Charles Hugh Smith at Of Two Minds points out a core truth about the American economy that is hardly ever discussed in the mainstream media: nominally U.S. companies don't need to worry their heads over unemployment and poverty in the States, because most of their profit comes from elsewhere. (Tip of the hat: Zero Hedge.)
Global Corporate America has been decoupling from its country of origin for a long time, and the last weak bonds appear to be snapping. ...
Let's look at the number of consumers of global U.S. corporations' goods and services in aggregate. According to the FDIC, about 25% of Americans have little or no access to credit. This is an excellent metric of poverty: in other words, 75 million Americans are too poor to purchase much more than rent (subsidized by Section 8 vouchers, etc.) food (subsidized by SNAP food stamps), minimal healthcare (subsidized by Medicaid), toothpaste, cable TV, mobile phone service and fancy footwear made in Asia. (Every "poor" person above the level of homeless I see on the subway or bus has fancy footwear and a cellphone.)
That leaves about 225 million Americans with enough discretionary income to be more rabid consumers of global corporate America's goods and services.
Alas, the U.S. is a mature consumer economy and the limits of consumer debt and leveraging seem to have been reached. As a result, corporate revenue growth in the domestic market is limited to GDP growth (most of which is generated by Federal borrowing and spending at this point): roughly 2-3%.
You can't "grow profits" 10% a year on this sort of tepid growth. So Corporate America's focus on international markets is not just rational but essential: there is no other way to grow revenues and profits.
The U.S.A. is increasingly a small frog in a big pond. Multinational corporations don't think of it (or any country) as "home," for whose citizens it has some responsibility. If you work for one of these outfits in a managerial role, you don't live in the United States even if that's your mailing address; you are "based" there. Next month you could be "based" in Beijing or London or Brazil.
Smith says, and I see no reason to disagree, that the multinational corporate employees' "loyalty during their working hours is to the corporation, and the goal of the corporation is to maximize return on investment for the shareholders, owners and senior managers who will profit most from rising revenues and profits."
Offshoring jobs and operations isn't only to take advantage of cheap labor, although that's part of the motivation. Equally important is that corporations want a big footprint in what they perceive as their most important markets -- beyond our borders.
Can't the United States require companies headquartered here to spend some of their profits in ways that benefit Americans as a whole? I don't know how, and even if it were feasible, the government dictating to private companies how they should apportion their profits would be a quasi-totalitarian solution worse than the problem.
As a practical matter, Smith says, multinationals are now so powerful that however much they spend on lobbying lawmakers, it's nickels and dimes compared to the worldwide income they stand to make.
U.S. corporations are pulling $500 billion in profits from non-U.S. sales, and they hold $1 trillion in stashed overseas profits in various tax havens. All the growth in their revenues and profits are coming from non-U.S. sources. Spending $3-$5 billion on lobbying and campaign contributions is an "investment" with extremely high returns: for that small sum, U.S.-based global corporations make sure the U.S. government and citizenry don't become overly burdensome or obstructive.
What can the individual do? Invest in those corporations is the only answer I can offer. Gather a little of the action for yourself and your family. If that sounds too cynical, tell me a better idea.