GLOBAL BUSINESS

DICTIONARY

AGENCY PRINCIPLEVIOLATION

• Serving self (or corporation) instead of stakeholders (community)• Exploiting agents in business use established success systems (created by government) for self (rather than constituent or community) gain.

•Corporate deregulation•Economic & social outsourcing•Lapdog boards & regulatory agencies

•Short-term earn & burn tactics•Major political campaign contributions & lobbying•Neo-colonialism

BLACK HOLE OF

CAPITALISM & GLOBAL

BUSINESS

(Impersonal) capitalism is sustained by social, economic, technological, & political forces too powerful for corporations & nations to escape or resist. Capitalism runs the 21ST century world both economically & politically.

• Global off-shoring• Global suply chains• Free trade agreements• International Standards organization• Digital technology & “hot money”• Global government organizations

BODY & BRAIN

NATIONS

The global economy is divided into 2 basic categories of nations: Intellectual property creators (brains) & makers (bodies) of global products & services.

•Brain strategy =offshoring•Body strategy =using net exportingto turn brains into global debtors

BONDED WAREHOUSE

S

Trade stimulus for bordering nations

Government helps both cross-border buyer & seller of goods to generate revenue before they have to pay for their business trade expenses.

“BRIC”

Brazil

Russia

India

China

Emerging middle class non-Western markets using mixed capitalism

BULL & BEAR

ECOLOGICAL NATIONS

Natural resource surplus vs. deficit nations

Global footprints Natural resource dependency profiles predict future national & regional economic prosperity, stability, & geo-political dominance

Bulls will soon have to develop the capacity to engage in future natural resource rationing & overcome its negative pull on economic growth.

Developing a global pricing system for resource-replacement & renewal

CAPITAL ACCOUNT

The amount foreign nations invest in your nation minus how much your nation invests in foreign nations

The most common ways nations invest in one

another:

• Job creation via off-shoring•Supply chains•Technology-sharing

•Corporate joint ventures•Maintaining currency values•Legal & illegal immigrant labor

The USA owns/influences more of the world than anyone else due to capital account surplus.

CAPITALISM BENEFITS

•Material standard of living•Decentralization of economic efficiency•Jobs, technology, financing (psych wants)

CAPITALISM EXPLOITATIO

N CYCLES

•Non-sustainable income (“sweat shops”)•Currency superiority•Social off-shoring•Economic, political & cultural imperialism

To escape the exploitation cycle, developing nations must move up the value added chain.

CAPITALISM GLOBAL

INSECURITIES

Social Darwinism capitalism survival of the fittest

• Economies• Industries & markets• Technologies• Corporations• Jobs & careers• Communities & families (via dual career-marriages)

•Free trade & protectionism•Trade disputes•Business deregulation •Corporate empire-building•Unemployment & business cycles

• Job off-shoring•“Creative job destruction”•Business ethics violations•Social outsourcing•Culture conversion•Global footprints

CAPITALISM, MANAGING BUT NOT

CONTROLLING

•Business laws & regulations •National protectionism•Global government organizations•Social Darwinism

CAPITALISM RUNS THE

WORLD

Lack of economic self-sufficiency makes capitalistic trade mandatory for all nations.

Impersonal autonomous markets run themselves via the “invisible hand of capitalism” (institutionalized self-interest).

Impersonal markets control economic assets: jobs, pay, prices, currencies, & national budgets.

CHINA’S COMPETITIV

E CHALLENGE

S

•Heavy dependence on low value-added products, Western technology & outsourcing• Lack of middle class consumers & concentrated market zones•Corrupt business practices

• Inadequate number of industrial jobs for rural Chinese & Chinese-owned corporations•Many sweat shop operations•Lack of business regulation

CHINA SPLITS

•Agricultural vs. manufacturing workers•Rural vs. urban

Low vs. medium-profit products on the value added chain

CHINA’S WEAK

INSTITUTIONS

Feudal power structure

China’s “frontier” economy lacks institutional control & professionalism

Weak human rights = weak capitalism

CHINESE EMERGING

EMPIRE IN THE DEVELOPING

WORLD

Angola, Brazil, Iraq, Pakistan, North Korea, Albania, Cambodia, relationships established with most African nations

CHINESE ECONOMIC STRATEGY

Develop China’s

economy via foreign money & technology

1.Keep the West on the debt & off-shoring spider web

2.Net-exporting

3. Export-stimulus low currency policy

4. Non-meddling foreign policy with developing world economic partners

COMMUNITYCAPITALISM

Workers (vs. corporations in industrialized nations) as capitalists in agrarian nations use a less profitable, higher cost distribution system in order to provide a sustainable income for extended community stakeholders.

CORPORATE SURFING

(flex/speed)

The 21st century competitive need to:

•Rationalize global operations • Exploit new technology • Invent & innovate•Project management via multi-national virtual teams

•Domestic outsourcing & foreign off-shoring•Virtual organizations & assets (a la EBAY)• Flex employees: outsourced; part-time; temp; renewable contracts for finite hours of work

CORRUPT FOREIGN

PRACTICES ACT

1977 U.S. law that makes it legal for corporations to pay bribes for “facilitating” business services in non-institutional nations (as long as the bribes are reported on the company’s tax statement.) Bribes to government officials are illegal (but can easily be made via independent “consultants.”)

CREATIVE JOB DESTRUCTIO

N

The jobs lost by nations involved in off-shoring & free trade agreements are gradually replaced by new jobs both higher & lower on the value added chain.

•Most manufacturing jobs lost by the USA are replaced by lower-paying service sector jobs.•Some manual labor jobs are replaced by a fewer number of computer jobs.

•Some full-time jobs are replaced by part-time jobs.•Some jobs with benefits are replaced by jobs with fewer or no benefits.

CULTURE CONVERSIO

N

Capitalism thrives best in individualism cultures where community (multiple stakeholders) is minimized to enable people to live their lives around the needs of organizations > family.

Traditional, community, family-focused cultures (home to ¾ of humanity) are evaporating as capitalism spreads into the developing world. Capitalism molds culture.

CURRENCY MANAGEME

NT

Governments manipulate (“dirty float”) & maintain currency values by buying & selling large enough volumes in global financial markets to maintain their nation’s currency policy.

Maintaining a nation’s currency trading range requires cooperation with key trading partners.

By trading, a nation brings in foreign currency reserves needed for “dirty float” domestic currency management.

•“Propped up” (over-valued) currencies favor importers (consumers). •Undervalued currencies favor exporters (business).

National currency policy:

• Economic stimulus based on consumption (consumers)• Eco stimulus based on productivity (corporations), limited in the West by off-shoring manufacturing.

CURRENCY VALUE

Global perception of the nation’s economic & political stability

• Global trade affects currency supply

• Trade surplus nations generally have higher currency values (due to a lower supply of their currency in the world economy). Vice versa for nations with trade deficits.

CURRENT

ACCOUNT

A nation’s annual exports – imports = trade balance

The annual USA negative current account (trade deficit) empowers foreign creditors to influence American foreign policy.

DEVELOPING WORLD

¾ of all people live in:

•Africa•India•China•Middle East

Agriculture-based economies with exports low on the value added chain

Social, political, & economic problems stemming from historical exploitation by Western colonialism, religion, racism, disease, & over-population

Historically bypassed by capitalism

because of low profit potential &

poor business infrastructure

DEVELOPING WORLD

BUSINESS CHALLENGE

S

Inadequate business infrastructure:

Roads, electricity, sanitation, business professionals, banks, reliable suppliers, technology, political stability, etc.

•Weak, corrupt institutions •Untrained manual labor•Civil wars & ethnic cleansing•Scarce middle class

DOHA (Qatar)

ROUND OF WTO TALKS

The World Trade Organization achieved no progress in its Doha 2000-2006 round of discussions over Western nations dropping agricultural subsidies (a violation of WTO free trade regulations) to increase food importing from the developing world.

The Global Agreement on Tariffs & Trade (GATT) started the World Trade Organization because of irreconcilable trade agendas (West vs. rest of world). Failure of the Doha WTO round was “déjà vu all over again.”

ECONOMIC INTERDEPENDENC

Y

•The interconnected global economy has made nations more economically dependent on one another & more susceptible to global economic trends.•Virtual nations

• “Brain” & body” nations•Global supply chains•Manufacturing off-shoring •Free trade agreements•Technology uniformity•Debtor & creditor nations

ECONOMIC NATIONALISM

Protecting domestic corporations

•Tariffs•World Trade Organization suits•Tariff tax offsets

•Free trade agreements•Neo-colonialism via global government organizations•Corporate subsidies

ECO POWER IN THE 21st CENTURY

•In the 21st century, economic power trumps military power•Japan & Germany

•Trade surpluses: production/exporting > consuming/importing

•Balanced government budgets or surpluses•Trade surpluses

EMERGING MARKETS

“BRIC” &Latin

America

Emerging middle class (disposable income) consumers in large population zones

To grow economically, nations must move up the value added chain & become more middle class & less of an oligarchy.

The final capitalist bonanza?

ETHICS, NEO-

LIBERAL CAPITALISM

Business community = All stakeholders directly impacted by a corporation: customers, employees, suppliers, local communities, etc.

Companies dedicated to community would strive to maximize community benefits & minimize negative community impacts. This is inconsistent with neo-liberal Western capitalism, which views corporate stockholders as the sole group corporations are responsible for.

Because community & neo-liberal capitalism are incompatible, business ethics is legalistic (a matter of legislation & suits) rather than values-based (“morality”). Corporations in neo-liberal cultures are not responsible for social community.

In individualism cultures, corporations have only two ethical duties: to maximize stockholder financial returns & to obey the letter of relevant business legislation (as actively influenced by business lobbying & PAC contributions).

MAIN RECENT CAUSES OF COMMUNITY-DAMAGING BUSINESS BEHAVIORS

•Decline of agency principle & rise of professional exploitation•Business deregulation•Lapdog boards

•Business financing of politics•Libertarian ideology: individualism > community

EUROPEAN UNION

27 members: Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. 17 other regional nations are not currently members.

ANGLO-SAXONS: Ireland & Britain

CONTINENTALS: France, Germany, Belgium, Austria, Luxembourg

MEDITERRANEANS: Greece, Spain, Italy, Portugal, Cyprus

NORDICS: Demark, Sweden, Finland, Netherlands

EU CHALLENGE

D

•Citizen apathy & malaise about the EU “dream”•Standard of living inequalities•Persistent unemployment, government deficits, & economic stagnation

•High number of retirees supported by workers & crumbling welfare state•Rigid worker welfare laws & short workweek•No constitution

EU CONSTITUTIO

N

•Federalism vs. nationalism•Conflicting EU pluralities & divisiveness•Referendum rejections & surrogate treaties

•Growing right wing racist fascism

in Europe•Voting for politicians of different nationalities?

EUROZONE

•The 16 of 27 EU members that have adopted (1999) the Euro as their official national currency

The “PIIGS”, EU govt. deficit nations: Portugal, Ireland, Italy, Greece, Spain

•PIIGS governments are in financial jeopardy due to high social welfare (vote-buying) deficits & the high value of the Euro. Their rotten economies endanger the value of the Euro & the existence of the EU.

•PIIGS economies are too poor to afford the Euro on their own (like living in New York or Tokyo on a Waco income).•Northern EU nations subsidize their use of the Euro & hence PIIGS social welfare benefits.

•Should/can the EU cancel PIIGS membership to halt subsidies & their economic baggage?• Is use of the Euro as the EU’s official currency unrealistic, & hence the EU itself?

EXTERNALITIES

Externalities = the positive & negative impacts of corporate profit-maximization on non-stakeholders.

Positive externalities: • Job creation• Tax revenue• Productive use of technology

Negative externalities:

•Pollution•Social outsourcing•Unemployment•“Sweat shop” operations•Political bribery (legal & illegal) & lobbying

FAILED STATES

•Nations which lack a legitimate or functional government; fail to provide basic public services; & often are regional political “pariahs” who can’t coexist with neighboring nations

Somalia, Chad, Sudan,Zimbabwe, Afghanistan,Iraq, Pakistan, Haiti, IvoryCoast, North Korea, Yemen,Bangladesh, Congo,Guinea, Burma, Nigeria,Timor-Leste

“Failed states” (most in Africa & the Middle East) pose large humanitarian & Western foreign policy problems (from 19th & 20th century colonialism & involvement in 20th & 21st century regional civil wars).

“FAIR”

TRADE

The “fair” trade (vs. “free” trade) system of extended capitalist stakeholders (vs. stockholders): workers + their families + the local community + members of an alternate value-added chain

Worker & community capitalism for sustainable incomes

Alternate “FAT” value added chain & distribution system to enable price “premiums” for sustainable incomes

FOREIGN DIRECT

INVESTMENT

Globaleconomy’s $3T daily blood

circulation

Facilitating global capitalism: • Importing-exporting•Off-shoring operations•Stock & currency exchange markets•Technology transfer

FREE TRAD

E

•Maximum corporate access to global markets via permeable national borders•Economic Social Darwinism

•Noprotectionism

•Free trade agreements•Western ideological hypocrisy

FREE TRADE AGREEMENT

S

• North American Free Trade Agreement (NAFTA)

• European Union (EU)• ASEAN (Association of Southeast

Asian Nations) APEC (American-Pacific Trade)Cooperative)

• MERCOSUR (Southern Common Market)

• CAFTA (Central American Free Trade Agreement

• FTAA (Free Trade Agreement of the Americas)?

The FTA gamble:•Larger slice of the pie vs. a larger pie•Critical mass foreign direct investment + physical infrastructure & entrepreneurial risk-taking

•Creative job destruction = Mexico’s NAFTA gamble•Global triangle of free trade? Western single stakeholder capitalism is the most competitive form capitalism global

culture conversion

FREE TRADE ZONE

Designated geographical areas in developing nations where foreign companies can use cheap labor to make tariff-free products to sell in the nation

FRONTIER ECONOMIES

•Business operations with no regulation, corruption, or institutional support•“BRIC” nations

•Business corruption•Booms & busts•Corporate externalities •Oligarchs•Employee abuse

GLOBAL BUSINESS

DRAMA

• Interdependency of economies & the emerging one world economy•Drastic global wealth disparities•Economic nationalism

•Economic stagnation of the West & economic emergence of the developing world•Dominance of trans-national corporations

Neo-liberal (Western) capitalism & culture conversion

GLOBAL FOOTPRINTS

•Green & red bulls & bears•Natural resource debtors & creditors

Globalfootprints ofconsumerism

GLOBAL GOVERNMENT

ORGANIZATIONS (GGOs)

Organizations with politics-based authority over national governments

Political Influence:

•United Nations•International Criminal Court

Economic Influence:•World Trade Organization (WTO)• International Monetary Fund & World Bank• European Union•NAFTA

Ideological conflicts over forms of capitalism (individualism vs. community), Keynesian economics (debt-stimulated national economic growth), & neo-colonialism (Western domination via economic GGOs)

GLOBALISM, CAUSES

•Capitalism•Trade•Universal platform technology•Transnational corporations

•Free trade•Global government organizations•Maximizing ROI investors & price-minimizing consumers

GLOBAL SUPPLY CHAINS

•A global supply chain consists of all the contributors to a global product, including raw material suppliers, manufacturers, financers, transporters, retailers, marketers, etc.

•Major global companies, such as Dell Computer, “big box” retailers, & the U.S. military have “long” geographically extended) supply chains across continents.

The lever of global economic interdependency, trade, outsourcing, & control of industry value added chains

GLOBAL WARMING STRATEGY

CAUSES OF GW:

1.Oil-based global fuel system2.Permanently underpricing oil

3.Lack of global environmental protection institutions

4.Nationalism, especially among largest oil consuming nations

5. Short-term economic growth politics > environmental health

6. Consumerism-materialism cultures

7. Individualism > community cultures

8. Lack of convenient, efficient mass transit

9. Dangers of nuclear power

GW strategy options: 1.Taming libertarian consumerism (maximum materialism at minimum cost) as the primary engine of global economic growth2.Natural resource replacement & renewal global pricing system (paying the true cost of resource exploitation)

3. Pollution offset global trading markets

4. Need for a new global government organization to spearhead global warming recovery & coordinate disaster relief

5. Chinese economic development: the GW doomsday scenario

GODZILLAS TIGERS ZEBRAS

Godzillas•Largest global economies•Service sector economies•Consumption > production

• Intellectual property•“Brain” nations

Tigers•Recently emerging middle class body nations: Hong Kong, Taiwan, South Korea, Singapore, Mexico, Brazil •Mixed capitalism

Emerging Tigers

•China•India•Russia•Indonesia•Poland

Zebras•Least developed + failed states & regions•Africa, Middle East, rural China

HOT MONEY ECONOMIC

MELTDOWNS

• Currency/economic meltdowns occurred twice in the 1990s: Mexico & several Asian nations•Meltdown trigger #1: Short-term foreign direct investments treated as long-term capital by developing nations & loaned out to business

Meltdown trigger #2: High-expectations global investors panic at some unforeseen political or economic shock in an under-developed nation or region & suddenly pull out their FDI (now tied up in non-liquid business loans).

Meltdown trigger #3: Investor panic sets off a sudden currency depreciation:1.Investors suddenly pull their capital out of the economy, foregoing interest earnings.2.The nation’s government pays investors back in local currency, causing its global supply to shoot up & its demand (price) to fall

3. The weakened currency greatly increases the cost of imported goods, (especially hurting domestic corporations) & decreases revenue received for exported goods

4. Investors further panic about future prospects for the nation’s economy, prolonging the currency run

5. The government faces bankruptcy & must borrow large sums of money from the IMF & other nations = neo-colonialism

ILLEGAL IMMIGRATION ECONOMICS

• Illegal cross-border business that companies , consumers, & citizens on both sides of the border use for economic gain.• Because rich nations are so dependent on illegal immigration, they tolerate shadow (underground) economies.

The main causes of illegal immigration:• Inadequate profit incentives for capitalism•Lack of national economic development

•Weak or corrupt institutions•Significant standard of living differences between nations•Free trade creative job destruction

IMPERSONAL AMORAL MARKETS

Global markets for goods & services result from innumerable “grassroots” decisions (the “invisible hand” of capitalism) relating to profit-seeking by private interests + impersonal supply & demand factors.

Consumers have little knowledge of how prices are derived & how revenue is divided along the value added chain. Worker pay is determined by impersonal competitive factors, various government regulations, & foreign wages.

Virtually all capitalistic marketplace behaviors are based on surviving & thriving (self-serving behaviors) in the competitive marketplace. The “amorality” of capitalism is to use the market system for private gain.

Impersonal systems are also the nexus of career development (college degrees + job-hopping) & consumerism (credit cards, malls, & online shopping)

IMPORT SUBSTITUTIO

N

• Importing what is less expensive than producing it at home• International Monetary Fund’s neo-liberal capitalism (individualism culture single-stakeholder corporations)

Developing nations complain this eliminates their food self-sufficiency & raises global food prices due to climate change; periodic crop disasters; & persistent 21st century civil wars.

INDIVIDUALISM CULTURE

In individualism cultures, most people live their lives around the needs of organizations which employ them. Family & community are subordinate to careers.

Key characteristics of individualism culture:

• Personal achievement (careers) as the basis for personal identity & status• Producing > nurturing roles for women (unisex culture)•Rule by impersonal institutions

INTELLECTUAL PROPERTY

•Copyrights•Patents•Pop culture•Software•Franchises

•The bread & butter economic asset & export of the developed world•Low cost, high profit products

Primary trade agenda of the developed world

INTERMEDIATE PRODUCTS

Products such as computer hardware, mechanical parts, and textiles sold to manufacturers (mainly in the developing world) who produce the final product sold to consumers. Such supply products are on the middle section of the value added chain & thus generate less profit than the completed product.

INTERNATIONAL MONETARY FUND (IMF) & WORLD BANK

•Bank to nations•Headquartered in Washington D.C.• IMF loans to the developed world•WB loans to the developing world

Rich nations make deposits to be loaned out for ideological reasons: support of neo-liberal capitalism → cutting mixed capitalism; privatizing government-run companies; no trade barriers; import substitution

The World Bank has to experiment with many of its large developing world infrastructure loan projects (dams, roads, power plants, etc.) & learn the hard way from experience:

•Geographical displacement of people •Altering the social role of women• Unemployment •Shift towards individualism culture

INTERNATIONAL STANDARDS

ORGANIZATION (ISO)

Sculpting uniformity in all operational aspects of global business: manufacturing, distribution, safety, shipping, etc.

Corporations must be ISO certified in their areas of operation in order to engage in domestic or global business.

INVENTION &

INNOVATION

•Invention = a new core technology (portable computer)•Innovation = new applications of the core technology (PDAs)

The “twin I’s” + marketing push companies & nations to the most profitable end of the value added chain

The competitive edge of Western

business dominance &

magnet of future economic

opportunities

JOKER CARD OF

ASIA

China’s magnetic booming economy pulls in foreign direct investment flows from Asia & the West, giving rise to many economic & political surprises (like the Joker card in a game of cards):

•Off-shoring manufacturing nexus of the global economy•Siphoning foreign direct investment & jobs away from other developing nations to China

•Under-valued Chinese currency to stimulate exporting•Chinese economic neo-colonialism around the world

KEYNESIAN ECONOMICS

Economic policy advocated by British economist John Maynard Keynes after the “Great Depression” of the 1930s to stimulate national economies via government spending & deficits (mixed capitalism)

Most common arenas of government spending to maximize economic stimulus:• Social welfare benefits•Military equipping & war• Agricultural & corporate subsidies • Infrastructure building projects

Keynesian economic policy has three major drawbacks:• Escalating national debt, a threat to the standard of living of future generations• Compromising national sovereignty via dependence on foreign deficit-financing • Chief re-election strategy for incumbent politicians

MERCANTILISM

•Using the economic assets of other nations for your nation’s economic growth & stimulus•Win-lose exploitative mercantilism (20th century & before)•Win-win interdependency mercantilism (21st century)

• Japan’s post-WW2 mixed capitalism & interdependency win-win mercantilism• Japan & China, the West’s “drug pushers”: low-cost, high-quality manufacturing + Western government debt financing

MICs

Middle income countries with limited disposable income that have recently reached middle class status: China, Philippines, Brazil, Mexico, Argentina, Venezuela, Indonesia, etc.

MIDDLE

CLASS

Capitalism survives

& thrives onpeople withdisposableincomes

Middle class, not upper class, people are the core of business success & profit.

The largest middle class nations (USA, Western Europe, Japan) are the mecca of profitable global consumerism– the oxygen of business.

Middle class consumers are emerging for the first time in the developing world, beckoning a future bonanza for mass merchandising companies capable of dominating global competition.

MIXEDCAPITALISM

•Government ownership of businesses•Subsidies: agricultural, R&D, industry bail-outs, low interest rates, tax write-offs• Tariff protection

Western federal debt for economic stimulus

(Keynesianeconomics)

Mixed capitalism is the key to Asian economic nationalism:•National industrial planning•Cartel industries• “Sweetheart loans”•Global market placement

MOST FAVORED NATION STATUS

The strongest incentive nations have for joining the World Trade Organization, “MFN” status guarantees that member nations will always pay the lowest tariffs charged by other WTO members & thus won’t face trade discrimination.

MULTIPLE SPEED EU

An informal practice in the EU which allows nations to voluntarily adopt various EU regulations & programs when the nation is ready. In the absence of a strong EU government & constitution, this practice encourages member nations to eventually “fall in line” with early adopters.

NAFTA

• Free trade agreement (begun in the early 1990s) between Canada, Mexico, & the USA•NAFTA has economically affected Mexico much more than Canada or the USA, whose economies dwarf Mexico’s.

NAFTA has stimulated trade between all 3 nations; hurt smaller companies in Mexico; hurt Mexican agriculture (due to U.S. farm subsidies); & caused some “creative job destruction” in the USA.

NATIONAL INDUSTRIAL PLANNING

Japan’s pioneering form of Asian mixed capitalism in which the Ministry of Economy, Trade and Industry (METI) brokers a nationalistic partnership between government & Japanese corporations. Asian corporations favor national interests > investor interests.

NATURAL RESOURCE

INSTABILITY

New red bulls on the loose: China, India, Russia

•Lack of a global natural resource conservation & rationalization system •Prospects of natural resource wars & military-backed colonialism (especially in the Middle East)

NEO-COLONIALIS

M

Westernizing the economic & political polices of developing nations through the imposition of neo-liberal capitalism by global government organizations

Culture conversion of community cultures to individualism

NEO-LIBERAL

CAPITALISM

•Single purpose business: maximize profits•Single corporate stakeholder: financial owners of the company

• “Laissez faire” (leave business alone) government• Free trade (no protectionism)• Social Darwinism survival of the strongest corporations only•Minimum government; maximum catering to business

NET EXPORTING NATIONAL STRATEGY

IN ASIA

Using a mixed capitalism partnership between business & government to maximize national economic success

•Consistent trade surpluses •Government policies to limit social welfare benefits & importing (negative trade balance)

Using trade surpluses to finance Western nations with federal budget deficits

NON-GOVERNMENTA

L ORGANIZATION

S (NGOS)

Global social activist organizations that champion environmentalism, human rights, & peace

•Sierra Club•Greenpeace•Public Citizen•Human Rights Watch•Peacenet•One World•25,000 others

NGOs oppose neo-liberal capitalism; mass market consumerism; trans-national corporations; global business corruption; & the International Monetary Fund.

NON-PATRIOTIC

CORPORATIONS

•Foreign outsourcing of both manufacturing & service sector•Global supply chains

OLIGARCHIES

(plutocracies)

•Nations (mostly in Latin American & the Middle East) with a social structure dominated by a small number of powerful, rich elites who retard economic development & social change

•The need for more democratic institutions & middle class•Major cause of political revolutions in Latin America

OFF-SHORING

•Using cheap labor around the world as a substitute for expensive domestic labor.•Manufacturing & service sector job exporting

Hollowing out the blue collar manufacturing sector of Western economies via outsourcing

PRIVITIZATION

•Selling government owned businesses (mixed capitalism) to (often foreign) private companies•Common loan requirements of International Monetary Fund & World Bank

•Main disadvantages: loss of jobs in the privatized company; economic colonialism of foreign companies•Advantages: more efficient & effective operations + lowered government budget

PROTECTIONISM

•Tariffs•Subsidies•Quotas•Import substitution•Tariff offset tax breaks

•Violation of free trade principle•Ignites trade wars •Infant industry protection

RATIONALIZATION

OF GLOBAL BUSINESS

Maximizing corporate profits & minimizing corporate costs

using the entire world as an operating arena

Tactics of global rationalization:

•Manufacturing off-shoring•Global supply chains•Social off-shoring•Corporate surfing

RISK SHIFT IN GLOBAL BUSINESS

•Contracts•Mainstream currencies•Financial brokers (such as factors)•Friend-to-friend networking

• Industry oligopolies•Value-add chain control•Bribery•Business lobbying & political campaign funding

SOCIAL DARWINISM

Darwin’s survival of the fittest law of

the jungle applied to business

Business Social Darwinists favor:

• Corporations > governments• Transnational (large) corporations > domestic• Free trade• Libertarian (no government) political ideology

The “uneven playing field” of global business contributes to Social Darwinism:•Protectionism•Mixed capitalism•Business corruption•Neo-colonialism

SOCIAL OFF-SHORING

Exporting illegal corporate externalities to nations where they are tolerated or laws unenforced:

• Pollution• Sweat shops• Bribing government officials• Unsafe products or deceptive marketing

SOLDIER OF FORTUNE

CORPORATIONS

•Global resource rationing•Non-patriotic, non-community• Joint ventures with foreign companies

SPIDER WEB

STRATEGY

Win-win mercantilism--setting up a mutually beneficial interdependent trading system between nations:• Foreign outsourcing• Technology sharing•Government deficit financing (Keynesian economics)

Pioneered by Japan in the second half of the 20th century & followed by China & other Asian nations. Nations that need each other economically don’t have to like each other, but they do have to cooperate politically.

For the most part, Western nations use Asia for highly profitable manufacturing (cheap, plentiful labor) & borrow large sums of Asian money to finance Western government deficits. Asia receives numerous blue-collar jobs & creditor status with the West.

STAKEHOLDERS

Individuals & organizations directly affected by corporate profit-seeking activities: stockholders; employees; customers; suppliers; financers; governments at all levels

Dueling philosophies: private stakeholders only vs. community stakeholders

SUBSIDIES

Government payments to agriculture & sometimes high tech businesses to help them compete. A form of mixed capitalism & a violation of fair trade

The leading cause of trade conflict between the West & the developing world

SUSTAINABLE INCOME

• The amount of wages needed by global workers to meet the basic physical needs of their extended families. • Because most corporations serve only financial stakeholders, sustainable incomes are not guaranteed throughout the world.

“Fair” trade practices community capitalism by paying workers in agricultural coops a sustaining wage “premium” above & beyond what the impersonal marketplace provides them.

“SWEATSHOPS”

Low wage manual labor factories used primarily by off-shoring companies in developing nations

Some capitalists justify sweatshops on the grounds that they are a fleeting phase of a nation’s economic development & are better than no jobs at all.

“SWEETHEART” BANK LOANS

A form of mixed capitalism used by many Asian nations to encourage banks to make risky loans to corporations, in return for the guarantee that the government will pay off the corporation’s loan if necessary.

SYSTEMS EXPLOITATIO

N

• Institutions create impersonal systems that are exploited for both good & bad: commercial markets, stock markets, global trade, educational systems, corporations, political offices, etc.

•Nations, organizations, and individuals play the “gain game” by exploiting these systems for nationalistic & personal gain.

Capitalism is the world’s largest, most exploited, system for both good & bad because of its accessibility and unparalleled financial wealth.

•Global business exploits capitalism to a greater degree than any other system on earth. •Professional success hinges on the capacity to exploit corporate systems for career gain.

TARIFFS

Taxes exporters must pay to sell their products in foreign nations

Tariffs are a form of protectionism (violation of free trade) used to give a nation’s companies a competitive advantage over foreign exporters.

TRADE AGENDA

S

Godzilla nations•Intellectual property protection•Trade of services•Import substitution•Neo-colonialism

Tiger nations•Tariff protection•Protection from “hot money” economic meltdowns

Zebra nations

•Elimination of Godzilla agricultural subsidies•Elimination of import substitution & forced privatization• Infant industry protection

TRADE DUMPIN

G

Outlawed by the World Trade Organization, dumping occurs when a nation sells its exports below actual cost in a foreign nation to quickly grab significant market share or to put local competitors out of business.

TRANSNATIONAL

CORPORATIONS

Mega-large & powerful corporations (financially richer than most nations) that rationalize their global operations via maximum presence in global markets. They view the entire planet as their operating arena.

TURBOCAPITALISM

•Max political catering to business & corporations in domestic & foreign policy•Politically popular since “Reagonomics” in the 1980s

• Maximum business deregulation (chain reaction ethics scandals in 1990s & 2000s)

• Corporate political campaign contributions & lobbying (unprecedented political influence of corporations & industries)

• Appointment of former industry executives to oversee business regulatory agencies (abandonment of agency principle)

•Corporate tax minimization (increased middle class tax burden)•Keynesian economics: stimulating business with federal deficits (mixed capitalism)

TWO-EDGED SWORD OF

GLOBAL BUSINESS

Capitalist gains made at the expense of non-ownership stakeholders: employees, local communities, the environment, economies

•Off-shoring•Social off-shoring•Political campaign contributions & lobbying•Short-term unemployment

The fiscal debt failure of “Reaganomics” in the 1980s and 2000s (under George W. Bush) to reduce dependence on government led American leaders to increase dependence on neo-liberal capitalism for future economic growth.

Corporations became the new champions of public policy. This emergent libertarian capitalism has raised 3 new challenges in its emphasis on laissez-faire government, new rounds of business deregulation, and escalation of Social Darwinism:

1.Will expanded business deregulation unleash new systemic corruption such as in the energy industry in the 1990s (Enron-led financial fraud) and the finance industry in the 2000s (especially the catastrophic mortgage debacle)?

2. Will the probable future decreases in government social welfare programs (the byproduct of abandoning Keynesian financial stimulation) neutralize the anticipated gains of libertarian corporate economic stimulus?

3. Will the possible escalation of crime and social problems stemming from truncated government social welfare programs diminish the economic stimulus of consumerism?

VALUE-ADDED CHAIN

How revenue is divided between the various contributors to a finished product

The marketing activities of most products (branding, advertising, identity-creating) generally capture a much larger share of sales revenue than companies involved in providing material or human resources for the product.

Industry value-added chains are typically dominated by companies with the biggest clout (such as Wal-Mart in general merchandise retailing). Value chain leaders play a major role in determining product prices & worker wages globally.

VIRTUAL NATIONS

•Economic interdependencies •Free trade agreements•Global supply chains

WORLD TRADE ORGANIZATION

(WTO)

•Promotes & regulates trade & settles trade disputes•Headquartered in Geneva, Switzerland

•Stalemate between rich & poor nation trade agendas•The WTO perpetuates neo-liberal capitalism & hence neo-colonialism