Accountability and foreign investment.

[Ed Deak]

Dear Friends,

For whatever it is worth, I would like to express my thanks and support for
Henry McCandless postings on accountability.

While I also agree to a very great extent with Yves' skepticism over the
actions and reactions of the public, there are always the consequences of
the "last straw on the camel's back". Until then nobody can do anything to
stop the loading. The breakdown will occur, but how and when is impossible
to predict and there's no use driving ourselves into the grave over it. You
can lead the horse to the water, but can't make him drink. The same with
public action.

The fight against any destructive system or enemy must be based on realistic
appraisal of the facts, which is positive thinking. Based on historical and
political precedents, MAI will probably pass, but it is nothing to get
desperate about as it won't make much difference on the long run. 29
governments, among them the world's mightiest powers, can't just back out
with eggs on their faces. Even if they begin to realize that they are wrong,
they have to rationalize for fear of loss of public confidence and carry on
until the bitter end, defending their own stupidity. It has always been and
always will be so.

The biggest and strongest enemy of sustainable economics, not only in the
case of MAI, but generally in all aspects of our lives, are the money
markets and to a lesser extent the international stock and futures markets.
When governments floated their currencies in the late '60s they killed
democracy for all practical purposes. Now if any government would show the
slightest wavering over MAI, it's currency would become worthless overnight,
with the resulting dire effects on the people of the country.

A lawsuit, or general strike may hold up MAI, but the moment the suit is
launched the money markets will give us a warning to desist, or...... Pure
blackmail, but this is the result of uncontrolled monetary policies.

On the other hand, if MAI passes it will be the Stalingrad of capitalism.
Every empire reaches the end of it's expansion at it's apex. After MAI
there's nowhere else for capitalism to go but down and it will happen very
fast. Unfortunately a lot of innocent people will be hurt one way or another.

It is obvious that the purpose of MAI is not to regulate foreign investment,
but to regulate governments that accept it. As I wrote months ago on another
list, the main reason for MAI is China and other Asian dictatorships.

Generally, large corporations like to deal with "stable dictatorships", as
it makes their work much easier and less troublesome. They don't have to
worry about public opinion, labour laws, unions, environmental protection,
etc. All they have to do is to grease a few high and mighty palms and all
doors will be open, any public opinion or outcry against them will be
silenced fast. All they have to do is pick up the phone and send another
cheque to a Swiss bank account.

However, dictatorships can also change course at the drop of a hat. When our
captalists went to bed with and started pouring billions into
Marxist-Leninist China, the immortal words of the prophet Lenin started
coming true: "Capitalism will kill itself by its own greed". (So do
politbureaus, but that's another story.) What our Western corporations are
scared about is that China and other dictatorships will accept Western
technology, build up their industrial power and then simply expropriate and
kick out foreign investors. Ergo MAI, the last ditch defence, or rather
preemptive strike against this happening.

This is why the sentence:" MAI will protect the interests of our investors
abroad" comes up in every letter, leaving out, but meaning: "in the
countries of our Asian trading partners, who may be crooks and murderers,
but we love them for the profits we make". Obviously, they are not talking
about Germany, or the USA kicking out foreign investors, although Japan has
successfully kept most of them out until now, but this is also going down
the hill.

In many ways, I think it may be easier to kill MAI after it has been passed
and starts playing havoc with the lives of the presently reluctant public.
That 20 years quitting clause can be wiped out very fast. MAI won't last 20
years in any case.

In preparation of the MAI forum later this month, I would like to ask any
and everybody to please consider the following question and advise me,
whether the points I am making are out of line, incorrect, or wrong in any way?
-------------------------------------------------------------------------------
MAI is nothing more than a method for the protection of foreign investment,
which has become so much of the part of our lives that nobody seems to dare
to ask the question:

"IS FOREIGN INVESTMENT NECESSARY, OR BENEFITICAL ?"

"I submit that foreign investment is neither beneficial, or necessary":

1. Foreign investment is a remnant of the old, gold standard and fixed money
supply days. The creation of money is no longer tied to gold, therefore the
purpose of foreign monetary investment has become to convert worthless
concept money into real capital resources, which the recipient country
already owns, but the investor country wants to have. A conversion is not an
income, therefore the recipient country is selling capital, a fatal business
practice.

2. Foreign investment is the inflation of a country's money supply from
abroad. It creates permanent debt, local inflation and drain on the local
and/or national economy. E.g. Canada today, especially after the FTA and NAFTA.

Could anybody give a rational explanation why, in economic theory, inflation
from abroad is preferable to domestic inflation of the money supply?

3. It is an old business joke that if you can prove that you don't need it,
the banks will loand you any amount of money. By the same token, in my
opinion anyway, when a country has the resource base that will supply the
returns and servicing of foreign investment that country is in legal
position to create it's own capital and use the returns for the benefit of
it's own people. E.g. postwar Japan.

4. If foreign experts are needed for certain work, or for the setting up of
industries, they can be hired without creating permanent drain on the local
or national economy.

5. In the cases of the FTA and NAFTA, can anybody prove that either of them
had created any net jobs in Canada ?

6. In the BC forest industry the purpose of increased foreign and domestic
investment is to eliminate jobs by replacing workers with automated machines.
The industry hasn't created a single net job in about 20 years, but lost up
to 40,000. In round figures, for every $1 million investment a job is lost
and cutting demands increase to service the now 20 to 60 wage years of
investment per worker. About 65% of the industry is now controlled from
abroad. Is this a healthy and acceptable form of economy ? If yes, by whose
theory? Should such economy be encouraged and expanded through the
imposition of the forced acceptance of increased foreign investments through
MAI?

With all the very best, Ed (Ed Deak, Big Lake, BC, Canada)

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[Terry Cottam]

At 08:33 PM 9/16/97 -0700, Ed Deak wrote:
>While I also agree to a very great extent with Yves' skepticism over the
>actions and reactions of the public, there are always the consequences of
>the "last straw on the camel's back".

Nonetheless, APA's theory is compelling: to assert our expectation as
citizens for _competence_ from our elected leaders. We've never done it.
But they can't reasonably oppose it. It's relatively easy to do with a
little prompting. Let's try it!

For starters, I will post the "ten principles of accountability" that Henry
McCandless composed for his draft article.

>Until then nobody can do anything to
>stop the loading. The breakdown will occur, but how and when is impossible
>to predict and there's no use driving ourselves into the grave over it.

The breakdown will occur but the rebuilding can start right now. "Holding
to account" is a good start. It may not stop the MAI before it's ratified,
but it will make it increasingly untenable (as would happen in any case, as
you point out).

[cut]

>The biggest and strongest enemy of sustainable economics, not only in the
>case of MAI, but generally in all aspects of our lives, are the money
>markets and to a lesser extent the international stock and futures

markets....

Absolutely. Hence the movement toward non-profit parallel currencies (LETS,
HOURS, Time Dollars etc), which has matured to a point where some are
discussing links and operation via the internet. There are now at least
1,000 such currencies. In that sense, the rebuilding has already started.

>....A lawsuit, or general strike may hold up MAI, but the moment the suit is

>launched the money markets will give us a warning to desist, or...... Pure
>blackmail, but this is the result of uncontrolled monetary policies.

This is because we can't win at their game. Their game is to confront and
compete, whether by force, lawsuits etc. Ours is very different:

"Cooperate with us or we won't cooperate with the system"

Hence the term "non-cooperation". This is something every citizen can do
(and often does unconsciously.) It can be as simple as calling in sick when
you don't like your job, but deliberately doing so enmass is a familiar
tactic. This is part of long-established practices of political defiance.

However, before we contemplate such actions, first we establish our bottom
line: "what is competence?" Would any competent government recommend the
MAI? But rather than ask this right up front, we request them to take
competent action such as "please inform yourself about the MAI" and then
ask why some of them don't comply. Once they agree, it's very difficult for
them to justify incompetence.

>...In many ways, I think it may be easier to kill MAI after it has been

passed
>and starts playing havoc with the lives of the presently reluctant public.
>That 20 years quitting clause can be wiped out very fast. MAI won't last 20
>years in any case.

This may be the sad fact. However, we can mitigate the damage and shorten
its life considerably, as we are now quickly learning how democracy must
work, and now proceeding to put it in practice.

>In preparation of the MAI forum later this month, I would like to ask any
>and everybody to please consider the following question and advise me,
>whether the points I am making are out of line, incorrect, or wrong in any
way?
>---------------------------------------------------------------------------
----
>MAI is nothing more than a method for the protection of foreign investment,
>which has become so much of the part of our lives that nobody seems to dare
>to ask the question:
>
>"IS FOREIGN INVESTMENT NECESSARY, OR BENEFITICAL ?"

Excellent question. This is what APA's so-called "equity statement" is for,
to ask, "who benefits? who loses? who wants the MAI and why?"

>"I submit that foreign investment is neither beneficial, or necessary":

Rather than say this, which will trigger standard rebuttals, APA suggests
we say to MPs and the responsible minister: "it is your job to present to
the public, in clear terms, why the MAI is beneficial or necessary." Up
will come their claims about foreign investment, but now will come the
expectation of public challenge, and that the MAI will not be passed
without public approval.

That last point bears repeating. We put aside our cynicism and do this.
Because it's reasonable, when others see us do it, others follow. This is
how ideas spread -- by example. We've already begun with the sample letters
in Jim's MAI resource kit.

We still need the MAI forum to boost public awareness. But we also need to
start writing those letters, as I've done to Mac Harb (that letter wasn't
perfect, it was too harsh but the expectations expressed were OK). The
MAI-Not! Project will continue working with the APA on clarifying the
theory and creating introductory materials we can all use. Who would like
to help?

Terry