Wayne O'Leary

Toward World Government, Ready or Not

For years, one of the recurring nightmares of those on the political right has been that Americans are on the verge of being subjected to world government, a plot visited upon us by the United Nations or some other international governing body of similarly evil ilk. Ironically, those fears may be coming true, but not quite in the way conservative conspiracy theorists have visualized.

The notion of surreptitious world government seems to have coincided with the birth of the Trilateral Commission, a nonpartisan discussion group founded in 1973 by banker David Rockefeller to examine global issues arising from an increasingly interdependent world. Original opponents of the organization, principally right-wing conservatives ranging from former Republican Sen. Barry Goldwater to extremist members of the John Birch Society, viewed it from the start as the entering wedge of a movement to encroach upon national sovereignty and undermine American exceptionalism. The fewer detractors on the left, such as linguist Noam Chomsky, tended to look askance at the commission’s musings about excessive democracy leading to worldwide political instability.

However, none of the Trilateral Commission’s critics, right or left, fastened upon the threat posed to the international order by a gradual transition from growing world interdependence to outright globalization. They saw the potential problem as essentially one of extra-national governmental institutions run amok, whereas the real problem is one of globalized private economic forces imposing their will upon individual nation-states. In other words, if we are to have what amounts to world government, it will come quietly and indirectly through the pervasive influence of all-powerful multinational corporations operating behind the scenes, a process that appears to be gaining increased momentum as time passes.

In general, conservatism in the public sphere unequivocally supports this development as an expression of the inviolate marketplace, while progressivism, which has been in disarray for a generation, tags along reluctantly in me-too fashion. The obvious fact of the political right mostly setting the agenda and controlling elections in the developed world for three decades and counting is one manifestation of corporate dominance over government.

Yet, for the cause of corporate hegemony, it hasn’t mattered much which political parties have been nominally in charge. Both the right and the left know what the multinationals want (deregulated and privatized economies, lower taxes, open borders, free trade, fluid labor markets, constrained unions, unrestricted mergers, smaller government), and both sides accede to those demands — the right because it fundamentally agrees, the left because it’s intimidated. The recent surrender of the current French Socialist government of François Hollande to corporate economic-policy priorities is only the latest illustration of the trend.

In the US, the unceasing efforts of Democratic and Republican administrations alike to prop up the stock market, the plaything of institutional investors, is still more evidence of corporate domination; Wall Street’s fortunes far exceed full employment or a healthy housing sector among concerns of government policy makers. The success of this lopsided policy approach from the corporate standpoint is obvious. In the face of a stagnant Main Street economic recovery, the US stock market doubled in value between 2009 and 2013, reaching record levels.

The steadily ascending stock market is reflected in US corporate profits, which rose from 3% of gross domestic product (GDP) in 1980 to 15% in 2012. For global corporations as a whole, combined profits for 2013 were estimated by market analysts at 13.5% of GDP. It’s a tidy sum, and in Europe, where the European Union has imposed a corporate-state mentality, such returns are guaranteed by EU treaties mandating labor “flexibility,” eliminating capital controls, enforcing creditor-friendly policies, and limiting national economic sovereignty by means of financial integration and restrictions on the fiscal independence of member states. This makes it difficult and risky for individual governments, even progressive ones, to stand up to abuses of corporate power.

The leverage global corporations have to enforce their will, the implied threat they hold over all national governments, is loss of jobs — the recourse of offshoring and outsourcing always available to multinationals unburdened by national allegiances. Give us what we want goes the unspoken ultimatum, or lose your employment base.. The threat rarely has to be uttered aloud.

Take taxes, for instance, a prime corporate concern. The average statutory corporate income-tax rate for all OECD (Organization for Economic Cooperation and Development) countries, the world’s leading economic powers, fell from nearly 50% in 1981 to below 30% in 2012. Factoring in tax breaks and loopholes, today’s “effective marginal tax rate” (or EMTR) is actually much lower — well under 20% on average.

In the US, home to over a third of the largest multinationals, the corporate bottom line is indulged to an even greater degree. From 46% in the early 1980s, the official top corporate tax rate has fallen to 35% (with an EMTR of less than half that), and the Obama administration proposes to reduce it further — to 28%, in order to be “competitive” with foreign rates.

By now, much US-based corporate income is completely (and legally) untaxed. American multinationals are currently thought to be holding between $1.5 and $2 trillion safe from the IRS in overseas tax havens, profits they refuse to repatriate without assurances of a “tax holiday” like the one obtained from a Republican Congress in 2004, which temporarily reduced their effective rate on foreign earnings to an astonishing 5.25%.

After taxes, the issue that most animates the pursuit of corporate world government is free trade. Presently in the news is the tentative Trans-Pacific Partnership agreement (TPP) involving a dozen Pacific Rim countries. Less on the radar screen, but more consequential, is the ambitious Transatlantic Trade and Investment Partnership proposal (TTIP) tying together the US and the European Union in loving economic embrace; if approved, it would be the largest free-trade agreement in history, encompassing half the world’s GDP.

Like the TPP, the TTIP’s goal is less to lower already-low tariff barriers than to remove non-tariff barriers to multinational operations — what The Economist calls “trade facilitation.” Its profit- oriented aims, in addition to zero tariffs on goods and services, are regulatory harmonization, restrictions on competitive state-owned enterprises, and the protection of foreign investors from local governmental interference. Put another way, corporate world government here we come.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He is the author of two prizewinning books.

From The Progressive Populist, April 15, 2014