My friend Mike was so upset by the looting of the Baghdad museum two years ago that he stood out in front of the Met with a handwritten sign denouncing U.S. plunder of the world. The passing New Yorkers, art lovers and international tourists were largely sympathetic. My wife and I came out to show support, as did two of his other friends. The strategy we developed was not forming ranks shoulder to shoulder but rather standing in front of him as if thoughtfully considering his message, acting as shills rather than comrades.
But you know the U.S. does create wealth, I felt compelled to say over Chinese food a few weeks later. When a screenwriter sits down and plots the reveal of an action movie or a programmer codes a Java plug-in for a web browser, they are making something out of nothing. Designing and planning create value as much as cutting fabric and sewing do; a pattern is required to make a dress as much as needle and thread. Managing, organizing, borrowing, signing checks are all activities necessary to business. Manual labor is not enough, there has to be mental labor as well; there has to be a plan.
Our friendship had begun with an argument. I had met up with some publishing people for after-work drinks at a bar on 7th Avenue and 19th Street. At my end of the table was a likeable fellow with a sparse pate and pained expression, gently fulminating that FSG should be publishing more experimental poets. I tried to explain why his logic was unsound. FSG has the reputation they do because of who they choose to publish; the poets make the press, not the other way around. You can certainly say that the Library of America should include more work by radicals, and you could even argue that the New Yorker is such a quasi-official institution that it has an obligation to be representative in its selections. But if FSG published the list of, say, Black Sparrow Press, then the two would just magically change places. The prince would become the pauper and be neglected accordingly.
I donít think I swayed him but we did exchange e-mail addresses and wound up hanging out pretty regularly, taking walks along the river when the wind was not too strong. We found common ground in the ups and downs of married life and in minute appraisal of the girls on the downtown scene, along with the mystery of their intentions. We lamented Time and limned Decline and like all New Yorkers talked real estate in tones of genuine awe. Still, when it came to the realm of ideas we always had to stop and remember that here our friendship was based on opposition, that Mike was an esoteric hardliner while I was a Great Books fuddy-duddy at heart, ready to consign a century of modernism to the scrap heap.
At the end of 2003, U.S. direct investment abroad was $2.7 trillion, while foreign direct investment in the U.S. was $2.4 trillion. U.S. ownership of foreign stocks was $1.9 billion while foreign ownership of U.S. stocks was $1.5 billion. Since the share of foreign companies owned by American interests has for some time been pretty close to that of American companies owned by foreign interests, the two numbers cancel out, roughly speaking.
The net investment position of the U.S. is a broader figure which is comprised of both public and private assets. It includes foreign governments and individuals holding Treasury bills and dollars, sometimes as bank reserves to guarantee their own currency. Some of the figureís fluctuations are caused by buying and selling while others are caused by held assets changing value. As recently as 1985, the U.S. had more assets abroad overall than liabilities, but since then the U.S. has had a negative investment position for the first time since 1914, a shortfall which quickly became something of a freefall. While the first set of numbers have things roughly even, by the second the U.S. has fallen dramatically behind. According to the latest data, total foreign investment in the U.S. currently exceeds U.S. investment abroad by two and a half trillion dollars.
The 2004 federal budget deficit was $413 billion, due more to the Bush tax cuts than to the invasion of Iraq. The 2004 trade deficit was $617 billion, due to increasing Chinese imports and the rising price of oil. With a government that spends more than it takes in and a populace that imports more consumer goods than it makes for export, the U.S. is no worldbeater these days. Sometimes I think the only serious threat to Bush and the Christian right lies with the fiscally responsible element of the business sector, the hopefully non-imaginary old school Republicans who like their numbers to add up and donít care about other peopleís bedrooms.
Letís consider a different set of numbers. In 1987, Americans held $94 billion in foreign stocks, 3.5% of their holdings, while foreigners held $175 billion of U.S. stocks, 6.4% of the total. By 1996, Americans held $876 billion in foreign stock, 10% of their holdings. According to 2002 data from the Securities Industry Association, U.S. investors hold $2.3 trillion in foreign stocks and bonds, which is now about 11% of their total holdings. In the investment community, 10% is considered a ceiling to how much foreign exposure clients will tolerate and sometimes a guideline to how much they should. Todayís typical investor will not exceed this fraction because of the greater volatility of foreign investments, due to political instability and lower standards of accountability abroad. Most Americans feel safer keeping their money at home.
The idea that America owns the world is a crude kind of picture-thinking, an attempt to make the inherently abstract and frustratingly elusive nature of economic processes concrete by putting a human face on it. This is the same kind of thinking that on the right produces the anti-Semitic stereotype of the Jewish financier, the puppet master who pulls the strings of world governments. It is a flipside to the fantasy that Japanese businessmen or Saudi sheiks are controlling America from thousands of miles away, when in fact our largest foreign investor has always been Britain.
Should we feel guilty just for living in the U.S.? This attitude blurs crucial distinctions and inevitably sweeps us toward saying we are damned whether we do or donít and so might as well do and enjoy doing. The false liberal quickly accedes to universal guilt as a station on the way to self-declared amnesty, like a pilgrim washing his hands with dirt. I donít think any living soul should feel guilty for past atrocities; you are not responsible for things you did not do. I also donít think anyone should feel bad for working in an office or putting gas in their car; you cannot be responsible when you have no choice. So what does that leave? All I ask is accuracy.
A good argument can be made that the world communicates exclusively in lies and that in order to get by we must do the same; Iím impressed when anyone declines to do so. When General Mattis returns from Iraq and says that shooting people is fun, it might seem like he is being honest but heís not, because he wasnít actually doing any shooting himself and if you asked the people who were shooting and getting shot at, theyíd probably rather come home; it isnít fun. When General Boykin says his god is bigger than Allah, he is at least being sincere.
About half the worldís billionaires are in the U.S., 341 out of 691, according to Forbes, which parades them annually before the public like swimsuit models. So where does their money come from? Not all their companies rely on cheap foreign labor like Wal-Mart and Nike. Michael Dell is #18 on the list with $16 billion, while his company continues to manufacture its computers in the U.S. for the North American market. The software barons and cable kings are not even manufacturers at all, traditionally speaking.
There are three main forms of exploitation: controlling resources, controlling labor and controlling markets. If we look beyond the colonization of resources and labor, we see U.S. dominance increase considerably. For example, Microsoft does not make its products in refineries or sweatshops but it does unfairly monopolize domestic and international markets. It does not own the world so much as it owns something much of the world depends on, and it makes them pay through the nose for it, with profit margins as high as 86% for the Windows operating system. Coca-Cola is a similar case, raking in the same kind of 20% profit margins for its products as oil and pharmaceutical companies do. These gigantic monopolies make their profits by controlling the market, exploiting consumers in addition to workers.
Halfway through the journey of life, I got benefits. Working as a temp on and off, I had never experienced a paid holiday. My current employer made me wait sixteen months before officially hiring me. During that time, concerned friends stumbled over their words when asking about my work status. They wanted to ask if I was full-time yet, but of course I was already full-time in the sense of working forty hours. It would have seemed impolite to them to ask directly about the benefits themselves. There was no soft way to speak the hard truth of it.
Researching how retirement accounts work, I learned that most people donít know what they own. According to the Investment Company Institute, 37% of households own mutual funds. A typical mutual fund invests in 50 to 200 different securities, which are continually changing. Mutual funds only hold 20% of U.S. stocks, but more than half the rest is held through intermediaries like pension funds and insurance companies. 40% of these large institutional investments are in index funds, funds which distribute their purchases equally across the range of major companies so that their fortunes will rise or fall with the general trend of the market.
Bush speaks of an ownership society; meanwhile his tax returns reveal he owns companies he doesnít even know about. Ownership is dispersed. The modern corporation is an instrument for limiting personal liability and raising capital, but also for wider distribution of financial risk and gain. Much of the world is owned by people who donít know they own it. In the nationís capital you will see a condemned building side by side with people sleeping in the street, a consequence of absentee ownership. Could it be that the legal entity that holds the buildingís deed does not even know it exists?
To some extent, those who own the world are not those who run it. The rich donít run the world themselves any more than they raise their own kids; for that they have governesses and boarding school. The world is managed by proxies and functionaries, working on a commission basis. The majority of corporations are run by M.B.A.s in the name of shareholder interests. 79 of the top 200 CEOís have M.B.A. degrees, as does the President himself.
No one would want a piece of the action if they couldnít swap it for something else. Everything that can be traded is constantly changing hands, or being held and watched while its price fluctuates, including the 70% of American homes that are under mortgage, the roof over your head and the very ground under your feet.
To be sure, high-quality family businesses like L.L. Bean, Martin guitars and Wegmanís grocery still exist. Ernest and Julio Gallo are real people (Bartles & Jaymes were not), as was Frank Perdue. I have bet against J.C. Penney and Clarence Birdseye and lost; they were flesh and blood like me.
Ironically, Wal-Mart is a family-owned business, 38% of its stock in Walton family hands, producing five heirs tied for seventh richest person in the world. Ford is still 40% in the family, Viacom 68%, Newscorp 30%. Comcast is family-run, as is Clear Channel. It seems not every family business uses the family name. In some cases, faceless corporations present themselves as people by hiring a celebrity spokesperson or using a charismatic CEO for publicity, while in others wealthy families hide behind the impersonal screen of a legal fiction.
P.C. Richard, an electronics chain I resent because they put up a branch on the former site of the legendary Julianís pool hall, was actually founded in 1909 by a Dutch immigrant named Peter Christian Richard and is run today by fourth-generation Richards. In fact, one family business replaced another. When my dishwasher broke, I spent a couple days comparison shopping before giving up and buying from them.
When I heard Noam Chomsky speak in my student days, someone from the audience asked naively if the rich knew that what they were doing was wrong. Itís irrelevant, he told us. He was not interested in the contents of their minds. I believe Marx would agree with him, since the great insight of Marx was that we live under a system in which money makes the decisions rather than people.
The short answer to my question is that the rich own the world, by definition. The rich have more of everything; thatís what it means to be rich.
The long answer is that God is dead and numbers rule. The answer to every question is not a satisfying name but some mystifying numbers, not yes or no but x billion and y percent. The richest 5% of Americans now own almost 60% of the countryís wealth, while the lower three quintiles comprising 60% of the population have 4%, .3%, and at the bottom nothing or only debt. In the shrinking middle are people who need this score and that amount of tuition to get into this school so they can make that income and live in that high-scoring zip code. Once you believe this, youíre lost like me.
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