Multinational take-overs versus tax reform – Free Trade

The unethical activities of some Multinational Corporations are a problem for some Georgist thinkers, many of whom naturally tend to be doctrinaire about free trade.
Modern revisionist historians have noted that the great trading companies of history, like the Hanseatic League and the various East India Companies, relied more heavily on cannon and government backing than on the "inescapable laws of supply and demand."

6-7 Progress September/October 1999
PROBLEM FOR SOME GEORGIST THINKERS
"Multinational trade"
by John Massam, WA

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   Lawlessness and lack of morals were just as much part of the stock in trade of the historical traders enriching themselves through slaves and opium, as of their modern counterparts gun-running to dictators, profiting from sweatshops, filling rivers with mining slag, and selling banned medical drugs to Third World countries.
   2. Regarding the apparent takeover of Australian public infrastructure and firms by overseas multinational corporations, an old-time Georgist wrote to me: "What does it matter who or where the people who hold the land live? ... What is important is whether we voters elect governments which charge people (taxation) according to the amount of land they hold ..."
   In commenting on that, let me say that the people who own land can:
• Increase rent
• Demand that the land be used the way they wish
• Insist on employees and sub-tenants being of a certain group
• Evict.
   3. Many landowners are so wealthy they do NOT have to obey the alleged laws of economics, nor even worry about their own self-interest. In addition, there are many current and historical examples of very wealthy people and corporations who misuse their wealth to intimidate people or even use violence towards them. Electing governments is actually a privilege of a small percentage of the world's population; democracy is not guaranteed, and is struggling to grow in a minority of countries.
   4. British Isles, reduced income, controlled politics: In history, the landlords in England, Ireland, Scotland, and Wales were determined to get their own way, and actually drove out many tenants, sometimes to pasture sheep for more profit. At other times landowners deliberately lost revenue by, for instance, making large empty areas for deer and grouse shooting.
   Landlords retained the House of Lords power to veto laws (only now about to be abolished), and long ago used murder and threats to "clear" the Highlands and replace the Northern Ireland natives. Landowners rigged House of Commons elections by bribery, threats, and the ever-present threat of eviction. If a village voted the wrong way in the landlord's eyes, most of the tenants would not be granted a lease renewal, even if it meant leaving the properties empty. Usually there were plenty of other people anxious to take up the leases!
   5. Foreign owner changed religious atmosphere: According to information I have about a certain district of Lancashire in England, landlords gradually replaced the tenant farmers of one religion by people of the rival religion. Last century the estate came into the possession of an overseas nobleman, who started the reverse process, so the district gradually gained a majority of the rival religion. The overseas noble family donated land so that the rival religion could build churches! The foreign-born owners had reversed the discrimination! And all the time they kept receiving a good income.
   6. It seems to me that in Northern Ireland the murders and discrimination between the two main religious/political groups do not just come from bigotry, but arise largely from unjust land grabs centuries ago leading to today's unjust land distribution, as well as the consequent unfair power distribution and the unjust taxation system. Once the "multinational investors" of hundreds of years ago obtained Irish land holdings, some of them wanted what they called "loyal" people to be the tenants -- so the majority of the native Irish in six counties of Ulster were dispossessed, and Scots were brought in to take their places.
   7. You won't convince a modern Roman Catholic in Northern Ireland that it doesn't matter WHO owns the land or where they live! Or that Catholic and Protestant voters will amicably select and elect politicians who will ensure that the landlords pay their fair share. Ireland's troubles date back centuries, and history is hard to unravel -- -- why should we willingly embrace the risk of history repeating itself?
   8. In Australia in the 1990s we can see overseas investors bringing in their own people to run enterprises, and to work in them. Overseas investment is almost certain to lead to dispossession. In fact, the tide of dispossession is now running so strongly that Canberra has, ahead of time, appointed four North Americans to the top positions in Telstra BEFORE the planned sellout, suggesting that A T & T is the preferred buyer, not the Marconi Corporation. (Don't believe the Mums and Dads shareholder story -- they or their children sell their shares.)
   9. Latin countries: In Latin America and the Philippines, the landowning elite hire murder gangs to ensure that the ordinary people do not organise themselves to get a bigger share of what they produce, and use violence to prevent the establishment of a juster system.
   10. Multinational bananas, trade threat: The United Fruit Company of the USA, which controls the banana exports of Central America, has actually got the US Government in recent months to threaten the European Union with trade sanctions. The reason is that some of the European countries buy bananas from their former colonies at prices higher than United Fruit's. Although the percentage is only, I think, 10%, United Fruit demands the right to 100% competition, and has convinced the US authorities to threaten Europe.
   But anyone who follows the news of the poor countries knows that United Fruit Company is a ruthless price-cutter, and that the landholders who supply the bananas pay starvation wages.
   11. Another fact: In a recent year the leaders of one of the small Latin American countries tried to market bananas a different way to get a fairer price. United Fruit organised it so that most of that country's bananas could not be sold anywhere. Heavy losses were made by the rich and middle class in that small country. Of course, United Fruit, just by raising the selling price of other countries' bananas by a few cents a pound, could receive nearly the same annual profit as usual.
   The small brave country did not try to break the monopoly the following year. The ruling clique there was undermined by United Fruit. In addition, those of the elite who had the courage to fight, realised that to continue the fight would have required that for a few years the rich would have had to live austerely, smuggle their bananas out under armed guard, and take the risk of unorthodox fiscal action, or even face an armed revolution financed by agents of U.S. Big Business.
   12. Indian sub-continent: In India the higher castes (many landlords among them) are murdering some people of the lower castes, and killing a few of the outsiders who go in and offer the people a way out -- education, a few modern conveniences, and a religion that rejects the caste system. In Pakistan and Bangladesh the religious background is different, so the labels change. Whether the "change agents" are Gandhian visionaries, or missionaries of Christianity or Buddhism, or political reformers, the landlords and their pawns in these sorts of countries declare the reformers and their followers to be Communists, or to be of a different race, traitors, heretics, apostates, or extremists -- the intimidation, torture, dispossessions, and murders go on. And so does the economic exploitation.
   13. Rich won't all stick to the rules: There are extremists among the multinational corporations. The truth is that, like big business everywhere, the multinational corporations, both the Australian ones like BHP and the foreign ones, do not want to pay site revenue at the rate necessary to keep the public administration going. Abolishing disincentive taxation really means reducing the load on the general public. The richer people will rightly believe that they will have to pay more, so they will resist ground rent more fiercely than they evade and avoid income tax now.
   14. Idealists and reformers often do not like to publicly admit that the rich will have to pay more under a genuine taxation reform, and that some of the rich will use foul means. Georgism is NOT just a "simple adjustment," as some of our handouts say. It is a radical move to shift the burden on to the backs of exploiters, and off the backs of the toilers.
   15. Foreign governments' interference is a worry: Many reformers strongly oppose selling assets to overseas interests, because of the concentration of power, and the inability of governments and the public to ensure they are good corporate citizens, plus the ability of some huge corporations to get foreign governments to interfere (like United Fruit). What were the 19th century Chinese Opium Wars really? The "multinational corporations" of those days insisted on their "right" to break the Chinese laws, and they induced Great Britain, the Superpower of the day, to back their "rights" with force. Then land (Hong Kong) was ceded, and the Chinese Customs was run by foreigners, to ensure that trade continued, including the drug trade. The demand that all countries and oceans be open to trade was consistently made by these "multinational corporations" of past centuries, and included the right to take, buy, sell, and kill African slaves.
   16. Armaments trade, Iraq, landmines.: My eyes were opened by the Reader's Digest summaries of articles about the modern armaments trade, which can be compared to the former opium and slave trades. For example, corporations from the West and the armaments factories of the then Soviet bloc were falling over themselves to export arms to Iraq, although Saddam Hussein's human rights record was abominable. In the Gulf at the start of the Desert Storm war the allied fleet found at least one ship loaded with weapons for Iraq, sailing along "to earn a living" although the ultimatum time had passed!
   17. Landmines have been an important export item of several countries, including Australia. The Fiat Motor Company of Italy used to export millions of landmines until the recent global ban was adopted. So let us ask ourselves, "Is all international trade for the benefit of the human race and the planet?" Do you think our politicians are carefully vetting overseas investors, and ensuring that none of the corporations are like Nike and Levi's (sweatshops), arms dealers, landmine manufacturers, drug lords, or environmental thugs? If not, do you think that such multinational corporations will add to Australia's democracy, assist in spreading wealth, and offer to assist us to usher in Georgism?
   18. Information sources: To inform ourselves about the immoral methods used by some monopolists, landlords, financiers, and the multinational corporations (most really just about the same people), I recommend reading the periodicals Land and Liberty (a Georgist publication) and The New Internationalist (both from UK), and the writings of people such as Susan George (How the Other Half Dies, and A Fate Worse than Debt), Frances Moore Lappé and Joseph Collins (World Hunger - 10 Myths), and Naom Chomsky ¹ (Profit Over People: Neoliberalism and the Global Order).
   The latter and other authors also show that many huge corporations and landholders are experts at extracting money, privileges, monopolies, and tax holidays from governments, while preaching the necessity of "the market" and "competition" to the rest of the people.
   19. The book Roche versus Adams opened my eyes to the international thuggery of a huge multinational corporation. Even the Parliament of the European Community could not get redress for the persecuted man, because the Commission refused to act. (Now that all the Commissioners have resigned, I wonder if any of the EC politicians will remember their past attempts to make the big pharmaceutical company pay compensation?). Another book, Vendetta (Bryan Burrough: 1992, London, Harper Collins), alerted me to the amount of money that American Express was willing to spend in 1988-89 to get villains to blacken the character of Edmond Safra, a rival in the finance industry.

(The following details about Mr Safra's murder were put on this Webpage 6 Dec 1999.)
Edmond Safra was murdered by robbers in his Monaco flat (The West Australian, Dec 6 1999 p 16)
The Telegraph, London, at http://www.telegraph.co.uk/ had the following newsitems about Mr Safra:
06 December 1999: Police doubt 'garbled' claims over Safra death
06 December 1999: Obituary: Edmond Safra
05 December 1999: Billionaire banker's killing was 'inside job', say police
04 December 1999: When the luck ran out for a billionaire
04 December 1999: Billionaire banker killed in raid on penthouse
04 December 1999: Safra's death will not halt Republic deal
30 November 1999: Republic sued over 'Princeton'
13 November 1999: The week that was
09 November 1999: HSBC presses on with Republic buy
29 September 1999: Canary Wharf backers halt offering
29 September 1999: HSBC delays Republic New York deal
28 September 1999: Safra tells of Canary Wharf share sale
03 September 1999: HSBC runs into Tokyo snag
03 August 1999: HSBC division is 'not for sale'
12 May 1999: City Comment
11 May 1999: HSBC pays $10.3bn for US bank

20. Violence, bribery, last century: The Robber Barons* is a classic about American big business last century, reporting the violence some used to take over businesses, and how they bribed legislators. -- John Massam, written April 1999, published in Progress Sep-Oct 1999, pp 6-7.
________________________________________
* The Robber Barons has recently recently been reprinted, I found when I featured it on the WA Georgist website. (I no longer service that website.) A summary is at: http://www1.dragonet.es/users/markbcki/joseph.htm
1 Chomsky, Naom: http://www.zmag.org/chomsky/index.cfm Profit Over People: Neoliberalism and the Global Order, Naom Chomsky, 1998, Seven Stories Press, 288 pages, $US 15.95 paper, $32 cloth. In these new essays, Chomsky shows the dramatic shift from a pluralist participatory ideal of politics towards an authoritarian profit-obsessed model, which he classifies as neoliberalism. The principles that are proclaimed publicly are quite different to what is actually prevailing. Chomsky traces the origins of the authoritarian money-making model of society, and expresses profound hope in social activism to re-define people as citizens, not just as consumers and "labour units." He wants the vision to be of a global democracy movement, not just a global market.
¹⁷ It seems that the decisions about landmines that I had thought in 1999 were associated with the tragic death of the anti-landmine campaigner Diana, Princess of Wales, did not, in fact, lead to a definite worldwide ban. Negotiations about landmines are still taking place in 2001. (inserted 27 April 2001)
¹⁹ Roche versus Adams, ©1984 Stanley Adams, 1985, Glasgow, Fontana Paperbacks. (inserted 27 Apr 2001)

Progress (first published May 1904), Tax Reform Australia, later renamed as Prosper Australia (Victoria), 1st floor, 27 Hardware La., Melbourne, Vic, 3000, Australia. Annual subscription $15. Tel. 03 9670 2754, Fax 03 9670 3063; E-mail: progress /AT/ prosper /DOT/ org /DOT/ au, Websites: http://www.prosper.org.au , http://www.earthsharing.org.au , http://www.lvrg.org.au . Formerly: http://www.taxreform.com.au . (Contact details etc. updated March 11, 2010.)
Useful links about "Free" Trade: International Labor Organisation - Report on Child labour Human Rights for Workers - the crusade against global sweatshops Sweatshop Watch Announcing Sweatshops.org Suffer the little children - a special series published by the Ottawa Sun -- ©SBS, Australia's National Multicultural Television Broadcaster

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