Category Archives: Globalization

Germany Bucking Toxic, Nation-State Eroding Transatlantic Trade and Investment Partnership

We’ve inveighed against the dangers of two Orwellianlly-branded “trade” deals, the TransPacific Partnership and its ugly twin, the Transatlantic Trade and Investment Partnership. Both negotiations have been shrouded in a deeply troubling level of secrecy, with their draft terms being given classified status and Congressmen kept largely in the dark as to their content (summaries provided by the US Trade Representative aren’t remotely adequate, since as in all contracts, much hinges on exact language).

The business press in the US has tended to amplify Administration messaging, that both deals are moving forward. In fact, as we’ve covered in some detail, the TransPacific Partnership is in quite a lot of trouble, and as we’ll discuss below, the Transatlantic Trade and Investment Partnership is also going pear shaped.

US Port Strike Threat Highlights Supply Chain Risk

One issue we’ve raise over the year is the ways that the corporate fetish for offshoring and outsourcing greatly increases business risk. Even when savings are realized (and as we’ve discussed, in many cases, the main result is a transfer from factory/lower level workers to managers and executives), they are seldom weighed properly against the increased fragility of the operation, and the resulting exposure to big losses. For instance, extended supply chains entail more communications across the chain, longer production cycles, more shipping, all of which increase the odds of writeoffs via having too much inventory or inventory in the wrong place, and those occasional losses can swamp the savings over time.

Those supply chain risks have come into focus, as the Financial Times reminds us, as the possibility of West Coast port strikes looms.

Japanese Prime Minister Abe Vows to Conclude TransPacific Partnership by Year End. Should We Worry?

Last week, I came across an article in Japan Times which gave the impression that the TransPacific Partnership was being revived from the dead. From the article:

Prime Minister Shinzo Abe has a “strong intention” to conclude the Trans-Pacific Partnership talks by the end of the year, TPP minister Akira Amari said Friday as the U.S. pork lobby pressured Japan to make concessions, but added that the free trade deal cannot be struck without a commitment from all sides.

But is this a real commitment, or mere Japanese conflict-avoidance?

The Corporate Illogic of Outsourcing and Offshoring

You must go, now, and read a critically important piece questioning the logic of sending American manufacturing jobs offshore. It’s titled Losing Sparta (hat tip Dikaios Logos) by Ester Kaplan in VQR. We have written regularly about how we have been repeatedly told by managers and executives that the case for offshoring was often not compelling, particularly when risks, such as higher financing and shipping costs, exposure to foreign exchange losses, and inventory risk were included. This makes perfect sense when you consider that for most manufactured goods, factory labor is a mere 10-15% of total wholesale cost, and any savings in factory labor will be offset by higher shipping and greater managerial costs (more coordination, performed by much more highly paid workers). It is thus more accurate to regard a lot of offshoring as not being about cost savings, but a transfer from ordinary workers to managers and executives.

The article focuses on a world class manufacturing plant in Sparta, Tennessee, owned by Phillips that made florescent light bulbs.

Gaius Publius: Arctic Seafloor Methane Release is Double Earlier Estimates

one of the cornerstones of the idea that mankind still has a “carbon budget” — that we can still release even more CO2 and other greenhouse gases like methane, though a “limited” amount — is the idea that we can do a good job of modeling climate-changing feedbacks. We can do a good job of modeling some feedbacks, but we’re very bad at modeling others, and some feedbacks have so much randomness about them that modeling them becomes next to impossible.

The release of frozen methane is one of the biggest uncertainties in climate modeling. Results so far are much worse than forecasted.

Mexican Shale Industry Hoist on Nafta-Induced Gang Violence Petard

There’s perilous little recognition in the US of how much of the rise in gang violence and drug wars, as well as much harsher economic conditions for ordinary people, is the direct result of Nafta. While the toll has fallen hardest on Mexicans, American businesses may see collateral damage in the form of not getting much access to Mexico’s shale gas. An industry that doesn’t hesitate knocking over countries to get what it wants seems a bit stymied in how to deal with drug thugs who control access to a resource the developers want and have no interest in playing nice.

Bill Black: Obama’s Latest Betrayal in Favor of the Big Banks: TISA

Yves here. I’ve taken the liberty of editing down Bill Black’s post slightly to bring readers more quickly to his correctly outraged discussion of the latest Wikileaks expose on a trade deal that has managed to go completely under the radar: the Trade in Services Agreement, otherwise known as TISA. We wrote about this troubling news when the story broke. Astonishingly, the mainstream media has taken no notice of this release. Black’s discussion is accessible to lay readers, and I hope you’ll circulate it in the interest of raising awareness of how the Administration intends to sell out the US to banks, Big Pharma, and other multinationals.

Black explains how TISA is designed to replicate, indeed, optimize the criminogenic environment that made fraudulent financial CEOs wealthy by “looting” “their” banks.

“Risky Business” Climate Report: Paulson, Bloomberg, Rubin, Schultz Late to Combat the Denialists

Those who have been involved in trying to raise awareness of the risks of global warming might have to repress a “Beware of Greeks bearing gifts” response to a new, accessible, and well written report on the probable impact of climate change on the US. The effort, called “Risky Business” has Hank Paulson, Michael Bloomberg, and Thomas Steyer, retired chairman of Farallon Capital, as co-chairs, with its other committee members including Bob Rubin, George Schultz, Henry Cisneros, Gregory Page (the executive chairman of Cargill), Donna Shalala, and Olympia Snowe. In other words, when Hank Paulson looks like the best of a bunch, there’s reason to be cautious.

Nevertheless, the report is meant to demonstrate that the US is long past having the luxury of debating whether global warming is happening, and that a sober look at the seriousness of the outcomes says we need to do something, pronto. If nothing else, it presents some important new analysis and represents a split among the elites, always a welcome development.

Maine in the Crosshairs: The Penobscot, the East-West Corridor, and Globalization

Watch the proposed East-West Corridor in Maine for an example of local resistance to globalized resource extraction.

Trade Treaties and the Coming Rule of the Global Corporatocracy

The ultimate goal of these treaties is to reconfigure the legal apparatus and superstructures that govern national, regional and global trade and business – for the primary, if not exclusive, benefit of the world’s largest multinational corporations.

Wikileaks Exposes Super Secret, Regulation-Gutting Financial Services Pact

The document that Wikileaks exposed on Thursday is a portion of the financial services section. It is clearly designed to serve the pet interests of big international players. This agreement is designed to institutionalize the current level of deregulation as a baseline and facilitate the introduction of new products, further ease the movement of funds, data, and key personnel, and facilitate cross-border acquisitions and other forms of market entry.

New Zealand: The Shell Company Incorporation Franchises: Round-Up

In a series of recent posts on shell company incorporation scams, we reanalysed the New Zealand entities incorporated by GT Group (Ian Taylor), New Zealand Company Incorporators (Michael Taylor) and The Company Net (Glenn Smith). Curiously, some modest and uncontroversial reforms have yet to be enacted.

Ashoka Mody and Michael Walton: Story of a Fraying Capitalism in India

French economist Thomas Piketty has written a scholarly tome with the humdrum title, Capital in the 21st Century. The book has become an overnight sensation because Piketty documents an inherent tendency for ever-increasing inequality of income and wealth in capitalist economic systems. It is not an accident, he says, that many will be left behind even as others become richer. The book taps into a collective anxiety, coming as it does amidst the lingering after-effects of the global crisis and slowing global growth.

India’s capitalist dynamic — as in other emerging economies — is different from that in the richer countries that Piketty focuses on. Yet, the lessons Piketty offers should ring a cautionary bell. Indeed, even more so than in the rich countries, India could find itself in a low growth, high inequality and high insecurity trap. These are the real fears that bubble under the theatrics and ugliness of the ongoing political debate.

Gaius Publius: Did the “Clean Natural Gas” (Methane) Lobby Help Write the EPA “Clean Power Plan”?

Obama’s energy plan ignores methane as a greenhouse gas. That reflects the Administration and EPA buying into Big Oil and “clean energy” propaganda so as to permit more fracking.

Russian Companies Plan to Denominate More Trade in Renminbi

Russian companies are mounting a challenge to the dollar by seeking to arrange trade transactions in other currencies. But how serious a threat is it?