for 10 or 11 years they have been able to prevent the payment of decent trade union wages. So they are making money by thwarting the law, by being a scofflaw. They are no different than the fellow who gets 15 or 20 or 40 citations for illegal parking, for speeding, and all of the rest. Scofflaw. And yet they are able to go on their merry scofflaw way with relative impunity.

Indeed every single year they get DOD contracts. Scofflaw. Apparently there is no onus attached to it. It depends upon the nature of the crime.

Now, Mr. Chairman, there is a picture of a situation-it could be this company, it could be another company-a situation where the laws do not yet in our country, the labor-management laws in this specific case, do not prevent and so far can not prevent on the part of a determined employer the kind of activity, the kind of violation of the law, over and over and over again that I described to you.

What do we do about it? Well, obviously the first thing it seems to me is that you reform the law. You change the labor-management law, which obviously hasn't worked in situations like this. Or, as some are now suggesting, and I don't feel expert enough to comment intelligently on it, Federal chartering of corporations.

Well, there are more direct ways of approaching it, I suspect, and one is simply the business of liberalizing our existing laws to make it possible for Government, which has recognized the right to organize by workers, to make it possible to eliminate this kind of antiunion practice.

Just parenthetically again I repeat this, because it irks me no end, it irks trade unionists no end, for this kind of behavior, the Government not withstanding awards them with contracts every year. And there are dozens and dozens of large corporations in this area that can provide the same kind of services, produce and sell the same kind of product as J. P. Stevens, but the scofflaw corporation gets special treatment.

Finally, I want to talk about what we consider our very special problem, and that is the unbridled activities of American multinational corporations.

I suspect I am not saying anything that the chairman is not fully aware of, indeed may be more so aware than I am.

Since the late 1950's, just in this very short span of years, the most phenomenal industrial growth in the world have been that of the American multinationals abroad.

If historians write about this period in terms of economics, I think they will single out this fact. In our judgment multination corporations have been behaving omnipotently with powers greater than many nations.

The last figures I saw, and they could be off some, because the statistics are horrendous in this area-and I will talk about that soonAmerican multinationals were producing abroad in the neighborhood of $400 billion worth of goods.

If you want to get a sense of perspective on this, the total American exports is roughly in the area of $100 billion a year. Recently I noticed in one very short span it nudged close to $120 billion, but that can go up or down. It has been roughly $100 billion, our total export, as

against roughly $400 billion of product produced abroad by American corporations.

We have been making the point, and I make it again, I must confess to you I do it in every and any forum, because we don't yet fully comprehend, in our judgment, the recklessness of our lack of public policy in relation to American multinational corporations.

We export technology, export capital, export jobs.

TECHNOLOGY

I am sure, Mr. Chairman, both of us were raised on the truism, not a misconception, a truism, that our one defense, our one shield, our one advantage, our one ace in the hole, in terms of competition in the world was that we had a big technological edge. We were bright, we knew how to invent, we knew how to handle the industrial process, and so what if Singapore paid 12 cents, or Taiwan paid 22 cents, or Korea paid 11 cents, or whatever, we knew how to invent and we know how to produce.

I think this is true. We have been inventive, we have been ingenious. But willy-nilly we are shipping out that advantage, our technology. I know that statistics are dull, but I will tell you, these statistics are the stuff out of which our future will be made, and is being made now. Of all of the world technology, of all of the technology exported in the world, the United States exports from 50 to 60 percent of it. And of the 50 to 60 percent of all export of technology in the world, American multinationals export 88 percent of that.

So it is almost exclusively the export of technology by American multinational corporations are that we are concerned with.

If you want to get again the relationship, the British, who are No. 2 in exportation of technology, they export only 12 percent. And I know now why the Japanese are so ingenious, they import 23 times more technology than they export. And that tells me something about their capacity to survive in the competitive world, without any raw materials of their own of any consequence whatsoever, in a tight little island, overpopulated, but they have learned the tricks of competition.

CAPITAL

How many times have you heard, Mr. Chairman, that we have got to give more tax concessions to the multinational corporations because they don't have enough capital?

I suspect there are some industries that can make that point validly, namely, the shortage of capital. But I find it difficult to lend a listening ear when we know that from $25 to $30 billion every year is sent out and invested by American multinationals abroad.

And you can't cry for special tax concessions in one breath, and in the next breath, or out of the other pocket, to mix a metaphor, send out that vast amount of capital.

Much of it, incidentally, will be in competition with American corporations that remain in America.

Another fact, roughly 52 million workers are retained by American multinational corporations abroad. I don't say that all of those could be transferred to the United States. That is not realistic. But I tell you,

Mr. Chairman, from our research we have lost roughly 1,800,000 jobs in the United States attributable exclusively to American multinationals abroad. And that should mean something, shouldn't it? It would reduce our unemployment by roughly 2 percent. And it would create taxpayers who would be able to pay in $28 billion per yearthat is the figure that we lose-$14 billion in tax revenues for every 1 percent of unemployment.

What would that do for our budget? And we have figured with some research that we have done, based on some research that HEW has done, that is getting no attention at all, that for every 1 percent of unemployment, HEW pays out, in a variety of programs, $6 to $9 billion. So we would save there anywhere from $12 to $18 billion for the 2 percent of employment that we have lost by multinational actions.

Quickly, as I know that you are pressed for time, but is it all right to take a couple more minutes, Mr. Chairman?

Senator HARTKE. That is fine.

Mr. CLAYMAN. Very good.

Senator HARTKE. I might say we have an executive committee meeting going on in Commerce, which I may have to leave for at any moment.

Mr. CLAYMAN. Then I will simply make one quick point. The Bureau of Labor Statistics (BLS) is the source of one of the few Government statistics we have. That is one of our problems, our Government is not requiring multinational corporations to tell us much. The BLS made an inventory of jobs in the electronics and electrical industries on September 1, 1969, and repeated the inventory on September 1, 1972. And in those two industries they found there was a job loss in those 3 brief years of 450,800 jobs. Fantastic.

Now we know those industries are owned lock, stock, and barrel with modest exceptions by American multinational corporations. We know what has happened to the electronics industry, what is happening to the TV industry. We know that TV's are manufactured abroad by American multinational corporations and shipped back into the American market. And there is no savings to consumers.

The series of examples that we have described, in our judgment, demonstrate corporate irresponsibility. Many of these shortcomings can be reformed by changing the existing laws.

I point to the National Labor Relations Board situation, and J. P. Stevens. Multinational corporations, I told you, are not required to provide meaningful information and statistics.

There are a couple of bills pending in the Senate in this issue. We have been urging, providing, so far with no success, to require multinational corporations to provide more facts to the Government. And so in the absence of sound information multinationals have free reign to allege what they will.

And the interesting fact is that you will find it difficult to disprove them. And so these corporations adamantly fight any effort to require an itemization of that is transpiring in their corporations, country by country, to the U.S. Government.

That, Mr. Chairman, is a brief, I think, somewhat sordid. picture of some of the things that are happening in America in our time, today, on the part of some of our corporations.

In our humble judgment if we don't learn to control them, they will control us, and indeed the argument can be made that that has already happened.

Thank you, Mr. Chairman.

Senator HARTKE. Thank you. There is a vote just starting.

Let me ask you this: Some European countries have added labor representatives to the boards of directors.

Do you feel that that would in any way be of benefit to a better understanding of some of the needs, and would it provide for any type of relief?

Mr. CLAYMAN. Some of us have looked at the European experience, and principally it has been happening in Germany and Sweden. Our people are not as excited about it as the Europeans are. So far we don't see it giving the unions the kind of meaningful voice in the serious corporate decisions that we think are necessary.

Now it may be one of the palliatives. It may add something to the total scene. Generally the American labor movement has not pressed in this area. The feeling is that we want to maintain our independence of action and cozying-up that closely to the corporate management, without really meaningful powers, may not be the way for the future. But I must say I think we have to look closely at this new development and I would guess that the American labor movement would be open-minded about it, although not as involved in the meaningfulness of that approach as the German labor movement, for example, seems to be.

Senator HARTKE. You stated that you have more difficulty dealing with a large conglomerate, like Litton, for example, than with the large single-industry firms.

Can you explain why that is so?

Mr. CLAYMAN. Well, our experience, you know, goes beyond conglomerates. Conglomerates obviously are much more impersonal. They have facilities all over the country, all over the world, and it is simple for them to close up one, send the product or the machinery to another, and it is simpler for them to behave in this impersonal way.

It is much more difficult for a smaller operation that can't afford to do this. If it moved, it would have to probably make a large investment in the process and probably couldn't afford to do it.

So the smaller operations generally are owned-not always-but generally are owned on the local level and this makes a difference.

If you live in New York and you make a decision that affects Owensboro, Ky., you know, it is an impersonal thing.

Senator HARTKE. In other words, what you are saying is the effect on the community or even upon a smaller unit of concern, State government, for example, they would have the same difficulty the labor movement would have in dealing with conglomerates, isn't that true?

Mr. CLAYMAN. Oh, they have the same problems. The fact is that they are more readily pushed out of business and are being pushed out of business every day by the larger corporations.

Senator HARTKE. You cited a case of violation of the National Labor Relations Act.

I think this is at the heart of it. In other words, there is a difference in how some of these people feel you should approach this matter. For example, some people feel that what you should do is provide for specific laws, such as reported out of the Banking and Currency

Committee yesterday, a new law dealing with the question of utilization of bribes to foreign officials.

Others feel that the responsibility lies really in organizing the corporate structure in such a fashion that there would not necessarily need to be those specific laws directed to the specific instances, but the corporate officials would be held responsible to a standard of conduct which would encompass those ideas.

Which of those two views do you feel has the most merit, or do you think we need both?

Mr. CLAYMAN. We in AFL-CIO have no policy on this issue which is relatively new. But it is entirely possible, and I am just ruminating now, it is entirely possible both can be used.

I don't think I would want to wait, for example, for the Federal chartering of J.P. Stevens, because I think it will take years before you promulgate a set of standards that you could put in that law which sets up chartering, so we would be certain it would be an effective law.

I would want to move in terms of J.P. Stevens more specifically through the reform of the National Labor Relations Act.

Senator HARTKE. Let me put it this way: I understand that instead of coming up with specifics, that there could be a removal of a director, or some type of imposition on the directors for failing to follow the law. Perhaps even their corporate charter would be revoked.

My judgment is that considering the law which came out of Banking and Currency as an example, to them a fine or penalty, even a fine or penalty against the directors, might not be nearly as effective as the threat of actually having their corporate charter revoked, so they couldn't do business any longer.

Under the antitrust laws in the State of Texas, for example, if a corporation is found guilty of violation of the State or Federal antitrust laws, they are prohibited from doing business in the State for a period of 5 years.

Now that is a very effective remedy. And it has much more salutary effects upon the people involved than merely going ahead and assessing $50,000 or $100,000 or a big fine against the individuals. Thank you.

[The statement follows:]

STATEMENT OF JACOB CLAYMAN, SECRETARY-TREASURER,
INDUSTRIAL UNION DEPARTMENT, AFL-CIO

My name is Jacob Clayman, I am Secretary-Treasurer of the Industrial Union Department, AFL-CIO. The IUD is composed of 58 national and international unions which represent over six million working men and women. We appreciate this opportunity to present our views on the role of the modern corporation in our society.

As the most economically significant form of business in this country, the corporation has a profound impact on our individual and collective lives. Many of the laws that cover corporations date back many years-to times when seemingly unlimited economic growth characterized our economy and our society was not nearly as complex as it is today.

Most union members work for a corporation. Not surprisingly, the bulk of them work for that handful of giant corporations that exercise great control over the affairs of our society.

Today, there are many Americans who are reexamining the role of corporations in this country. They wish to know who runs the corporations and for what purposes. They are examining the role of the federal government in governing