Thursday, April 10, 2003

Outsourcing War

The precepts of globalization are being applied to our current war in the Gulf.

* Rule 1 of globalization is that intellectual property and capital have power; people don't.

I don't present that in a value-laden way; since I'm in the technology business, which is all about intellectual property and capital replacing people, I can hardly stand on firm ground and say "this is a bad thing". I don't exactly rest easy with the concept, but it's part of the world as we know it, and certainly a part of historical trends going back at least 500 years.

* Rule 2 of globalization is that with technology and capital the limiting factors in production, people (labor) are forced to compete with each other in order to participate in the system.

This is what drives both the desperate attempts of third-tier localities in America to attract manufacturing jobs with tax breaks (I am particularly reminded of the competitions which led to BMW's U.S. manufacturing being based in Spartansburg, South Carolina) and also the desperate attempts of third-tier countries to out-price and out-position each other in order to similarly attract manufacturing jobs. Some of my Gap T-shirts are sewn in Indonesia; some in Costa Rica; some in Thailand; but all of them are $9.95, because each of those very different regions has competed to drive down its costs (i.e. wages) of manufacturing while building the best possible infrastructure to attract foreign capital and technology. Although I don't regularly check the "made in" label on my Intel microprocessors, the same litany of third-tier global locations drive high-tech silicon as low-tech cotton.

* Rule 3 of globalization is that creating legal entities (corporations) to hold rights to capital and technology/intellectual property is the key way in which benefits (profits) are channeled to investors, while reducing as much as possible the benefits (wages) which are channeled to workers. After all, it's called capitalism, not laborism.

Since all contracts and legal obligations are associated with a particular legal entity, this means that workers (who can't create shell personalities, declare bankruptcy and reform, and reconstitute themselves as new versions of themselves) are always at a distinct disadvantage. United Airlines (UAL) has entered bankruptcy protection; this is a formal process by which the corporation (which holds rights to the capital and the technology that is UAL) can alter its relationship with its workers, while in the meantime, it keeps flying and taking customers' money.

So how are we applying the precepts of globalization to war?

Well, as a back story, a long time ago, the U.S. military figured out that the best way to prevent more student riots and burning of draft cards and so forth, as happened in Vietnam, is to create a military largely without people. Nothing against the Vietnam protestors, but most of them were apparently a bit more worried about dying than they were about killing Vietnamese. Ergo: no draft, no protestors. The technology of our armed forces is awesome, and largely it replaces people; lots of the "other guys" still die, and few of us do. But that's just the back story. What about the present narrative?

Last December, the NY Times noted that the U.S. would run its "war games" out of a brand new command and control center in Doha, Quatar. This was just the foreshadowing; in fact, the war has indeed been run from this base. Quatar is pretty much next door to Saudi Arabia, where we have a very fancy and expensive airbase called Prince Sultan, which was built for the last time we fought a Gulf war. So why did we move our operations to Quatar?

Well, as we're all aware, the Saudis have a difficult internal problem with that bane of globalization, people. Their citizens don't exactly like the current geopolitical moves of the U.S., and the Saudi regime is in the awkward position of either futher suppressing internal dissent, or not being able to provide America with what it needs to fight Iraq. What America needs, of course, is a location to base its capital infrastructure (tanks and planes and missiles) and intellectual property (all the cleverness in those weapons, various computer systems, plus the contents of Gen. Tommy Franks and his staff's heads)

So we invest in a new legal entity (Quatar) and transfer all our capital and IP into it; leaving the old legal entity (Saudi) and its annoying people behind. Kind of like reforming UAL, isn't it? Or, kind of like GM moving plants to Mexico, and ditching all those high-priced, low-productivity workers in Flint. It's all of a kind.

Spartansburg, I mean Quatar, which incidentally is running out of oil and is thus keen to play the globalization game, built *on a speculative basis* that billion-dollar airbase at Doha, in the hope that America would bring its capital and IP over to play. That's a better deal than we offered Turkey! Quatar only has about 750,000 people, and thus is largely free of the public-protestat issues which dog the more-populated Saudi Arabia. This is a twist on the normal run of globalization, in which countries (legal entities, remember, just like corporations) usually pimp out their citizens as cheap labor in return for foreign IP and capital; in this case, Quatar is presenting as its key competitive differentiator its *lack* of grumpy people protesting the overwhelming local presence of Western capital and IP.

It's a fascinating case study in the way the world works. The question I keep asking myself is:

If the overwhelming trend in the global marketplace today is Western capital and intellectual property married to cheap and malleable third-world people, where exactly does that leave the people (formerly known as citizens, currently known as consumers) of the West? There's not a clear productive role for us in this wonderful efficient system; and while we're useful for the moment as consumers, surely that can't last forever.

As this war unfolded, I sat back and watched while the capital and technological power of America, plus the generous globalized offerings of Quatar, did my fighting for me. Now, perhaps, I'll get exactly what I've earned through my participation.

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