CORPORATIONS ARE NOT HUMANS : NOT EVEN CLOSE---Episode 16

                GLOBALIZATION HAS CORROSIVE EFFECTS 

   Market mechanisms are essential to modern societies. However, for the market to serve the public good, business must recognize and accept the essential roles of government and civil society in maintaining the conditions on which the economic and social efficiency of markets depends, even though this may reduce corporate profits, limit the freedom of corporate action, and increase the prices of some consumer goods. The payoffs for society include good jobs that pay a living wage and protect the health and safety of the workers and the community, a clean environment, economic stability, job security, and strong and secure families and communities. 
   There will also be cases of government inefficiency, just as there are cases of corporate inefficiency. It is appropriate to reduce the costs of such inefficiency both to taxpayers and to business. It is also appropriate to ensure that increases in consumer prices do not make it more difficult for people of modest incomes to meet their basic needs. However, we should not be concerned when governmental intervention in the public interest makes it more costly to consume things that we may not really need, reduces excessive corporate profits, and gives corporations fewer freedoms than humans. 
   To play its essential role in relation to the market, a government must have jurisdiction over the economy within the borders of its territory. It must be able to set the rules for the domestic economy without having to prove to foreign governments and corporations that such rules are not barriers to international trade and investment. A government must be able to assess taxes and regulate the affairs of corporations that conduct business within its jurisdiction without being subject to corporate threats to sue for lost profits, withhold critical technologies, or transfer jobs to foreign facilities. For such jurisdiction to be maintained, economic boundaries must coincide with political boundaries. If not, government becomes impotent, and democracy becomes a hollow facade. When the economy is global and the governments are national, global corporations and financial institutions function largely beyond the reach of public accountability, governments become more vulnerable to inappropriate corporate influence, and citizenship is reduced to making consumer choices among the products that corporations find it most profitable to offer. 
   Domestic economies that favor locally owned businesses --- serving community interests in ways that foreign producers and footloose investors cannot ---- need not exclude imported goods and outside investors. Where a community finds benefits in foreign trade and investment, it should surely welcome them. But people have both the right and the need to be in control of their own economic lives through their own enterprises and the rules they set for themselves through their own democratically elected governments. If they wish to place economic speed bumps on their borders to create an advantage for local investment, they have every moral right to do so. Such a strategy worked for the Western nations during the post-World War II economic boom and resulted in the broad domestic sharing of economic benefits. 
   Sweden offers an instructive case-study of what democratic pluralism  was able to accomplish during the mid-twentieth century and of the dynamics that ultimately led to its breakdown in favor of rule by a small corporate and financial elite. 

                                 THE CASE OF SWEDEN 

   Sweden is known among the Western industrial countries for its success in achieving prosperity and equity through mixing elements of both capitalist and socialist models within a strong framework of democratic pluralism. Sweden's experience offers instructive insights into the dynamics of pluralism and the consequences of globalization. 
   Few realize that industrialization came a hundred years later to Sweden than to England. Until the years following World War II, Sweden remained an extremely poor country. In the countryside, many people lived on small farms that, given the poor soil and climate, barely provided them a living. Some died in famines or emigrated. Many others, even well into this century, lived in serf-like conditions on large estates. Illiteracy was widespread. In the late 1940s, it was still common for a family to live in an apartment consisting of one room plus a kitchen (toilet facilities were shared with other families). Even the Swedish royal house was relatively poor by the standards of its European cousins. 
   Sweden's modern success was a creation of the Swedish Social Democratic Party, which melded and sustained a national consensus that kept it in power for forty-four years, from 1932 to 1976. The Social Democrats built Sweden's elaborate social welfare system. Their wage policies brought working people into the middle class and created a substantial degree of wage equity ---including greater equity between the wages of women and men--than in any other Western country. The Social Democrats place a high priority on maintaining full employment. To encourage Swedish transnational firms such as Volvo, Electrolux, Saab, and Ericsson to concentrate their operations in Sweden, the applicable tax rate was much lower for profits generated in Sweden than for those generated abroad. 
   An alliance between the major Swedish industrial corporations and organized labor served as the party's political base and supported the centralized and peaceful negotiation of wages and working conditions by national union and employers' organizations. This alignment produced significant benefits for both big labor and big capital. 
   This arrangement had important structural flaws, however, that eventually destabilized it. One was a tax system that subsidized larger firms that were expanding and investing at the expense of small-scale and family firms. This led to increasing concentration and monopolization of ownership of the Swedish economy.  Although wage policies stressed equality within the working class, the gap between the working class and those who controlled capital grew substantially. At the time, this gap was considered the price of maintaining the industrialists' commitment to the coalition. In the end, it brought about the coalition's destruction. 
  When the first shock of rising oil prices hit in 1973-74, the resulting economic slowdown brought a fiscal crisis and triggered popular resistance to higher taxes. During this same period, Sweden was opening its economic borders and becoming a more active player in the international economy. This loosened the bonds that tied capital to local labor and weakened national labor movements. 
   In the early stages of globalization, the outward expansion of Swedish firms generated new employment at home, and the objectives of the two sides of the alliance did not significantly conflict. But once Sweden's transnationals began to define their own interests as global rather than national, the alliance between blue-collar workers and the owners of capital began to disintegrate. By this time, Sweden's highly educated white-collar workers outnumbered blue-collar workers, and the younger generation was taking the welfare state for granted, further weakening the political base of Sweden's Social Democrats. 
   The growing contradiction between government support for the global expansion of Swedish transnationals and the need to create employment and rising real wages at home could no longer be sustained. In 1976, the Social Democrats lost the election to a three-party, center-right coalition government.
   When the Social Democrats returned to power in 1982, they were a chastened party intent on promoting policies that would allow Sweden's industrialists sufficient profit margins on domestic investment to keep them "believing in Sweden," a phrase coined by P.G. Gyllenhammar, the chairman of Volvo. Maintaining a belief in Sweden meant increasing the share of the national product going to profits compared with wages so that Sweden's industrialists would find it worthwhile to invest at home. This was accepted as the price of maintaining full employment at a time when unemployment elsewhere in Europe was running at 8 to 9 percent or higher. 
   The resulting policies pushed corporate profits to previously unimaginable levels. With so much more money in their pockets than could be absorbed by productive investments, Swedish investors turned to speculation, driving up the price of real estate, art, stamps, and other speculative goods. To stop the upward spiral, the government loosened monetary controls so that the excess funds could spill over into Europe. Money flowed out at such a rate that it helped push real estate prices in London and Brussels to record highs. As the speculative bubble fed on itself, the quick profits offered by speculation drained funds away from productive investments within Sweden. When the bubble in Swedish real estate finally burst, the Swedish banking system lost $18 billion in uncollectible loans. The bill was picked up by the state and passed on to the Swedish taxpayers. { Does this economic bullshit sound familiar ?}