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Clyde Prestowitz is founder and president of the Economic Strategy Institute. He has played key roles in achieving congressional passage of NAFTA and in shaping the final content of the[…]

Because heads of global companies are more responsive to the wishes of authoritarian regimes, authoritarian values are beginning to take hold in the U.S.

Question: What should the role of the global corporation be? 

Clydern Prestowitz: We tend to casually talk about American companies. We rnthink of GE as an American company, or Caterpillar as an American rncompany. Of course these companies are headquartered in America—they’re rnchartered, their corporate charter is in America—but they’re really rnglobal companies and the CEOs of those companies, often they’re getting rnmore than half of their sales outside the U.S., often more than half rntheir profits outside the U.S. They have subsidiary companies or branch rncompanies around the world. They have other constituencies. They have rnworkers in China, or in Brazil, or France, or wherever. They have to rntreat those workers fairly, they have to deal with the Chinese rngovernment and the... and Brussels and Tokyo. So in a way, they’re rnalmost quasi-sovereign entities; they're not countries exactly, but theyrn have resources that far exceed those of most countries. And so they’re rnglobal players, and they’re allegiance is to their shareholders but not rnnecessarily to any particular country. And I’m not saying that it shouldrn be because as I said, the CEOs do have responsibilities to a broad rnconstituency. But, we as American citizens—and particularly officials inrn the U.S. government—tend to think of them as American companies in the rnsense having some kind of special allegiance or special obligation to rnthe United States. 

Now, in talking about globalization over the rnlast ten or 15 years we’ve had kind of a mantra—Bill Clinton actually rnpopularized it—that globalization will make everybody rich and being rnrich they’ll become democratic, and being democratic they’ll be rnpeaceful. Well, it looks as if people can be rich without being rndemocratic, without having the rule of law. We thought that the global rncorporation would be the transmission bill of democratic values into rnauthoritarian societies. But ironically and perversely, it seems that rnthe transmission could be the other way. The head of a global company inrn Washington is a big political player, the CEO of a global company makesrn big political donations. He or she has an legions of lawyers and rnlobbyists. In the United States, with the rule of law, companies can rnchallenge the government in court and win. They can stop the U.S. rngovernment. They can cause legislation to be written, they can cause rnlegislation to be blocked or to be passed. They’re big political rnplayers. In Beijing, they’re not; in Riyadh, they’re not; in Singapore, rnthey’re not; they’re supplicants. They don’t deal with a rule of law in rnBeijing, they’re careful about the relationships they have with rnofficials. They have to stay on the right side. They don’t make rnpolitical donations. They don’t have, they don’t challenge the rngovernments in court. 

And so, in a funny way, the head of a rnglobal company is more responsive to the wishes and the desires of the rnauthoritarian regime than of the democratic regime. And so, what’s rnbeginning to happen is the transmission of authoritarian values into thern U.S. regime. And those global corporations, who... frequently are on rngovernment advisory committees. So you have this funny thing where the rngovernment thinks they’re American companies and we have advisory rncommittees for the U.S. trade representative and other officials and thern heads of these global corporations come into advise the American rnnegotiators. But you wonder, are they thinking about the interests of rnAmerica or are they thinking about the interests of their corporations? rnAnd in thinking about the interests of their corporations, to what rnextent are they beholden to the desires of the authoritarian regimes? rnAgain, I’m not trying to be critical of the CEOs, I think they’re in a rnvery difficult position and I think many of them struggle. Jeffery rnImmelt of GE has voiced this. He’s talked about GE being a global rncorporation and yet, understanding that maybe shareholders are not the rnonly obligation, maybe it has other obligations. It’s a difficult rnposition for the CEO, but my main point is that in making policy for thern United States, we need to completely understand the role of the global rncorporation and right now we don't. 

Question: Should rnthere be a global entity in charge? 

Clyde Prestowitz: Well,rn in conjunction with other countries I’m not sure. That’s an interestingrn question actually. Maybe there should be some kind of a global rnchartering, corporate chartering mechanism. But for ourselves, I think rnthat I would like to have corporations chartered with a federal charter,rn rather than a state charter and I would like to have a rule in the U.S.rn like the Canadian rule. In Canada, only natural persons can make rnpolitical donations. I’d like to have only natural persons making rnpolitical donations in the U.S. And I would like to see a revamping of rnthe advisory committees in the U.S. government so that there’s a better rnmechanism for defining and considering the American interest rather thanrn the corporate, global corporations interest.
Recordedrn on May 10, 2010
rnInterviewed by Jessica Liebman