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THE NATION
FEATURE STORY | November 12, 2001
Pro Patria, Pro Mundo
by WILLIAM GREIDER
A recent New York Times headline asked an insinuating question:
"After the Attacks, Which Side Is the Left On?" The Times
should find the nerve to put the same question to the major players
of business and finance. Which side is Citigroup on? Or General
Electric and Boeing? Where does loyalty reside for those American
corporations that have rebranded themselves as "global firms"?
Our resurgence of deeply felt patriotism, with official assurances
that Americans are all-in-this-together, raises the same question.
At a deeper level, the patriotic sense of unity collides with familiar
assumptions advanced by the architects and cheerleaders of corporate
globalization. The nation-state has been eclipsed, they explain,
and no longer has the power to determine its own destiny. The national
interest, they assert, now lies in making the world safe for globalizing
commerce and capital.
In these threatening times, such claims sound suddenly unpersuasive.
Frightened citizens turn naturally to their government for security--the
original purpose of the nation-state--and business enterprises do
the same. The global corporation, however, intends to have it both
ways: American first when that serves its interest, but otherwise
aloof from mere nationality. Since these companies are busy waving
the flag at the moment, one needs to recall how they described themselves
during the past decade, as they dispersed production worldwide and
planted their logos in many distant lands. "The United States
does not have an automatic call on our resources," a Colgate-Palmolive
executive once explained. "There is no mindset that puts this
country first."
The much-admired CEO of General Electric, Jack Welch, portrayed
GE as a "borderless company," and he brutally enforced
the logic. When GE wanted additional cost savings on turbines, jet
engines and appliances, it told its US suppliers to pick up and
leave, or else--that is, move the jobs to Mexico or other locales
where the labor is much cheaper, or GE would find different suppliers.
A GE executive in Taiwan once remarked, "The US trade deficit
is not the most important thing in my life...running an effective
business is."
An aerospace executive who supervised McDonnell Douglas's production
in China told the New York Times: "We're in the business of
making money for our shareholders. If we have to put jobs and technology
in other countries, then we go ahead and do it." A few years
later, McDonnell was swallowed by Boeing, which likewise subscribes
to an unsentimental view of national identity. Boeing's on-site
manager at the Xian Aircraft Company in China, where $60-a-month
machinists make tail sections for the 737, told me, "We've
got suppliers that we've dealt with for fifty years, and we're asking
all of them to offload production to China." In addition to
the low wages, American firms trade US jobs and technology for access
to such burgeoning markets. The US government looks the other way
or sometimes even facilitates the transactions.
Then there is Citibank, a pioneer in global banking and now part
of the mammoth financial conglomerate called Citigroup. John Reed,
Citibank's former CEO, used to complain regularly about the stultifying
bank regulations imposed by the United States, and he often threatened
to relocate Citibank's headquarters to a more banker-friendly nation.
"The United States is the wrong country for an international
bank to be based," Reed asserted (though the US government
more than once bailed out his bank when it was on the brink of failure).
Citibank, it happens, is also a notorious channel for wealthy autocrats
trying to spirit ill-gotten fortunes (including drug money) out
of their home country ($80-100 million for Raul Salinas, the corrupt
brother of Mexico's corrupt former president). Citigroup has lobbied
to weaken the new regulatory rules required to halt the flows of
terrorist money in the global financial system.
Which side are you on? In the aftermath of September 11, the question
was swiftly resolved by the multinational lobbyists who mobbed Washington
for handouts. Boeing, the second-largest military contractor, expects
to be a big winner from the crisis (never mind the 30,000 workers
it is laying off) because Boeing agents, in and out of Congress,
are pushing for huge new orders of modified jetliners and cargo
transports for the Air Force and Navy. IBM, though the majority
of its work force is now non-American, has lined up at the trough
with Silicon Valley's high-tech firms to lobby for new government
subsidies. American International Group, the world's biggest insurer
and a leading apostle of unfettered global markets, is out front
promoting a new federal safety net for the insurance companies--a
bailout that will compel US taxpayers to share in the industry's
risks. GE, Citigroup, AIG and other financial-services firms persuaded
House Republicans that the US economy should be stimulated by giving
them a $21 billion tax break for their overseas operations. When
the going gets tough, these guys turn out to be real, red-blooded
Americans.
Other Americans will be rightly infuriated as they see the urgent
need for national unity exploited for private gain. Activists associated
with the Seattle movement might devote some energy to educating
other citizens who don't yet grasp the contradiction. But this new
crisis exposes much more fundamental issues than corporate hypocrisy.
It upends the fictitious premises used to sell the supposed inevitability
of corporate-led globalization. Nation-states, at least the largest
and strongest ones, have not lost any of their powers to tax and
regulate capital and commerce, to control international capital
flows and other globalizing practices. In the face of market pressures,
major nations simply retreated from exerting those powers. The United
States, as principal promoter and defender, led the way. Other advanced
economies gradually followed, often reluctantly. Poorer nations,
of course, did not have much choice but to go along if they wished
to attract investment capital from the wealthy economies.
Now, crisis requires leading governments, especially that of the
United States, to do an abrupt about-face and begin to employ their
neglected sovereign powers, that is, to intrude purposefully in
the marketplace and impose some rules in behalf of society. The
most compelling example is the need for new regulatory controls
on capital flows in the global financial system in order to smash
the terrorists' critical support base--the secretive, cross-border
access to money. The global bankers, led by Citigroup, resisted,
claiming it's too complicated to trace movements of illicit money.
Complexities do exist, but the plain truth is that the United States,
joined by a handful of wealthy nations (Germany, Japan, France,
Britain and a few others), has the power to shut down any subsidiary
banking system in the world that refuses to cooperate--simply by
rejecting all money transfers from that country.
Citigroup and other major banks want weak enforcement not because
they are soft on terrorism but because they recognize that policing
terrorist money can lead to tougher enforcement aimed at their own
activities--their profitable role serving wealthy clients in money
laundering and the massive tax evasion that occurs through offshore
banking. The evasion of national laws is a principal hallmark of
the laissez-faire global system, one that governments have lacked
the will to confront. The Bush Administration's sincerity will be
tested on this issue since it must choose between defending the
privileges of international banking and protecting the security
of American citizens.
Imposing new forms of accountability on global finance leads ultimately
to a much larger question--how to exert moderating controls (and
taxation) on the destabilizing surges of capital that have ignited
recurring financial crises (and led to massive bailouts by unwitting
taxpayers). Only nations have the power to solve this problem. "At
some point, we have to ask whether utterly free capital is a benefit
to everyone," a financial economist with a leading hedge fund
once told me. "Free capital is certainly a benefit to people
who own the capital. But they couldn't exist if these governments
did not exist to protect them. No one wants to locate the Chicago
Board of Trade in Bangkok or Jakarta."
The logic of globalization has led, in fact, to a redefinition
of national interest, at least for the United States, in which government
policy assumes that advancing the well-being of shareholders and
global firms--as opposed to the general population, workers and
communities--provides the highest overall benefit. This preferential
order is never frankly acknowledged, of course, but it has been
embraced by both Democratic and Republican Presidents. The contradictions
for the nation have long been visible, but they were explained away
with propagandistic economic claims (much the way authorities ignored
obvious contradictions in the stock-market bubble). Over the past
twenty-five years, for instance, the wage levels of ordinary working
people have been stagnant in real terms as the prime manufacturing
jobs moved offshore. Partly in consequence, the United States became
a debtor nation--buying more from abroad than it sells and borrowing
the money to do so--with accumulated indebtedness that has surpassed
20 percent of GDP. The multinationals claim US trade deficits don't
matter--for them, they don't. For the rest of us, this condition
has led to a deepening dependence on foreign investors and the potential
for an eventual breakdown of the global system itself, when the
proud leader and principal consumer in global trade someday taps
out.
My point is this: The patriotic tensions generated by war and recession
can spawn a rare clarifying moment--the political opportunity to
educate and agitate Americans on these deeper contradictions in
power between the nation-state and the global system. Inattentive
citizens are no longer so passive, but suddenly paying attention
to world news. The Seattle movement, as Kevin Danaher of Global
Exchange observed, has a potential to connect with a much broader
audience, now ready to listen and learn. The teach-in curriculum
should begin closer to home, not for narrow nationalistic purposes
or to stop globalization but to build support for fundamental change
in how globalization proceeds. If the global system is to be reformed--made
more humane and democratic, more equitable and respectful of each
society's values--the power to achieve those goals belongs only
to national governments, not to remote international institutions.
For obvious reasons, that power resides especially in the politics
of Washington, DC.
An important first step is to re-establish the nation's sovereign
prerogative to legislate its own standards of decency as governing
values in global trade. The exercise of national legislative initiatives
is not as remote as it may sound. Bipartisan legislation is pending,
for instance, to close US markets to goods exported by Burma until
that notorious regime halts its forced labor practices (American-in-name-only
companies like Unocal are complicit). The measure's leading sponsors
are ideological opposites--Senators Jesse Helms and Tom Harkin--who
share outrage over the trading system's laissez-faire tolerance
of gross human abuses. Their measure, on its face, seems to violate
World Trade Organization rules; in fact, the advocates actually
hope it will provoke the Burmese generals into filing a formal complaint
with the WTO. If the WTO upholds the US law, it would open the way
for broader measures of social reform. If the WTO rules against
the United States, the indifference to brutality will further discredit
the WTO.
Another, similar measure is "right to know" legislation
that would require multinationals based in the United States to
report the location and conditions of their overseas factories--everything
from toxic pollution to health and safety standards to the status
of labor rights. The bill does not attempt to set standards of behavior
for foreign countries but requires US companies to report the facts
to local workers and communities as well as to the US government--information
that can stimulate grassroots agitation for change. The measure
would establish an important principle: Congress cannot impose American
values on others, but it does have the right to impose them on multinationals
that call themselves American.
A more ambitious project would be to confront US multinationals
on the ambivalent nature of their own patriotism. Air the facts
and name the names. If the companies are truly global and without
responsibility to this particular nation, then why are US taxpayers
expected to subsidize their success and bail them out of failure?
The legislative vehicle for forcing a debate on these questions
would be recurring amendments to cut off the firms unwilling to
accept explicit obligations to nation and citizens. One might describe
these measures as "homeland security."
Critical questions about global corporations are no longer abstract
propositions. As is already clear from recent actions in Washington,
some Americans are regarded as special in crisis--and awarded billions
of dollars in protection from malign market forces. Other Americans
are told to keep a stiff upper lip. This malformed definition of
national unity is ripe for attack by the true patriots.
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