Tuesday, October 20, 2009

The Philanthropy of Financiers: excerpt 8

MNCs render classic theories relating wages to labor productivity obsolete - according to theory, wages are low in poor countries because output per hour worked is commensurably low - that may have been true in the days before MNCs, but now workers paid pennies an hour can be furnished with advanced machinery and managed with advanced techniques by MNCs or their local subcontractors - studies show US owned auto plants in Mexico are 85% as productive as US plants - and some newer plants are the equal of any in the world - but pay their Mexican workers only 6% as much as their US counterparts.

"investment clusters" are identified by the UN Transnational Corporations and Management Division (TCMD, formerly the Centre on Transnational Corporations) - the TCMD has been developing a model of the new order in which the three foci of the global economy - Western Europe, the US, and Japan - are gathering about them a handful of poorer countries to act as sweatshops, plantations, and mines - but, rather than focusing on the divisions among what it calls the Triad, the TCMD points as well to their deep investment and trade links, links established by MNCs and nurtured by free trade agreements.

trade patterns reflect these investment clusters - Almost 60% of US trade is with developed countries, with a handful of large countries like Mexico, Brazil, and South Korea making up most of the balance - over half of Japan's trade is with the developed world and another third is with Asia, leaving only 15% for the rest of the Third World - Europe trades largely with itself, the US, Japan, Eastern Europe, and Africa - much of this "trade" is the trans-border migration that goes on within MNCs.

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