(c) Copyright 1998 by Graham Strachan
Let’s be clear on one thing: Australia has always had foreign investment, but until now the federal government has always retained the right to limit and control it. Signing the MAI signs away that right. In its place the MAI creates a ‘right’ of multinational corporations (MNCs) and foreign investors to do what they like in and to the country without any corresponding social responsibilities, and to sue the government if it interferes. This frees up the minds of MNC executives, now paid millions of dollars annually, to concentrate on the delicate process of profit maximisation without having to worry about damage done to the host country or its people. That’s ‘rationalism’.
On the other hand, the alleged benefits of the MAI to the Australian people in exchange for lost economic sovereignty are mainly lies (untrue statements which the maker can have no reason to believe are true). It is important to realise that the MAI is not an isolated instrument. It is part of the process of ‘globalisation’ which has been going on for at least 15 years, and includes the policies of ‘economic rationalism’ and phony ‘free trade’. The actual results are coming in now, and they make nonsense of the promises by academics and politicians for economic rationalism, ‘free’ trade, and the MAI.
According MAI Policy Briefs on the Internet, foreign investment will ‘promote economic growth, jobs and rising living standards world-wide’. In fact the OPPOSITE is true.
As for ‘promoting jobs’: since the Hawke/Keating government opened the Australian floodgates to foreign investment in 1983 the people looking for work, or more work than they have, has risen to 25% of the workforce (1). Big business is eliminating jobs at the rate of 500,000 per year. What job creation there has been is in the small/medium sized locally-owned business sector, the very sector threatened by economic rationalism and the MAI.
As for ‘rising living standards’: a report released earlier this month by the Governor General found that 5.5 million Australians (30% of the population) now live below the poverty line, an increase of 800,000 over the past 25 years. Australia has slipped from around 6th to 26th in the OECD list of good countries to live in.
As for ‘promoting economic growth’: now that foreign investors own 90% of Australia’s big business and pay little or no tax here, ‘economic growth’, rather than being an indicator of national economic health, is now a measure of the degree to which foreign investors are growing fat on Australia’s natural resources, including its people. The rest of the country lives on borrowed money. During the era of economic rationalism, Australia’s foreign debt has grown from $23 billion to a massive $222 billion.
The same trends are observable worldwide: rising unemployment, increasing debt, rising poverty, declining living standards for most, while the mega-rich get mega-richer and increase their econo-political power over the masses.
MAI proponents claim that foreign investment will ‘provide consumers with increased quality, wider choice and lower prices’. In practice, the top 20% of the market, the most profitable customers, get the improved choice, quality and customer service, the middle 80% get less of all those things and pay increased charges, while the bottom 20% get nothing at all, or fall back on a rapidly shrinking welfare net.
Foreign investment does create a certain sort of employment: in things called ‘Free Trade Zones’. Prime Minister Howard has already proposed them as the ‘solution’ to Australia’s employment crisis. Countries like Honduras fence off these zones and build factories in them, to which they then induce foreign investment with promises of cheap labour, no unions, tax-free profits, minimal rent, and no import duties on products sold to the local elites. In the factories women are paid around $3 a day under conditions as bad as any endured during the worst days of the Industrial Revolution, for sewing brand name garments such as Levi’s for the US market (2). Foreign investment creates temporary dead-end jobs. It does not help the host country pay off foreign debt, or provide revenue which the government might use for health or education.
In other countries, foreign investment has led to ‘maquilodoros’. Along the Mexican/US border there are over 1800 of them, foreign owned export-only factories in which foreign investors exploit cheap Mexican labour. The Mexicans live in shanty towns around the factories with no sewerage, running water or electricity. Filthy waste disposal practices by the investors mean that toxic waste runs through the shanty towns in open drains (3). Since offending the investors might cause them to take their investment elsewhere (they moved the Hawaiian pineapple industry to the Philippines virtually overnight leaving 6000 jobless) it is difficult for the Mexican government to get them to observe better standards. After the signing of the MAI it will be impossible.
MAI Policy Briefs also claim foreign investment will get the Third World out of the poverty trap, pointing to World Trade Organisation (WTO) ‘studies’ which allegedly show that ‘low levels of trade and inflows of foreign investment are symptoms rather than the causes of the plight of many of the poorest countries.’ WTO ‘studies’ notwithstanding, the evidence against that theory is overwhelming.
The Third World has to have foreign investment because it can’t accumulate money of its own, due to massive interest payments to First World banks (4). During the 1970s, Third World governments were induced to borrow a lot of money from international bankers, who then jacked up the interest rates. The governments defaulted on the loans, so the international bankers sent in the global debt collectors: the International Monetary Fund (IMF). As part of the ‘bailout packages’, the IMF made the countries privatise their assets, including the best land, in return for cancelling some of the debt. ‘Debt for equity’ they called it. Now foreign investors make record profits from ‘cash crops’ grown for export on the best land, while Third World people literally die of starvation for lack of food. That’s what foreign investment is doing for the Third World.
It is sometimes said that whoever pays for an opinion poll gets the result they want. It seems the same applies now to theoretical economics.
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