Book reviews

 

"THE TOBACCO INDUSTRY IN NEW ZEALAND:

A CASE STUDY OF THE BEHAVIOUR OF MULTINATIONAL COMPANIES"

by George Thomson and Dr Nick Wilson, Public Health Monograph Series No. 6, Department of Public Health, Wellington School of Medicine and Health Sciences, University of Otago

- Jeremy Agar

"Occasionally," a tobacco hack told his Wellington lawyers, "I have a nightmare that somehow, from somewhere [the anti-smoking lobby] will come up with a million dollars to bankroll a serious challenge". It was 1995 and a flak at Wills [NZ] had heard a radio interview which indicated that the healthy brigade were serious about getting the cigarette makers to butt out. One man’s nightmare is another man’s dream, the lawyer might have thought. His client could certainly afford to pay enough to counter that million bucks. Wills is now a part of British American Tobacco [BAT], as is Rothmans. The merged corporation enjoys 80% of the NZ tobacco market. It is used to getting its way by outspending health advocates.

The three companies peddling cigarettes in NZ (the others are Imperial and Philip Morris) have an annual turnover of about $US70 billion, a lot more than NZ’s entire Gross Domestic Product (GDP) of $NZ98 billion. Money talks, they say, and in the business of selling a product which everyone knows to be lethal the oligopoly is obliged to talk loud and long. BAT had already spent $2 million in Australia just preparing for a threatened challenge. The industry’s base strategy has been to chuck so many lawyers up against the public interest that taking the companies to court is prohibitively expensive and time-consuming.

The oligopoly acts in concert. "Product litigation is an industry issue," Big Tobacco agreed, as they planned how to push their cigarettes, "and all costs would be split 50/50 … irrespective of the company directly involved" (p11). Big Tobacco is always pleading that its advertising is to do with brand loyalty. It would be truer to say that the three huge corporations have a common interest in making sure that young people become addicted to cigarettes and that the already addicted don’t quit. Big Tobacco’s task has been to deny the medical evidence in order to resurrect the idea that smoking is hip and cool. And they try to make sure cigarettes remain addictive. None of these aims is easy to achieve, even for the super-rich. As well as sharing costs, the oligopoly applies worldwide resources to the task in each country.

Like most foreign overseers of little NZ, Big Tobacco liked to employ the Overseas Expert. In 1979, one such fellow, who called himself sometimes a "physical anthropologist" and sometimes a doctor from Harvard, was sent, with some success, by Philip Morris. The mainstream media gave mostly uncritical prominence to his rejections of sound science in his cigarette touting. Some were credulous (an earlier version of John Davy*) repeating, for instance, the already obsolete view that smoking and heart disease were unrelated. Other journalists might have worked for outlets that had been paid off (this monograph makes no unwise charges; it does present evidence from which we can make assumptions). *John Davy – the Canadian conman who got the job of head of Maori TV. Sacked, convicted, imprisoned and deported, in 2002. Ed.

For some time now the industry has recognised that blunt denial will not work. Because they cannot deny facts, a propagandist pointed out, their message must become "more believable". So the public relations (PR) experts obfuscate and evade. Overseas experts sent to bamboozle the natives work only so long in a modern, dignified country. The practical need to come up with more subtle defences happened to coincide with the triumph of neoliberalism in the home bases of the tobacco industry - and in New Zealand. So it is that the notions of ‘choice’ and ‘freedom’ became popular with the tobacco industry, even when they were incompatible with the fact of addiction.

Portraying Smoking As A "Lifestyle Choice"

Smoking, it was now said, was a "lifestyle choice". Public health guardians were portrayed as tedious zealots as the tobacco industry tried to ingratiate itself with youthful rebellion and the independently minded. An RJ Reynolds American campaign concentrated on "portraying antismoking activists as a bunch of no-fun puritans and playing up smoking as a forbidden pleasure".

The tobacco lobby had admitted that smoking was addictive and unhealthy, so it had now to switch the terms of the argument. In 1992 a New Zealand tobacco strategist urged his international mates to be more implacable when meeting their opponents in public: "We have to walk out, speak out, infiltrate", he urged, "trying to discredit [the anti-smoking] movement and support all people who are prepared to denounce the follies and fallacies of medicine, puritanism, moralism, social terrorism…" (p60).

Wills (NZ) thought the best to do this was to "always target Government" (p59). This tactic achieves several things. It confirms the popular view of politicians as being tedious spoilsports and "bureaucrats", in contrast to fun-loving, freethinking smokers. Secondly, it appeals to the anti-intellectualism that is never far from the surface in our culture. "Attack the researchers" themselves, smoking lobbyists were advised, and divert attention to them. Create doubt over scientific rationality by equating its findings with "puritanism" and identify its morality as "terrorist". Thirdly, and crucially, arguing that governments are the source of all our problems plays into the wider New Right campaign to discredit any and all public communal activity.

The tactics and language are those of guerillas deploying against an entrenched state. A 1978 Australian soldier in the struggle for global tobacco liberation pointed out: "We cannot hope to win in a head-on confrontation. Our tactics must be to discover our opponents’ weaknesses, attack those particular points, cause as much confusion as possible, and attack somewhere else while their attention is distracted. Our method of attack must be constantly varied so as to deprive our opponents of a clear target. Surprise is a key element. Applying this philosophy, we are continually studying our opponents and their strategy to discover any areas where we can embarrass or even defeat them…".

The tone is reminiscent of another warrior against the New Zealand State as it then existed. Roger Douglas became Minister of Finance in 1984 and launched the neoliberal revolution that integrated NZ into world capitalism. His memoirs are modern classics of the advocacy of these tactics of surprise and movement.

A common target of the 1984-1999 New Zealand governments, and of Big Tobacco, were international agencies. In concert with the Employers’ Federation and the Business Roundtable, the Bolger National government blasted the International Labour Organisation in Geneva, to which the country’s unions had appealed. Meanwhile, elsewhere in the same city, the United Nations found that "evidence from tobacco industry documents reveals that tobacco companies have operated for many years with the deliberate purpose of subverting the efforts of the World Health Organisation to control tobacco use" (p59).

Neoliberal agents want to undermine the ability of society to defend itself by making rules to ensure safe working conditions and decent wages - or clean air and healthy lungs.

The lies and evasions of the last 40 years are background noise to our lives, aspects of our collective unease. This monograph, the sixth in a public health series produced by the Wellington School of Medicine and Health Sciences, finds the tobacco industry has been "highly irresponsible" in its behaviour, "obstructive" to efforts to clean up its mess, and generally anti-social. This has resulted in what the authors deem a "public health disaster". When it comes to cigarette smoking, the jury returned a guilty verdict decades ago.

The value of this study lies not so much in its conclusions as in its documentation. As Thomson and Wilson keep insisting, everyone has been made aware of the basic points. Their role has been to collate the arguments. If you’re interested in the supporting detail, you will find an extensive bibliography, telling appendices, and some guidelines, currently (at the time of writing) before a Parliamentary Select Committee, as to how best we might react.

 

"WORLD INVESTMENT REPORT 2001:

PROMOTING LINKAGES"

United Nations Conference on Trade and Development, New York and Geneva

- Jeremy Agar

If, once upon a time, the United Nations had produced a report whose title suggested that "promoting linkages" was a good idea, it might have seemed redundant. It would have been supposed that by its very nature the United Nations is about nothing but promoting linkages - if that means improving relationships between its member states. This, though, is not the meaning of the title of its annual Report on international investment.

The exact meaning of the phrase, which has to do with the fostering of policies deemed to enhance investment, is not at all clear. It can in fact be defined only by an array of jargon. There are links between the source of the investment and the recipient, and there are links between investing companies and between the investing company and other domestic companies. The links are the web of business relationships that result from money moving around the world.

The linkages are specifically not relationships between nation states. As the Report points out, there has long been a trend away from national economies. Trade and investment now move at once on both a bigger and smaller scale than that controlled by the nation state. Investment happens between corporations whose reach is global and the foreign places, which assemble their products. The marketplace is not naturally defined as being a nation. Markets, which buy products, might be continents or demographic groupings that exist within particular countries and internationally. Similarly factories, which produce goods, are distributed according to geographic, cultural and economic factors which often do not correspond to national boundaries. Countries have little to do with modern economic life. Buyers are golfers or asthma sufferers or Robbie Williams fans. They are not so much Brazilians or New Zealanders.

National governments remain as political units, often resented by corporations, which want to be able to make what they want where they want and how they want. This used to be a matter of rich countries raiding the rest of the world for cheap labour and raw materials. The Report reminds us that, like national boundaries, primary industries and natural resources are no longer as central as they were. Investment has moved to service industries and high technology.

Up to a point this is indeed the case. And a casual reading of the Report gives the impression that old-style extractive commerce has disappeared. But service industries account for just over half of all transnational investment. The other half remains. Besides, much service industry (like the fast food and tourist sectors) is itself very low-wage and quite unskilled; and much of what counts as high tech (such as the making of computer chips) is sweated and highly exploitative assembly line work. Less has changed than the conventional wisdom allows. The dominating industries are much the same as they were 50 years ago. The biggest transnational in the world is General Electric. The next seven biggest companies still make cars and pump oil.

The Report talks a lot of "clusters", areas which specialise, attract new enterprise and skill, and thereby come to dominate. Silicon Valley is the classic example. There are, however, down-market clusters too, often found in the poorer areas of poor countries, where compliant local governments have bid down prices to attract investment.

Not People But Consumers

It could be said that the metaphor of a cluster applies not just to international production patterns. Corporations see the people of the world as consumers. We used to suppose we were bound to each other by concepts like patriotism or duty. We are now free agents linked to the corporation by the automatic transactions machine (ATM – i.e. the "hole in the wall" cash machines. Ed.). Our buying habits might have more in common with someone of our own age and income in, say, France than with the bloke next door.

As a result, the picture is complex. Rich countries are the origin of investment capital, but they are also its target. The computer industry seeks out highly paid, highly skilled workers in California - or in Silicon Fen, in the UK. It also seeks out unskilled labour in the Philippines. Conversely, poor countries can be attractive for investors as sources of cheap labour. Or they might be seen as unreliable basket cases and passed over.

To measure the growth rate of foreign direct investment (FDI) the Report lists all the world’s countries in five groups. Those with the highest growth rate of over 30% annually since 1986 include the hapless Afghanistan and the successful Norway and Ireland. The major investing countries, the UK and the US, are in the middle quintile. Being rich or poor does not in itself determine the amount of FDI a country is likely to experience, except that the bottom group consists of 21 of the poorest countries where investment declined. Their names are those we are used to seeing in the headlines for bad news stories rather than as the subjects of economic analysis. The barrage of propaganda to the effect that "free trade" is intended to enhance the huddled masses does not stand up to scrutiny. The 49 least-developed countries attracted just 0.3% of global FDI in 2000.

The share of all developing countries in world investment is down for a second successive year, at 19% of FDI, from a high of 41% in 1994. Developed countries meanwhile received 21% more of the share, while all FDI increased by 18%, a faster rate of increase than that of production or trade. These figures indicate that the rich are investing in each other’s countries, shuffling more than three quarters of the world’s share of FDI between themselves, often through mergers and takeovers. Most of this investment is parasitic, a device to shift money to enrich the already well off. Here, too, it’s business as usual. The rich get richer. The real trouble is not that: it is that, despite constant propaganda to the effect that we are all doing better, the poor are still getting poorer

The Report points out that, when a developing country is trying to attract foreign business, "stability" is the prized attribute. In the old days of the banana republic this meant that a country was made over to the export of one big cash crop, grown by an American or European corporation with a local dictator installed to keep the lid on any protests. The Report wants to say that this no longer happens. Its own evidence, though, suggests that nothing essential has changed.

If anything, exploitation has deepened. The Report notes that the increased emphasis on high technology has increased the gap between "haves" and "havenots", unleashing "intense competition forces" and "making local conditions more, not less, important". Investors are into "efficiency-seeking". ‘Simply opening an economy is no longer enough,’ the Report says (p.xviii).

This is where the "linkages" find their real natures. The Report sees trade liberalisation as occurring in three stages. After the barriers are lowered, countries are encouraged to "market themselves". The final stage, the subject of the current analysis, involves what the Report calls "targetting" foreign investors.

The language is that of PR. There is much talk of the type so dear to the heart of Jenny Shipley (NZ Prime Minister, 1997-99. Ed.) - for countries to get into "branding" and the creation of "images". It doesn’t sound drastic. But what does it really involve? The Report recognises that corporations are holding the aces, referring to "what firms have done to force linkages". Host governments have to provide favourable "costs, logistics and reliability factors". Governments compete, "so as to maximise corporate efficiency". This is the old "stability", not "branding" so much as installing banana republics.

When the effect of foreign ownership is measured, the Report considers four measures - FDI as a proportion of GDP, the value added of foreign affiliates as a percentage of GDP, FDI inflows as a percentage of fixed capital formation, and FDI as a percentage of total employment. This gives a measure of "transnationality". In the developed world the most transnationalised country (as of 1998) is New Zealand.

NZ Mirrors The Third World

Other developed countries with high levels of foreign ownership are Belgium, Luxembourg, Ireland, The Netherlands and Sweden. These are good company, rich economies with investment flowing in and out. NZ is not like them insofar as we have three times as much investment flowing in as we have going out. In this respect, the NZ economy mirrors not developed Europe but the developing world.

A closer look at the numbers reveals that, when it came to inflows of FDI, in the 1988-1990 period (the years of the neoliberal revolution) NZ ranked fifth of all countries, behind only the highly atypical trading posts of Singapore, Seychelles and Hong Kong - and Belgium and Luxembourg. Ten years later NZ was not in the top 30. Benelux remained high in the 1998-2000 index, where, following policy changes, Sweden and Ireland jumped respectively from 29th to 4th and from 46th to 3rd in the index.

The report attributes NZ’s drop to contractions in Asia and Japan. Certainly Australia, where policy shifts have been less frenetic - one might say more stable - fell down the index too. But there was another factor. By 1998 the big NZ privatisations and asset sales had been completed.

Business exists to make a buck. This hoary truism is never far from your mind when you look at the lists and the numbers and take in the earnest advice. The Report cannot resolve the contradiction between cheering on free trade and grasping a niche for itself. Agencies like the UN have little real power, especially over the transnationals (TNCs), which want only "linkages" of their own devising. Does the UN, the world’s super-government, see the world’s national governments as having a role? Beyond the cosmetic, probably not.

Governments: Waving Through The TNCs

In considering "market failures", the Report offers little beyond strategies for easing the entry of private interests to local suppliers or explaining how to get on with the natives. The Report sees governments as traffic cops who have to wave through the fast cars because the police are riding bikes. In the middling countries governments are offered the job of providing infrastructure for private foreign interests. The Report knows that transnationals "may be reluctant to invest in building local capabilities because the benefits leak out to other buyers". TNCs don’t spend money for the benefit of others. In the poorer countries there might not even be the chance of public subsidies for private profits - for the very good business reason that "local capabilities may be too far below the levels needed to make it feasible for the TNCs to invest in improving them" (p163).

In the end, the Report seems to think that token opposition to the TNCs is doomed. It comes clean and counsels surrender: "It is important to note that the policy space available for national linkage policy space is narrowing. A number of the direct measures used in the past to increase local purchases are being phased out, as a result of autonomous liberalisations by host countries, the decline of intervenionist policies and rules agreed in the context of the WTO [World Trade Organisation]" (p165).

When the WTO was created, in 1995, it placed further restrictions on the ability of states to require local content rules, or to impose controls over imports and exports, with the stated intention to phase them out entirely. Similarly the International Monetary Fund (IMF) has pressured countries into removing any controls on currency and capital transactions, while almost entirely unregulated financial markets (backed by the IMF and big powers, such as the US) make it almost impossible to set exchange rates to suit trade needs. As the constraints become more and more stringent, it is ever harder for people to protect themselves from the effects of those market failures.

In New Zealand, where we have passed through a breathless integration of the domestic economy to the dictates of global forces, we were encouraged to suppose that there was nothing to regret as There Is No Alternative. It is timely to note that Philippe Legrain, a former adviser to the WTO, has just written a book he has called "Open World: The Truth About Globalisation". His "truth" is that his soulmates are wrong. Globalisation is very much a choice that the world’s people can make through their governments. As Legrain says, the fact that it is possible to change course makes policy debate more, not less, important.

Without this debate, the UN can scarcely be blamed for not defending the rights of sovereign states. After all, the staff who compiled this Report represent the world’s governments, virtually every one of which is a fully paid up lobbyist for privatisation. For its funds the UN depends on the big rich countries, the very ones which have most to gain by an impotent UN. When global privatisation and deregulation are on the agenda, public agencies are potential threats to the brave new disorder. In this context, we can be grateful that the UN is still able to put out such a thorough analysis as this one. Its array of facts and figures are a vital resource.

 

"SEEDS OF DISTRUST:

THE STORY OF A GE COVER-UP"

by Nicky Hager. Craig Potton Publishing, Nelson, 2002

- Jeremy Agar

"Seeds of Distrust" came out during the July 2002 election campaign and became the main issue. At the time it was easy to suppose that the determination of all eight parties not to discuss the economy meant that there was so little difference between them that environmental issues were all that was left to argue about, with one party at least having something to say. Thus we witnessed the Labour-Alliance Government warding off Green critiques, with the other Opposition parties standing by, sidelined by their common preference for Labour over the Greens. It was not long until Helen Clark invited National supporters to defect to her side - successfully, it would seem.

The Greens’ failure to respond to repeated taunts from the Prime Minister suggested that they were not in a hurry to seize an issue that should have been heaven-sent. Why? If you read Nicky Hager, you can see why. For one thing, his book is not about genetic engineering (GE) at all. For another, the Greens figure in his account only briefly, and then it is as tacit supporters of the Government rather than as heroic champions of organic purity.

Hager’s subtitle should have tipped us off. His topic is the response of the Government to a crop contamination. It is an excellent book, concise, balanced and timely, but it is not about Frankenstein foods. It is about how governments exercise power. In the scheme of things the GE cover-up (for that is what it was) was not a major scandal and that is another reason why no party made or lost much political capital over it. The cover-up was pretty much routine Beehive activity, so much so that, without Hager’s book, the whole business would have passed unnoticed by those of us who imagine we are part of the "general public".

Hager was painted as a hell-raising alarmist so that the political class could divert attention from his case. "Seeds of Distrust" is in reality a quiet and sober account. Hager has nothing to say about the science of GE beyond saying (p6) he is against "the needlessly risky". Referring to the obvious precedent for a New Zealand consciousness, he suggests that it is possible to oppose some "completely immoral sides of nuclear technology" while supporting the use of "nuclear medicine in hospitals".

This is a pragmatic, conservative position, one with which few Kiwis would not agree. With genetic engineering, Hager suggests, scientific doubt would counsel that "if something goes wrong, it is likely to be the result of some surprising interaction or some unforeseen biochemical effect". Large-scale commercial GE in agriculture dates only from 1996. For NZ, which, as an island nation with a respected food industry, is uniquely advantaged, to compromise its "clean green" identity is unwise. We do not yet know all the science involved in the genetic modification of food, but we do know that consumer tastes in our main markets increasingly favour organic produce. We know, too, that, once GE organisms are loose, it could well be game over for organic producers. Our economy’s dependence on strict border controls is one of the oldest and surest aspects of public policy. It’s why we search at ports and airports for snakes and spiders. It really is hard to see why we need rush to introduce GE crops.

At the time the GE corn story broke, in November 2000, Helen Clark thought so too. Her Government’s policy of not allowing genetically modified seeds was at risk. Pull out the infected crop, Clark said. It would not have inconvenienced many. Only 178 hectares had been planted, in Gisborne, Hawkes Bay and Marlborough. Then the phones rang. Soon Clark was not so sure. It is in tracing the PM’s weakening attitude that Hager tells his story. The corn seeds involved in the GE cover-up came from the US corporate giant Novartis, a company which is into private short-term gain for its international shareholders rather than the long-term public interest of New Zealanders. Thus, like tobacco companies (see Jeremy’s review, above, of the report on the tobacco companies in New Zealand. Ed.) biotechnology feels obliged to manipulate, to spin. Hager points out that we tend now to refer to GM rather than just to GE because Monsanto, another big corporate, thought that "modification" sounds kinder and gentler than "engineering".

A key strategy was to convince lawmakers that it was "inevitable" that crops become contaminated by unintended organisms, the intent being to create a fatalistic acceptance of these events. Hager shows that the strategy worked. Our Government began musing about the impossibility of being completely sure our crops were clean. Media hacks on cue derided enivironmentalists for yearning for an impossible fairy-tale world. But at the time of the NZ corn cover-up Austria and Greece, continental countries, found their own contaminated seeds. Unlike NZ, they pulled them up. Assuming that life on a huge landmass was never perfect, they would in future allow small traces of contamination. Up to 0.1% contamination would be allowed for a crop to be seen as GE free. NZ’s standard came to be more lax. Two weeks after its initial reaction - that the crop would be destroyed - the NZ government came to prefer the "US standard" - one that had resulted from intense lobbying by companies like Novartis and Monsanto. A contamination of 0.5% would henceforth be ‘’deemed" free of contamination.

NZ Leads The World Again

NZ, said a Cabinet paper (8/12/00), "would be among the international leaders in the setting up of systems for providing assurances that GM contamination in non-GM seed imports does not exceed defined low levels" (p72). In a few weeks, the Government had switched from an absolute opposition to released GE to a boast it was "Leading The Bloody World" in allowing it. By doing so, said the Cabinet, NZ could cast itself as an ‘international leader" in setting up "best practice guidelines" (p81). As Hager comments, "NZ could then be cited as an example of low standards when other governments were being lobbied. Up to this time NZ policy had been that no GE contamination was permitted" (yet National and ACT say the Government is nasty to Washington).

Confirming this dismal interpretation, Hager quotes a Ministry paper (30/11/00): "It may not be in the interests of major producing countries (multinational seed companies) to go to extra trouble and expense to meet our entry requirements," the Cabinet was advised. "Moreover, with stricter border controls, there may be a backlash where NZ was no longer perceived as a convenient cost-effective place for other countries to bulk up seeds". So said the Ministry of the Environment (p76). NZ, Hager concludes, is to be touted as a "low-cost, off-season growing space".

Backing this effort, says Hager, the Ministry of Foreign Affairs and Trade (MFAT) pushes for foreign interests to be allowed easy entry. Hager shows how the Prime Minister (and her advisers) manipulated consent from the Cabinet by fudging the issues and ensuring MPs were reassured that nothing much had gone wrong. High costs were invented to hint that the problem of seed contamination was not to be readily solved. In other words, it was politics as usual. Neither the Greens nor the media picked up on the real story soon enough.

In April 2002, Novartis was part of a US group (alongside poultry and grain interests) urging a compliant World Trade Oraganisation (WTO) to keep "non-trade concerns, such as food safety and environmental issues, out of WTO agricultural negotiations". Again, the biotech oligopoly was operating very like the tobacco oligopoly, pushing national governments and international agencies to be allowed a free hand. Novartis wants to modify policy. It wants to engineer the sort of deregulation that the UN regards as necessary for any government branding itself as open for business (see Jeremy’s review, above, of the UN’s World Investment Report 2001. Ed.).


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