From: "Salil Tripathi" <salil61-AT-hotmail.com> Subject: Corporations and societies Date: Sat, 20 Oct 2001 07:30:48 +0000 Dear Margaret and Liam (small ref to your post of yesterday), I'm afraid your reading of multinationals is fundamentally flawed. I say this not as someone who works at an MNC, nor as someone who is a fan of MNC, but as someone who sees them as just another bumbling international organ which sometimes gets it right, sometimes wrong, and does not go about with an intent to terrorize or impoverish people; and an organ that's more accountable in many ways than churches and I daresay, some NGOs. Let me explain in the S Asian context. As Kathy has pointed out earlier, South Asia is far too heterogenous for any generalization. Collectively, international investment into South Asia is a minuscule proportion of the investment that goes elsewhere. In fact, some 90% of investment worldwide is *between* developed countries -- Germans investing in the US, US in France, France in Australia, etc. Of the rest of the foreign investment going to so-called emerging economies, an overwhelmingly large amount, over 60% goes to a single country, China, and 80% of the investment in China is from Hong Kong Chinese businesses, or Taiwanese investment routed into CHina from Hong Kong. Southeast Asia's poor countries? the biggest investors in Cambodia and Vietnam are Malaysia and Singapore respectively; big investors in Indonesia include Thailand and Singapore. It is a far, far, more diverse world than the one you cavalierly paint. Africa? Collective investment into Africa is less than one percent of total investment flows in the world. Now it can be shown that the "emerging economies" are poor and badly off. If that is the case, the cause is *not* investment by MNCs, because MNCs aren't there!! On your other issue, that in India, the Monsantos and Carbides are responsible for the problems -- you've cited one study of Frontline; let me cite more detailed research of the Indira Gandhi Institute of Development Research, which shows that on balance, India in 2000 is better off than in 1990, by all socio-economic indicators. Why 1990? It was in that year that India really opened its economy. Your anger (and mine) is at Carbide, for Bhopal. The incident happened in 1984, when the Foreign Exchange Regulation Act of 1973 was in full force; when other laws controlling and curbing big business, including MRTPA were in full force. The Controller of Capital Issues determined the size of share issues and premiums, and no multinational worth its name ever reinvested capital in India because Indian laws did not allow that. All MNCs gave away their profits as dividends to their shareholders, because they could not repatriate profits abroad either. And of the shareholders, at least 40 percent and often more (sometimes over 60%)were Indian nationals and institutions. So when you look at Indian investment environment, pre-1991 India simply hasn't mattered for any international investor. And Liam, I agree imperialism is bad, but even today, international investors do not like to invest in India for the red-tape, corruption and instability. Companies have pulled out rather than stayed in. Forget the old story of Coke and IBM pulling out; almost all power sector investors have pulled out or sold, including the controversial Dabhol project. Your question was interesting; is India deliberately under-regulating or badly-regulating because of pressures from big companies? The answer is no; it is doing so because it has a bad administrative set up -- try to get a police complaint recorded, or get a ration card from a village tehesildar's office. It has nothing to do with making India more desirable to foreign investors. Indian administration doesn't want to make India attractive to Indians as well. It is an equal opportunity society, remember, caste discrimination is banned and all Indians are equal (grin -- just kidding!!)?? Returning to Monsanto, then: it is only one of the several new investors, and it simply hasn't shown enough results to argue, one way or another, whether its record has been good or bad. Same with Cargil seeds -- had they been allowed to operate in Bangalore, the beneficiaries would have been the poorer farmers who'd get a fairer price, and not the rich middlemen like the Karnataka Ryot Sanghatana, which went and ransacked its office. Do remember that bigger Indian companies and MNCs offer the same price to all suppliers for clarity and simplicity, and they computerize records, which makes underhand dealings, for which the middlemen are famous, difficult. And some MNCs in India are *more* socially responsible than local Indian companies. Here's one deliberately provocative example: McDonald's. You are probably aware that many Indians are vegetarians, and many of them are vegetarians for religious reasons. Yet, when you go to an Indian restaurant and if you are a devout Jain or Buddhist or Hindu, there is no guarantee that the utensils used are not contaminated by meat products. Nor are you sure that the cook has not cooked fish vindaloo and then made idli sambar right after that. At McDonald's (whose food I don't eat, by the way) the kitchens are separate, the utensils are color-coded and made separate to prevent contamination (red handles for meat products, green for vegetarian products) and vegetarian items are clearly marked. Its menu is more diverse than elsewhere in the world. McDonald's is doing all this because it is sensitive to the market, and creates an ambience and products that the people want, because it knows, and we all ought to know, that people eat at McDonald's because they want to -- nobody in the world is being forced to eat there by this Big Bad MNC. Indian companies and restaurants, in contrast, do not see the need because of a careless disregard -- the same cook can do both jobs. You could argue that the vegetarians are being unnecessarily fastidious -- that's not the point. They have the right to have uncontaminated veg food, and the only chain that respects the right is McDonald's -- and indeed, being India, there's no beef burger there, although some Indian restaurants (in five star hotels and the wonderful Irani and other so-called Muslim restaurants) do offer beef dishes. I can go on and on with many examples -- it is not only one Microsoft that has been good for India -- look at Citibank and how it has created a confident, mobile Indian managerial class; or fast food chains which have created jobs where teenagers from upper class and caste don't mind doing jobs like cleaning the loos and floors of restaurants; software companies which readily hire women, altering the balance of employment in India. Turning to statistics again: in 1970, the percentage of Indian population below poverty line was over 60; today it is 26. Literacy? the pct of literacy was 38%, today it is around 52% -- though some say 65%. Life expectancy? in 1970, it was about 58 years, today it is about 68, and in Kerala nearly mid-70s. Source? Central Statistical Yearbook of Tata Economic Consultancy Services. Beyond India, as I mentioned sometime ago, I know many people who love to hate Nike and Gap and make illiterate comments like "corporations are taking over the world" (eg Noreena Hertz, the British academic, or Naomi Klein, the Canadian activist). But facts show that those corporations have moved on; Nike pays its workers more than other workers in similar industries; people want to work at Gap, because the alternative is worse; and that alternative is not something for which Gap or Nike can be held accountable. True, when MNCs invest abroad there could be some job loss in the west. No wonder western trade unions are so keen to put little trinkets on the Christmas tree, asking for all sorts of protectionist measures. When Motorola closed a plant in Scotland last year, leading to 900 job losses, it opened another factory in Thailand, which created a few thousand jobs there. Why is the job security in Scotland more important than in Thailand? The laws that regulate multinationals are old. The Sherman Anti-Trust Act, which is the principal US law against the creation of monopolies goes back to 1890 -- it still works. Christie's and Sotheby's are being punished for price-fixing as we speak; Microsoft is being held accountable for its perceived monopoly power today; AT&T was split in 1984 for similar reasons. American government policy is certainly active in curbing monopoly power, to a far greater degree than other jurisdictions -- EU is only now getting around to it, selectively picking US targets. Perhaps none of these facts and arguments would sway you, because of (a) that one Frontline article, (b) your deep-rooted conviction that MNCs are neither good, nor accountable to anybody. I can't argue with faith; I can argue with reason. Salil _________________________________________________________________ Get your FREE download of MSN Explorer at http://explorer.msn.com/intl.asp --- from list postcolonial-AT-lists.village.virginia.edu ---
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