Who is Responsible for MNCs Mistakes?

Having grown up the grandchild of a mining engineer, it’s hard to avoid discussing the topic of being in a mine, from the processes to the devastating effects that they have, there always ends up being some debate on how MNCs operate and the responsibilities that they have. Canadian mining MNCs have been particularly offensive in this sense, almost always being associated to some extent with environmental or humanitarian disasters in the host countries that they operate in. Placer Dome, the Canadian mining firm based out of Vancouver that my grandfather worked for, is no exception to such allegations. In 1996, the Marcopper Mine majority-owned by Placer Dome suffered a fracture in one of their drainage tunnels, causing massive environmental damage to the island of Marinduque. Originally, Placer Dome took responsibility and was willing to cooperate for the cleanup from the disaster, but quickly pulled out of the project via divesting from the Marcopper Mining Corporation. In 2001, citing an agreement made with Marcopper, Placer Dome saw their selling of Marcopper as ending their responsibility for the cleanup of the mine tailings.

This change of heart by the company is particularly concerning when examined through the lens of corporate social responsibility. In particular, the fact that a firm would openly consider their responsibility ended the moment they sell their subsidiary in the host country reflects the attitude of many firms at the time. This tact that MNCs during this time took shows how, despite the immense power that they held, there is very little incentive for them to consistently aid in global governance. Nevertheless, these actions by Placer Dome did create positive change in terms of strengthening the Philippine Mining Act to ensure greater protection for the environment and the groups in close proximity to mining operations. Overall, based on examples like this, I find that it is hard not to see MNCs as wanting to be a part of the governance framework only when it is convenient. This notion is especially prevalent with regards to MNCs in extractive industries, as Shell just recently called for the Canadian oil lobby to support the imposition of a carbon tax, yet conveniently did so after divesting from the Alberta tar sands.


Amazon’s Relentless Abuse of Power

Amazon’s original name was going to be Relentless, and they continue to quietly own that domain name. That is exactly what Amazon has been in since it announced its plan to build a second headquarters in 2017, relentless to lower costs to the firm. Amazon’s intentions were relatively clear from the start: start a bidding war to lower costs and maximize gains. This “search” for a second home saw many states and provinces putting together plans to provide tax exemptions and infrastructure projects that would benefit the online shipping giant. The politics of this search were highlighted by the fact that, in the end, Amazon decided to choose New York City and Arlington, Virginia. Despite splitting their new headquarters between cities, them being both along the Eastern seaboard shows that their decision was practically determined from the outset, using the bidding process simply maximize the firm’s tax breaks. These two areas already being centers for global markets, having large infrastructure development, and a being on the opposite coast from its original headquarters in Seattle likely contributing factors in Amazon’s decision. These incentives alone were likely enough for the firm, but the bidding from cities would reduce the likelihood of Amazon needing to fund any infrastructure improvements as part of the agreement to expand to the winning bids.

The power of MNCs to completely revamp a local economy has been widely recognized for some time now. This power is something that most states recognize and strive to obtain, yet in doing so they simply strengthen the bargaining position of MNCs, which is what has occurred on a lesser scale with US states and Canadian provinces vying for the prize of an Amazon headquarters. John Stopford’s 1999 Foreign Policy article, titled “Multinational Corporations”, discusses this notion in depth, noting that a multinational corporation will follow the social contract when they wish. This explains the nature of Amazon’s search process, as it provided a mirage of benevolence behind which their desire for subsidies and tax breaks were hidden. Additionally, Susan Strange in her article “Big Business and the State” also touches on themes relevant to the Amazon expansion, in that, once permitted access to a given market, they are the ones determining to what extent they will enter it. Thus, Amazon is using its market power in the United States to ensure they receive a plan that allows them to gain from the optics of a new headquarters, with all the jobs that it creates, without taking on any further burden from heavier taxation.