We Need Domestic and International Regulations to Prevent Corporations from Fleeing Overseas

Miriam Shestack

When corporations can move about the world as they please, workers have no chance of ever winning any long-term concessions from them.

In the early 20th century, working conditions in the Unites States were abysmal and often deadly. Legal protection for workers was all but nonexistent. At the same time, companies polluted and degraded the American landscape unchecked. But Americans soon began fighting — and occasionally dying — for reforms to make workplaces safer and to curb the ability of corporations to destroy the environment. Growing worker power in America also led to the formation of the most prosperous working class in the nation’s history. 

But that is only half of the story. No sooner had the United States began successfully regulating the labor standards and environmental impact of corporations than corporations began looking for ways to move production into less regulated territories.

Erik Loomis, author and assistant professor of history at the University of Rhode Island who writes for the blog Lawyers, Guns, and Money, spoke with In These Times about his new book Out of Sight: The Long and Disturbing Story of Corporations Outsourcing Catastrophe, which he sees as a history of capitalism over the past 100 years. The book details significant victories in workplace and environmental safety rapidly undercut by the ability of corporate interests to outsource the most dangerous aspects of their operations to more vulnerable parts of the world and far from the view of consumers. Now, Loomis says, it is up to American citizens to pressure our government to curb corporate power domestically and to bring American corporate behavior abroad under legal scrutiny. 

What is the main argument of your book?

The book is a history of capitalism over the last 100 years. In the late 19th and early 20th centuries, both labor and environmental conditions in the U.S. were terrible, workers were dying, pollution was unchecked and corporations could basically do whatever they wanted, including in the political arena. During the 20th century Americans fought and struggled and died in order to change that. Americans demanded environmental regulations and labor regulations and created the middle class and workers got a bigger piece of the pie.

That’s a story that might be well known, but it is also increasingly a story of the distant past. Corporations in the middle of the 20th century, and really beginning in the 1970s and 80s and into the present, tried to escape those regulations by moving their capital abroad. Corporations had long tried to do this, but at that time, they were able to leave the U.S. entirely. Most moved to Mexico and then to Asia and Central America. In doing so they have begun recreating that period of 100 years ago where corporations controlled everything in the U.S.; again they are responsible for terrible labor conditions worker deaths, and horrifying pollution. If a nation or people try to resist, corporations now can very easily just close shop and move to another country.

You write that geographic distance creates a gap between consumers and the people who make goods, such that labor abuses are not visible to consumers. However, you point out many ongoing cases of unsafe work conditions and environmental degradation in the American South, not very far from American consumers at all. Can you reflect on what other factors like race, culture and income of the community play a role in keeping workplace and environmental hazards hidden from consumers?

When corporations can move, workers and politicians and communities become very worried and skeptical about applying any workplace regulations or environmental regulations, because companies openly claim that they will move the jobs overseas in the face of greater regulation. This undermines the ability of American workers to demand a safe workplace or good wages. Every time jobs are moved overseas, this undermines the ability of the American working class to fight for any kind of positive change. That’s because unions no longer have the union dues to affect the political system and workers and communities are careful to not say anything negative or do anything that might threaten their jobs.

The other part, of course, is that both corporations and politicians have worked very hard to place production and pollution in communities that have the least ability to resist. There are reasons that some companies continue to site production in the U.S., and when they do it’s in southern states like Louisiana and Mississippi and in Latino communities in the West. They site that production in areas that have very high poverty rates, which in this nation usually corresponds to places where high numbers of people of color live. Corporations attempt to escape regulation by targeting those parts of the nation that have already been left behind in whatever gains have been made in the past.

I’m wondering about the audience of this book. I feel like it’s largely written to the globally relatively wealthy American consumer class. How do you understand the role of the wealthy in the developing world in outsourcing workplace and environmental hazards from the West?

There is clearly an alliance between American corporations and an elite class in nations like Bangladesh, Vietnam and Cambodia, so that both are able to prosper through this system. It’s very much a neo-colonial relationship wherein an American corporation or a British corporation creates alliances and close connections with somebody like Sohel Rana, the owner of the Rana Plaza factory that collapsed in 2013, in order to get products made as cheaply as possible. It’s in both of their interests to ensure that production takes place without the actual knowledge of the details by the American corporation so that they can remain not liable for it, while also allowing factory owners like Rana to boost their profit margin.

When someone like Rana has as much political power as he does, what exactly is the conduit for workers to step in and protest and to make change? What can workers in a nation like Bangladesh do when their factory owners are also the politicians who create the system, and the military and the police are willing to effectively serve as private armies for apparel companies? The wealthy in places like Bangladesh are certainly culpable in this system, but the system also doesn’t exist without the American corporations seeking to take advantage of it.

In the book you talk a little bit about some successful student campaigns like with USAS, which I used to be a member of, and a factory that closed in Honduras over a union drive. What do you think about consumer activism that has to do with shaming corporations and getting them to sign onto various accords as a means of changing the system, as opposed to perhaps more legislative mechanisms?

Corporations signing onto some sort of agreement is a positive step, but there is a limitation to that kind of activism largely because people’s attention is going to move on to something else. Corporations can outlast people’s attention. So you might have a campaign that gets a company to sign on to some sort of labor agreement, but what happens five years down the road when activists have moved on to some other issue? Then who is really holding them accountable?

Shaming corporations through consumer activism is a really useful and necessary first step. But in the end, corporations have to be held legally accountable so that when the attention of consumers has moved on, companies can be held accountable by courts, by governments agencies and by workers themselves.

This book is, in a sense, a story about how the U.S. legal system consistently serves the interests of corporations much better than those of average citizens. You address the relatively low cost of OSHA fines to corporations, such that they become an acceptable risk in running a dangerous but highly profitable business. You also tell the story of several cases where workers or environmentalists try to hold corporate actors accountable for dangerous practices and are ultimately thwarted by endless appeals from companies that can afford to play a waiting game. How do you see the role of the U.S. legal system in the story of labor rights and environmental protection?

There’s no question that the U.S. legal system is flawed and the path ahead that I’m proposing is a hard one. We’re in a situation right now where we need to basically recreate the system that once held corporations in check and make it global. The U.S. legal system at this point in time is very favorable to corporate interests, and with every lost union job it becomes more favorable to corporate interests.

I’m a historian, and the reality is that the only thing that’s really ever created better workplace conditions is changing the legal system. I’m not underestimating the size of this task, but I think that what we need in the end are new laws that would empower workers to access the U.S. legal system, and then on top of that, a legal system willing to enforce workplace regulations.

This doesn’t have to only be a U.S.-based effort. That said, if we’re going to allow corporations to go global, then we have to decide what standards to have as Americans for the conditions under which goods are produced by American companies everywhere, and the conditions of production that we allow in imported products. The only way to make those decisions and enforce such standards is through statutes in the U.S. legal code.

Can you talk more specifically about what kinds of U.S. policy changes you think might be effective?

We could demand real inspections of factories, we could say as Americans that sweatshop workers making products for the American public have to be paid a particular wage, we could monitor pollution around those plants. We could establish that if workers die in these factories that there is going to be an investigation to determine whether those goods can be imported to the US from that factory in the future.

The U.S. is relatively powerful as a nation, and we have the power to dictate more than we already do. Corporations are dictating the conditions of production in Bangladesh. That’s already happening. So we as Americans can say, yes, clothing factories aren’t coming back to the U.S., but we also want to make sure that these companies are not just dumping dyes into the water and poisoning the entire eco system where they do operate.

There are all sorts of things that we can do if we were to choose to. It’s just a matter of wrestling the power from the corporations to make it happen.

What kinds of steps do you think need to be taken to take that power back from corporations?

We as Americans have to decide to reverse the current system of tremendous exploitation and growing income inequality that we are seeing in the U.S. now. The Citizens United decision is certainly central to that. We have to organize and demand that our politicians hold corporations accountable. I think we’re already starting to see that, or the beginnings of it, beginning with Occupy, and moving on now to the Fight for 15 and the OUR Walmart campaigns. This is a hard struggle because labor unions, the one institution that has assisted working class people and given them a voice in the government throughout American history, have reached an all time low in terms of membership, and that’s intentional on the part of corporations.

The thing worth remembering is that, although we’re in a terrible situation now, during the early 20th century there was no reason to believe that we ever would tame corporations in the first place, and we largely did — for a time.

You write in your book that people are in a better position to challenge corporate power when they themselves feel financially secure, which is why so much of that happened in the mid-20th century in the U.S. Do you think income inequality in the U.S. needs to be addressed before more global issues of capital mobility, environmental degradation and worker safety, or can the two work in concert with each other?

They are certainly connected. The rise in income inequality in the U.S. comes at precisely the same time that so many quality jobs of the American middle class were shipped overseas. Theoretically, yes, we could create a $20 per hour minimum wage, or pass a federal jobs bill that provided full guaranteed work for people. Those things could happen, but they are not going to happen, because the institutions that might work to make that happen have all been decimated. So yes, theoretically, domestic and global income inequality could be separated as issues, but they are very closely related.

Speaking about policy changes and legal accountability, you mentioned that perhaps the goal in the U.S. should be to reform the gains that had been made in the 20th century to hold corporations more accountable and also make the impact of the regulations more global. So at what level of governance or regulation do you think corporations should be held to account? Are U.S. laws enough? Are international regulations effective?

We are in a situation where almost any reforms will help help. There’s a number of different ways that countries should be able to establish minimum acceptable work and environmental conditions of domestic production or demand that any goods entering their country or produced by their corporations be produced with ethical standards. They need to have the legal authority to enforce those standards. I also think that if you actually empower the International Labor Organization in the UN to really have the ability to craft international standards, that would be helpful. Right now, the ILO effectively creates model laws for nations to sign on to and that’s useful, but greater international ability to craft real standards is necessary. Obviously, supporting the fights of workers to try to improve the conditions within their own nation is also viable. This has to be a multi-pronged front.

The key here is a combination of a U.S. legal code that effectively establishes the standards for our nation, in concert with international regulations through the ILO. We should have an ILO that is really empowered to create global levels of regulations.

You write this book very much from the opinion that capital mobility is not something that is going to be curbed but that could perhaps be regulated. So do you think that if it were possible, capital mobility should be curbed? Or is there an upside to this mode of production, if it were better regulated?

The purpose of these regulations is in part to curb capital mobility, or at least to disincentivize it. Look at Central America for instance. You have a bunch of tiny countries all next to each other, so when factory workers in Honduras organize and struggle for years to establish unions and succeed, the company just closes the factory and moves 20 miles away to Guatemala. That has to stop. We have to take away the incentives that make it okay for companies to do this wherever they want to, to whomever they want and for whatever reason. If an apparel company is held legally accountable for their contractors no matter where they operate, then it actually becomes their incentive to have a unionized workforce and to stay in one place so they have stable production under safe conditions.

There is not very much positive about capital mobility at all — certainly the constant ability of companies to keep moving is a disaster. Yes, in a theoretical construct you might destroy the American middle class to create a Bangladeshi middle class. But that is not the case because as soon as the Bangladeshis start to develop a middle class, the jobs disappear there too.

Touching on the last chapter of your book, if I am an American consumer looking to get involved in this fight, what should I do? Can you suggest some avenues for what average people should be doing?

On a basic level, you can join a union if you’re able to. Think of yourself as a worker wherever you may be and seek to express power that way. Worker power is a direct way that everyday people can affect the political system and make their lives better.

You could also hold elected politicians accountable to these issues and elect people who are pushing for corporate accountability like Elizabeth Warren and Sherrod Brown. There are politicians who we should be giving our money to and who we should be supporting. We should make it a political liability for politicians to support pro-corporate policies. If they don’t support ethical working conditions and policies that allow the U.S. to have a middle class, we need to punish them. Politicians understand power. If we have power, we can create the necessary reforms to the global economy.

The more that people know about these issues, the more that they hold corporations accountable — which is precisely why corporations don’t want them to know anything. If you’re a student, creating a USAS chapter or another student organization that promotes labor rights is another way to take action because university administrations at least theoretically have to listen to students. Whether it’s as a student or a member of a church or any type of organization that you’re involved with, in which you have a certain amount of leverage. Find out about how things are made and make choices based around that knowledge.

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Miriam Shestack is a Spring 2015 In These Times editorial intern. She is a senior at the University of Chicago majoring in history and a member of Students Organizing United with Labor, an affiliate of United Students Against Sweatshops.
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