Pointing the Finger

Corporate Responsibility is a topic that is covered in chapter 14 is at large a huge controversial issue in today’s business world. Corporate responsibility is refers to “consideration of, and response to, issues beyond the narrow economic, technical and legal requirements of the firm to accomplish social benefits along with the traditional economic gains which the firm seeks”.  Seeing that BP’s disaster with the oil spill in the Gulf of Mexico incorporated so much of corporate responsibility I figured it would be the perfect example of the lack of corporate responsibility. While the oil began to spill into the Gulf of Mexico BP stated that only 1000 barrels of oil where spilling into the ocean, where individual scientist where stating that number was merely not accurate and stated that it must be at least 70,000 barrels. BP refused to allow scientist to test the spill to establish an accurate number of what was actually spilling into the gulf. While Tony Hayward stated that “I think BP’s response to this tragedy has been a model of good social corporate responsibility. It has mounted an unprecedented response”.  All the while they refused to release video of the spill to the news. Not to mention BP continued to blame others for the spill where they stated that they well, equipment, and employees where all Transocean’s. They refused to take responsibility for not being responsible for the mishap. Not to mention Tony Hayworth gain 18million dollars after leaving BP and BP refused to put money toward the people who where effected form the spill until everything was said and done. BP claimed that they where a perfect model of corporate responsibility. If BP is the model for corporate responsibility then we are all in a bit of trouble because there lack of care and willingness to cooperate with common laws is unacceptable.  

Corporate Control, What Happens to those Who have nothing?

“The purist of profits is an old story” Although there was at one point a time when things that were seen as to secrete and to indispensable to human life and the public good to be seen as privatized by any given person or business. We really begin to see where this privatization has begun in the modern age if look at the 1400^th and 1600^th century. During that time period people and communities worked with a collective responsibility where people belonged to the land the land did not belong to the people. Stating then in Europe we began to see the enclosure of commons. Commons such as the grand land masses of the worlds which were reduced to private property. Thus we began to see the privatization of our oceans of the world where we created laws and regulations that allow counties and even corporations to claim a certain amount of water out of their country. After these we see air being privatized were it is divided and could be bought and solid buy airplane companies. With deregulations privatization is an enclosure of the commons as privatization takes hold. We begin to question what creates wealth. Is wealth is only created when it is owned by someone? In essence privatization causes a usurpation of wealth. What we now see is that we do not give so publicly owned property it to some nice person, we see it being sold to the high-test bidder and the highest bidder is in most cases an unaccountable tyranny. It sounds out idiotic to think that the world’s most powerful companies would like everything to be owned by someone but this is essential what is happening and what they want. Now I understand the reasoning for this is that if everything is owned there would be someone that was help to preserve if for their own wealth. But that leaves the question of what do those that do not own anything.

Now with this said many of you may be thinking what any of that has to do with corporate control. So what we know can speak on the idea that 2/3 of the world will not have access to fresh drinking water in 2025. An a idea such as this which has provoked a the preliminary confrontations of control over the world’s most basic resources. When Bolivia sought to refinance the public water service the World Bank required it be privatized. Thus we have the Bechtel corporations which gained control of all Copacabana’s water even the water that falls from the sky.  

Now the problem with this is that citizens of Copacabana are not allowed to collect rain water or even use any type of water without paying a fee for it. Seeing most Copacabana citizens live on one dollar a day it is easy to see how this privatization of an essential human need is disastrous to the Bolivian people.  Bechtel even takes it to the extreme of confiscating Copacabana’s citizen’s homes for payment of water use. When citizens decided to fight for their right to use water without being charged the government enforced Bechtel’s regulations on the city and a war brook out where citizens where being shot and killed.

This leaves on to question how far Corporate Control will go and who really wins, not the citizens of Copacabana that is for sure. “Water has been characterized as the oil of the 21st century. Blue gold. It is essential to life, and yet humanity faces a growing water crisis as a result of severe mismanagement in water and sanitation, which will be exponentially exacerbated in the coming decades by population growth combined with declining resources”  (Coha). Seeing the breakdown of privatization and neoliberal policies in Latin America have taken place it should not come as a surprise that the people are objecting to the privatization of this basic human need, because what happens to those who don’t own anything at all?

http://www.youtube.com/watch?v=wLhvhW55c_s

http://www.coha.org/water-for-sale/

Exporting Intermediaries

I decided to write my blog on export intermediaries which are somewhat like a middleman of international trade. They are known as a “firm that acts as a middle man by linking domestic sellers and foreign buyers that otherwise would not have been connected” (Peng 138). I found a website of a more in depth look at exporting intermediaries which are known as indirectly exporting.  Essential this site is instilling the idea that exporting intermediaries are used in efforts to decrease the risk of entering into foreign markets. Vices such commission agents, exporting management, exporting trading companies, exporting agents, and piggyback marketing.

Commotion agents are used to find firms that want to purchase domestic products. Exporting management projects act as an exporting departure for several products. Exporting trading company are used as facilities to exports of domestic goods and services. Export agents, merchants, or remarketers maintain the job of packaging and marketing products to the manufacturer’s specifications. Piggybacking marketing is an arrangement where one of the manufacturers or firm distributes the other firms services and even products to another country where they know and understand the culture and the markets demands.

http://www.bizmove.com/export/m7e.htm

World Trade Organization or Trade Regime

I decided to surf the internet for thing on the WTO and a happened to stumble upon an interview with Noam Chomsky on the WTO and what began to unfold in this interview was how the WTO essential devalues humans and focus on the well being of corporations. In essence the WTO has become a Trade Regime which consequently pushes free trade and thus we see the loss of democracy.

What is the WTO according to the WTO’s website which states that “The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.”

The WTO is portrayed as in organization that protects all countries interest in regards to trade but in actuality it essentially only protects the interest of big corporations and banks. Chomsky speaks on how the WTO emphasizes trade as the superior values and in turn disregards human value. He states that WTO undermines the environment as well as the wealth and prosperity of third world nations. We see this taking place particularly when it comes to food security which is known as the availability of food and ones access to it. The problem with the WTO in regards to food securities is that when the WTO established free trade throughout nations of the world it opens up foreign markets to foreign imports. In countries such as the United States and Europe this is not necessarily a huge problem but for the third world counties. These foreign imports of food which is highly subsidized form the first world creates many problems. Seeing that food such as corn and soy are subsidized food which are produced and thus shipped to the third world. When this food is put onto the markets of the third world it can be sold at a much cheaper price than those who locally grow the same products thus driving local farmers out of the market. These food imports also have negative effects on the environment seeing that it is corporately grow with chemicals, and then shipped to other countries to be sold. This process denies the third world from cultivating their own food consequently driving these counties to become reliant on the developed world.

Another major aspect of the WTO that Chomsky speaks on is it negative effect on the world. Seeing that it establishes a one fits all motto.  When a regulation is are put into place all counties and their governments must abide to these regulations. One might ask how they decide on what regulations should be established and what ones should not. All nations involved in the WTO are at conferences and listen to speeches on different regulations that should be established. The countries that vote on what regulation become law and what do not are those that have the most trading power therefore any country that is not a major power player will not decide on whether a new regulation should become law. This plays into the hands of those who are in power and remain in power.

Chomsky also focuses on how the WTO promotes privatization as well as deregulation of corporations. It protects the interests of corporations and undermines the values of humanity. We see now a transfer of human rights away from people and into the hands of corporate entities. Corporations where granted the rights of people, thus they became private tyrannies where corporations have more rights than individual people. This is seen when a corporation goes into another country they are looked at as a business of that country and all laws thus apply to it in their favor.  With this we see wealth become much more highly concentrated then in the past. Chomsky states the free capital flow undermines democracy and unless a country can control its own capital the decisions on how the country will be run are under the control of international capital.  

http://www.youtube.com/watch?v=zLWXmUKzZWY

http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm

Here lies a country of fools who traded away their future.

In Chapter 5 Peng discusses International Trading. In particular he discussed the Theories of International Trade. Two of these theories spiked my interest, the Absolute Advantage theory and the Comparative Advantage theory. Both of which are very different. The Absolute advantage theory suggests that under free trade, each nation gains by specializing in economic activities in which it is the most efficient process. While Comparative Advantage suggest that a nations gains by specializing in production of one good in which it has comparative advantage.

Two very different and interesting suggestions of what exactly is the most beneficial for to a country in regards to trading. I found an interesting article on the Freemans ideas of liberty where Dwight R. Lee discusses how comparative advantage is overall more beneficial to a nation’s wealth on a global scale. He states that “The most straightforward case for free trade is that countries have different absolute advantages in producing goods (Lee).” With this said Lee goes in to distinguish how it is imperative to have comparative advantage seeing that “A country can have an absolute advantage in the production of a good without having a comparative advantage. Comparative advantage is what determines whether it pays to produce a good or import it (Lee).” What we see here that in essence Lee distinguishes that it is imperative to have a Comparative advantage in order to be the most efficient in production and trade. If we take an example it become more clear how this is evident. While in American let’s say it is very efficient in producing coats and can produce 5 coats in 1 hours. While in China it is not as efficient in producing coats where it China can only produce 3 coats an hour. It would seem that with the absolute advantage it would be more efficient for American to make coats and not import them from China. Although if you take into account that it cost more money to produce a coat in American then it does in China then it would be more efficient for American to import coats from China which thus allows for a cheaper product and a cheaper cost. This example involves both and Absolute Advantage in which American can produce at a quicker rate than the Chinese can, although China has the comparative advantage which is that it can produce coats at a cheaper rate than in American thus driving down the cost of the good.

Even more interesting below Lees article was comments on in particular that caught my eye was the comment made by Ron O where he indicates that while Lee does bring forth some interesting point it is only a hypothetical that he compares international trade to with this car and computer example that is much like my coat example. He states that there are many other factors to account for when discussing Comparative advantage. He attaches the idea that Lee states that Comparative Advantage does not account for lower wages and unemployment. His basis for this argument is that if like in Lee’s hypothetical everyone who was in the computer industry, in American, who lost their job because of the importation of computers, would not get jobs in the car industry just because that is where the works is. Ron argues that these people who were in the computer industry would not necessarily be able to get a job working on cars. Seeing that Lee does not know what the market demand for American cars will be, Lee also does not know if these computer techs if employed by international companies would make the same wages as they did previously. Ron states that “The mistake that comparative advantage makes is that it assumes that there is some kind of ‘invisible hand’ that will create an infinite amount of demand for any product or for the world. Does it even account for the price of oil in all of this or to the limits of economic activity the world can handle? Not everyone can be middle class. As a matter of fact, look at how the middle class is disappearing throughout the world (Ron).” Ron makes a interesting point here which displays the weakness in Lee’s argument as well as in the Comparative Advantage theory. He establishes the idea that no economy can survive without borders.

            On a large part I would have to agree with Ron and his arguments against the Comparative advantage as well as Absolute advantage, seeing that there are so many aspect of the economy that are unpredictable and over looked when it comes to applying these theories to real life. As we can see over the last few decades the American economy has become very unstable seeing that we rely highly on other countries for our goods putting us and our futures in the hand of others. It is in my opinion that free trade opens countries up to many unforeseen issues that can arise and as we have seen recently that it exactly what happens. With an ever so connected world much vulnerability occurs. It leaves us the people, the working class at the mercy of something that is uncontrollable and unforeseen. A bargain I don’t feel is in our best interest.  

http://www.thefreemanonline.org/columns/comparative-advantage/

Standardization of Culture

http://www.youtube.com/watch?v=dnca-FDLN-0&feature=related

I placed a short video above because it is extremely relative to what I am going to be talking about and that is Culture. What is Culture really, we hear it all the time in school, we read about it in books, and see it on TV but what is it really? Culture is the “inherited ideas, beliefs, values, and knowledge, which constitute the shared bases of social action” (Dictionary). Now that we have defined culture we can examine why it is so essential for international businesses to respect common cultures when spreading businesses around the world. International Business has take the world by storm with companies such as McDonalds, Starbucks, Walmart, and many more. It is ever present to understand to effects of globalization and international business on culture for two reasons. One being to keep large businesses in check form overstepping there bonds ethically and culturally and two to understand the importance culture has on people and society.

Culture is inherited ideas, beliefs, and values. These ideas, beliefs, and values are past down from generation to generation. It is important to understand that these core values that distinguish people to a particular group are fundamentally important to societies. Culture is what brings people together, it allows them have a sense of belonging. It also in some cases allows outsiders to understand others better, due to the engagement of the exchange in cultural knowledge.

Now when it comes to International business we can see how this can become a difficulty because when you establish a business take for instance McDonalds in another country, where let’s say they don’t eat beef, such as Iran (A Muslim country). There is a cultural issue here seeing McDonalds sells beef products. For those who live in this country and do not eat meat they would not purchase products form McDonalds due to the cultural back lash. Seeing many native Iranians would not be purchasing any products from this store McDonalds would thus not be making money and the point of a business is to make money. On the other side of the spectrum you would have natives of this country in arms seeing that it goes against their cultural values. It is not right for McDonalds to place a restaurant that sells meet in a country such as this unless it does shift to abide by their cultural values, which in fact is exactly what McDonalds has done in Muslim countries.

International Businesses deal with issues of cultural differences on a daily basis. It is a part of expansion.  A problem that still lies here for me is that although McDonalds may have shifted to cultural values in Iranian it has still done damage on cultural traditions. If we look from the transformation of companies spreading throughout the world we can begin to distinguish a common pattern and that is the pattern standardization. Which is in itself a whole other issue but standardization does have a major impact on culture because standardization slow begins to take away from traditional norms and replace them with new ones that are more standardized. Now I am not saying that International Business is a bad thing I am merely just stating that there are major negative effects of International business when it comes to the standardization of culture and societies and this is what need to be evaluated. Evaluated in the since of whether or not international business is an overall positive to societies and cultures or negative.

Are we to Dumb for Democracy

Chapter two in out books discusses at large Democracy and the finer details of it. As we know democracy is the citizens elect representatives to govern the country on their behalf. I have never fully understood how a democracy was run effectively, seeing that it is in my opinion that America does not run our democracy in a positive manner. While watching the State of the Union Address I began to feel even more disillusioned about America and democracy. As some of you may have watch the president speech on national concerns and so forth. It began apparent that the house was divided strongly due to partly lines. As the camera viewed representatives through the entire speech it was clearly seen that on many issues party members were not clapping while other member stood in applause. Not only was this division troubling but the fact that most representatives that where typing away on their phones during the closing of Obama’s speech. If was as if they cared less about what Obama was speaking about. Seeing that there opinion have already been formed and there is no changing their minds.

This is significant to what I really wanted to talk about seeing I am discussing how Americans are to dumb for democracy. I recently read an article by the Boston Globe about threats to democracy. This article being about how our brains are the biggest threat to democracy due to something known as “Backfire” Backfire is known as “Natural defense mechanism to avoid cognitive dissonance.” Cognitive dissonance “is the feeling of uncomfortable tension which comes from holding two conflicting thoughts in the mind at the same time.”

The article also on how democracy thrives on voters being blank states. A blanks state does not mean being ignorant it means being free of strong beliefs. Seeing most if not all voters have a strong form of beliefs it hinders our ability to distinguish fact from fiction. This is not to say that we do not understand some fact what we see in this article is that human base their beliefs on fact but in many cases these facts that we assume are true are misinformed information because of this out beliefs are formed about information that is misconstrued.

Joe Keohane the author of this article states “in reality, we often base our opinions on our beliefs, which can have an uneasy relationship with facts. And rather than facts driving beliefs, our beliefs can dictate the facts we chose to accept. They can cause us to twist facts so they fit better with our preconceived notions. Worst of all, they can lead us to uncritically accept bad information just because it reinforces our beliefs.”  

Thus when we do here facts that are true we are not likely to accept it as truth seeing it goes against our beliefs. Other things such as motive reasoning also are discussed in this article. Motive reasoning is understood as when a human has once adopted an opinion draws all things else to support and agree with it.

This thus effects democracy because it creates a situation here beliefs interfere with the facts, thus creating a populations that is self delusion holds precedence over all else.  

  http://changingminds.org/books/changingminds_book.htm

I attached the article below. I also attached a short video done by PBS on Threats to Democracy. Its only 3 minutes but it is a good video to help show how true this article really is. Take notice to Matt Bar a journalist as well as Congressmen Tom Feeney.

http://www.boston.com/bostonglobe/ideas/articles/2010/07/11/how_facts_backfire/

http://www.youtube.com/watch?v=VkeIsQQXVJs