ECONOMIC GLOBALIZATION AND THE POWER OF TRANSNATIONAL

CORPORATIONS

Is this a positive consequence of globalization?

Richer than governments….. Does that make them more powerful??

TNCs have come to dominate the global economy-some large TNCs are richer and more powerful than many governments around the world.

REMEMBER: Transnationals are businesses that operate in a number of different countries. The headquarters of TNCs are usually located in one or more countries, while production or services are located in other countries.

http://www.youtube.com/watch?v=szH2g1dQdCM

United Nations Global Compact There are many controversies surrounding transnational corporations. One is that these corporations have enormous wealth and power.

In 1999, the United Nations established the Global Compact, which requires TNCs to abolish child labour and reduce greenhouse gas emissions.

Since its official launch, July 26, 2000, it has grown to include over 5300 businesses in over 130 countries.

What Happens When WALMART Comes To Town.

A crash course.

http://www.youtube.com/watch?v=ZmUSk231WFE

“If you look at the facts with an open mind, you’ll agree that Wal-Mart is good for America.”

--Lee Scott,

Wal-Mart CEO

Company press

release 2/23/05

One perspective

“Handful of Losers.”

“It’s also easy, at some level, to

empathize with our critic’s fears—after all, the

economic change Wal-Mart

represents creates a handful of losers even as the vast majority

of ordinary Americans gain.”

--Lee Scott 2/23/05

Learning Wal-Math

1 job created

- 1.5 job destroyed

= 1 job

The Greenfield, Mass. Wal-Mart Impact Study• More retail square footage would

close, than would open as a result of Walmart coming to town.

• Walmart promises 177 new jobs, but after other stores close= 27 jobs (net)

As Wal-Mart grew, 22,000 Kmart

Workers Were Laid Off• “The company announced that

the closing of these stores will result in the loss of approximately 22,000 associate positions.”

The other side of the WAL

• “Net” job gain is negligible• Old jobs in new aprons• Pays prevailing wage: 34

hours/week considered full-time• Woman with one child at 34

hrs/week works in poverty• Sued in more than 30 states for

stealing time “off the clock”

Off the Clock: Time Theft

“As of December, 2002, there were 39 class action lawsuits against Wal-Mart in 30 states, claiming tens of millions of dollars in back pay for hundreds of thousands of Wal-Mart employees.”

--NY Times, Jan, 13, 2004

http://www.youtube.com/watch?v=uzpOS5WAMzU

“We became our own competition”- Sam Walton

• Ames, Rich’s, Bradlee’s, Caldors.• All in New England. • All of them gone.

Wal-Mart’s Hidden Cost

The typical Wal-Mart supercenter with 200 workers costs the taxpayers

$420,750 a year in tax-supported subsidies, including

earned income tax credits, housing subsidies, food stamps, health insurance (Medicaid), etc.--Congressman George Miller (D-Ca) 2004

Tax Welfare for Wal-Mart

• Wal-Mart has benefited from more than $1 billion in economic development subsidies from state and local governments.”

-Shopping for Subsidies, Good Jobs First Research Group

The Wal-Mart Wage Gap

• Lee Scott made $17.5 M last year• In two hours, he makes what a

WM clerk makes in one year. ($16,860)

• Wal-Mart loves outsourcing! Subcontractors make:

-17 cents an hour in Bangladesh & China

-46 cents in Indonesia -23 cents in Nicaragua

Jobs At Wal-Mart(2004 data)

• “The jobs we provide are the kind people take to enter the workforce.”

–Lee Scott

• Sales Associate: $7.05 an hour• Cashier: $7.20• Average hourly Wal-Mart worker

per year: $17,285• Average all retailers: $24,023

2. Supporting the Local Tax Base

• Real estate taxes• Sales taxes• Income tax from store payrolls

“Local tax receipts usually increase substantially when a Wal-Mart opens its doors.”

-Wal-Mart, 1998

There Goes The Neighbourhood

In Lake Charles, LA neighbors of a Wal-Mart supercenter watched their property values drop –28% within the first 4 years after the store opened.

Much of Wal-Mart “Good. Works” comes from in-store promotions or customer & employee contributions—not from the company itself.

The Other Side of the WAL

Cheap goods at Wal-Mart come from:

• Sourcing products from Third World sweatshops, costing the US millions in lost manufacturing jobs.

• Muscling suppliers to reduce cost of labor and materials.

• Exploiting its own workforce with ‘everyday low wages, and “off the clock” practices.

This is how WalMart gets a lot of its products …….sent from China.

Most all of these containers are shipped back to China, EMPTY. We send nothing back on most of these ships. What does that tell you about the current Financial State of North America and the Free Trade agreement?

Made in America?

• In 2002, Wal-Mart imported roughly $12 billion in Chinese goods.

• Represents 10% of our record-setting trade deficit with China.

• Sam Walton called this “knee-jerk import buying.”

3 Million Lost American Manufacturing Jobs

• Since 2000, American has lost at least 3 million manufacturing jobs.

• Pressure on vendors to lower prices = outsourcing production to Third World countries= lost U.S. jobs.

• Wages in a “race to the bottom”• Levi Strauss, Fruit of the Loom,

Master Lock—closed factories, lost jobs.

Everyday low prices? Wal-Mart would “lift

its prices as and when competitors disappeared. Nearer to Little Rock, where there are plenty of pharmacies, its drug prices are lower, in more remote towns, higher.” –Arkansas Court

Below Cost Pricing

“Wal-Mart officials said during the trial that some items were priced below cost to draw customers, not to drive local druggists out of business.”

--AP story, 10/13/93

“We say we sell for less, which means if a competitor’s prices are lower, we will drop our prices, even if it means below our cost.”--CEO Lee Scott, WSJ 10/6/04

Conclusion

What happens when Wal-Mart comes to town?

Low wages. Lost jobs. Empty buildings.No economic growth.

You can’t buy small town quality of life at a Wal-Mart.

But once they take it from you, they can’t sell it back at any

price.

Walmart: The High Cost of Low Prices

Watch part of this documentary and use the slide show to complete the following chart:

Economic (deals with money, between

people, business and government)

Social (deals with the individual and group interactions with others,

their community, nation and the world)

Political (deals with the interactions that

people and groups have with their government and vice versa)

http://www.youtube.com/watch?v=2dl0Pwcy3nM