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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Multinational Corporations and the Race to the Bottom

Robert Scheer has a thought-provoking column this week on the perspectives of multinational corporate executives about their prospects in the U.S. and elsewhere. And he goes beyond the usual hand-wringing about the inability of individual nation-states to control what multinationals do.
For one thing, he points out that multinationals depend on the U.S. government for a lot more than direct tax and spending subsidies: most notably, for a massive defense infrastructure that makes doing business around the world possible.
But Scheer also makes this observation based on what corporate CEOs say about what motivates them to invest in particular countries:

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.”

Interesting, eh? We are constantly being told by conservative pols and opinion-leaders that consumer demand in the U.S. is irrelevant to the current economic crisis; that it’s all about the terrible burdens faced by “job creators” (enjoying record profits, by the way) in the way of wage, tax and regulatory costs. Thus individual states, and the national government as well, are being encouraged avidly to pursue “race to the bottom” competitive strategies ravaging the public sector in the name of the almighty desideratum of lower business costs.
If this strategy made sense, of course, then “low-road” states like Alabama and Mississippi would be the economic dynamos of the whole world. But it’s good to hear a validation that something else is actually going on from a corporate titan.
This topic was discussed at length today on the syndicated public radio show “Left, Right and Center,” in which I sat in for Arianna Huffington along with regulars Scheer, Matt Miller and Tony Blankley. There’s a feature at the very end where everyone gets to say something very brief (in my case, 10 seconds were left) about any old topic. I got in a quick reference to today being Earth Day. It was the first and only time that was mentioned, which is, I suppose, a sign of the times.

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