Looking Forward

Thursday morning, I sat in on a conversation in which seven or eight Nicaraguans – now all grandparents – shared their experiences during the 1979 Nicaraguan revolution and under the subsequent Sandanista socialist regime. As they talked about the triumph of the revolution, the honeymoon years of socialism in the early 1980s and the following US-inspired civil war, they spoke of the overwhelming solidarity among Nicaraguans and Central Americans.

When one of the gringos asked how we could be in solidarity today with Nicragua, the second poorest Latin American country, the refrain was strong and clear: Nicaraguans, Central and Latin Americans, and their brothers in the developed world must fight the evils of the current economic world order (which I studied this past spring at St. Andrews): globalisation, the WTO, IMF and World Bank, economic imperialism, underdevelopment, CAFTA, and – above all – multinational corporations.

The more I listened, the more I think that MNCs may be “where it’s at” for me. A discussion of multinational corporations covers politics and business. In Latin America, liberation theology means it’s about religion, too. I don’t know where I stand on economics yet; the discussion was a little too leftist and reactionary for me. But the economic underdevelopment of many countries, to me, presents a worthy challenge. I wonder if my role will not be running, fighting, regulating, studying, or being somehow engaged with multinational corporations, which I think are at the heart of the economic challenges facing developing countries, and the locus of economic change, both positive and negative, that will occur in our lifetime.

9 Replies to “Looking Forward”

  1. Are multinational corporations necessarily large corporations? Do they have a reputation for being sensitive/insensitive to the communities in which they locate?

  2. two books i recommend to you: 1) Samuel Huntington’s Clash of Civilizations, written about 12 years ago, and has largely been right in its predictions. 2) Naomi Klein’s No Logo, which talks about the presence and impact of TNCs from a localized level. i’m with you in saying that how these corporations operate largely will dominate politics, but i think that it’s too late to say they can be changed. they already DO dominate the playing field, and will for generations to come, unless, as Huntington points out, civilization overcomes economics as the major player in how countries organize their financial structures. you can see it in the election yesterday of Iran’s harldline government, and in the rebuilding of Iraq particularly, the interplay between economy and ideology, and how one determines the other.

    there will be a breaking point at which people refuse to let it happen, i.e. the Iranian revolution of 1979. however, i’m becoming more convinced that globalisation is not a complete evil, only a mostly insidious force. if there could be a way to have the working conditions altered, the humanity of the maquilladors could be restored. i was struck walking back over the Mexican border a few weeks ago at the protest graffiti, and how from the Mexican perspective, a job is not a job if it leads to death.

  3. Good questions, both. Thank you for the comments!

    To Mom: no, MNCs are not necessarily large. Any company that gets some of its inputs (supplies or labor) from another country, or sells its outputs (products and service) somewhere else is technically a multinational corporation. However, when people talk about MNCs, they usually mean the top few who control enormous assets. Oil and gas companies, car manufacturers, and communications-based businesses (like Sony or Toshiba) are good examples.

    To Myles: I think you’re right that MNCs are already in play, but I also think that they are much more bound by politics and place than either they or their detractors would have us think. I also agree with you that globalisation is not necessarily evil. I might add, though, that it’s not even a necessary evil: it is to politicians and the media’s advantage to play it up, even when 80% of US commerce is still domestic. It is easier, for example, for Tony Blair to push for conservative market reforms if people believe that inefficiency (ie the welfare state) will discourage investment and destroy the economy.

  4. I have not thought this one through yet and I am engaging in a topic that is not familiar to me, so bear with me as I venture into unknown waters. We live under a government the believes in Laissez Faire practice. We also live under a government, to the dismay of some, that believes in protecting countries from a poorly run or corrupt government. Now, I don’t think that the idea of Laissez Faire is constitutional, but rather an unwritten and solid practice of our government. However, the protecting of another country’s citizens from an unjust or harsh government is (or was) constitutional, at least in the Central America region under a name I can’t remember right now, which I think is the reason for the US intervention in Nicaragua anyway.

    Getting to the point, what then should be done when it is this practice of the US Government, Laissez Faire, that allows MNCs (that originally started in the US) to dominate the global economy and cause the economic and govenmental downfall of the very same countries’ it fought for in order for that not to happen? In that case, the US government is then fighting itself, because it is the US government allowing poverty to occur to people by allowing this to go on. Would the Laissez Faire concept to take a back seat to the John Locke ideals of government or would money and power in politics turn a blind eye to this?

    Thinking a little more about it, who is to say that one buisness is American and another is not. Business is business and has no nationality, only a birthplace. But regardless, measures could be taken, at least from the US standpoint, to slow the MNCs down and help revive the lesser nations’ economies. But that would breech the Laissez Faire idea. But not breaking the practice would be not helping weaker nations.

    A dog chasing its tail? Or me not knowing what I am talking about?

  5. On second thought, the US government has intervened before into business when large businesses were strangling the smaller ones during the Monopoly Bust in the early 1900’s. The MNCs, to the untrained eye, seems to be the same deal except on a larger scale. Other governments and more powerful corporations are involved here. But if justice was served in the past, and I think it was, then would in not serve the same for this situation? If the US government would aid the smaller countries, wouldn’t it then allow those countries to better participate in the import/export game and (ideally) ultimately improve the world’s economy?

  6. Good questions from you too, Luke. Some clarifications:

    1) It’s right that our government’s economic policy is relatively laissez-faire (is that spelled right? I don’t know). That’s the default – although there are major restrictions on all kinds of businesses. For instance, billboards on I-49 have to be in proximity to an exit, and nearly all companies are required to pay minimum wage to their workers.

    2) The United States has in recent history acted to deliver people from oppressive leaders; Cf. Iraq, Afghanistan, and, depending on who you’re talking to, Bosnia. However, the US has chosen not to act in a host of cases (Taiwan, Rwanda, Sudan, Zimbabwe) and has backed, militarily and monetarily, some of the worst dictators in human history (Iraq, Iran, Greece, El Salvador, Chile, and Somoza in Nicaragua). The distinction between those we choose to liberate and those we choose to ignore seems to be determined by something other than the plight of the people in other countries.

    3) The jury, for me, is still out on whether MNCs make their host countries poorer or richer. You can read endless articles on both sides of the debate. My current thinking is that what really matters is who is in charge of the host country and who is running the MNC.

    4) Like I suggested to Myles, businesses do in fact have a home; they are constrained by the laws of their country of origin, by the cultural differences that formed their organizational structure, and by the stark reality of distance – it’s easier, but not easy, to locate worldwide. While economists might have us think that business has no nationality, economists seem to forget that governments are still the ones writing the rules of the economic game.

  7. Shoot, I didn’t know this could be this fun…

    About your fourth point, Mark, do U.S. labor laws apply to U.S.-based companies employing workers overseas (this is an issue that is as close to the heart of this discussion as any other I think)?

    What I’m interested in is how these global market-driving companies will affect the American worker. I know this may be a bit short-sighted, but how does international labor reform affect us at home? More simply put, how are poverty at home and abroad linked?

    It’s interesting to hear your Nicaraguan friends decrying CAFTA because I’m sure they’re motivated by very similar feelings that motivate Louisiana sugarcane and sugarbeet farmers who protest CAFTA’s adoption.

    I love George Bush just as much as the next Republican, but he and his advisors certainly do not understand the deleterious effects of multinational free-trade agreements on small farmers in the rural South and Midwest. Where do we go from here?

  8. Ok, Will, very good input. My best shot:

    First: yes, US companies are required to hold to the same human rights standards if they open up factories in other countries. However, they are not necessarily responsible for the actions of their subsidiaries – as a result, Coca Cola has for years bought Salvadorian sugar cane from a company which uses child labor to harvest its cane. This is a sticky issue that I don’t have enough knowledge on.

    Second, you’re right that it’s very important for American leaders to protect American interests. Entire towns can collapse, for instance, when Dell closes down a call center and moves it to Delhi, India. At the risk of seeming to defend MNCs, let me offer a few counterpoints:

    a) from a hardline economics perspective (which might be called economic convservativism in the US or liberalism everywhere else), markets should be allowed to run their course, and everybody should do what they’re best at in order to increase the size of the pie. If Indians do call centers more cheaply than Americans, then so be it (argues the economist). This is a much longer debate, but I’ll leave it one-sided for now.

    b) the idea that small farmers will lose out because of CAFTA is mostly a myth, as are the idea that small farms really exist much anymore. The vast majority of American farming has long been concentrated in the hands of large producers which, not surprisingly, lobby hard to make sure that their products are “protected” from cheap imports. The reality is that, like with US corn to Mexico, US producers often produce more cheaply than their third-world counterparts and are in little danger. It’s useful for them, and for the politicians which do their bidding, to appeal to the public by decrying the plight of “family farms.”

    Third, on CAFTA: I haven’t read the agreement, but if it’s anything like NAFTA, then it’s less about free trade than it is about opening doors for foreign investment (meaning American corporations setting up operations in Central America – also called FDI, or foreign direct investment). NAFTA would more properly have been named the North American Foreign Investment Agreement, but NAFIA just doesn’t sound as good, does it?

  9. The good writing in French is: laisser faire!
    I do not know if I well very included/understood but your comments are interestings. The translation is not very easy for me but I cling!

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