The debate over Republicans' insistence on continued tax breaks for the super-rich and the corporations they run should come to a screeching halt with the report in Tuesday's Wall Street Journal headlined "Big U.S. Firms Shift Hiring Abroad." Those tax breaks over the past decade, leaving some corporations such as General Electric to pay no taxes at all, were supposed to lead to job creation, but just the opposite has occurred. As the Journal put it, the multinational companies "cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million, new data from the U.S. Commerce Department show."
General Electric, which was bailed out by taxpayers and which stored so much of its profit abroad that it paid no taxes for the past two years, was forced to tighten up, but while cutting its foreign workforce by 1,000 it cut a far more severe 28,000 in the United States. Jeffrey Immelt, the CEO of GE, recently appointed by President Barack Obama as his chief outside economic adviser, admits that this does not involve poorly paid work that Americans don't want, but instead prime jobs: "We've globalized around markets, not cheap labor. The era of globalization around cheap labor is over. Today we go to China, we go to India, because that's where the customers are."
There is a bitter irony in that statement given that consumer purchasing power is down in the U.S. thanks to the devastating collapse of a housing bubble GE Capital fed with suspect mortgage financing that provided the company with well over half of its profits before the crash. The loss of well-paying jobs at multinationals like GE to other nations -- 54 percent of the GE workforce is foreign -- exacerbates the plight of U.S. consumers while making the foreign customers even more attractive.
Of course it will be argued that multinational corporations have the right to arrange their business as they see fit in order to maximize profit. But if that is the case, do beleaguered American taxpayers have to foot the bill? When those corporations run into trouble overseas because of financial hustles or hostile locals and need the diplomatic and military might of the U.S. government to protect their interests abroad, it is again the U.S. taxpayer who must pay to maintain this new world order. It is an order, as we see with three current wars and a military budget that rivals Cold War highs, that is contributing mightily to the U.S. government debt. More than half of all discretionary spending, the dollars that the Republicans in Congress now want to take out of needed domestic programs, is accounted for by defense spending. That defense spending to support a massive network of military bases and deployed weapons and troops is key to establishing an order in which the interests of American corporations are attended to. If the companies don't feel that way, let them operate under the flag of Liberia or the Cayman Islands.
No less important than U.S. military muscle is the power of the American government to construct and enforce a worldwide trade and finance structure to the advantage of U.S.-based multinational corporations. That is why the companies spend so much money lobbying Congress on matters ranging from regional trade agreements to international banking regulations. It is precisely the impact of trade agreements like NAFTA that has facilitated the erosion of well-paying jobs. And it was the deregulation of international banking standards, led by the U.S. Treasury Department under the past five presidents, that created the conditions for the recent disastrous housing and banking meltdown.
Big government, the devil that Republicans love to inveigh against, is big precisely because it is so active in so many costly ways in serving the interests of our biggest corporations. Corporate lobbyists attest with their every breath that big government and big business are bedmates in a bountiful venture that impoverishes the rest of us. It is time to admit that we are, in practice if not surface appearance, close to the Chinese communist model of state-sponsored capitalism that sacrifices the interests of ordinary workers, be they in the public or private sector, for the exorbitant profits of the super-rich. It is the corporations that need big government to protect their interests, and one would hope they would be willing to pay for the services that their government so faithfully renders to make them obscenely wealthy as it studiously ignores the well-being of the rest of us.
I know I'm a little late with this comment, but hey. I stumbled on it a few months ago and stumbled on it again, and figured I'd share my thought.
Instead of better results for customers, competitors seem to be in a race to the bottom in sleezy behavior and poor quality. It all seems aimed at getting us to throw things away in disgust and pay more in the long run. Instead of competing with natural competitors, competitors seem to be coordinated so that there is little real choice, and instead whole industries are competing with one another.
The health care industry has been winning by outpacing inflation at a fearsome rate and taking all of our potential raises, and more, that might have been spent on goods or other services.
The only other winner has been financials -- they have invented various money machines for themselves that require relatively few employees, so their activity adds a great deal to GDP but benefits do not accrue to the rest of society. They divert investment away from other industries which continue to shrivel.
I don't know what it would take to get politicians to understand. It might help if academia (business and economics) would do more original thinking. It really does not do business any good to spiral together to the bottom as customers are slowly starved of discretionary funds.
You bring up a great point in the lack of economic freedom the rise of corporatism brings. Not only have middle class wages stagnated the past 30+ years, which inhibits economic freedom, but to use a simple example, every freaking town I drive through looks the same with the same 7 chain restaurants and the same 5 box stores. Free market capitalism breeds competition, but with competition there are winners and losers. The losers go out of business or are swallowed up leaving only the winners to choose from. The stronger the winners get the more difficult it is for new business to compete. Then of course we get to your conclusion, poor service because the really isn't any viable competition and because these businesses are so big they can afford to skimp on quality. A brand new KFC opened up nearby, we tried it and will never go back.....undercooked chicken. How does a brand new restaurant undercook their chicken? Alright, I'm being a little silly, but I think the point is made.
"....the U.S. economy actually went off the rails more than a decade ago. What's more, many of us have failed to realize it because the most widely watched economic indicator, gross domestic product, actually tracks consumption, irresponsible or otherwise, rather than real wealth generation.
We are, in a word, considerably poorer than we imagine – something politicians of all stripes should, but probably won't, consider as they grapple with our massive deficit.
...we can blame this addiction to leverage on both parties, who took the turn-of-the-century explosion in capital gains tax collections as a sign money would continue falling from the sky forever. But while spending continued to grow at a rapid clip, tax collections fell off a cliff."
http://finance.fortune.cnn.com/2011/04/20/lost-decade-weve-already-had-one/
1) 'There is a bitter irony in that statement given that consumer purchasing power is down in the U.S. thanks to the devastating collapse of a housing bubble GE Capital fed with suspect mortgage financing that provided the company with well over half of its profits before the crash'. In reality the consumer purchasing power was eroded in the mid 1980s when jobs were first shipped overseas and we were offered 'cheap credit' because The Great Restructuring was based on the 'debt is healthy for the economy market'. We've never had to monetary power to purchase unless we've borrowed.
2) Big Government doesn't exist, only Corporate Government exists now just as 1 in 5 people are employed by a handful of multinationals. You're right the Trade agreements have put the corporates in charge and 'governance' is lacking. The whole conversation since the mid1980s has been around 'economics' and nothing else. We need governance in order to control business. Business should serve not control. The founding fathers didn't want Royalty or The Church to control our government. They certainly won't want Corporations to.
However, keep up your comments. They are much needed in this time of The Great Renewal.
Still another danger is represented by those who, paying lip service to democracy and the common welfare, in their insatiable greed for money and the power which money gives, do not hesitate surreptitiously to evade the laws designed to safeguard the public from monopolistic extortion...
The American fas.c1sts are most easily recognized by their deliberate perversion of truth and fact. Their newspapers and pr0paganda carefully cultivate every fissure of disunity, every crack in the common front against fa3.cism... They claim to be super-patriots, but they would destroy every liberty guaranteed by the Constitution. They demand free enterprise, but are the spokesmen for monopoly and vested interest. Their final objective toward which all their deceit is directed is to capture political power so that, using the power of the state and the power of the market simultaneously, they may keep the common man in eternal subjection."
~Henry A. Wallace, 33rd US VP under FDR
There is some rather interesting and related information regarding an experiment carried out by a teacher with his students some time ago. I think you might find it very interesting reading, I will give you a wiki leak which you can use to pursue it if you find it as pertinent and as chilling as I did.
http://en.wikipedia.org/wiki/The_Third_Wave
Thank you for the link. Faved - already fanned.
Liberals: By Any Means Necessary meets Everything Within the State, Nothing Outside the State.
As a construct to help illustrate why your "no substantive" observation is, well, what it is, simply substitute his name with Sarah Palin, Ronald Reagan, etc.