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The Problem with Transnationals and what to do about it

by on February 13, 2011
trans

(I’m reposting this, because it is somewhat older and only few read it. It’s more relevant than ever, though….)

Recently  New York’s Public Advocate Bill de Blasio released a very important study about Wal-Mart’s effects on local communities. It represents a major step forward in the understanding of the effects of Big Business.

These effects are insufficiently understood, because scholars have degenerated into spin masters for Big Business, simply because it is Big Business that controls their budgets, allowing  only studies explaining how wonderful they are. It’s the same process that led medical ‘science’ to the conclusion that Mustard Gas is beneficial to human health.

However, correctly directed science is indeed capable of coming to useful and even truthful conclusions and the mentioned report is a case in point. I recommend studying it, the offered link leads to a compact 10 page executive summary with all the main conclusions. It is indispensable ammo for community leaders of good faith.

Although the report investigates Wal-Mart in the USA, it is clear its conclusions can be extrapolated to the European situation. Just fill in Aldi, Lidl, Ahold, Carrefour, Sainsbury or Tesco, depending on your local situation.

The Di Blasio Report

The main conclusions are shocking and to the point and make clear what damage Wal-Mart actually managed to do to the American economy. The two most fundamental conclusions are these:

1. Wal-Mart store openings kill three local jobs for every two they create.
Wal-Mart is the biggest employer in the USA, with 1,4 million ‘associates’. The conclusion is, that Wal-Mart alone has killed about 700.000 American jobs. Only Wall Street can boast greater destruction to the American labor market.

2. Chain stores, like Wal-Mart, send most of their revenues out of the community, while local businesses keep more consumer dollars in the local economy: for every $100 spent in locally owned businesses, $68 stayed in the local economy, while chain stores only left $43 to re-circulate locally.
This means Big Business have a deflationary effect on local economies. And this in turn explains why Big Business destroys both employment and business.

These two conclusions are more than sufficient to make the study worth while, but I’ll give a few more, just to further the point.

3. Stores near a new Wal-Mart are at increased risk of going out of business. After a single Wal-Mart opened in Chicago in September 2006, 82 of the 306 small businesses in the surrounding neighborhood had gone out of business by March 2008.

4. Wal-Mart’s average annual pay is $20,774. Below the Federal Poverty Level for a family of four. In fact: ‘a Wal-Mart’ spokesperson publicly acknowledged in 2004 that ‘More than two thirds of our people…. are not trying to support a family. That’s who our jobs are designed for.’ ‘
So Wal-Mart is an effective accomplice in the social engineering campaign of our bosses, isolating people and consciously attacking the family unit.

The above makes abundantly clear that Wal-Mart and Big Business in general have a profoundly negative impact on economies, both locally and nationally.

So why do people shop at major Retail Chains?

Of course it is useful to have the figures. But then again: we already knew this. We know Big Business is just destroying smaller and medium sized businesses and we also know that these smaller businesses are the backbone of our economy.

Sure, these stores offer a certain convenience, usually having a larger assortment of goods. Why go to four shops if you can get everything at one? We don’t have the time!

But we don’t have the time, because we need three jobs to maintain the illusion of a middle class status. And we need these jobs because we are accomplices in the plundering of our communities and neighbors.

And of course Big Business is often cheaper. At least: until they have destroyed the local competition, after which they start their monopoly pricing operation.

So we make decisions that damage our neighbors, favor ourselves in the short term, but eventually make us and our kids go begging for a $20,774 per annum job.

Are we just stupid? Yes, we are, we know we are. But there is also the ‘prisoner’s dilemma’.

The prisoner’s dilemma is a fundamental problem in game theory that demonstrates why two people might not cooperate even if it is in both their best interests to do so. It was originally framed by Merrill Flood and Melvin Dresher working at RAND in 1950. Albert W. Tucker formalized the game with prison sentence payoffs and gave it the “prisoner’s dilemma” name (Poundstone, 1992).

A classic example of the prisoner’s dilemma (PD) is presented as follows:

Two suspects are arrested by the police. The police have insufficient evidence for a conviction, and, having separated the prisoners, visit each of them to offer the same deal. If one testifies for the prosecution against the other (defects) and the other remains silent (cooperates), the defector goes free and the silent accomplice receives the full 10-year sentence. If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge. If each betrays the other, each receives a five-year sentence. Each prisoner must choose to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act? (Source)

The problem is, that most people don’t trust their peers to do the right thing and therefore they just take the short term gain themselves. This is a major trump in the hands of Big Business and basically explains why they are so successful in enslaving us. It is interesting that this behavior is defined as ‘rational’ in economic game theory.

Solutions

So we are the victim of a classic ‘prisoner’s dilemma’. What can we do?

Individually
In the first place: individuals can transcend the prisoner’s dilemma by just deciding to not play along. Especially when we are not facing the kind of prison sentences as in the example. All we stand to lose is a little discount here and there. And why are we allowing ourselves theses discounts when we know we are dealing with the devil anyway? We are being mind-controlled into believing cheaper is better, but anybody giving it a little thought must realize that this is simply hogwash. Our decisions should be made on far more profound grounds than just price.

We needn’t worry about the idea we would not be acting ‘rationally’ as defined in game theory, because not all people are as stupid as most economists and Douglas Hofstadter decided to call players doing the right thing in the prisoner’s dilemma ‘superrational’. And right he is: people benefit from cooperating and taking the long term into account (as long as the short term isn’t immediately lethal) is clearly rational behavior.

We should also take into account that we lead by example. It is a common human trait to wait for others to do what is necessary. It is this trait that got us here anyway. The simple fact of the matter is, that it is a thousand times more powerful to put our money where our mouth is, than it is to forward this article to everybody we know. We can only change ourselves and however difficult this may be, the good news is, it inspires others.

Once we realize what we are dealing with, we must be able to understand we need to quit shopping at Big Business outlets and start patronizing local businesses. For our own sakes and for that of our neighbors.

Systemically
Not only do Regional Currencies (RC) make us less dependent on the nefarious banking system, they also profoundly strengthen us in the struggle with Big Business. Most Regional Currencies don’t allow Transnationals to participate (and usually Big Business is not interested to do so either). This means RC’s can be spent only at local shops and businesses.

It is clear that this is a very useful aspect of these currencies: they increase the competitiveness of local business, because people owning some of the currency can only spend them at local enterprises.

Even if you patronize local business exclusively, it still makes sense to pay with an RC, because the shop owner can only spend the money at his or her colleague’s businesses. So even after you have spent your money, you still positively influence the local economy. If you pay with a dollar, there is a higher chance your local supplier will spend the money outside your own region.

Concluding

Big Business is destroying our economy and we are accomplices in this process by shopping at their outlets.

We should immediately quit doing so. A rational appraisal of the situation leaves us no other choice.

Regional Currencies, beside their other useful benefits, exclude Transnationals and enhance the local economy by strengthening the competitiveness of local businesses. Even if we do the right thing by shopping locally ourselves, it is still useful to pay with them, because we strongly encourage our local suppliers to shop in the neighborhood as well.

This article was written for, and posted by, Activist Post. It can be found permanently here.

Related:
Why Transnationals Thrive

14 Comments
  1. The real advantage of giant coporations is that they are labor-efficient. This makes up for their being very inefficient users of land and natural resources. Shifting local taxes onto land values gives small business a competitive advantage. State and federal taxes on fuel consumpion increase that value eve more, because local retailers tend to buy from local suppliers who buy from local manufactureres.

    Regional currencies could also help, but multinationals have learned to deal with national currencies, and they could learn to deal with local currencies as well.

    • The real advantage of transnationals is not labor efficiency. Nobody can compete with agile small firms run by people actually involved in the business, instead of being cogs in the wheel. The real problem is that they are capital efficient and the first law of the market place is: ‘he with the lowest cost for capital wins’.

      Here’s my take on ‘Why Transnationals Thrive’:
      https://realcurrencies.wordpress.com/2011/12/22/why-transnationionals-thrive/

  2. REN permalink

    One aspect Bill de Blasio didn’t capture was the skiff and skim that retail takes in China trade. The differential in goods costs are captured as wage arbitrage, and also the bribe money (skiff and skim) paid to dock workers and retail stores. The dynamic of lifting industry out of the U.S, then exporting back to the U.S. hollows out the country, while captains of industry and Wall Street Capture the arbitrage. In addition retail is complicit when they accept skim bribes. In the end, prices are just under what “local industry” can produce. So, Rents in the form of wage arbitrage, skiff, and skim are all vectored to our private elites. This is another form of warfare against labor, which is the money power’s game. Some of this skiff and skim money is used to bribe politicians, especially via the 17’th amendment. In the end, middle class wages and labor is depressed, meaning that many assets can be bought cheaply. It doesn’t always have to be usury to make the “grabbing and foreclosure” mechanism work.

    Walmart has become ChinaMart because they can control the whole chain of production and distribution, while capturing differentials in prices as profits. In the U.S, due to its dollar as reserve status, import duties must remain low; hence skim and skiff work to Walmart’s advantage.

    In Texas, it is always enjoyable to see a new HEB grocery store or super-store go up across from every new Walmart that is built. HEB also invaded Houston, after Walmart was established. This is the first time Walmart has been put on their heels. Texas must be giving Walmart fits. Also, Walmart’s board has recommended they go slow in northern Mexico, since HEB has been pounding them there.

    • Very interesting narrative and absolutely to the point and adding to an already grim picture.

      “It doesn’t always have to be usury to make the “grabbing and foreclosure” mechanism work.”
      It’s true. Far from it. But the basic extortion of Usury is one of the drivers behind many of the ways that others feel ‘forced’ to ‘skiff and skim’ to compensate. Rents are not direct usury either, but they would hardly exist without it, just an example.

      But we agree, it’s just the formula.

      “Walmart has become ChinaMart because they can control the whole chain of production and distribution, while capturing differentials in prices as profits”
      This is indeed another vital issue. Compound profits in the supply chain actually also amount to mind boggling sums, and basically unsustainable price effects. Here’s an interesting article plus stats:
      http://www.monetaryreform.com/MR/profitDebt2.htm

      It’s huge. Capitalism is totally unsustainable, these profits are just as bad.

      The only reason I ignore it, is because people hate me enough as it is.

      • REN permalink

        Thanks Anthony. I had no idea about the compounding profits. I’m stunned and a little sickened by it. Don’t worry, it is good to be loved for the right things, and also hated for the right things.

  3. Comment on ‘But we don’t have the time, because we need three jobs to maintain the illusion of a middle class status.’

    Here’s number 8 from http://www.guardian.co.uk/environment/2011/feb/06/ten-big-ethical-ideas

    “Part of the long, historical struggle for better quality of life has been the fight for a shorter working week. But recession-hit Britain is scarred by cultures of overwork and high unemployment. While some don’t have enough, others are caught on the consumer treadmill, working crazy hours to buy things that they don’t need, that won’t make them happy and that the planet can’t afford.

    When the recession hit Utah, in the US, and the municipality put its workers on a four-day week out of necessity, they were amazed by the results. Absentee rates went down, staff morale went up and carbon emissions dropped by 14%. Could it work here? Andrew Simms, policy director of the New Economics Foundation, suggests that a flexible, non-compulsory new norm of a 21-hour week would give us back the time for the greener, more engaged lives that so many people want.

    “We’d save money by being able to do more things for ourselves,” says Simms, “and with more people around to care for each other and help each other out it would take the pressure off public services and reduce the stress of retirement.” He adds that innovations in home ownership and finance could remove the obstacle many face of high mortgage payments. “A voluntary shorter week could create time to be better friends and citizens, and do things that really raise our wellbeing.”

    • Hilarious, the surprise expressed when witnessing the obvious results of a more relaxed life.

      But as we know from the Protocols, our Masters realize full well how important it is to keep us busy. As it was said in Protocol 4:

      4. In order to give the GOYIM no time to think and take note, their minds must be diverted towards industry and trade. Thus, all the nations will be swallowed up in the pursuit of gain and in the race for it will not take note of their common foe.

      Ah yes, the illusion of our free choices…………..almost inescapable shackles indeed.

Trackbacks & Pingbacks

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