America becoming a corporate colony

From our overstocked archives


Sam Smith, 2013

One of the hardest things to see is when underlying assumptions and premises of one’s society start to change, a first subtly  and then in major ways. Typically there are no news conferences, no easily visible campaigns and no name for it all.  It just starts to happen.

Take America, for example. For nearly 240 years we have seen it as a democratic nation state devoted to principles like the social and economic advancement of its citizens, fairness and creativity.

But slowly, without public admission or overt acceptance, that has been changing during the past three decades. The economic gap has soared, democratic adherence has waned, and the heartland of imagination have been replaced with robotic bureaucracies, data demons and a far more rigid resistance to the new and unique..

But something else has also been quietly happening. While many have opposed the specifics, we have cast them in terms of classic domestic struggles – say between the working class and greedster capitalists. We have not seen that the very course of America as it had been defined for over two centuries was in danger because America itself was being redefined.

I have written about this over the past two decades but it came home again recently listening to a talk by Colin Woodard – journalist and author of the widely acclaimed American Nations, a look at the rival regional cultures that comprise our land. On this day, however, Woodard was talking about an earlier book, The Lobster Coast, an excellent history of coastal Maine.

He descried how Maine had thrived in the early 19^th century thanks to factors like sailing ships carrying  things like granite, ice, lumber and salt fish far away.

But with the Civil War, the economic progress collapsed for a variety of reasons, including the extraordinary death rate of Maine soldiers in the Civil War and the decline in the influence of Maine politics.  In a 2011 article he described other effects:

Those at home watched the state’s coastal trade and most of its once-thriving textile industry collapse, cut off from southern markets and sources of cotton. The fishing fleet contracted as the cost of everything from insurance to canvas exploded. Farmers, cut off from seaborne markets, were forced to abandon their farms, and many would flee to the south and west where, on the advice of soldiers’ letters, they could expect to find better soils and transportation links. Lumbermen decamped for the forests of the Great Lakes and, not long thereafter, the Pacific Northwest, where entire lumbering towns were settled almost exclusively by people from the Machias area.

The age of sail was over and “to make matters worse, after the war the commerce of the nation began moving east to west on the expanding railroads.

As I listened to Woodard’s description of this change, I found myself suddenly thinking, that’s not just Maine he’s talking about. It’s America today.  Our economy has been outsourced, only not to the west coast but to places like Bangladesh. Our political power is slipping noticeably, and technology and history seem to be constantly working against us.

There are other connections, such the present day nemesis JP Morgan, During the time of which Woodard spoke, he came to own half the railroad mileage in the country -- the same J. P. Morgan who got his start during the Civil War buying defective rifles for $3.50 each from an army arsenal and then selling them to a general in the field for $22 apiece. What we now proudly call the "American free market system," initially propelled by slavery flowered after the Civil War in an era of enormous bribes, massive legislative corruption, and great anti-competitive cartels. It was a time when the government, in a precursor to modern industrial policy, gave two railroad companies 21 million acres of free land.

As a metaphor if not a full argument, what happened to Maine in the wake of the Civil War is similarly in some ways to what is happening to the United States. New trends in capital, technology, and politics are making our nation state a shadow of what it once was. We are becoming not just a target of domestic corporatism but a colony of multinational corporatism.

If this seems exaggerated, remember that America was started in part because of an earlier manifestation of corporate colonialism as characterized by the British East India Company.

This corporation, for example, essentially ruled India for a century beginning in the mid 18^th century.  And thanks to the EIC, as with modern America, one of its biggest trading products was drugs. In the early 19^th century illegal opium funded the British taste for tea from China.

Earlier, with a European depression, Britain had passed the Tea Act which exempted EIC from important duties paid by American merchants. The latter didn’t like this, which was most dramatically demonstrated by the Boston Tea Party.

It’s fair therefore to say that part of the American rebellion was a revolt against international corporate colonialism, an echo of what we find ourselves face with today.

That story, however, was long forgotten by the time of the counter revolution of the Reagan era. Slowly, slyly but intractably, a mythology developed in which the false virtues of corporatism – national and international – replaced those of the Constitution, democracy and other valued American principles. This shift was aided in no small part by the rise of television as a major weapon of propaganda, led by news organizations too naïve or too corrupt to notice what they were doing.

The other factor, kicked off by Bill Clinton, was the massive retreat of the Democratic Party from its former principles such as putting the interests of the worker ahead of the corporation.

John Russo in Working Class Studies describes one of the things that happened as a result:

[Twenty] years ago, using a blizzard of research and marketing, NAFTA proponents claimed that the new trade deal with Canada and Mexico would be a boon for U.S. exports and create high-paying American jobs. Opponents argued that NAFTA would cost jobs (that “giant sucking sound”), erode labor and environmental standards, and undermine national sovereignty. The debate was fairly even until President Clinton became a champion of NAFTA to the dismay of labor and working-class supporters, who saw his support as evidence that the Democratic Party had embraced neoliberalism.

Now, it is safe to say that the opponents were correct on all accounts. NAFTA’s expansion of investor privileges promoted offshoring. Instead of bringing the new jobs promised by corporate and government apologists, NAFTA has resulted in massive job losses — over one million jobs– especially in manufacturing, and export growth has slowed.  NAFTA has also led to lower wages for the jobs that remain in the U.S., so that even with cheaper prices for good and services, workers struggle to get by. Manufacturing communities have been especially hard hit, since the loss of industry and jobs eroded the tax base for schools, hospitals, and infrastructure. NAFTA contributed to increased inequality, and low-paid workers have suffered further from policies that benefit multinational corporations by undermining consumer health and safety, 

environmental laws, financial regulations, and public interest requirements.

In 1997, I described it this way:

The 2000-page NAFTA agreement could only have been envisioned by a lawyer. After all, as Ross Perot pointed out, if you just wanted free trade with Mexico all you had to do was plug some zeroes into existing tariff agreements. The path from such admittedly oversimplified solutions to the engorged  legislation of the Clintons lead past too many hidden agendas to too many unidentified bank accounts and too many unspecified bottom lines. Many American heads could not sort it out, but many American hearts knew it was wrong. 

After all, even NAFTA's supporters admitted it was far more than a trade agreement; it was part of the new world order. Late, perhaps too late, many had come to sense that this new order was not for them; that it was part of some strange and massive alteration in how things are run and who runs them; a hidden revolution against the sovereignty and ground-rules of their country.

 It was, in the end, another step in the replacement of politics, laws and culture by a darwinian international marketplace mediated, if at all, by secret trade tribunals rather than public debate, one more step in the substitution of corporate law for constitutional democracy.

Or, as Henry Kissinger said in a rare honest moment," I don't look at NAFTA as a trade agreement. I look at NAFTA as a new political orientation for the United States."

A few years later, it looked like nationhood might be regaining some ground. As Lori Wallach of Yes Magazine wrote recently:

Thirteen years ago, at the World Trade Organization’s Seattle Ministerial, a similar threat (to TPP) in the form of a massive expansion of the powers and scope of the WTO was stopped. 

At the Battle in Seattle, the immovable object called grassroots democracy was victorious over the allegedly unstoppable force of corporate-led globalization. The “Doha Round,” which followed two years later and continued the attempt to expand the WTO’s reign, was also derailed thanks to tenacious campaigning by organizations and activists worldwide.

But citizens of the United States and other countries were still up against NAFTA, an albeit weaker WTO, the IMF, World Bank, Bilderberg Group and similar undemocratic institutions with increasing control over the course of world in the service of  multinational corporations. And supporting this disloyal dismembering of American sovereignty were presidents, business leaders able to purchase politicians thanks to Citizens United, and media moguls whose employees repeatedly told Americans that there was nothing to worry about.

And now we have TPP, which Wallach describes this way:

Think of the TPP as a NAFTA on steroids, which could encompass half of the world.

Foreign firms could extract unlimited amounts of taxpayer money as compensation when investors claim that U.S. government actions undermine their expected future profits.

The TPP is the latest strategy by the same gang who got us into the North NAFTA and pushed for the expansion of the WTO: American job-offshorers like GE and Caterpillar; banksters like Citi; pharmaceutical price-gouging giants like Pfizer; oil, gas, and mining multinationals like Chevron and Exxon; and agribusiness monopolists like Cargill and Monsanto. 

They’ve misbranded the TPP as a model 21st-Century “trade” deal to try to sell it with the usual false promises of it expanding exports. But only two of the TPP’s 29 chapters are about “trade.”

Most of the TPP’s proposed provisions instead comprise a corporate power grab. The TPP would include extreme protections for foreign investors, which would help corporations offshore American jobs to low-wage countries.

The investor rules would elevate individual foreign firms and investors to the same status as the sovereign nations that would be party to the TPP. Corporations and investors would be empowered to privately enforce the agreement by suing a signatory government before the World Bank and other foreign tribunals. In this “investor-state dispute resolution,” three private-sector lawyers, who rotate between suing governments and acting as “judges,” could order governments to pay large amounts of our tax dollars to investors who do not want to follow the same laws as domestic firms. 

There is almost no progressive movement or campaign whose goals are not threatened…

The TPP would also ban existing and future “Buy Local” and “Buy American” procurement policies. These are rules that direct federal and state governments to reinvest our tax dollars to create American jobs by buying domestically made cars, steel, food, and more, and by giving contracts to local construction firms or call centers firms. 

The TPP also would expose to attack green and sweat-free procurement rules that specify that only recycled paper, non-old-growth wood products, renewable-source energy, or products made under fair labor standards can be purchased with government funds. Under these terms, democracies would no longer be able to decide that we want to invest our tax dollars to create jobs at home or to create markets for green energy or morally produced goods. Instead, the TPP would require our governments to send our money offshore and spend it with firms trashing human rights and the environment.

The TPP would limit financial regulation by forbidding bans on risky derivatives and other dangerous financial products, as well as the use of capital controls to counter wild surges of speculative investments in and out of countries, which destabilize the global economy. The massive financial firms that caused the financial crisis could use these terms to roll back the new financial regulations implemented in the U.S. and around the world.

When you put NAFTA, WTO, and TPP together you have three of the most serious assaults on America sovereignty since the Civil War, sadly supported, among other things, by two Democratic presidents.

Millions of Americans and others around the globe will suffer as a result, but unlike the World Trade Center, we won’t be able to count precisely the consequences. And the media will continue to phrase it as a mere ideological debate.

You can find America’s new status as a multinational corporate colony elsewhere as well. Consider this item from Forbes:

Detroit, broke with almost no prospects for recovery, is the fourth most popular U.S. destination for Chinese real estate investors… Chinese shoppers can’t resist a bargain.  Where else can you buy a two-story home in the U.S. for $39?  China Central Television, the state broadcaster, in March reported that two houses in Detroit cost the same as a pair of leather shoes. 

Dongdu International Group of Shanghai bought, sight unseen, two downtown icons, the David Stott building for $4.2 million and the Detroit Free Press building for $9.4 million, both at auction this September. 

Moreover, Chinese purchasers are making bulk purchases of “inexpensive properties”—those selling for $25,000 or less—in the rings surrounding the city center.  “They’re banking on the downtown resurgence spiraling out into those rings,” explains Kelly Sweeney of Coldwell Banker Weir Manuel.  Mainland parties often buy at tax and foreclosure sales, hold their property, and patiently wait for appreciation.

The Chinese certainly have made an impact on the locals in Detroit.  “I have people calling and saying, ‘I’m serious—I wanna buy 100, 200 properties,’ ” said Caroline Chen, a real estate broker in nearby Troy, Michigan, to Quartz.com.  “They say ‘We don’t need to see them.  Just pick the good ones.’ ”  Chen reports that one of her colleagues sold 30 properties to a Chinese investor….

Or this from Popular Resistance:

Last week, when self-employed author and speaker Brent King was driving home from the airport, he tried to use the debit card connected to his HSBC business account.

To his surprise, it was declined. Thinking there was some incident of fraud, he contacted HSBC, who told him that there was no problem with his card. It was simply that his small business account had been closed.

When he tried to get an answer about why his account had been closed, he said he got a scripted response that after a “strategic review, HSBC had determined that there were many small business accounts closed due to not being international or multi-national in scope, with too small a balance or not enough transactions.”

HSBC is no longer interested in certain small-business accounts, choosing instead to focus on larger, international businesses.

Brent was one of more than 45,000 small-business owners who lost their HSBC accounts last week. And HSBC isn’t the first big bank to spurn “low-earning” clients. Last year, JPMorgan Chase all but said it preferred to serve clients with accounts of $100,000 or more and had shifted its focus away from small clients, asHuffPost Business reported. It no longer found middle-market customers profitable, and was phasing out less-profitable branches.

And some items the Progressive Review a few weeks back:

Not only do defense contractors no longer need big wars to get their cut, there has been another major change: countries  - the places we used to invade – just aren’t what they used to be. 

In fact, a lot of them are smaller than American corporations. For example, Global Trends reported:

“Wal-Mart Stores had revenues exceeding the respective GDPs of 174 countries  including Sweden, Saudi Arabia and Venezuela and employed over 2 million people, more than the entire population of Qatar. If it was a country, it would be the 22nd largest in the world.

“Shell has bigger revenues than the combined GDPs of Pakistan and Bangladesh, the sixth and seventh most populous nations in the world, together home to 350 million people. Sinopec, China’s leading energy and chemical company, is bigger than Singapore. The insurer AXA is bigger than Nigeria. Even with the troubles of the automotive industry, Ford is bigger than New Zealand.

“Together, the 44 companies in our top 100 list generated revenues of US$ 6.4 trillion in 2009, equivalent to over 11% of global GDP. These combined revenues are larger than the combined economies of 155 countries.”

But it’s not just size; it’s also location. Last year, Rick Newman in US News described some examples of the portion of revenue from overseas:

• Walmart: 26%
• Exxon-Mobil: 45%
• General Electric: 54%
• Ford: 51%
• IBM: 64%
• Boeing: 41%
• Dow Chemical: 67%
• Intel: 85%
• Amazon; 45%
• McDonalds: 66%
• Nike: 51%

It is astounding that two of the above are also on the list of the top 25 American defense contractors: Boeing (#2) and General Electric (#12).

And that the Washington Post is now owned by a guy who does nearly half his business overseas.
And that McDonald’s has 1500 outlets in China, 374 in Russia and 700 in the Mid East.

It is hard to think of an issue that deserves more attention and is getting less. America, a country that started in part by revolting against a multinational corporation with the Boston Tea Party, is now becoming a colony of scores of multinationals corporations and stunningly few seem even to care.