Arafat's guerrillas shot 7; world silent.

[Ned]

Originally posted by Spiffor
You have forgotten #5 :
Congratulate the nationalizing country for having taken back their rights in the face of capitalist pigs

Or, option 6, Spiffor, arrest the greedy capitalist pig exploiters here in the US and send them for proper trial and execution by the new Peoples Liberation Government!

Actually, for serious discussion purposes: are US companies the only companies that bribed extensively? I recall seeing some discussion that bribery was a way of doing business abroad. Everyone did it. If Americian companies did not bribe as well, well they lost the business.

If the above is true, the proper solution would seem be to clean up the concerned governments. But how? Typically, we do nothing until the revolution is well under way.

[Spiffor]

Originally posted by Ned
Or, option 6, Spiffor, arrest the greed capitalist pig exploiters here in the US and send them for proper trial and execution by the new Peoples Liberation Government!

Actually, for serious discussion purposes: are US companies the only companies that bribed extensively? I recall seeing some discussion that bribery was a way of doing business abroad. Everyone did it. If Americian companies did not bribe as well, well they lost the business.

If the above is true, the proper solution would seem be to clean up the concerned governments. But how? Typically, we do nothing until the revolution is well under way.

Bribery is extremely used to do big business worldwide, and is even an asset in western countries. The use of friendly governments to have the riff-raff stay in line while you plunder the resources of his country is still being done on a huge scale in Africa, and to a limited extent in SE Asia (Burma...)

An example of a non-American corrupt company is French Elf. Elf very widely corrupts about every tinpot dictatorship and semi-free countries in the world, as well as having many entries in the black boxes of western countries. In African countries like Gabon, Elf is the main partner of the dictator, who uses violence as soon as Elf's interests are jeopardized by the workers. In return, he gets France's support, and keeps his power.

If gabon liberate itself from Elf, you bet I'll support them nationalizing Elf's asset

[Ned]

Ah! Spiffor, this really is an international problem as well between the industrialized countries. Imagine if we wanted to declare war on dictator who had taken a lot of French company money in bribes and granted those French companies large contracts worth billions. I could almost here it now, "War is a last resort," echoing from the French Foreign Minister's artfully curled lip as he addresses the supportive Security Council, many of whom have similar bribes in place and many of whom have received such bribes.

Interfering with "business" is like encroaching on the mob's territory. One gets whacked pronto.

[Spiffor]

Thanks for bringing us back in the middle East, we are now closer of Palestine where the thread started. Dang, I am tired with all these travels

Iraq was a very different thing for France's interests than Gabon. Iraq was an ordinary client of French hardware, and an ordinary supplier. Saddam was also considered as an important element in the French strategy in the region (who seems to want status quo above all IMHO).

Nothing like the symbiotic relationship between Gabon's rulers and Elf.

[Ned]

Master Zen, just to recall something I said yesterday about Brazil. My wife gave me a lot of "leftist" reasons for protectionist laws designed to keep US and other businesses out of Brazil. Of course, if all they do is bribe the government to gain better access to land, lower taxes and preferred mineral and other rights, then I begin to see their point. However, I still maitain that these investment barriers are put in place primarily to protect the local elite and have the effect of maintaining large disparities between the rich and the poor in Brazil.

[Arrian]

You have forgotten #5 :
Congratulate the nationalizing country for having taken back their rights in the face of capitalist pigs

*Gives Spiff the finger, in the nicest possible way*

#4 could/should lead to Ned's #6 - if a reasonable law was passed (heh) and a company failed to follow it, the executives should be prosecuted. Though I'm not sure we'd feel comfortable with extradition, however "motivating" that might be to would-be criminals.

-Arrian

[Ned]

But, still, Spiffor, my point does illustrate that the US alone cannot clean up the world. We almost need an international treaty that makes bribery an international crime. What I see is, for example, is that if French company were to lose a contract to an American company because of bribery, the French company could ask the French government bring a criminal complaint against the US company and its officer's and directors in an international court.

Such a law would go a long way to fixing the corrupt system of international business.

[Ned]

Actually, referring back to an earlier post when I raise the "mob" issue, many of us here in the US believe Kennedy was assassinated by people, mainly the mob, who lost millions if not billions when Kennedy f*cked up the Bay of Pigs.

As I said, interfering with "business" gets one whacked pronto.

[MichaeltheGreat]

The problem with bribery and corruption is that it is the vaguest sort of crime and the hardest to prove, especially if the foreign jurisdictions don't cooperate.

Some bribery I have no problems with - lower level people (who get paid crap) getting paid small, reasonable fees for excellent service, for example. Here in Mexico, for example, if you go sign up for cable TV or telephone service, they put you in a queue to get hooked up, just like in the US. But you can drive around, find an installer, and for $20 US, he'll either get to you at the end of the regular workday, or after he completes the present job. He still has his daily work to do, so it's like getting paid OT to work through his lunch hour, or work a little late at night, except the company doesn't pay the OT, you do (voluntarily). IMO, nothing wrong with that, and life in the US has all sorts of analogues.

Paying somebody to get a project approval? Happens all the time with developers in the US. Want an environmental group off your ass so you can go ahead with your landraper project? Buy 'em some land that's habitat for some critter they're interested in, deed it over to them or the Nature Conservancy, and boom, end of problem. City councils and just about every group that can be a pain in your ass all try to get something - in the US, you just can't pay an official to put the money in his or her pocket. (Instead, you donate to a PAC which donates to the campaign for that official)

The Foreign Corrupt Practices Act is a joke. A few years ago, I was going to do some USAID work in Nigeria (I got a better offer, so I didn't bother), so I had to sign off the usual FCPA acknowledgement. A lawyer could drive a truck through the gaps in that law, and truckloads of money still get driven through.

If anything, the FCPA helps American businesses dealing with corrupt officials, and reduces their net costs. Bribes haven't been deductible business expenses under the Internal Revenue Code, so if you just give someone a suitcase full of cash, you used to have to go through hoops to misaccount for it so you could deduct it.

FCPA simply channels you to hiring local "consultants" for "government relations" - you pay him a check or wire transfer, so you have a contract and proof of payment for a "legitimate" business expense. He takes a 20% cut (costs you more than the suitcase of cash, but now it's all legally deductible ), then bribes the necessary officials to accomplish whatever it is you want.


I'd lump bribery and corruption into three categories:

The little stuff (essentially tips for good service) to the everyday working stiffs who help you out. - no problem.

Medium grade bribery - paying someone for approvals, taking on hidden "partners" as a cost of doing business, etc. Can be expensive, but shouldn't be that big a deal.

Potentially dangerous bribery - kickbacks for mineral rights or other hard asset or monopoly rights, or up front payments for those rights. This is the stuff revolutionaries and others get riled up about. There's a big fight going on where I live about a potential LNG receiving facility proposed to be installed Playas de Tijuana, which is primarily a residential/commercial area without port facilities. The argument is that it works as a receipt point for both San Diego (Sempra has ambitions to expand their pipeline presence down here) and Tijuana.

Of course, the locals are virtually 100% in opposition, and it's a campaign issue in the congressional elections here, but it's a case of locals vs. Feds + multinational corps, so it could get pretty interesting.

That's the type of situation that is problematic. And a treaty regarding bribery won't work - FCPA's essential meaninglessness is a perfect illustration why. Everyone will have their own idea of what is "corrupt" and how to get around whatever rules are enacted. It's endemic in US politics as well, with all the pork projects which aren't in the national interest, but which help incumbents get reelected to Congress all the time.

[Arrian]

True, but depressing.

So how do you work the problem? Or do you return to option #1 - status quo?

-Arrian

[DaShi]

Arafat's guerillas just shot a CBeast!

[Dinner]

Damn! I wanted that CBeast. (Grumble, grumble, grumble...)

[Master Zen]

Originally posted by Ned
Master Zen, just to recall something I said yesterday about Brazil. My wife gave me a lot of "leftist" reasons for protectionist laws designed to keep US and other businesses out of Brazil. Of course, if all they do is bribe the government to gain better access to land, lower taxes and preferred mineral and other rights, then I begin to see their point. However, I still maitain that these investment barriers are put in place primarily to protect the local elite and have the effect of maintaining large disparities between the rich and the poor in Brazil.

Most of the local elite happen to be propped and supported by the foreign elite. It's a symbiotic relationship, foreign elite wants money, local elite wants power. Local elite makes the money available for the foreigners, foreigners use their wealth to keep the locals in power. Hardly a noble relationship for either.

Now if you are talking in the economic sense, of trade barriers protecting the domestic economy then you are wrong again. The Latin American countries (like Brazil) that followed import-substitution with high protectionist policies during the 50s-70s had social inequality WORSEN once the barriers were knocked down in the 90s, and go check any economic almanac to prove it. If anything, dropping trade barriers have made the gap between rich and poor get wider, its not my idea, it's a proven fact.

[Dinner]

Originally posted by Master Zen
Now if you are talking in the economic sense, of trade barriers protecting the domestic economy then you are wrong again. The Latin American countries (like Brazil) that followed import-substitution with high protectionist policies during the 50s-70s had social inequality WORSEN once the barriers were knocked down in the 90s, and go check any economic almanac to prove it. If anything, dropping trade barriers have made the gap between rich and poor get wider, its not my idea, it's a proven fact.

Of course it worsened. Those lumbering, often state owned, companies were in no shape to compete against international companies using the latest equipement, best management, and the newest products. Thus they got eatten for lunch and their workers had to take a big hike.

You see midsized economies like Brazil are in a tough spot. There market isn't rich enough to wall itself off and still have enough competetion to keep its companies competetive, yet, if they open up then there is going to be an adjustment period were inefficient business are either run out of business or are forced to become more efficient (read lay off workers). The upside is iff you can make it through the tough beginning then the economy will start growing at a faster rate then it would other wise have and the people, as a whole, will be better off then if they remained in Isolation.

[Master Zen]

Originally posted by Oerdin

Of course it worsened. Those lumbering, often state owned, companies were in no shape to compete against international companies using the latest equipement, best management, and the newest products. Thus they got eatten for lunch and their workers had to take a big hike.

Not just the state owned companies. The biggest hit were the small/medium sized companies who could compete even less. Since these small companies (most of which weren't directly targeted for protection before) account for the majority of employement, you can see just how severe the hit was.

You see midsized economies like Brazil are in a tough spot. There market isn't rich enough to wall itself off and still have enough competetion to keep its companies competetive, yet, if they open up then there is going to be an adjustment period were inefficient business are either run out of business or are forced to become more efficient (read lay off workers). The upside is iff you can make it through the tough beginning then the economy will start growing at a faster rate then it would other wise have and the people, as a whole, will be better off then if they remained in Isolation.

Your point is a good one but there is really not enough evidence to prove your final point, that an economy grows fasters eventually. Some of these protectionist countries grew at rates like 7-8% decade yearly averages during the 50s-70s and without the level of income inequality today.

These days, growing at 3% is something to dance about, even when much of the adjustment period that you speak of (which is very true) is done. And due to the worsening inequality, you would have to mathematically grow even more than before to achieve the same level of comprehensive prosperity as much of that extra growth would only favor a minority.

Finally, knocking down trade barriers implicitly attracts foreign direct investment. However, much of this investment (most of it i'd say) is still foreign owned, and does not benefit the host country in anything other than national accounting reasons due to the fact that the poor institutional framework hinders any economic spillovers that this investment potentially carries. Thus, here lies the big difference between GDP and GNP. GDP is domestic, it is the product found within the territorial borders of a nation, whereas GNP is national, the product accumulated among all nationals of that country. In countries like Japan or the US, the GDP figure is less than the GNP due to the heavy investments abroad are greater than investments within. Countries like latin America are totally the opposite, GDP is larger due to the huge level of foreign investment.

Frankly, I think the object of any country is to increase the product of its nationals, not those of foreign countries.