Corporations and the Global Economy
Managers and investors, who make millions of dollars a year, or even hundreds of millions, assert that they feel no shame or moral dilemma about it. They believe they deserve it because they have “worked hard.” Although this argument might sound right the first time one hears it, it is flawed.
No human being, regardless of his or her physical and mental abilities can create that wealth on his own. One of the billionaires interviewed by NPR in 2006, had incomes of more than $200 million a year. He earns more than $555,550 every day, including the weekends. That is $23,150 every hour of the day. But this is a monetary value only, not related to any real goods or services produced by him. He contributes nothing to society. If he died, the world would not lose anything of value. It is only in the context of this corrupt political and economic system, that his fictional monetary value is accepted to reclaim (purchase) real goods and services, allowing him to parasitize the production of other people. This extractive form of economy is the result of a constant evolution of the system pushed by private interests, with the help of complicit governmental authorities. This could never happen in a fair economic system, based on the trade of goods and services of similar value, without the human invention of money.
When money was invented, it represented more or less the exchange value of one good or service for another. Therefore everybody had to produce something of value for their own use or to exchange with something else. In this primitive trade system, there was no possible devaluation of the goods and services, unless such good or service was no longer needed or desired by others, in which case its production would have been discontinued. This was a productive type of economy because everybody produced something of real value to contribute to society.
Before WWII, the currency of a country represented a certain amount of gold, which the government promised to pay to the holder of the note. After WWII countries stopped using gold to back the value of the paper or metal currency. The huge increase in global business transactions made impossible to maintain the gold standard because there was not enough gold in the world to back the huge amounts of money being issued. The U.S. dollar was accepted as the standard currency for international trade. Other countries pegged their currencies to the dollar in order to keep its standard value. Thus other currencies gave support to the dollar, and were more prone to devaluation.
Currency exchange became a profitable business, especially for those who are able to monitor currency tendencies in the international market with sophisticated equipment. The creation of corporations and the stock market created a new system, which has evolved through the years into something very complicated. Trillions of dollars change hands every day without producing any real goods or services of tangible value. In fact, most of this exchange does not even require the use of real money, but only in computer and accounts of the people involved in that business.
It is one thing for a company to issue stocks or bonds in order to raise capital, but another thing the creation of markets where those stocks and bonds are bought, sold and re-sold, changing price at each step without logic or realistic reasons. To complicate things more, this system gave birth to new types of related businesses, where people make wealth without adding anything of material value, but parasitizing on the production of other people. Brokers, bankers, speculators, corporate riders, and other financial organizations extract monetary value from the global economy by imposing their framework into the system.
The nature of corporations, their influence on governments, and their competition for survival and control, has created a system of corruption, deception, and blindness, in such a way that the phrase “to climb the ladder” means to reach higher positions of hierarchy in the corporate world, or to learn how to succeed as investors within the Wall Street financial system. The emphasis in making money without production of material goods leads the nation and the world to a system of two main social classes, the exploiters and the exploited. The exploiters have integrated the middle class in between, linking them to serve the system at different levels. Integration prevents people from fighting the decisions of the top elite groups, because they own the means of production, and when they fall they drag the whole economy down. However, as time passes, this dependency of the people in the middle and the working class becomes stronger, power groups become more entrenched, and change is more difficult.
Globalization of War and Violence
Global corporations use the U.S. military and political machinery to expand their control in the world. There is a very long list of U.S. foreign interventions since the beginning of the 20th century on behalf of private corporate interests. The documentary “What I’ve Learned about U.S. Foreign Policy,” by the “Addicted to War” publishers, provides a brief review of those interventions.
How did corporations get so much power? First, they give big campaign contributions during elections to people friendly to their interests to make sure they are elected. Second, they buy out media outlets in order to control the information. They refer to private corporate interests as “American interests,” making easier for politicians to appeal to people’s sense of patriotism and pride to gain their support for foreign interventions and war. They use the media to spread fear and confusion about their own created enemies, or grossly exaggerate the power and threat of non-capitalist governments, which are relatively easy to fight and subdue. Third, corporate representatives of the private sector are elected to high positions in the government, because, according to political analysts, they have the necessary experience to govern. But most people do not realize that they also have a conflict of interests, and their priorities continue to be with those of the companies they worked for before being elected.
Thus the links between private interests and the government is cemented. The corporate world has the resources and organization to maintain an army of lobbyists to constantly fight important changes for the well being of the nation, and influence the government in the direction they want. Some members of Congress leave their seats to work for private companies as lobbyists. They are hired because they know their way around in Washington.
Dick Cheney was named CEO of Halliburton in 1995 not because of his qualities, but because he had connections with key people in the government. He doubled the size of government contracts granted to the company (www.moveon.org). When he became the vice-president of the United States, he gave privileges to companies related to Halliburton and the oil industry to receive government contracts.
There is evidence that the wars in Afghanistan and Iraq were planned well in advance before 9/11/2001. Dan Rather, reporting from Rawalpindi, the military headquarter of Pakistan, had indicated on 9/10/2001 that Osama bin Laden was in a military hospital in that city. Was it possible for him to plan and direct the sequence of events of the attacks in the U.S. the next day? The Bush administration, immediately announced its plans to attack Afghanistan, and within four weeks it did just that. How could a government lead a nation to war with so little time to investigate the source of the attacks and to plan the whole strategy, unless they had planned it long before 9/11/2001?
The U.S. trained the Taliban and Osama bin Laden during the Afghan war against Russia (1979 – 1988), just as it trained Latin Americans since the 1930s to defend U.S. corporate interests in their countries. Why did the Soviets want to control Afghanistan? Why is it so important for the U.S. now to control that region?
The War in Afghanistan
There is evidence of huge deposits of oil and natural gas in the Caspian Sea and its eastern region: Turkmenistan, Kazakhstan, Uzbekistan, and South Russia. According to information gathered by Wikipedia (Free Encyclopedia), a project to place a gas pipeline from Turkmenistan through Afghanistan and Pakistan to India was proposed in 1995 by the Asian Development Bank, which is mostly controlled by the United States and Japan. In 1996, the Central Asia Gas Pipeline (CentGas) consortium had formulated a plan, which was led by UNOCAL Oil Company. In 1997, an agreement to the plan had been signed by Turkmenistan, several oil companies, and the Taliban. (http://en.wikipedia.org/wiki/Trans-Afghanistan_Pipeline).
UNOCAL and a Russian oil company withdrew their share in the plan in 1998, because the Taliban was not willing to assure the safety of the pipeline. John Maresca, vice-president of international relations of Unocal declared before a U.S. Congressional meeting in 1998, that the oil and gas pipeline project needed U.S. support to achieve political stability “in the Region, including Afghanistan.” (http://whatreallyhappened.com/WRHARTICLES/oil.html)
Maresca’s words were also posted at (http://www.lewrockwell.com/orig/sardi7.html), and the sequence of negotiation events since 1992 until 1998 are posted at http://www.worldpress.org/specials/pp/pipeline_timeline.htm
Maresca estimated that the natural gas reserves in the Caspian Sea were more than 236 trillion cubic feet, and the oil reserves between 60 billion and 200 billion barrels. The main problem, he said, is how to get this oil and gas to the markets of the world. He mentioned that the GasCent consortium had considered two options: one would use pipelines across a small part of Russia towards the Black Sea, which he said, did not have enough capacity. The best option according to Maresca would be to build a pipeline across Iran, but this route would be closed for North American companies due to U.S. sanctions. The only other option was a pipeline across Afghanistan, Pakistan, and to the Arabian Sea. But, he said, the “construction of the pipeline … across Afghanistan could not begin until a recognized government is in place, that has the confidence of governments, lenders, and our company.” (Ibid)
The war in Afghanistan and Iraq had a double purpose: because the Bush-Cheney team thought both wars would be easy and fast, they would increase their popularity for the 2004 re-elections, and most importantly, they would benefit the U.S. oil companies. The shock, confusion, and anger derived from the terrorist attacks of 9/11/2001 in the United States, provided the environment and justification needed by the Bush – Cheney team for both wars and sweeping changes in domestic and foreign policies.
The fact that the pipeline project was developed by the Asian Development Bank makes it appear that the objective of the project was to help the poor developing nations of South Asia. However, as Oxfam, a confederation of 13 organizations with partners in more than 100 countries explains, the bank’s projects frequently undermine human rights and overlook the environmental impacts of its operations in poor communities. Also, a United Nations Environmental Program report states that “much of the growth has bypassed the more than 70 percent of its rural population …” (http://en.wikipedia.org/wiki/Asian_Development_Bank)
The Link between the Domestic and Foreign Agendas
In 2001, Congress requested the Vice-President to provide information about the people who had intervened in the formulation of the National Energy Policy; his meetings with industry representatives and lobbyists. Cheney refused to provide such information and Congress sued the Task Force team but lost the case, thanks to Cheney’s friends in the Supreme Court of Justice, such as Antonin Scalia. The Enron scandal and its collapse provided the political pressure necessary to force Cheney to release the information, but Bush came in his defense asserting his right to secrecy based on executive privilege in regards to White House records. Sierra Club and the Judicial Watch sued the government appealing to the Freedom of Information Act to force the release of the documents. In the end only limited information was released, but it confirmed that 95% of the Bush Energy Policy was redacted word by word by private energy and oil companies. (Peter Phillips and Project Censored, 2005)
Information obtained in 2003 by the Commerce Department related to the Bush Energy Policy, contained maps of “Iraqi oil fields, pipelines, refineries, and terminals, as well as two charts detailing Iraqi oil and gas projects, and ‘Foreign suitors for Iraqi Oilfield Contracts.” (Ibid) Similar information was obtained earlier in 2001 containing maps of oil fields in Saudi Arabia, Arab Emirates, pipelines, refineries, and more infrastructures for oil exploitation.
In October 2002, a New York Times article indicated that, President Bush had made offers to Russia and France that their companies would participate in the Iraqi oil if they voted for the war against Iraq at the U.N. Security Council. After the invasion, the International Monetary Fund made Iraq one of its members charging it with a debt of $120 billion, of which the Iraqi people will never be free; so much for the “liberation” promise of the Bush administration.
The Weapons Industry
It is very important for the weapons industry that the United States always have foreign enemies to fight because the U.S. government is their biggest customer, and in times of war there is greater demand. This interest is shared by Pentagon leaders, who demand budget increases every year. They can partner with weapons industries since they are not required to report how the money is spent, and there is no public auditory.
Seeing big increases in profits for U.S. industries during and after WWII, CEOs of some companies suggested that war is good for the economy. “The biggest gains were in corporate profits, which rose from $6.4 billion in 1940 to $10.8 billion in 1944. But enough went to workers and farmers to make them feel the system was doing well for them,” writes historian Howard Zinn.
“Charles E. Wilson, the president of General Electric Corporation, was so happy about the wartime that he suggested a continuing alliance between business and the military for ‘a permanent war economy.” (Ibid)
However, as the economic globalization progresses, there is not much difference for corporations whether the U.S. remains as the only military super-power or not. They will give their support to any country with political stability, which are willing to give them freedom to operate and relaxed environmental and labor rules.
David Cay Johnston, a Pulitzer price winning journalist and writer, in his book “Free Lunch” describes how the U.S. government subsidizes corporations that outsource jobs and even endanger national security. In 1982 some scientists had combined iron and boron with a rare earth metal called neodymium, to make strong, lightweight permanent magnets. It is used to make microphones, computer hard drives, guitars, base-guitar pick ups, loud-speakers, and motor starters. But it is especially relevant because of its use to make the so called smart bombs, says Johnston.
General Motors (GM) had created a division to manufacture these magnets. GM made 80% of the kind of magnets used in smart bombs until 1995, when it decided to sell the division to a consortium of three firms lead by the sextant group. Because the deal was for only $75 million, the news media had paid little attention to it. (Johnston, 2008)
What made this business transaction relevant for national security is that two of the three-firm consortium who bought the magnet industry were Chinese and partly owned by the Chinese government. China had allowed GM access to the car markets in China mainly because of its interest in high tech industry with military applications. President Clinton had approved the transaction because he wanted to make China a member of the WTO, with one condition, the industry and the technology had to be kept in the United States. (Ibid)
Chinese firms continued to buy other magnet factories in the U.S., “including GA powders, an Idaho firm that used tax payer money to develop powerful magnets. Once the new buyers had a monopoly on the production of these magnets in the United States, they began shutting down facilities and moving manufacturing to China.” In 2003 the last and original magnet factory had closed, and the U.S. became dependent on China for those magnets for industrial and military purposes. The U.S. cannot just start production of these magnets again at any time, because the technology is gone, and the only mines of neodymium known are in China (Ibid).
According to Johnston, a senator of Indiana had written to President Bush in 2002 expressing his concern about the magnet factory being moved to China, which, he had said does not improve national security. Mr. Bush had not answered the question, but only replied that all the necessary steps had been taken to make sure that the American people are not in danger.
The importance of the deal became clear when the Chinese destroyed one of their own satellites in 2007. In the event of a war with the United States, China has the capability of destroying American satellites that provide intelligence information.
The magazine Businessweek from October, 2008, published an article entitled “Dangerous Fakes.” It said, “The American military faces a growing threat of potential failure—and even foreign espionage—because of counterfeit computer components used in warplanes, ships, and communications networks.
“Potentially more alarming than either of the two episodes are hundreds of counterfeit routers made in China and sold to the Army, Navy, Air Force, and Marines over the past four years.”
Corporations Against People
Despite of the great depression of the 1930s, for profit corporations and governments have not learned the lessons of the consequences of excessive greed and unregulated markets. WWII pulled the country out of the depression giving it a second chance to make things right. But the corporate culture of instant gratification and short term gains has been stronger than common sense, and has shadowed the democratic principles on which this country was founded.
As explained above, corporations have pushed the country to unprovoked wars and secret military interventions in small nations. They accuse them of having communist or socialist ties as a justification for intervention and to replace their governments for friendlier ones to corporate interests. Again, private corporate interests should not be confused with “American interests” because they are not the same. The interests of common people around the world are similar, and people of other nations are not the enemy of the United States, neither a threat to its national security and legitimate interests. This is very important to recognize, because greedy corporations manipulate the information to pit us against one another in order steal the resources we have and need for survival.
In the last few decades, corporations have gained too much influence in government, such that positive changes are extremely hard to make. When President Obama presented his public health care plan, an army of thousands of lobbyists from health insurance companies, pharmaceutical companies, big private hospitals, and HMOs set themselves to stop it in Congress.
Lobbyists did not need to convince Republican members; they were already against the President and against any of his reform plans from the beginning. But it became notorious the changing positions of many democrats, such as Senator Max Baucus, other members of the Senate Financial Committee, and a long list of others, which opposed the original single payer health plan reform, despite the fact that at least sixty five percent of the people support it, and twenty percent are undecided or do not know what it means. Because of the great division created in Congress, progressives presented a new version of the health care plan, which includes a public insurance option among many from the private sector, but the private interests and Republican leaders (for political reasons) still oppose any public option. Rush Limbaugh, Fox News programs and other corporate media launched a campaign of misinformation, lies, and scare tactics.
Private insurance companies opposed real reform during the Clinton administration as well. They had a free ride during the Bush administration. Bush’s health care policy included a clause prohibiting the federal government or individual state governments to negotiate health care prices or the prices of medicine. In practice, bargaining for better prices was made illegal. I could not believe it when I heard it on the news, and thought may be I misunderstood it, but it was real. From time to time the subject was mentioned again on TV and news magazines. How do such policies square with the “free market” theory of a capitalist system? It doesn’t. Concern for safeguarding capitalism is mentioned only when someone in the government is talking about a social program to benefit the poor and working class.
Time magazine had an article that said, “Obama’s diagnosis for health reform would cut costs by rewarding quality care and limiting unnecessary treatments. But one man’s economies are another’s lost profits.” (Time, June 29, 2009). The question is, should the nation keep its health care system as it is, with minimal changes, just because any real change will affect the profits of insurance and pharmaceutical companies? I think the answer is clear.
Privatization of War
The U.S. Army recruits, trains, and provides education to thousands of young people using taxpayer’s money every year. They are used to fight foreign wars, occupy a foreign country after an invasion, and maintain military bases in many countries around the world. However, the army does not pay them well. Therefore, many well trained soldiers leave the U.S. army to work for private military contractors. This benefits tremendously the private companies, because they do not have to spend money training their personnel.
Moreover, the government itself hires more and more services from these private military contractors and death squads. Private mercenaries were used in Colombia in the so called War on Drugs or Plan Colombia.
For years, native people and African – Colombian communities tried to keep petroleum companies out of their lands because of the environmental damage they cause. Many Uwa indigenous were killed when they refused to be displaced by the Colombian government to let Occidental Petroleum drill in their lands. According to an independent report, Occidental Petroleum left the country in 2000 when the Uwa showed their determination to die in their land to protect what they consider the blood of mother earth. Six months later, Bush sent private mercenary contractors to spray “coca-plantations.”
Katie Knight messages for CSN, a human rights observer group, indicated that the United States was spending $2 million per day without informed consent of the taxpayers. She said, “US financing of the Colombian military and paramilitary actually increases the flow of drugs into the US by supporting those most involved in drug trafficking… planes spray the Amazon rainforest with Monsanto’s herbicide Round-Up Ultra.”
A website—www.usfumigation.org—reported the damage on food crops caused by the sprayings, and even posted many photographs of the affected areas. Bananas, papayas, yucca, plantain, and corn crops were fumigated, even when there were no nearby plantations of coca. The text said, “Banana plantation and particularly yucca are fragile and susceptible to the effects of glyphosate. In the distance, half an acre of cocaine remains untouched, while the three hectares of yucca and plantain have been totally wiped out by fumigation.”
The U.S. continues to spend billions of tax-payers dollars in Colombia, despite that it has been found links between the paramilitaries operations and the Colombian government. With the interest of keeping US military aid flowing, the Colombian army set to kill as many
Private Armies in Africa
Blackwater is a private army company that was hired by the Bush administration to work in Iraq. In 2007, Blackwater body guards opened fire in Baghdad’s Nisoor Square, killing 17 unarmed civilians. The Iraqi authorities demanded that the perpetrators of the murders be tried and sentenced by Iraqi courts of law. That incident was not the first one, but this time the Iraqi government banned the company from operating inside Iraq. Five Blacwater employees face manslaughter charges in the shootings, which prosecutors say it was an unprovoked attack on civilians. Despite the ban the State Department renewed Blackwater’s contract in 2008.
Because of its bad reputation, Blackwater changed its name for Xe in January 2009, and now they are expanding their operations to Africa. Xe’s representatives as well as representatives of other well known private security and military contractors had attended to a meeting at the Liaison hotel on Capitol Hill. According to an article of Mother Jones magazine, also the U.S. military command seemed interested in using the services of private military companies such as Blackwater, Triple Canopy, and DynCorp, the last of which was also used in the so called Plan Colombia in 2001. Business representatives had come from “Dubai and Malta to discuss this year’s topic—the Pentagon’s newly established US Africa Command, or AFRICOM—and to browse booths hawking everything from armored vehicles to high-risk insurance.” (Mother Jones, March 2009)
According to the magazine mentioned above, these mercenary contractors (called industries) were created when “mercenaries like Executive Outcomes and Sandline International fought for embattled African governments during the 1990s, allegedly in exchange for diamond and oil concessions.” (Ibid)
Although some international programs for economic and medical aid, might be justified to use armed forces to provide safety for the deliverance of aid to those in need, there is no need to use private military companies. The main imperative of such private armies, as the imperatives of any for profit business is to make money. They are not concerned much about justice and fairness, they work for those who pay them. We know how people trained at the School of the Americas killed thousands of innocent people in Latin America. Many of them became chief commanders of the military, such as Manuel Antonio Noriega in Panama, Guillermo Rodríguez Lara in Ecuador, and President Jorge Rafael Videla in Argentina.
The previous article mentioned above says, “Reliance on contractors, though, could add to the controversy already engulfing AFRICOM, especially the fears that the military’s forays into development work could blur the line between aid workers and soldiers or hired guns. … Critics have also accused the Pentagon of using AFRICOM as a fig leaf for broader geopolitical objectives; they view the command as little more than a strategic maneuver to counter China’s pursuit of Africa’s natural resources.”
The problem with the U.S. government is frequently, that it gets obsessed with its aid programs, that overlooks the valid complaints of people who are supposedly the beneficiaries of them. The article says:
“As US officials toured the continent (Africa) in search of a location for the new command’s headquarters, they met with so much opposition that they eventually decided to operate from Germany for the time being.” An South African ex-soldier had commented last November, “looking at … US administrations’ record in Africa, it is one long script of betrayal, destabilization, political blackmail and even worse.’ African nations, he noted, ‘remain extremely reluctant and wary to allow the wolf to guard their sheep.” (Ibid)
A big problem that perhaps most people do not see is that all U.S. private companies seek fast economic growth as their main objective. There is no limit to it, and so it is with private armies. What is going to happen when they grow so much that they can challenge any national army or any government in the world? Whenever they can get away with abuse of power they will do it, as it happened in Iraq.
We can see the problem of private interests within the Mexican army as well. The media does not bring the reality of what’s happening inside Mexico and its army. Thousands of civilians are killed every month either by the army or by drug traffickers, and thousands are escaping the country. Charles Bowden, a reporter for the Mother Jones Magazine tells the story of a Mexican reporter and his son who escaped to the United States. As a reporter he was under death sentence because he had published an article he was not aware it would bother someone with power.
BIBLIOGRAPHY
Perry, et al. Western Civilizations: Ideas, Politics & Society, Sixth edition. Houghton Mifflin Company. 2000
Korten, David. When Corporations Rule the World, Second edition, Kunmarian Press, inc. 2001
La Feber, Walter. Inevitable Revolutions: The United States in Central America, Second edition, 1993
Unger, Craig. House of Bush – House of Saud: The Secret Relationship Between the World’s Two Most Powerful Dynasties, Scribner, New York, 2004
Klein, Naomi, The Shock Doctrine: The Rise of Disaster Capitalism, Picador, New York, 2007
Bardach, Ann Louise, Cuba Confidential. Love and Vengeance in Miami and Havana, Random House, New York, 2002
Johnston, David Cay, Free Lunch. How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick you with the Bill), Penguin Audio, 2007
Phillips, Peter and the Project Censored, Media Democracy in Action, Censored 2005, First Edition, Seven Stories, 2004
Zinn, Howard, A People’s History of the United States, 1942—Present, Revised and Updated Edition, 1995
Mother Jones, Magazine. March – April, 2009
Businessweek, Magazine, October 13, 2008
The Nation, Magazine. June 15, 2009
www.whitehouse.gov
www.wikipedia.com
www.moveon.org
El Comercio, newspaper, Quito, 2004
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