Friday, March 14, 2008

The Role of Multinationals in the U.S. Economy

Michael Mandel, late of Dollars and Sense, may have returned to his roots, questioning the role of the multinationals, although suggesting that they have the potential to contribute to an economic recovery. He notes that the 150 U.S.-based nonfinancial multinationals cut more than 2 million jobs between 2000 and 2005, while they are hoarding more than $500 billion in cash.

A header describes the role of the multinationals as "exporting jobs, not goods."

Mandel, Michael. 2008. "Multinationals: Are They Good for America?" Business Week (28 February): pp. 41-51.

41: "the top 150 U.S.-based nonfinancial multinationals, which include the likes of Hewlett-Packard, Pfizer, eBay, and Sara Lee, had more than $500 billion in cash and short-term investments at the end of 2007."

41: "Figures collected by the Bureau of Economic Analysis suggest the multinational sector has in some ways been a drag on the U.S. economy since 2000. From 2000 to 2005, the last year for which full data are available, U.S. multinationals cut more than 2 million jobs at home, even as employment in the rest of the private sector grew -- and there's no sign the trend has significantly reversed."


S Molnar said...


S Molnar said...

Never mind.

J.Goodwin said...

People like to remark that the transnationals bring a lot of profits back into the US economy.

Of course, these profits aren't properly taxed, often don't come back at all (secreted in the Caymans), and don't have any US trickle down effect. The rich get richer, and the working class gets no part of it unless they are major shareholders who get some trivial dividend, while the half dozen top managers line their pockets with bonuses, perks, and loans that are later forgiven.

ProGrowthLiberal said...

j goodwin - Mandel notes the tax enforcement issue but he seems to think we lack the right laws. Over at Angrybear, I remind folks that if the government effectively enforced section 482 - much of this problem could be solved,

Michael Perelman said...

what is section 482?

ProGrowthLiberal said...

Section 482 of the US tax code allows the IRS to adjust the taxable income of a company to reflect what it would have been if intercompany prices reflected market prices ("arm's length standard").