25 April 2011

All for a profit, but at what cost?

Should everything we do be weighed against what we stand to profit?

One of the mindsets that develops in a capitalist society is that for every action there is either a net loss or a net profit.  The goal naturally is to earn the highest net profit possible.   The effective capitalists find ways to ensure that the chances of net loss are minimized.  The easiest way to achieve minimal loss is to bring down cost while increasing revenue.  The side effect of this view is that the perfect example of minimizing costs is by reducing salaries and wages or the size of the work force.  Historically the most common way to reduce wages is through slave labor and indentured servitude.  They've been a part of our entire civilized human history.  Both have been common practice throughout American history and are common practice today around the world.

Multinational companies find cheap labor in emerging and third world markets.  When more markets need to be created, corporations often enlist the US government to intervene militarily.  Military interventions have occurred regularly in order to allow for regime change more favorable to American business.  Noam Chomsky, Michael Parenti, James Loewen, Howard Zinn, and many other have written extensively about US intervention in countries like Cuba, Chile, Guatemala, Nicaragua, Iraq, Afghanistan, and Libya.  After regime change, American corporations move in to take advantage of cheap and abundant resources and cheap and abundant labor.  This is currently happening all around the world but the largest players today are India, China, and Indonesia.

Apple's connection to China and Singapore is a well known example.  A computer manufactured by an Apple subsidiary in Singapore for a couple hundred dollars, sold to the Apple headquarters in Cayman Islands for $900, then sold to distributors in America for $1000.  No taxes are paid on the transactions in the Cayman Islands.  Apple only pays tax on the $100 while $700 was preserved tax free in Cayman Islands.  None of this is illegal.

Freeport-McMoran Copper & Gold Inc (FCX) is an American mining corporation with headquarters in Arizona and mining operations around the globe.   According to their website (http://www.fcx.com/company/who.htm), FCX "operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum."  The site also claims that "The company has a strong commitment to safety performance, environmental management and to the local communities where it operates."  The Latest News section shows that profits are up and a declaration of a 50 cent dividend. 

Do a Google search for FCX and it may be difficult to turn up negative stories about them until the 18th or 19th page when more stories start to crop up.  Search Jakarta news sources and stories abound.  Recently FCX was in the spotlight (albeit a very dim one) when one of their mines in Indonesia collapsed killing two people.  Since the mine's founding protests have been staged, workers assaulted, and several people have been killed.  According to the Jakarta Globe, "The mine has been a frequent source of friction in Papua because of its environmental impact, the low share of revenue going to local Papuans and the legality of payments to Indonesian security forces who help guard the site."

Freeport has had its share of problems in Indonesia ranging from injuries and deaths to paying the government for military protection.  And although they are the largest private taxpayer in Indonesia and one of the largest employers, they employ very few Papuans and those receive lower level jobs.  In the US, FCX has been in the news as the company's stock has risen 1.8% and profits by 59%.  You would think that this would have incredibly beneficial effects on Timika's local economy but you wouldn't be surprised to learn that it hasn't.

Timika Marketplace
Unfortunately for Papuans even though negative news has been widespread, FCX is too big to face earnest prosecution or face ardent reparations.  The destructive pattern that FCX follows has continued for the past 40 years.

What is both astonishing and deplorable is how advocates of a free-market system cry for less government regulation because, the argument goes, the free-market will correct itself.  What will it correct, pricing, injury to workers?  Apple and FCX are evidently lousy examples of self-correction in free-markets.

The myth of self-correction in the free-market should be disputed with vigor.  The Capitalist Effect eliminates correction because it eliminates morality; capitalism is itself an amoral system.  The only morals and ethics that are applied to capitalism are created and imposed on the it through governance.  Much to the workers chagrin, capitalist motivated governments seem uninterested in regulating how corporations garner wealth.  And so, CEOs are multi-millionaires and billionaires, leaders earn profits, shareholders seek profit driven companies, and yet the common workers can barely afford the products they produce.  The Papuans employed at the Freeport mine probably don't earn enough money to buy one share of FCX.  Additionally the environment suffers beyond repair.  As it goes, all of this exploitation barely begins to satisfy, if at all, the open greed and apathy of the Plutonomy, who after ravaging one community will simply pack up and find another ripe free-market to exploit for personal power and wealth.
Read more about FCX:



Environmental impact: http://www.westpapua.ca/?q=node/124
Corporate Watch report:

Read about Apple: http://business.globaltimes.cn/world/2011-01/615066.html

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