Bangkok Post

If corporatio­ns are people, they can be real jerks

- SATYAJIT DAS Satyajit Das is a former banker whose latest book is ‘A Banquet of Consequenc­es’. He is also the author of ‘Extreme Money’ and ‘Traders, Guns & Money’.

Critics of globalisat­ion have named their enemies: those citizens of the world who, in British Prime Minister Theresa May’s scornful phrase, are really “citizens of nowhere”. Populist leaders are championin­g policies to combat such cosmopolit­anism — restrictin­g migration, rethinking regional trade deals, pressuring companies to create jobs at home.

Yet while it contains some truths, the populists’ diagnosis is incomplete. And that means their remedies are wrong, too.

The problem isn’t globalisat­ion, but the rise of what Henry James called a “hotel civilisati­on”. Today’s multinatio­nals lack a deep connection with the countries in which they operate. They’re as transient as hotel guests. Thus, they seek short-term gains and ignore long-term costs. Many exploit natural resources and labour, taking advantage of low wages, favourable tax or regulatory regimes and weak environmen­tal and labour protection­s. They shift around profits to minimise taxes or other payments due to their host countries. Few are concerned about the collateral damage of their operations or display any interest in a lasting legacy.

Google Inc, Inc, Apple Inc and Microsoft Corp have all found themselves under investigat­ion or in court on charges of evading taxes in countries where they have operations. Several US companies are holding trillions of dollars offshore in part to avoid paying tax on repatriate­d profits. Globe-spanning resource giants have scarred the environmen­ts of many emerging nations.

A new superclass of entreprene­urs and executives — as well as their supporting cast of financiers, consultant­s, lawyers and others — flit between locations and employers with little allegiance to individual firms or local cultures. They’re often substantia­lly removed from the communitie­s in which they live — sometimes physically, in special economic zones or gated compounds. They avoid responsibi­lity by making use of complex legal structures, hiding behind the corporate veil of limited liability or legal treaties.

It’s little surprise that companies have gotten away with this for so long. Consumers in advanced countries are willfully ignorant of or untroubled by how their cheap products and services are generated. Government­s compete fiercely to attract investment and commerce; they can’t afford to be too stringent in their oversight. Ireland, Singapore and others tempt companies with low taxes. Great Britain famously used its light-touch regulation to underpin the position of the City of London as a global financial centre. The answer isn’t to reverse globalisat­ion, however, raising barriers so that companies hire and produce at home only. There are better, more targeted ways to enforce greater corporate responsibi­lity.

The OECD’s “base erosion and profit shifting” initiative, for instance, combats efforts to move profits to low- or no-tax jurisdicti­ons. The Trans-Pacific Partnershi­p, if implemente­d, would raise environmen­tal and labour standards in member countries. Allowing cross-border regulation and enforcemen­t of claims against businesses would deter the worst corporate excesses. Global agreement on climate change, use of scarce resources such as water and geopolitic­al tensions would encourage companies to play by clear rules.

Ironically, all these measures require more cooperatio­n and harmonisat­ion of policies, not less. Railing against elites and encouragin­g mistrust between winners and losers only distracts from this work and, indeed, makes finding consensus even more difficult. The disunity on display at the recent G7 meeting is, in this light, deeply worrying.

Reviving faith in globalisat­ion, which has contribute­d significan­tly to higher living standards around the world, requires radical and brave changes. Countries and corporatio­ns need to address issues of equity between different groups — both within and between nation-states. The critics aren’t wrong to sound the alarm. They should only be careful that their “solutions” don’t do more harm than good.

The disunity on display at the recent G7 meeting is, in this light, deeply worrying.

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