Debt Economy
...an economy. Furthermore production is exclusively devoted to the export market. Fruits and vegetables are produced in huge quantities for export, whilst domestic food growing suffers. MNCs force the countries to deregulate labor laws, trade agreements and financial regulations. MNCs often employ their own imported specialists in technical areas. Locals are just trained to be good workers, engineers. There is no real transfer of technology! Developed countries also compete by offering financial inducements to MNCs. For example the total cost to taxpayer in South Carolina to attract BMW $400 million factory will be $130 million over 30 years. In 1997 the British government offered Ford Motor Company GBP 60 mln to continue car production at the Halewood plant. This represented 18% of the total investment. But the British government received neither company stock nor a share of the profits in consideration of this massive support. Also MNCs have for years avoided paying taxes by employing transfer-pricing (selling at inflated price from one sister company to another to show a low profit in the high tax nation, and register as much of its net profit in a low tax nation). This has lead to a competition between nations to offer the lowest tax regimes (low tax heavens) as part of the financial package attracting MNC investment. Nations are at different stages in the business cycle, thus MNCs can turn the fluctuations (of growth rates, exchange rates and interest rates) to huge advantage, deciding where and when to invest, where to borrow money, and which currencies to hold or to sell. The Third World, so deeply in debt, they are desperate for any influx of funds. Here the wages, corporate taxation is very low, and the bulk of profits are repatriated out the country. When trade liberalization takes place local firms may go bankrupt, and they become a target for take-over by MNCs. AS a result there is a transfer of resources from domestic to foreign ownership. MNCs are the ultimate creations of the debt finance. Although they tend towards monopoly power, there is intense competition between MNCs. The businessmen who pursue the competitive policies do so for exactly the same reason as everyone else – that is their job. Despite decades of in-flowing investment, Third World debt and dependency on foreign investment are still rising inexorably. The nations with the largest registration of MNCs — US, Japan and Britain — all continue to suffer a net outflow of funds through their own foreign investments. Where has all the money gone? The world economy today has virtually no money, other than that created as a debt. Just as in the UK, over 90% of money worldwide has only come into existence as a debt. 6. Free trade religion - The success of nations such as Korea, Taiwan & Japan in developing a powerful economy with a thriving trade in exports is frequently advanced as a model, which free trade would allow the poorer nations of the world to copy. But today’s Tiger economies all conducted their initial & successful development under a regime of tight protectionism, in which foreign imports were heavily curtailed. The recent decline of many Asian Tigers has precisely coincided with the opening of their borders to free trade, under pressure from the OECD, the IMF and the WB. - Identical goods crisscrossing the globe, regardless of environmental cost 7. Inflation - Inflation is not caused by too much money. It is caused by too much debt-money. - When our everyday experience is that there is never enough money and when there is a superabundance of goods and services of all descriptions, does ‘too much money chasing too few goods’ sound realistic? - It is this lack of purchasing power – the gap between prices and incomes – which is the driving force behind inflation. Inflation is nothing but the upwards drift of prices and wages in an economy where industry is desperately trying to recoup outlay & cover all the financial costs of production, whilst the consumer is desperately trying to bridge the gap between their income & the price of goods. - All c...