Brenda Rosser responds


(Lifted from comments from Bruce Webb’s main post Is it true that foreigners finance our debt? to her main post, with Prof. Rosser’s permission)

I have just found and read the contents of this discussion this afternoon.

The essential points I was trying to raise in my Econospeak blog entry were:

(i) US Treasury data refers to ‘nations’ that purchase US treasuries. That is, the reader gets a simple message such as ‘China purchased $xx worth of US treasuries in September 2008.’

However, no definition of ‘China’ (for instance) is provided. That means that US Treasury figures are likely to be giving the reading public an entirely false picture of US debt liabilities.

China’s economy consists in large part of a number of big US transnational firms (also US financial firms I’d expect) that trade with their parent companies in the US and probably also purchase US treasuries in the US. These same US firms act also as ‘conglomerates’ meaning that they co-own and often manage each other and also trade closely with one another.

(ii) It is no longer appropriate to discuss international trade and debt balances purely in terms of ‘nations’. The fact is that US transnational corporations dominate world trade and finance. They also overshadow many national economies in size. When these large firms also act as conglomerates their significance to the world economy may dwarf that of the United States itself.

I understand that this confusion of identity between the global corporation/s and individual nations is encouraged by the text of free trade agreements. Clauses within them (eg NAFTA) ensure that the trade of a US subsidiary in a foreign nation with that of its parent is to be officially regarded as trade between two distinct nations. [I’m writing away from my home computer so can’t readily dig up the exact text and references.]

I believe we have arrived at the ‘new world order’ that successive US Presidents and their administrations have aspired to now for the last 4 or 5 decades. The world economy is now closely integrated and managed to maximise profits (and avoid losses) for the global corporation.
Brenda Rosser | 12.07.08 – 9:52 pm | #