Our local area is graced with the presence of a biomedical drug production facility. The company manufactures important, lifesaving products from which mankind benefits and in doing so, the company makes a handsome profit. They also have a production facility in a Caribbean Island Territory which also manufactures important products. I understand that they are a very progressive organization. Friends, family, and colleagues from grad school work at the local plant and at the R&D office in Many Trees, in some coastal state. [Note: the name and location have been cleverly disguised or omitted- Th’ Gaussling]
Meanwhile, there is a constant buzz concerning the possibility of moving the entire mfg operation to this Caribbean paradise where the tax and labor costs are significantly lower. I have no special inside information here, I just know that this has been considered.
The situation outline is in no way unique to the particular company I’m thinking of. It is a very common situation. Company decides to move operations off-shore to continue profit growth of a successful product. Shareholders continue to enjoy good returns on their investment, product pricing is competitive and the company continues to hold on to market share. Everybody’s happy, right?
Back at the corporate HQ, assets are safely nestled in the Unites States of America, under the 24/7 protection of the Army, Navy, Air Force, Marines, and Coast Guard. Corporate human and capital assets (shareholder assets, really) enjoy the benefits of the vast infrastructure of the USA. Materials and people move safely and efficiently over land and through the skys of the USA. The FAA assures air safety and orderly movement in the skies. The DOT assures motor vehicle safety. State and federal monies provide for highways, bridges, and all of the motorway infrastructure to keep the trucks of raw materials and product moving.
Federal, state, and local governmental agencies provide reservoirs for water and electricity. Plant process water comes from a pipe put in place by the local water district infrastructure. Sanitary water treatment is provided by the municipality. The streets are patrolled by city and county police who are charged with crime prevention.
Corporate scientists who invent the technology that the company profits from so handsomely and the executives who guide product to market were educated within the vast academic/research complex that has made the USA the envy of the world. Graduate student and post-doctoral stipends in science and engineering are largely funded by some government agency or other.
Corporate researchers have access to enormous volumes of public domain technology and knowledge paid for by NSF and NIH grants. Researchers who were educated at public institutions with public subsidies take their talent and generate treasure for the corporations and the shareholders.
Yet, a great many corporate entities are escaping tax liability by moving manufacturing off-shore. Corporations whose very existance is owed to their fertile, wealthy, and knowledge rich nation have somehow seen fit to evade paying back into the system so as to perpetuate that very system from which they benefit so handsomely. Instead, others contribute to sustain it.
The advantage of substantial US infrastructure amounts to a kind of subsidy. The purpose of this subsidy is to stimulate the formation of wealth generating organizations who can then provide jobs and stability for the economy. Instead, we find that corporations are tapping US knowledge wealth and eventually using it to subsidize foreign economies.
There are mathematical justifications for this transfer of manufacturing from the local to the foreign. More profits flow to the shareholders- the big players and those who hold 401(k) plans. Growth is sustained and a competitive edge is held. But is it really? Could it be just the result of poor imagination?
Lamentations on Chemistry 
Bush the Lesser has created out of vacuum and spent some $2 trillion ($2×10^12) for incompetent international adventurism and internal corruption unimagined since Caligula. That $2 trillion hole must be filled by taxation or inflation – or there will be an accounting.
Every sane international corporation has moved its primary physicality offshore and its long term assets into euros – most notably Halliburton relocating from Texas to Dubai. Interest rates have been inverted for at least six business quarters. NINJA mortgages (no interest, no job or assets) are detonating. Leveraged investments are imploding like a fission core as margin calls exponentiate. The Dow is in unstable oscillation from positive feedback. Hello Black Thursday, 24 October 1929.
Honest citizens must make a decision: carbines against individuals or shotguns against mobs?
Sounds like a classic case of the free rider problem to me, with a couple of other concerns.
First, if the production of this drug were actually jeopardized in the Carribean location, through some kind of social disruption, I would guess that good old Uncle Sam would step in and protect the assests, if they were significant enough. (Hypothetically, if it were production of say bird flu vaccine or if it were the only production of an important life saving drug, like say Viagra.)
Second, this playing of games by corporations with the placement or creation of boundaries to avoid taxation is quite old. For example, near East St. Louis, Monsanto had a city created with one resident (the night watchman) to prevent a plant from being annexed and taxed by East St. Louis. This is just more of the same, but what has changed is the scale of tax avoidance and free loading off of infrastrucure built by others–that’s why solutions like the EU–with harmonized tax laws throughout–are critical to maintaining the social/cultural/educational/financial infrastructure in the EU, and the USA needs to learn from that example, or we will wake up to find our selves the equivalent of serfs, with corporations being the Lords.
See Max and Stacy who have frequently made this observation: http://www.karmabanqueradio.com/
I slightly prefer the term Corporate Fascism, for the way technology and control strucures will feed into this new system, unless something is done soon: