We won 54% to 46%, much to the chagrin of The Economist! Thanks to many of you who voted.
The Economist magazine held an online debate and poll on this topic: Do multinational corporations have a duty to maintain a strong presence in their home countries?
Harry Moser, Reshoring Initiative, was invited to write in support of that proposition.
Jagdish Bhagwati, Professor of Economics and Law, Columbia University, was invited to write in opposition to the proposition.
The moderator from The Economist, Tamzin Booth, was very surprised at the resulting 54-46 win.
This has been a closely fought debate, and for most of the time it looked as if Jagdish Bhagwati would prevail, with voting in his favour at around 54%. He robustly defended globalisation as practised by multinational corporations, and conclusively answered each point made by his opponent, Harry Moser of the Reshoring Initiative. Nonetheless, in the end the voting suddenly swung narrowly in Mr Moser’s favour. This is a surprising result, given that a large slice of Economist readers can be assumed to be strong believers in the benefits of a global economy, and the idea that companies owe a duty to somewhere called “home” counters that.
An odd comment, because the issue wasn’t whether there were benefits from a global economy. Ms. Booth exhibits sloppy thinking because those who think multinationals have some duty to the home countries are not stating that there should be no global trade or operations.
She also then tries to explain the results away, blaming “angst”.
But Mr Moser’s side prevailed in the end. This doubtless reflects not only his arguments in favour of reshoring to America but a broad angst about the country’s economic future.
Contrary to Ms. Booth’s assertion, the Bhagwati gang is the side which is emotionally involved with their version of duty-less global utopianism, regardless of the facts.
Michael, thanks for mentioning the debate during and after the voting! I, of course, agree with your analysis of the Moderator’s comments. The Economist was surprised that common sense could prevail.
I based a lot of my argument on the logic of producing near the customer: reshoring. For more see http://www.reshorenow.org. Use of our free tools can help bring some work back while we all work to solve the underlying problems so well presented by CPA.
Although I subscribe to the Economist for its detailed and wide coverage of world politics and economy, I know how to read through its editorial commitments to libertarian myths and extreme market ideology. Because the magazine is aimed at corporate executives and government officials, these ideological commitments are tempered with the pragmatic realism required to avoid advocating policies based on pure ideological positions, since these would provoke even more massive shocks and instabilities that would create social unrest and revolutionary popular reactions. But if one reads carefully, there is always a drive for international free flow of capital, goods and labor, and never a championing of any sort of community spirit, especially its most powerful form, nationalism.
The capitalist class, ie, the 1% who primarily make their income through investments and ownership rather than work, are the primary beneficiaries of organizing human enterprise around this extreme market ideology. They do not rely on social spending such as social security or public education for the fate of themselves or their children, and see its usefulness only to the extent that it prevents a society from descending into the mass poverty and rebelliousness that can make for a bad investment climate. Quality of the workforce is their only concern with public education, and in the international division of labor there is much work and many countries that, from the point of view of internationalist investors, do not require much social spending of any form.
This neo-liberal extreme market ideology came to replace the Keynesian and social democratic mixed economy ideas as the developed countries that had been destroyed in WW2 were rebuilt and thus, as industries matured and markets glutted with overproduction, brought a decline in the profitability in industrial investments. That is why the financial sector and Third World debt came to replace first world industrialization in the late 1970s and the 1980s. Especially with the fall of nominal communist regimes around 1990, the floodgates opened for the entry of billions of new laborers at much less standard of living to compete with the expensive labor of the developed countries. Thus globalization has meant huge new markets and huge profits for multinational corporations, even as the wages and savings and future of the working classes in the rich countries (so many of whom in the USA identify as “middle class”) have been in decline and headed further downward. As I noted by quoting Thomas Friedman in another discussion here at CPA
http://www.tradereform.org/2013/01/does-trade-deficit-drive-inequality/comment-page-1/#comment-186013
“The good news is that the end of Communism and the flattening of the world helped to lift 200 million people out of abject poverty in the 1980s and 1990s in China and India alone, according to the International Monetary Fund—and moved tens of millions more higher up the economic ladder into the middle class.”
And in that same comment I said in my own words that “The converse is that same globalization has opened up so much of the American working classes to international competition, resulting in stagnation and decline of wages, mass unemployment, spreading poverty (by American standards), and weakening of our country’s industrial ecosystem and future ability to create wealth through offshoring of jobs and factories, atrophy of skills and knowledge, trade deficits and resulting transfer of assets, etc.”
In other words, magazines like the Economist show the POV of international investors who have never been richer, and who have no sympathy for the resulting disruptions and immiseration of the lives of the tens of millions of their countrymen. They deploy their capital ruthlessly in a bean-counting way focused only on their own returns, while politically they have to move more slowly in destroying the last vestiges of economic security and stability that the working classes of the rich countries had won in the decades after WW2.
Will Wilkins speaks truth to power. I too have been faithful reader of The Economist for years and I will continue to be. I want to know what the opposition is up to. Also, they have information I get nowhere else. As Will says, they have their biases and limitations. Actually, though, the biases and limitations are worse, in my opinion, in peer reviewed Journals published by the American Economics Association. AEA journals are worse because they love articles that spin out the consequences of assumptions rather than seek out data.
I am totally in agreement with Raymond and Will. These global investors are not patriotic with their investments. They will do anything to win including undermining our economy.
Our government is so beholden to power that it can not govern effectively for the majority of the people. Instead they pander to power and eat up all the excuses like free market ideology to continue to serve their interests. A few 3 or 4 month long longshoreman’s strikes or similar supply shocks would change their economic incentives real quick.
Tom T.
The language we use helps resolve the contradiction. When you name one of your most influential journals “The Economist,” you implicitly brush aside the rest of human behavior. Case in point: “Free Trade” orthodoxy only works in the narrowest economic view of the full reality. Even then, economists need to ignore market failures, which demonstrably can reach into the trillions of dollars.
When you add back social values, environmental interdependence, human rights, labor rights, economic and political stability, and public health, you can see the full experience of real people.
When Harry Moser talks about “common sense” he is really calling out the full picture, not just the narrow economists’ layer of the full picture.
The poll results indicate that there is a good demand for the end of outsourcing. Now is a good time to attack the belief that our problem can be fixed by financial manipulation such as taxes and government spending. The recent focus on the “fiscal cliff” is worrisome in that it directs attention away from the real problem. Taxing and spending will not replace the outsourced production of 50,000 factories and 5 million now-unemployed production workers. Let’s get the focus back where it belongs. Money only distributes wealth; factories create wealth.
Mr. Heft,
Your post’s reference to financial manipulation such as taxes and government spending echoes the CPA post of 10/25/12, Bye-bye, Globalization, link follows:
http://www.tradereform.org/2012/10/bye-bye-globalization/
Thank you.
When you publication begins with a preconceived notion - as does the Wall Street Journal and The Economist - truth be damned!!