Posted on May\u00a027,\u00a02013<\/h4>\n\n<\/p>\nBy Robert Reich<\/p>\n
This post originally ran on Robert Reich\u2019s Web page<\/a>.<\/i><\/p>\nForbes Magazine likes to call itself a \u201ccapitalist tool,\u201d and routinely offers tool-like justifications for whatever it is that profit-seeking corporations want to do. Recently it has deployed its small army of corporate defenders and apologists in the multi-billion dollar fight to keep the effective tax rates of global corporations low.<\/p>\n
One of its contributors, Tim Worstall, recently took me to task<\/a> for suggesting that a way for citizens to gain some countervailing power over large global corporations is for governments to threaten denial of market access unless corporations act responsibly.<\/p>\nHe argues that the benefits to consumers of global corporations are so large that denial of market access would hurt citizens more than it would help them. The \u201cvalue to U.S. consumers of Apple is they can buy Apple products,\u201d Worstall writes. \u201cWhy would you want to punish U.S. consumers, by banning them from buying Apple products, just because Apple obeys the current tax laws?\u201d<\/p>\n
Wortstall thereby begs the central question. If global corporations obeyed all national laws \u2013 the spirit of the laws as well as the letter of them \u2014 and didn\u2019t use their inordinate power to dictate the laws in the first place by otherwise threatening to take their jobs and investments elsewhere, there\u2019d be no issue.<\/p>\n
It\u2019s the fact of their power to manipulate laws by playing nations off against one another \u2014 determining how much they pay in taxes, as well as how much they get in corporate welfare subsidies, how much regulation they\u2019re subject to, and so on \u2014 that raises the question of how citizens can countermand this power.<\/p>\n
Consumer benefits may sometimes exceed such costs. But, as we\u2019ve painfully learned over the years (the Wall Street meltdown, the BP oil spill in the Gulf, consumer injuries and deaths from unsafe products, worker injuries and deaths from unsafe working conditions, climate change brought on by carbon dioxide emissions, and, yes, manipulation of the tax laws \u2014 need I go on?), the social costs may also exceed consumer benefits.<\/p>\n
Why would an economics writer for a seemingly sophisticated national publication such as Forbes deny the existence of corporate power to circumvent or create favorable laws, or dismiss the social costs that corporations bent solely on maximizing profits routinely disregard? I\u2019ll get back to this in a moment. <\/p>\n
Worstall then goes on to criticize me for suggesting that governments also condition market access on receiving some of the social benefits that corporations now wield to play countries off against one another, such as good jobs or investments in research and development. In his eyes, I\u2019m committing the mortal sin of denying the economics of comparative advantage.<\/p>\n
On what planet have Forbes\u2019 capitalist tools been living? Many of the world\u2019s most successful economies \u2014 among them, China and Singapore \u2014 owe their successes in part to their conditioning market access on certain kinds of jobs and investments, including research and development. That\u2019s the way they have come to use global corporations, rather than be used by them. It\u2019s the same approach Alexander Hamilton advocated more than two centuries ago in proposing how the United States develop its manufacturing industries. <\/p>\n
Comparative advantage is nice in theory, but in a world where powerful global corporations are using every strategy imaginable to maximize their profits and powerful governments are strategically employing market access to develop their economies, it\u2019s just theory.<\/p>\n
Economics writers like those affiliated with Forbes Magazine surely are sophisticated enough to know this as well. So why are they so eager to trot out such economic nonsense?<\/p>\n
Perhaps because so much profit is at stake that those who pay their salaries \u2014 and who have also put many academic economists on retainers \u2014 prefer that they mislead the public with simplistic economic theory that appears to justify these profits rather than to tell the truth.<\/p>\n
My modest suggestion that governments become the agents of their citizens in bargaining with global capital should hardly raise an eyebrow. But the capitalist tools at Forbes, and elsewhere, must be worried that average citizens may be starting to see what\u2019s really going on, and might therefore take such a suggestion seriously.<\/p>\n
Robert B. Reich, chancellor\u2019s professor of public policy at UC Berkeley, was secretary of labor in the Clinton administration. Time magazine named him one of the 10 most effective Cabinet secretaries of the last century. He has written 13 books, including the best-sellers \u201cAftershock\u201d and \u201cThe Work of Nations.\u201d His latest, \u201cBeyond Outrage,\u201d<\/a> is now out in paperback. He is also a founding editor of The American Prospect magazine and chairman of Common Cause.<\/i>\n<\/p>\n ![\"\"](\"http:\/\/www.truthdig.com\/images\/eartothegrounduploads\/3788730167_5b128b1843-apple-black-and-white-320.jpg\")
<\/p>\n
By Robert Reich<\/p>\n
This post originally ran on Robert Reich\u2019s Web page<\/a>.<\/i><\/p>\n Forbes Magazine likes to call itself a \u201ccapitalist tool,\u201d and routinely offers tool-like justifications for whatever it is that profit-seeking corporations want to do. Recently it has deployed its small army of corporate defenders and apologists in the multi-billion dollar fight to keep the effective tax rates of global corporations low.<\/p>\n One of its contributors, Tim Worstall, recently took me to task<\/a> for suggesting that a way for citizens to gain some countervailing power over large global corporations is for governments to threaten denial of market access unless corporations act responsibly.<\/p>\n He argues that the benefits to consumers of global corporations are so large that denial of market access would hurt citizens more than it would help them. The \u201cvalue to U.S. consumers of Apple is they can buy Apple products,\u201d Worstall writes. \u201cWhy would you want to punish U.S. consumers, by banning them from buying Apple products, just because Apple obeys the current tax laws?\u201d<\/p>\n Wortstall thereby begs the central question. If global corporations obeyed all national laws \u2013 the spirit of the laws as well as the letter of them \u2014 and didn\u2019t use their inordinate power to dictate the laws in the first place by otherwise threatening to take their jobs and investments elsewhere, there\u2019d be no issue.<\/p>\n It\u2019s the fact of their power to manipulate laws by playing nations off against one another \u2014 determining how much they pay in taxes, as well as how much they get in corporate welfare subsidies, how much regulation they\u2019re subject to, and so on \u2014 that raises the question of how citizens can countermand this power.<\/p>\n Consumer benefits may sometimes exceed such costs. But, as we\u2019ve painfully learned over the years (the Wall Street meltdown, the BP oil spill in the Gulf, consumer injuries and deaths from unsafe products, worker injuries and deaths from unsafe working conditions, climate change brought on by carbon dioxide emissions, and, yes, manipulation of the tax laws \u2014 need I go on?), the social costs may also exceed consumer benefits.<\/p>\n Why would an economics writer for a seemingly sophisticated national publication such as Forbes deny the existence of corporate power to circumvent or create favorable laws, or dismiss the social costs that corporations bent solely on maximizing profits routinely disregard? I\u2019ll get back to this in a moment. <\/p>\n Worstall then goes on to criticize me for suggesting that governments also condition market access on receiving some of the social benefits that corporations now wield to play countries off against one another, such as good jobs or investments in research and development. In his eyes, I\u2019m committing the mortal sin of denying the economics of comparative advantage.<\/p>\n On what planet have Forbes\u2019 capitalist tools been living? Many of the world\u2019s most successful economies \u2014 among them, China and Singapore \u2014 owe their successes in part to their conditioning market access on certain kinds of jobs and investments, including research and development. That\u2019s the way they have come to use global corporations, rather than be used by them. It\u2019s the same approach Alexander Hamilton advocated more than two centuries ago in proposing how the United States develop its manufacturing industries. <\/p>\n Comparative advantage is nice in theory, but in a world where powerful global corporations are using every strategy imaginable to maximize their profits and powerful governments are strategically employing market access to develop their economies, it\u2019s just theory.<\/p>\n Economics writers like those affiliated with Forbes Magazine surely are sophisticated enough to know this as well. So why are they so eager to trot out such economic nonsense?<\/p>\n Perhaps because so much profit is at stake that those who pay their salaries \u2014 and who have also put many academic economists on retainers \u2014 prefer that they mislead the public with simplistic economic theory that appears to justify these profits rather than to tell the truth.<\/p>\n My modest suggestion that governments become the agents of their citizens in bargaining with global capital should hardly raise an eyebrow. But the capitalist tools at Forbes, and elsewhere, must be worried that average citizens may be starting to see what\u2019s really going on, and might therefore take such a suggestion seriously.<\/p>\n Robert B. Reich, chancellor\u2019s professor of public policy at UC Berkeley, was secretary of labor in the Clinton administration. Time magazine named him one of the 10 most effective Cabinet secretaries of the last century. He has written 13 books, including the best-sellers \u201cAftershock\u201d and \u201cThe Work of Nations.\u201d His latest, \u201cBeyond Outrage,\u201d<\/a> is now out in paperback. He is also a founding editor of The American Prospect magazine and chairman of Common Cause.<\/i>\n<\/p>\n <\/p>\n