China’s Anti-trust Law is going to take effect in August 1st. Recently there have been quite a few articles discussing its implications on multi-national companies in China. Media in the US have been speculating, for instance, whether Microsoft’s bid for Yahoo would be effectively blocked by the Anti-trust Law. (e.g. NYTimes article)
There have been plenty of comments and critics, and will be more. They are, however, surprisingly similar. Commentators argue that the regulations of multinational companies such as Anti-trust Law, while damaging them, also harms the local economy. Such an argument is reflected in the following text from a recent New York Review of Books article Gloomy About Globalization.
The emphasis of his [Stiglitz's] book is on the damage multinational corporations do, and he wants them to reduce this damage by forcing them to pay for it, that is, by limiting their property rights in poor countries. This is a defensible position if one believes that the social value of entrepreneurship has declined. This may be the case in already developed countries, though if one looks at the revolutionary effects wrought by the development of cell phones and Internet corporations like Google, one may doubt it. But the one place it is surely not true is in the developing world, which requires more entrepreneurship, not less. Although Stiglitz recognizes the importance of good domestic institutions for economic success, the focus of his book is too resolutely on the external sources of failure. This fuels the natural tendency of the unsuccessful to claim they are victims of the successful.
It is unclear how regulating multi-national companies harms the “social value of entrepreneurship.” Maybe, if I could complete the argument for the author, he wants to claim when a developing country regulates multi-national companies–or, to use the author’s words, forces them to pay for the damages–the country infringes property rights, which surely harms all entrepreneurs including local ones. Harming local entrepreneurs equals to harm the local economy. If the regulation harms the local economy, he would then conclude, a developing country should not regulate multi-national companies at all.
The author assumes–without much warranty–that an alliance has been formed between the local entrepreneurs and multi-national companies. If there were ever a regulation, multi-national companies weep–not for themselves, but for their weak local allies. Absurd. The alliance is no more meaningful than the slogan of “local interests” by colonialists in the 19th century, but is surely more misleading today–the crocodile’s tears are never true.
Developing countries do see through the crocodile’s tears. The alliance is often denounced by the local entrepreneurs, who undoubtedly know their interests, which are far from those of their self-claimed allies. [跨国公司，反垄断法，微软，雅虎，公司并购]