Let's say there is Company A, from Country 1. The majority of the investors of Company A, live in Country 1. This means that when Company A makes profits, it gets distributed locally. This profit and distribution helps Country A pay for what they need, schools, healthcare and to build a strong military. However, the majority of Company A's business revenue comes from Country 2. Not only that, the majority of the revenue of the companies (2,3,4...) from Country 1 using Company A, also come from Country 2.
Company A makes 1 million dollars from the consumers in Country 2, where there is a tax rate of 20%. This tax collection goes to funding schools and roads and healthcare. However, Company A doesn't employ anyone in Country 2 directly, so there is also no income tax paid by employees locally. Not only this, Company A doesn't do their tax locally, they do it in Country 3 which has a tax rate of 10% instead. This means that 1M dollars comes out of Country 2, 100K goes to Country 3, and 900,000 minus costs goes back to the shareholders in Country 1.
Now, Company A is doing this in 100 countries, which means that they are able to draw 100M in total, paying very little tax in any of them locally, but transferring a very large amount back to Country 1. Many other global companies from Country 1 are doing the same, and that large money flow gives additional economic energy at the local level, which means that a lot of local businesses get supported too, as well as the ability to keep expanding military operations.
However, this large flow is also burdened by corruption and greed, and the volume coming from abroad and being spent locally over-inflates much of the industry value, as well as leads to a lot of wastage, because those in Country 1 can afford to waste. Yet, even with all of the money pouring in, Country 1 still manages to have an increasing national debt, which points to the artificial inflation of value, mismanagement, corruption and wastage.
But, because Country 1 is able to waste so much, they are the largest consumer market on earth, which makes them attractive for companies from all the other countries. Because of this, the other countries are constantly making concessions to Country 1 in exchange for access, and as Country 1 has been able to use its skimming mechanisms to build a strong military base, this becomes one of the bargaining chips they often play, threatening to remove support, or attack, unless concessions are made. This creates an economy by coercion, much like racketeering, except legal.
What is essentially happening though, is that Country 1 benefits by siphoning value from all other countries, without even having the courtesy to pay the tax owed to those countries.
I bet you’re the kind of guy that would fuck a person in the ass & not even have the god damn common courtesy to give him a reach-around! I’ll be watching you!
Full Metal Jacket
Yet, this process of extraction and collection is accepted by all of the other countries, because the 0.1% at the top of each are invested and earning from this broken system themselves, even if it means undermining the financial situation of their own country. As they say, "The rich get richer."
And the poor finance them.
The globalised economy is fundamentally broken, because it isn't actually globally operated, it is centrally operated from Country 1. The "global" of it is only from the perspective of extraction, where the tentacles of Country 1 are able to pull value in from anywhere on earth, without actually having to give much back. And what they do give back, is actually financed from the rest of the world anyway. If those funnels of value collection were to close, Country 1 would be in a difficult position, because it isn't self-sustainable. Again, even with all that they are generating from abroad, they have a ballooning national debt, and growing social problems, even though the companies from Country 1 and their shareholders are increasing their wealth exponentially.
While this is a gross simplification of the global economy, it is easy to see that there is no way this system can ever be made healthy, using this kind process. If anything, it is going to encourage wastage and corruption at an increasing rate, and lead to the majority of the stakeholders globally suffering. This will in turn create even more issues at the economic and social levels, causing more volatility, and more harm to the vast majority. Something has to change, but that means closing down those funnels and dealing with the consequences.
Taraz
[ Gen1: Hive ]
