File spoon-archives/postcolonial.archive/postcolonial_2001/postcolonial.0110, message 427


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


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