RSN Fundraising Banner
FB Share
Email This Page
add comment

Reich writes: 'As global capital becomes ever more powerful, giant corporations are holding governments and citizens up for ransom … while sheltering their profits in the lowest-tax jurisdictions they can find.'

Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)

Global Capital and the Nation State

By Robert Reich, Robert Reich's Blog



s global capital becomes ever more powerful, giant corporations are holding governments and citizens up for ransom - eliciting subsidies and tax breaks from countries concerned about their nation's "competitiveness" - while sheltering their profits in the lowest-tax jurisdictions they can find. Major advanced countries - and their citizens - need a comprehensive tax agreement that won't allow global corporations to get away with this.

Google, Amazon, Starbucks, every other major corporation, and every big Wall Street bank, are sheltering as much of their U.S. profits abroad as they can, while telling Washington that lower corporate taxes are necessary in order to keep the U.S. "competitive."

Baloney. The fact is, global corporations have no allegiance to any country; their only objective is to make as much money as possible - and play off one country against another to keep their taxes down and subsidies up, thereby shifting more of the tax burden to ordinary people whose wages are already shrinking because companies are playing workers off against each other.

I'm in London for a few days, and all the talk here is about how Goldman Sachs just negotiated a sweetheart deal to settle a tax dispute with the British government; Google is manipulating its British sales to pay almost no taxes here by using its low-tax Ireland subsidiary (the chair of the Parliamentary committee investigating this has just called the do-no-evil firm "devious, calculating, and unethical"); Amazon has been found to route its British sales through a subsidiary in low-tax Luxembourg, and now receives more in subsidies from the British government than it pays here in taxes; Starbucks' tax-avoidance strategy was so blatant British consumers began boycotting the firm until it reversed course.

Meanwhile, At a time when you'd expect nations to band together to gain bargaining power against global capital, the opposite is occurring: Xenophobia is breaking out all over.

Here in Britain, the UK Independence Party - which wants to get out of the European Union - is rapidly gaining ground, becoming the third most popular party in the country, according to a new poll for The Independent on Sunday. Almost one in five people plan to vote for it in the next general election. Ukip's overall ratings have risen four points to 19 per cent in the past month, despite Prime Minister David Cameron's efforts to wrest back control of the crucial debate over Britain's relationship with the European Union.

Right-wing nationalist parties are gaining ground elsewhere in Europe as well. In the U.S., not only are Republicans sounding more nationalistic of late (anti-immigrant, anti-trade), but they continue to push "states rights" - as states increasingly battle against one another to give global companies ever larger tax breaks and subsidies.

Nothing could strengthen the hand of global capital more than such breakups.

Robert B. Reich, Chancellor's Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest is an e-book, "Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause. your social media marketing partner


A note of caution regarding our comment sections:

For months a stream of media reports have warned of coordinated propaganda efforts targeting political websites based in the U.S., particularly in the run-up to the 2016 presidential election.

We too were alarmed at the patterns we were, and still are, seeing. It is clear that the provocateurs are far more savvy, disciplined, and purposeful than anything we have ever experienced before.

It is also clear that we still have elements of the same activity in our article discussion forums at this time.

We have hosted and encouraged reader expression since the turn of the century. The comments of our readers are the most vibrant, best-used interactive feature at Reader Supported News. Accordingly, we are strongly resistant to interrupting those services.

It is, however, important to note that in all likelihood hardened operatives are attempting to shape the dialog our community seeks to engage in.

Adapt and overcome.

Marc Ash
Founder, Reader Supported News

+49 # PABLO DIABLO 2013-05-20 15:38
The corporations and the military are killing us. WAKE UP AMERICA. Stop the "divide and conquer". Take back our government.
+27 # 666 2013-05-20 16:46
from mussolini to hitler to orwell to today's "leaders", they all recognize the fundamental struggle of the 20th & 21st centuries is between socialism and corporatism
0 # Cassandra2012 2013-05-24 22:28
Quoting 666:
from mussolini to hitler to orwell to today's "leaders", they all recognize the fundamental struggle of the 20th & 21st centuries is between socialism and corporatism

Corporatism is fascism according to Mussolini!
-1 # Eldon J. Bloedorn 2013-05-20 19:39
Robert Reich does provide excellent information to RSN. but when does Robert, Michael Moore and the others lead the country to something other than just a "bitch board?"
+11 # Todd Williams 2013-05-21 07:30
What do you expect them to do. Eldon? They are not elected officials and as such have no power beyond their pen (or computers). They offer their opinion and the reader passes judgement on the opinion. Nothing more. I don't expect them to do anything other than offer their opinion.
+5 # Eldon J. Bloedorn 2013-05-21 08:25
As previously stated, this is most often just a "bitch board." Opinions are the cheapest commodity on earth. Yet, I understand your point.
+13 # Todd Williams 2013-05-21 10:07
Collective opinions often lead to real change.
+52 # bingers 2013-05-20 15:41
If corporations and lobbyists aren't reined in hard the American Empire is doomed, and very soon.

Conservative economics and ignorance are one and the same.

Time to raise the taxes to the Eisenhower years standards of 91% top marginal rate on people and 52% on corporations.

When the rich and corporations pay through the nose, they still get richer, but the country in general does too. Offshore banking needs to become a crime with extremely harsh punishment.

If you do business here keep your funds here and pay all your taxes or have your corporate charter pulled and your property seized and sold off to smaller companies at a few cents on the dollar with the proviso that they operate honorably, honestly and put the consumer ahead of profit, the way corporations were required to do at the beginning of the nation.
+8 # 666 2013-05-20 16:47
no, the empire is NOT doomed. the "great experiment" the constitutional republic is doomed, past doomed. it's already dead.

the fascist american empire is on the rise, led by dark vader...
0 # RLF 2013-05-21 06:05
Problem is it is going to explode in one firey ball of world war.
+3 # Todd Williams 2013-05-21 07:32
Oh and by "dark vader" are you perhaps referring to Obama? Not too veiled of a racist comment.
0 # Cassandra2012 2013-05-24 22:32
Oh, you mean Darth Cheney, perhaps?
-1 # Sisddwg 2013-05-20 17:05
America was doomed from the start. It took some time but it's speeding up.
-2 # mickeynow 2013-05-20 22:35
I'm all for that.
+11 # RLF 2013-05-21 06:04
How about we call off the embargo on Cuba and start one up on the Cammans and Singapore. There should also be ACLU fights against special treatment of large corps, giving them special tax breaks, because it is "unequal treatment under the law".
+1 # Eldon J. Bloedorn 2013-05-21 14:33
I was a paid member of ACLU. I dropped my membership. While I think gays need civil rights, too much of the ACLU efforts were, it seems, devoted to this "top of the menu" list for so many years. Yet, ACLU has a good purpose.
+1 # Majikman 2013-05-21 21:40
Agree, Eldon. I was stunned when the ACLE supported Citizens United.
0 # Eldon J. Bloedorn 2013-05-22 18:04
TO: MAJIKMAN That is an interesting point you made-"ACLU supporting Citizens United." Can you direct me to a site where I can read up on this matter. Thank you in advance. Regards, Eldon
+1 # Eldon J. Bloedorn 2013-05-22 23:53
Found some ideas which the ACLU presented. They thought that money spent was a form of freedom of speech. The ACLU may also believe that "the sun is not real because it was dark last night."
+1 # davidmichael 2013-05-21 09:36
No matter what the proposed tax rate is for corporations, the smart ones will always pay lower taxes tha most individuals. Why? Because that is how the current tax code has been set for decades. When I had a small company under C Corp status, I was amazed at all of the legal tax loopholes that existed to help us along. In all fairness, many were shared and encouraged so that both employees and employer/owners all shared in the profits.

The reality of the USA is, if you want to be wealthy, start and succeed in business. Rereading "The Millionaire Next Door" recently, made the same conclusion. So...rather than bitch and gripe, start a business. It's one of the best things still about our country.
0 # Cassandra2012 2013-05-24 22:32
"Conservative" -- what a misnomer, just what are these fascists/corpor atists 'conserving'?

They are rather, 'radicals' [as in tearing things up by their roots] right wing radical hoarders and extremists are more like it.
-22 # wantrealdemocracy 2013-05-20 16:03
I disagree with Mr. Reigh. He thinks that to break up large multi national agreements would strengthen the hand of global capital. I think the truth is the exact different way to go. The larger the organization the less ability there is for any democracy to exist. The larger the government the less power the people have. The United States would do well to revert to the Article of Confederation with an agreement between the states but with the federal government to have strictly limited functions. Democracy can only exist in small enough regions that the people can participate directly. Our representative system obviously DOES NOT WORK. There is not ONE 'representative ' in Congress who votes as the constituents advise. These bought and paid for lackeys of the rich follow the orders of their pay masters. You know this and yet you still don't rebel? What's wrong with you? You like serfdom? Grab your forelock and bow down and maybe you will get thrown a crumb. Maybe not.
+18 # Anarchist 23 2013-05-20 17:01
Articles of confederation? Even I know that we have the Constitution because the Articles were insufficient..b ut by all means let's try failure again...nothing says madness like doing the same thing over again and expecting a different result.
+7 # RLF 2013-05-21 06:07
Are you saying we need a good, self disaplined military man to run it all? That's where it is going, with people's worship of the military and respect for moron soldiers who volunteer for these dumb ass corp. wars.
0 # Cassandra2012 2013-05-24 22:35
Musssolini was a meanie (Hitler was a jerk...)
+29 # DPM 2013-05-20 16:42
"Global Corporatism" should be met with "Global Business Regulations". If global business interests owe allegiance to no country, no country should give them privilege. If you don't wish to be beholden to the global "company store" it is time to speak out.
+4 # soularddave 2013-05-20 20:05
I have a feeling that such an idea is why Rethuglicans and right wingers are against the United Nations. They don't want to answer to another layer of "regulation". Who else is going to make Corporations pay for the destruction of smaller countries, oceans, and the atmosphere? Heck, we can't even stop their destruction of BIG countries! Perhaps the French were on to something.
-5 # jwb110 2013-05-20 17:28
If states rights are an issue and re-instating the Articles of Confederation is a good next step then why not step all the way and give states full autonomy and give no taxes to the Federal Gov't. If you don't want your Federal taxes waisted then never let the dollars get there in the first place.
+7 # reiverpacific 2013-05-20 19:09
"Here in Britain, the UK Independence Party - which wants to get out of the European Union - is rapidly gaining ground, becoming the third most popular party in the country" Q.V.
From what I hear from friends in Scotland, the Scottish Nationalist party is likewise gaining support and the leader of the Scottish Parliament is SNP leader, Alex Salmond.
I've long been against Nationalist movements. I'm a Socialist and Internationalis t, not a "National socialist" (Nazi). Nationalist movements have been typically deeply conservative but in Scotia, SNP's main opponent is Labor (There's not ONE Tory constituency), who have held the party to the left, so the Scots model is based on Democratic Socialism, which I'm beginning to find supportable, as are many of my friends.
The English UK Independence Party is an example of the conservative, even Libertarian model, taking advantage of the current wave of restless discontent under Cameron's hung parliament coalition with the Liberal Democrats whose leader and deputy PM Nick Clegg, has just rebelled after Cameron's Tories refused to back the Lib-Dem's proposals to reform the House of lords. Cameron's crowd of regressive Whigs are tying to gerrymander many English constituencies to their advantage like their Rethug' counterparts here.
Both are supportive of the dominance of their countries by global corporations and their resistance to paying their fair share into the community chest.
BTW, Apple is one of the worst US tax avoiders.
+7 # Majikman 2013-05-20 20:08
Did y'all miss a very important piece of this "Starbucks' tax-avoidance strategy was so blatant British consumers began boycotting the firm until it reversed course."
Instead of useless complaining and signing endless petitions, we should be using the power we do have...our purse, tiny as it is, when combined, it's awesome. Poor, poor baby can't live without your I-phone? Or Walmart? Get real. Boycotts, wild cat strikes are still within our power ...for starters.
+6 # m... 2013-05-20 21:36
Even our Military is hugely operated under for-profit contracts to Big-Biz-Big-Cor porate entities.
Our Government hires for-profit 'Contractors' to perform many of America's military functions-- Big 'Businesses' with huge armies operating all over the place.
Add to that.., corporate contracted intelligence gathering, prison and detention systems, oversight of food and drug safety.., an endless list brought to us through the sham known as Privatization of Government.
We've fired the Civil Servants who worked directly for us and replaced them with the employees of Businesses interested in making profits.

WHO are these company employees loyal to? America? or to the source of their paychecks?
Where does 'profit potential' lie now in a world where SHAREHOLDERS run the functions of Governments?
Continuing a FAILED Drug War?
MORE real WAR in more place?
MORE incarcerated people?
LESS drug safety=greater profit?
LESS food safety=greater profit?
LESS free press for us, more information control for 'them?

The biggest question of all is-- How can Americans be made aware in a nation where the major sources of information are narrowly owned by entities beholden exclusive;y to their (GLOBAL?) Shareholders, that a very few have conned the rest of us into a race to the bottom.., to a cheaper, lower quality life by going down into their flim flam rabbit hole otherwise known as--- 'SMALLER GOVERNMENT'...
+6 # Todd Williams 2013-05-21 07:39
Yes, you are right of course. Also, with privatization of government functions comes lower wages and fewer benefits and no unions. The GOP doesn't have to win Federal elections, it only has to control state governments in order to facilitate corporate take-over.
+7 # karenvista 2013-05-20 21:47
I think that no American corporation that doesn't pay taxes here should be allowed to sell products here without having an import duty imposed that would equal the percentage of taxes that they owe. For instance, if they don't pay taxes here, they should be charged a 35% import duty.

Free trade is destroying the world economy for workers. But not for the oligarchs and the mega-corporatio ns.

We used to make and grow everything we needed here. We certainly have enough unemployed people to restart the 50,000 factories that have been sold and/or shipped overseas.

We supplied the world after WWII. I am aware that it was because our competition was destroyed but now WE are being destroyed.

Want to compete? Well China is too expensive now at $1.35 average per hour in manufacturing so all OUR companies are moving to countries like Bangladesh where average wages are between $28-$38 per month, including all the overtime anyone can imagine. And no safety or environmental regulations exist.

Yes, Let's Compete! Not.....
0 # Todd Williams 2013-05-21 07:41
Hopefully, the collapse of that sweatshop in Bangladesh will change some laws in that country.
+1 # Todd Williams 2013-05-21 10:11
And somebody doesn't want Bangladeshes' laws to change to make their industries safer? You've gotta be kidding me!
+2 # dkonstruction 2013-05-21 07:40
What a shallow piece.

On the one hand, Reich is absolutely right that there has been and continues to be a dangerous revival of right-wing nationalist/nat ivist politics and ideology in both the US and Europe. But he offers no strategies for combatting this. None. No call for workers to organize internationally . No attempt to point out that workers across national/racial and ethnic lines have much more in common with each other than they do with the 1% in their own country and who are from their own racial and ethnic group. No call for internationaliz ing the labor movement

Second, Reich offers no strategies or tactics whatsoever to combat "global capital." No calls for restrictions on the "free flow" of capital. No call for forcing US corporations doing business abroad to pay the local equivalent of US wages (and benefits and forcing them to abide by US worker safety, environmental and other regulations).

So, yes, US corporations should be taxed and we should close all of the loopholes that allow them to move money overseas to avoid paying US taxes. But this is far from sufficient and will in fact do little to nothing to reign in the powers of global capital nor combat the rise of right-wing populist (which are akin to the old school fascists) nationalist/nat ivist politics.
+5 # mdhome 2013-05-21 13:48
THIS IS THE BOTTOM LINE "The fact is, global corporations have no allegiance to any country; their only objective is to make as much money as possible - and play off one country against another to keep their taxes down and subsidies up, thereby shifting more of the tax burden to ordinary people whose wages are already shrinking because companies are playing workers off against each other."
+1 # Hitchhiker 2013-05-21 20:30
"Bitch Board" - I like that. So very descriptive of all the boards I visit. I think it's very obvious to everyone here that a Revolution is required to change the status quo, to come up with a new paradigm that embeds at its heart the pursuit of the Common Good, not the pursuit of Profit. Civilisation is a social contract between individuals in which we have agreed to mutually acceptable Terms and Conditions, Rights and Responsibilitie s: Equal Opportunity, Equal access to the law, protection of the old and weak and Equal responsibility to ensure the system works. It is Broken.

We know who the enemy is, which is step One in transformation - understand the problem. Now we need to move to the next stage - working on the solution and not just endlessly whining on "Bitch Boards".
One of the fundamental issues is that Corporations have been given the rights of Individuals, with the advantage that they are immortal. Immortality brings the accumulation of vast wealth, then the Power to use that wealth to corrupt. "Lobby" is a particularly American euphemism for Corruption, and your government is driven by "lobbyists".

The key to the solution is to harness the enormous anger demonstrated on these boards, to understand that as individuals we are powerless but as a mass of highly motivated individuals pulling together we have the strength of dripping water to bring down mountains.
+2 # Todd Williams 2013-05-22 05:47
It may be a so-called bitch board, but I call it an exercise in First Amendment rights! The more people realize they aren't the only ones that feel that way, the more they will feel compelled to vote, to protest, to run for office, to whatever. RSN is a great bitch board.
0 # Roger Kotila 2013-05-22 10:38
The United Nations is helpless in this situation as the Charter grants excessive sovereignty to each nation which is ideal for multinational corporations to take advantage. The evidence is obvious as Big Money goes to "cooperative" nations, and to "cooperative" states or provinces for the best deal (for them). The Earth Federation under the Earth Constitution (to replace the hapless UN Charter) is the solution bringing back in to the action the 99%. Big Money and Multinationals combine for a shadow (world) government. The antidote for this domination by the .1% is the emerging Earth Federation Movement under the Earth Constitution. See

THE NEW STREAMLINED RSN LOGIN PROCESS: Register once, then login and you are ready to comment. All you need is a Username and a Password of your choosing and you are free to comment whenever you like! Welcome to the Reader Supported News community.