Of the Competition Between Small Businesses and Corporations

                    It seems that those wanting to localize the economy and those pushing globalization are in competition. The possible decisions of both sides could be modeled using game theory techniques developed by John Nash.  Some of  the elites do not realize the economy is an open system. I suspect that one of the biggest weaknesses of the elites is that they view the resources of those trying to localize the economy as being too limited to damage their economic and political clout. By localizing the economy I do not mean that free trade would be avoided. Rather, regions and cities would benefit more from free trade.  This is because under a system of placed based finance and industry the goods and services that a country exports would be produced by firms that would re-invest much of the profits from this activity locally and regionally within the exporting country. Also, companies would have a greater incentive to invest regionally and locally as the economy of regions and cities in a country improve.  This is assuming that this process has already started and people with time and money to invest have started to think in local and regional terms.  Thus, the human resources in a region would be greatly improved and consumers would have more disposable income.  This is assuming that goods and services that require a high level of skill to produce would be produced in this region.  Of course, consumers and companies would still buy imported goods and services as free trade would still take place.  I have commented in earlier blogs on the impact of free trade and a full analysis of this is beyond the scope of this blog.
                 Despite the benefits of a more localized economy there are organizations that benefit from hyper- globalization.  For example, in 2013 the CEO of Apple, Tim Cook, testified before congress after the company had avoided paying taxes on billions of dollars of profit made overseas via Irish holding companies.  Apple made a deal with the Irish government to be taxed at a 2% and Apple transferred intellectual property to Ireland so that Apple could keep its profits made in Europe there.  However, the Irish government claimed it could not tax Apple's overseas profits as it would be under the U.S federal government's jurisdiction and the U.S government did not tax Apple for these overseas profits as they claimed it would have been under Irish jurisdiction.  Although months ago Trump gave a one time tax incentive for companies to move money back to the U.S, this policy is unlikely to have a significant long term effect.  Another example is that during the 1990's the NAFTA trade deal was signed under the Clinton administration between the U.S, Canada, and Mexico.  Shortly after this free trade deal was signed American manufacturers moved production overseas to countries with cheap and abundant labor such as Mexico and China.  However, this trend recently started to reverse when companies started moving production back to the U.S from countries such as China.  This is because when China enjoyed a decade of rapid growth from 2008 to to 2018 the wages of low skilled workers went up as demand for these workers soared.  Also, China's One Child Policy which limits the number of children families are allowed to have has limited the supply of labor.  This trend in the labor market combined with the high cost of shipping goods from China to the U.S has made it cheaper for manufacturers to move production to the U.S.  Also, the jobs that are coming back to the U.S are high skilled jobs.   
                 Corporations can raise capital by issuing stocks and bonds.  That money can be invested in the business in the form of research and development or marketing.  Also, the massive amount of marketing that large companies that focus on consumer products engage in builds a brand image for that company.  Large companies can innovate by dedicating a group of employees to the task of improving one of their products as part of research and development.  Or the company could collect data from consumers that use the companies product to find ways to improve the product.  However, large corporations typically have many layers of management, so an employee with an idea would have to go through several layers of bureaucracy before he could start developing it.  Typically, multi-national corporation are not as agile and cannot innovate as fast as a small business could.  A corporation could create barriers to entry such as lobbying to the government for costly, unnecessary regulations that deter entry by small companies.  Also, if the large company is in an industry where it would be dependent on suppliers such as the restaurant industry.  For example, hypothetically if a large burger chain could prevent smaller firms from entering the market by buying vegetables such as lettuce from suppliers.  Thus, raising the prices of the key ingredients.  This is not purposeful price manipulation as the buyer has to buy these ingredients in order to produce enough burgers to satisfy demand.  Rather, it is a by product of a company becoming so large that its purchases from suppliers impact the market price of those goods.
                   Small businesses can often develop a niche market for their products in the local communities they serve as customer service is typically better.  Also, small businesses have more flexibility to innovate as they are only being run by one or two people.  However, this opens up the possibility that the sole proprietor or partners either lack the knowledge necessary to make sound business decisions or they merely commit a fatal error that leads to the downfall of the business.  This can be avoided if small business owners speak with successful entrepreneurs on how to properly manage a new business.  Indeed, the success of small business is vital to the local economy.  As cited in INC article, "The Truth About How Small Businesses Create Jobs and Benefit the Economy", The Bureau of Labor Statistics stated that since the end of the 2008 recession to March 2018, small businesses (businesses with less than 500 employees) have created 62% of all net new private sector jobs.  A link to the articles is posted in the references below.  As I've pointed out in previous blogs, the success of small businesses and credit unions would help keep the money local.  Thus, enriching the local and regional economy.
                  Now back to my suspicion that the biggest weakness of those perpetuating hyper globalism do not think that those trying to localize the economy have sufficient resources to compete with them.  Those pushing globalism may be afraid of something else threatening their political and economic clout.  The first thing they may be afraid of is that the mechanism of propaganda they are using is not working.  In other words, people may not be believing the commentary given in the corporate controlled media such as CNN or MSNBC.  Media companies typically have political biases, so it is important to distinguish facts from commentary when reading articles by any news outlet.  The second thing they are afraid of is the possibility that a third party will interfere.  While it is unknown who this third party is.  Former Assistant Secretary of Housing and Urban Development, Catherine Austin Fits, provides a possible explanation for the "third party".  As I've mentioned in previous blogs, there have been a number of UFO sightings over the last decade and there is evidence that there is trillions of dollars missing from the U.S federal government that went toward a secret space program.  I am not suggesting that the UFOs are aliens because they could be humans from Earth with advanced technology.  These UFOs are probably not using anti gravity technology or other outlandish techniques that some researchers have speculated.  Its further possible that many of these UFOs are not even intended for space travel.  Which means its plausible that many of these UFOs are merely the product of secret research and not aliens.  Catherine Austin Fits has further stated that there's evidence that there is so much money missing that some of it is possibly going to a third party.  Perhaps in the some of commerce or even tribute.  If a third party were to intervene its unclear what the third party would do.  Its possible that combination of interference by a third party and a group of coherent observers that are not influenced by mainstream media could occur at the same time.  Indeed, this would involve action by both a third party and a group of coherent citizens.  As I've mentioned before, Catherine Austin Fits is the publisher of The Solari Report and I have posted a link to her website below.      

           

References

"The Truth About How Small Businesses Create Jobs and Benefit the Economy"

  https://www.inc.com/todd-mccracken/why-we-need-to-give-more-aid-not-less-to-small-businesses.html

"Apple CEO makes no apology for company's tax strategy"

https://www.reuters.com/article/us-usa-tax-apple-idUSBRE94J0U320130521

"The Solari Report"

https://home.solari.com/