In the long run, because the Spanish did not invest in productive enterprises, their silver flowed to bankers and manufacturers in the Netherlands, Britain and other countries.
Potosi is now a ghost town, an example of what Mann called the “extractive state,” whose rulers—often absentee—sought only to extract what they could of value from the land, regardless of consequences.
The bulk of Mann’s book tells what happened next, as food crops, diseases and people moved to and from the New World. American food crops changed the world. Imagine Italian cooking without tomato sauce, or Thai cooking without chili pepper! The American sweet potato saved China from famine and the white potato saved northern Europe, Mann wrote, but at the cost of creating an agricultural monoculture—crops that were genetically the same—that left the crops vulnerable to disease and pests.
Click to enlarge.
One chapter tells the story of tobacco, the cash crop that attracted English settlers to the New World. In a remarkably short time, nicotine addiction spread all over the world, to Japan, China and India as well as Europe. Another tells the story of rubber, a product as vital to the industrial world as steel or fossil fuels. Deforestation and leaf blight virtually destroyed the rubber trees of Brazil, but the rubber industry meanwhile was reestablished in Southeast Asia. Brazil is known for coffee, which originated in Ethiopia.
Mann said globalization fostered “extractive states”—societies controlled by people who lived elsewhere, and who were only concerned with what they could profitably extract in the short run. different from, say, England under William the Conqueror, who lived among the people they ruled and expected their descendants to be able to do the same.
In 1491, Mann told how European diseases wiped out a large percentage of the American Indian population. In 1493, he told how the New World was influenced by malaria and yellow fever. The peoples of west and central Africa have immunities to these diseases that Europeans and American Indians lack, so over time African slaves replaced European indentured servants and American slaves as plantation labor. At the same time, the United States and then Haiti were helped in their struggles for independence by the effects of malaria and yellow fever on the invading British and French armies.
A final section tells of the relations of Africa and the Americas. According to Mann, the number of Africans who crossed the Atlantic in the 16th and 17th centuries in slave ships was greater than the number of Europeans who immigrated. Many Africans fled slavery and took refuge with American Indians, where they formed numerous independent “maroon” communities beyond the reach of the governments of their areas. The Seminoles of Florida, who gave refuge to American slaves, are a small example, but there were huge maroon communities all through the American tropics. Mann told how, in the present era, the “maroons” of Brazil are fighting to keep their lands from being expropriated by ranchers and developers.
Click to enlarge.
The photo above shows the property of Maria do Rosario Costa Cabral, whose family of maroons have lived for generations along the tributaries of the Amazon River. Their history has been to settle on abandoned land, bring it back into production and then be pushed out because they have no legal title. She told Charles Mann she acquired her current property cheap because the land had been ravaged by the 1980s fad among fashionable Americans and Europeans for heart-of-palm salad. Whole trees were chopped down to get the edible tips. This time she acquired legal title, paid the back taxes and, at the time of writing, succeeded in fending off ranchers who tried to expropriate her.
Her current management of her property resembles the practices of American Indians described by Mann in 1491. She is neither an environmentalist, who leaves the land untouched, nor an exploiter, who extracts whatever is of immediate value and moves on. Instead she manages her environment so that it can sustain her and her family over the long term. To the untrained eye, as the photo shows, it looks like undeveloped wilderness.
I’ve always subscribed to what has been called the Whig theory of history, which basically says the historical process that has led to me having a good life must have been good. Mann’s 1491 and 1493 make me doubt that assumption. The Columbian age of globalization has brought many benefits to humanity, but often at great eventual cost in social and environmental disruption. I’m unable to say whether the benefits or costs were greater. The story isn’t over yet.
Click on The Dawn of the Homogenocene to read the opening section of Mann’s 1493.
Years ago, when I first learned there was a controversy in California over whether unauthorized immigrants could get driver’s licenses or send their children to public schools, I wondered how that could even be an issue. If someone is in the United States who is known to be here illegally, why is the person not deported immediately?
After a little bit of reading and thinking, the answer became obvious: Because it is to the benefit of employers to have an underclass of workers who are outside the protection of U.S. law.
David Bacon, a former union organizer and immigrant rights advocate and current photojournalist, spelled out in detail just how this works in his 2008 book, Illegal People: How Globalization Creates Migration and Criminalizes Immigrants. He drew a picture of the authorized immigration situation by connecting a great many dots that usually are not connected.
He began the book by describing the labor struggles of Mexican immigrants at a luxury hotel in California and a meatpacking plant in North Carolina. He showed how employers used immigration enforcement as a means to suppress workers who asserted their rights or tried to form union. Then he went to the parts of Mexico where many of these workers came from, and described the conditions which forced them out of their homes.
Some came from Oxaca in southern Mexico, where imports of cheap mass-produced U.S. corn, and the cessation of Mexican government purchases of corn for government grocery stores, bankrupted many small farmers and turned them into migrant laborers, like the Okies and Arkies during the U.S. Great Depression. Others came from Sonora, where copper miners in Cananea went on strike against wage and benefits cuts, and were blacklisted.
Historically the Mexican government provided some protection for small farmers and union workers, but, Bacon reported, these were withdrawn under pressure from the International Monetary Fund, World Trade Organization and administrators of the North American Free Trade Agreement. They operated under the “neo-liberal” philosophy that says that benefits to farmers and working people are illegitimate because they interfere with free trade and the free market. Unemployment in Mexico and Guatemala rose to 25 percent. In order to survive, Mexicans and central Americans came to work in the United States without legal rights, at a time when U.S. workers were losing ground on wages and benefits.
Bacon described the political struggles of Mexican immigrant workers in the United States, and their sometimes successful efforts to form alliances with the African-American community and the U.S. labor movement. Mexican immigrant workers, African American workers and white Anglo workers should recognize that they’re all workers, and not allow themselves to be pitted against each other, he wrote.
He ended the book by tracing the history of Filipino immigration and labor struggles in the United States, and a report on immigrant workers’ struggles in Germany and Britain, which are similar to the U.S. conflict.
He rejected sanctions against employers as a solution to unauthorized immigration, for the reason that sanctions have not been enforced. In practice, they are used as a rationale for threatening Immigrant workers who stand up for their rights.
He said “guest worker” programs and the H-1B visa program for high-tech immigrant workers are another form of exploitation. Both programs leave immigrants at the mercy of their employers, with no right to quit their jobs. They are like the indentured laborers of colonial America, who were obligated to serve a particular employer on his terms for a specific period of time, such as seven years—the difference being that, after serving our their indentures, they were free to remain.
Do unauthorized immigrants have a right to remain in the United States in violation of U.S. law? Bacon argued that if corporate executives have a right to shift capital freely from country to country in search of profit, surely people have the same right to go from country to country in search of work.
There is a legal doctrine which, I think, is called “adverse possession.” If I allow my neighbors to use a footpath across my land for decades, and never close it off, at some point they gain a right to use it. If migrants are brought into the United States, and the laws against their being here are winked at, do they not at some point gain a right to stay here?
A friend of mine knows a man who does work abroad as an architect and subcontractor for work on U.S. embassies and consulates. He had just got back from doing work in Norway. My friend said he told him that Norway deals with its immigration situation by strict enforcement of wages and hours laws. Contractors could import workers from the Balkans or Turkey, but what would be the point if they had to pay the same wages and benefits as a Norwegian workers?
Bacon would say that is the real question. If workers in all countries could earn sufficient wages to provide for themselves and their families, immigration would not be an issue.
Click on David Bacon News for his home page.
Click on How Mississippi’s Black / Brown Strategy Beat the South’s Anti-Immigrant Wave for an article by David Bacon in The Nation about a political alliance between Mexican immigrants and African-Americans defeated anti-immigration legislation in Mississippi.
The trouble with globalization is that there aren’t any democratic global institutions.
The only global institutions are multinational corporations, international banks and international organizations such as the International Monetary Fund and World Trade Organization that serve the interests of corporations and banks.
During ancient and medieval times, political philosophers believed that democracy was something that could work only on a local level. They thought a town or city-state could be democratic, but not a large nation. And it is true that it is hard to make democracy work when you go above the level of the New England town meeting. But our existing international institutions and organizations don’t even attempt to be democratic.
Nike factory in China
Apple Computer, Nike, Wal-Mart and many other companies depend on Asian sweatshops as suppliers—a sweatshop being defined as a factory with low pay and benefits, long working hours and child labor.
Some writers, including Nicholas Kristof, who reports from Asia and Africa for the New York Times, and Paul Krugman, winner of the Nobel Memorial Prize in Economics, say that in historic perspective, Asian sweatshops represent a step forward. As bad as conditions are in China or Cambodia, they are better than they were under Mao. As tough as it is to work in a Foxconn factory, many find it a lesser evil than rural poverty. As bad as it is to have a young child working 12 hours a day in a factory, it is better than being sold into prostitution, if that is the only alternative.
SF writer Bruce Sterling made this argument many years ago in an article in Wired magazine about megaprojects in China and elsewhere.
China has a very bad government. Nobody should fool themselves about this. It’s a profoundly corrupt one-party dictatorship based on a bankrupt, morally discredited ideology.
However, the current Chinese government is certainly the best government any living Chinese citizen has ever seen.
Their 20th century: Corruption, Catastrophe, Foreign Repression, Revolution, Repression, Revolution, Military Coup, Chaos, Warlordism, Anarchy, Foreign Invasion, People’s War, Civil War, Communism, Starvation, Purges, Anarchist Frenzy, Counterpurges—and then, suddenly, material relief—maybe enough food and a warm place to sleep.
The 21st century is almost upon them now [this was written in 1998]: cologne, panty hose, Asian pop videos and maybe even a car. The Chinese people are definitely with this program. They know how much they have to lose.
Defenders of Asia sweatshops go on to say that there were sweatshops and child labor in the United States in the early days of industrialization, and, so they argue, this laid the foundation of the prosperity that we enjoy today.
The problem with this argument is that the sweatshop advocates are saying to the Chinese workers: Thus far and no further. Because conditions were even worse in the past, you can’t expect any improvement in the future.
U.S. companies such as Apple Computer, Nike and Wal-Mart are not just adapting to Chinese conditions. They are collaborating with the Chinese government is keeping conditions as they are. If Chinese workers had the freedom to bargain collectively, I would not tell them they were settling for too little. But you can’t claim to be an advocate for Chinese workers and at the same time deny them a voice.
What I would ask of Apple, Nike or Wal-Mart is that the company live up to its own professed standards. This would require two things:
We the people could choose to buy only from companies that have independent audits and meet minimum labor standards. Shareholder activists could demand independent audits and labor standards. The U.S. Congress could finance independent auditors and impose taxes or penalties on imported products produced under inhuman conditions.
This would not mean the deindustrialization of China or other poor countries. It would be a lever to both protect American workers and improve conditions in those countries. It would not be a zero-sum game. Prosperous Chinese would be good potential customers.
Such leverage has been used to improve the quality of manufactured products. The ISO 9000 standards for assuring a quality manufacturing process spread outward from Germany to the European Union to the whole world. It should be possible to use similar techniques to inprove labor standards.
The strenuous efforts by the Chinese government and Chinese governments to suppress unions and blacklist malcontents, and the suicides among stressed-out workers at Foxconn, the big Chinese electronic components supplier, show that Chinese workers—some of them, at least—want something better than they have. We Americans should not be accomplices in holding them down.
Click on Outsourcing: the Good Side of Asian Sweatshops for the pro-sweatshop argument.
Click on Behind the Label for a collection of interesting brief essays on the issue of Asian sweatshops.
Click on Sacom for the home page of Students and Scholars Against Corporate Misbehavior and its continuing reporting on labor issues in China.
Click on The Spirit of Mega for Bruce Sterling’s entire 1998 article.
Somebody named Tony Shin e-mailed me a link to an infographic about the abuse of Chinese sweatshop workers who make components for Apple Computer. It is well-done and accurate, and that is why I reproduce it below.
[Added 3/15/12. Perhaps I should have been a little more suspicious. Click on Mystery of the Infographics for why.]
But I don’t want to single out Apple as if it were greatly different from the world’s other electronics companies or, indeed, any company that outsources to China. As I type this, I am wearing a shirt “Made in Cambodia”; I doubt the Cambodian workers enjoy better conditions than Foxconn workers in China.
Now the fact that other companies engage in bad practices doesn’t mean that Apple management is not responsible for their own company’s practices. What it does mean is that nothing is to be gained by boycotting Apple if it just means shifting to Microsoft or Sony or some other company that uses the same suppliers. In fact, if I were more cynical than I am, I would suspect that some of the campaign against Apple is being orchestrated by Apple’s competitors. [Added 3/15/12. Maybe I ought to be more cynical.]
As you look at the infographic below, keep in mind that what it depicts is more than the moral blindness of just one company. It is a whole system of production and distribution that encompasses many companies besides Apple and many nations besides China and the United States.
The trouble with globalization is that the only global organizations, except maybe the Roman Catholic Church, are international banks, other international corporations and institutions such as the International Monetary Fund, the World Trade Organization and the European Central Bank which serve the interests of the banks and corporations.
Trade in goods and services among people in different countries is a good thing, not a bad thing. Cooperation among nations for common purposes is a good thing, not a bad thing. But what globalization has come to mean is nations yielding control over national resources, currency and finances to banks, corporations and international institutions that do not have their best interests at heart.
Naomi Klein has described the extreme of this process in The Shock Doctrine—how the international financial community takes advantage of crises to pressure countries to drive down wages and sell off national assets at bargain rates. This seems to be what’s now going on in Greece.
Democracy exists (so far) only at the national level. When a nation gives up its national economic sovereignty, it gives up the possibility of democracy. Instead it is subjected to governance in theory by international civil servants, but all-too-often in practice by an international financial oligarchy.
The European financial crisis shows the pitfalls of an international currency without international democratic governance. When a nation such as Greece runs a big trade deficit, its national currency becomes worth less, its goods and services become cheaper in terms of other currencies and its trade tends to come back into balance. A cheaper Greek national currency would make Greece more attractive as a tourist and retirement destination, and help redress the balance. But because Greece is in the Euro zone, its goods and services cost more, which works to the benefit of exporting nations such as Germany.
The experience of the past 20 years is that the nations that have fared best economically are those whose governments have acted in the national self-interest and disconnected from the IMF and WTO. Until there are international institutions that are accountable to the public, that will continue to be true.
Click on Europe’s Transition from Social Democracy to Oligarchy for more from Michael Hudson.
Foxcomm and other Chinese electronics suppliers force their workers to work under conditions so inhuman that Foxcomm requires its new hires to sign a no-suicide pledge. American, European and Japanese companies that hire these suppliers are well aware of these conditions, but do nothing. The late Steve Jobs demanded action in six weeks to produce a scratch-proof surface for the i-Phone, but procrastinated for years about doing anything about his own company’s reports on substandard working conditions.
Bill Black, associate professor of economics and law at the University of Missouri and an expert on white collar crime, gave a good rundown on the situation in this interview in the Real News Network. He points out that the Chinese suppliers violate their contractual obligations with their U.S. customers and their Chinese workers, and also violate Chinese law.
So it is not a question of imposing American standards on the Chinese. We have a right to hold the Chinese to their own standard, just as other countries have a right to hold us Americans to the standard of our laws and Constitution.
How could this be done? Congress could enact a law empowering the U.S. Commerce Department’s International Trade Administration to impose penalty tariffs on imports of products made under conditions that violate international labor standards and the domestic laws of the country of origin.
The U.S. government could adopt a policy of only purchasing electronics equipment, especially for the military, with U.S.-made components. This would be wise on national security grounds. If the U.S. has a military confrontation with China, we don’t want the Chinese to be in a position to cut off supplies vital to our military.
Labor and consumer organizations could recognize companies that obey the law and refrain from fraud, and we the people could patronize these companies.
Congress probably would have to revise or cancel the World Trade Treaty. The World Trade Organization authorizes punitive action against countries that engage in unfair trade practices, such as dumping products at prices below cost. But it has never, so far as I know, authorized action against unfair labor standards.
Globalization under these conditions could be a force for raising wages and improving working conditions around the world, rather than driving them down to the lowest possible level.
It’s not as if having suppliers pay decent wages would force Apple Computer and other electronics companies to go broke.
Click to enlarge.
Nine inches of snow fell overnight here in Rochester, N.Y., and I had to get out and about this morning before the snowplow crews had time to clear my street. I thought about my car and how it compared to the first cars I owned back in the 1960s.
Back then, you had to think about whether your car would start on a cold winter morning. To be safe, you had to run your car in neutral the night before for 10 or 15 minutes to charge the battery, and then again in the morning. I never even think about it now. I just turn the ignition in my 2006 Saturn Ion-2, which of course has an alternator, and I take it for granted that it starts.
When I first moved to Rochester in the mid-1970s, rustproofing your car was a big deal. I unfortunately made the choice of an inexpensive undercoating job rather than a premium service, and lived to regret it. Now, with my plastic card, rust is not something I have to think about.
Under conditions I drove in this morning, I would have expected to get stuck several times. I was in fact on the verge of getting stuck a couple of times, but my car had good enough traction to keep going.
Compared to the first cars I owned, my present car is like something out of science fiction. I won’t even mention the Global Positioning System and the other technological bells and whistles I don’t care about.
General Motors Corp., the maker of my car, is losing money and has divested the Saturn brand. Yet back in the 1960s and 1970s, when quality wasn’t nearly as good as it is today, GM was making money hand over first. That is what it is to compete in a global economy.
When I was a high school student, I got straight As without having to work hard. When I sent to college, I found I had many classmates who had straight As in high school. I studied harder and learned more in college than I ever did in high school, but my grades were not as good.
Likewise with the United States in the world economy. Our industries have to do better just to hold their own than they once did to reign supreme. But that doesn’t mean we can’t hold our own.
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