FacebookTwitterGoogle+RedditEmail

When Multinationals Say Adieu

No one blinks when the editor of a magazine called Multinational Monitor (that’s me) suggests that multinational corporate interests diverge from and frequently contradict those of regular people.

But it’s another matter when the questioning comes from BusinessWeek.

“Multinationals: Are They Good for America?” is the cover story in the current issue of the weekly chronicler of business. The answer to the question, from BusinessWeek’s chief economist Michael Mandel, is a little bit of “on the one hand, on the other hand,” but the ultimate conclusion is: Not particularly. The article emphasizes that the success of U.S.-based multinationals — the corporate sector best positioned to handle a U.S. recession and benefit from the declining dollar, because it sells so much in other countries — is not doing much to help the U.S. economy, by the measures that matter most.

In favor of multinationals, the BusinessWeek article cites research indicating they are more productive, pay more and are better managed than their domestic counterparts. U.S. multinationals also tend to base research and development in the United States, providing high-paying jobs.

But while multinationals are more efficient by many measures — and BusinessWeek does not discuss whether they are efficient because they are multinational, or whether efficient firms grow to become multinationals — they don’t deliver on many of the things people want most from an economy.

Most importantly, multinationals have a terrible record on job creation. U.S.-based multinationals cut more than 2 million jobs in the United States from 2000 to 2005, BusinessWeek reports. Foreign multinationals also cut jobs in the United States during that period, reducing U.S. employment by 500,000.

This is not just an issue of moving to lower-wage, lower-cost locales. As compared to large companies doing business just in the United States, multinationals provide many fewer jobs overall — counting jobs both in the United States and abroad — relative to their share of sales and profits.

But a lot of the explanation for the reduction in multinationals’ jobs in the United States is about the companies shifting jobs to lower-wage locations (and sub-contracting, an issue BusinessWeek does not discuss). “Instead of ramping up American operations to sell into the global markets, giant U.S. companies such as General Electric, IBM and United Technologies took their operations overseas,” BusinessWeek’s Mandel writes.

“In effect, U.S. multinationals have been decoupling from the U.S. economy in the past decade,” he concludes.

The free-falling U.S. dollar should encourage global producers to invest increasingly in the United States, which will become progressively cheaper as the dollar falls more. But BusinessWeek cautions that tax considerations, among other issues, will slow this process.

This leads to a second key issue the BusinessWeek article raises: multinationals’ tax avoidance strategies. “Moving operations overseas gives a multinational an almost infinite number of legal and quasi-legal strategies for reducing U.S. corporate income taxes.” Among the time-worn strategies the article references: transfer pricing (so that U.S. subsidiaries overpay for products from other country subsidiaries, thereby locating revenues and profits in low-tax jurisdictions); transferring intellectual property to subsidiaries in low-tax jurisdictions, and making U.S. subsidiaries pay high royalties; and borrowing in high-tax jurisdictions to take advantage of interest-rate deductions.

A third problem BusinessWeek identifies is the ability of multinationals to blackmail (my word, not BusinessWeek’s) countries, by demanding concessions in exchange for locating production sites.

The article focuses on the semiconductor industry, as an area where research continues in the United States, and where there is a prospect of expanded manufacturing. It then quotes industry leaders who brazenly declare that the United States has no choice but to shower companies with tax breaks and incentives.

“We have to choose to compete on the investment level and match other countries’ offerings on incentives and tax breaks,” George Scalise, president of the Semiconductor Industry Association declares. “If we don’t do this, it will be very difficult for us to maintain our leadership in technology and innovation.”

Echoes Hector Ruiz, CEO of Advanced Micro Devices: “It’s not corporate welfare. [This is] a competitive world.”

What Ruiz doesn’t say is that the competition is rigged. In the multinational corporate-dominated world, the competition is between countries (and states and towns), and the people who live there. No matter which of these jurisdictions manages to outbid the others, the same companies still win.

ROBERT WEISSMAN is editor of the Washington, D.C.-based Multinational Monitor and director of Essential Action.

 

 

 

 

 

More articles by:

ROBERT WEISSMAN is president of Public Citizen.

August 20, 2018
Carl Boggs
The Road to Disaster?
James Munson
“Not With a Bomb, But a Whimper” … Then More Bombs.
Jonathan Cook
Corbyn’s Labour Party is Being Made to Fail –By Design
Robert Fisk
A US Trade War With Turkey Over a Pastor? Don’t Believe It
Howard Lisnoff
The Mass Media’s Outrage at Trump: Why the Surprise?
Faisal Khan
A British Muslim’s Perspective on the Burkha Debate
Andrew Kahn
Inhumanity Above the Clouds
Dan Glazebrook
Trump’s New Financial War on the Global South
George Wuerthner
Why the Gallatin Range Deserves Protection
Ted Rall
Is Trump a Brand-New Weird Existential Threat? No.
Sheldon Richman
For the Love of Reason
Susie Day
Why Pundits Scare Me
Dean Baker
Does France’s Economy Need to Be Renewed?
Jeffrey St. Clair
A Mighty Voice for Peace Has Gone Silent: Uri Avnery, 1923-2018
Weekend Edition
August 17, 2018
Friday - Sunday
Daniel Wolff
The Aretha Dialogue
Nick Pemberton
Donald Trump and the Rise of Patriotism 
Joseph Natoli
First Amendment Rights and the Court of Popular Opinion
Andrew Levine
Midterms 2018: What’s There to Hope For?
Robert Hunziker
Hothouse Earth
Jeffrey St. Clair
Roaming Charges: Running Out of Fools
Ajamu Baraka
Opposing Bipartisan Warmongering is Defending Human Rights of the Poor and Working Class
Paul Street
Corporate Media: the Enemy of the People
David Macaray
Trump and the Sex Tape
CJ Hopkins
Where Have All the Nazis Gone?
Daniel Falcone
The Future of NATO: an Interview With Richard Falk
Cesar Chelala
The Historic Responsibility of the Catholic Church
Ron Jacobs
The Barbarism of US Immigration Policy
Kenneth Surin
In Shanghai
William Camacaro - Frederick B. Mills
The Military Option Against Venezuela in the “Year of the Americas”
Nancy Kurshan
The Whole World Was Watching: Chicago ’68, Revisited
Robert Fantina
Yemeni and Palestinian Children
Alexandra Isfahani-Hammond
Orcas and Other-Than-Human Grief
Shoshana Fine – Thomas Lindemann
Migrants Deaths: European Democracies and the Right to Not Protect?
Paul Edwards
Totally Irrusianal
Thomas Knapp
Murphy’s Law: Big Tech Must Serve as Censorship Subcontractors
Mark Ashwill
More Demons Unleashed After Fulbright University Vietnam Official Drops Rhetorical Bombshells
Ralph Nader
Going Fundamental Eludes Congressional Progressives
Hans-Armin Ohlmann
My Longest Day: How World War II Ended for My Family
Matthew Funke
The Nordic Countries Aren’t Socialist
Daniel Warner
Tiger Woods, Donald Trump and Crime and Punishment
Dave Lindorff
Mainstream Media Hypocrisy on Display
Jeff Cohen
Democrats Gather in Chicago: Elite Party or Party of the People?
Victor Grossman
Stand Up With New Hope in Germany?
Christopher Brauchli
A Family Affair
Jill Richardson
Profiting From Poison
FacebookTwitterGoogle+RedditEmail