The Rise of Corporate Global Power

tuxpenguin writes: "While playing around with GNutella the other day, I came across this PDF document (HTML Here). It gives figures on the Top 200 businesses in terms of net/gross profits and employees. It also compares this information to the GDP of different countries, campaign contributions, government lobbying etc. I found it to be an interesting read. I also found it interesting, that being a rather contriversial document for big businesses, I came accross it first on a p2p network. Something most major corporations would be thrilled to see disbanded."

Comments

Re:Conspiracy theories

[PaxTech]

Milhouse : "Let's put it on the Internet!"

Bart: "No, we have to reach people whose opinions actually matter."

--
PaxTech

Most major corporations don't care - Gnutella

[alexhmit01]

Most intellectual property (copyright) companies would like to see Gnutella die... most companies couldn't give a rats ass about Gnutella. Even companies that deal in intellectual property don't give a damn.

Software companies have had easy piracy to deal with for years, Gnutella and ilk aren't their problem.

Movie producers are probably okay. They survived without money from video rentals before and will again if need be. As long as they can provide a compelling experience in the theater, they will be fine. The VCR gave them additional revenue. If they lose it, they'll come up with another one. Bitch all you want about the MPAA, they're much better behaved than the RIAA. The DVD region encoding annoys me (I still haven't bought a DVD player), but it isn't as bad as the RIAA's actions towards artists.

However, I don't understand when Slashdot went communist. I've only been a user for about two years, but this has really gotten weird over the past 6-12 months. Corporations aren't evil. Some of the large companies, where the shareholders and boards are too separated and management isn't overseen, may have done some bad things. But you guys treat all corporations as these evil entities. If you want to criticize multinationals, pick some out and go, many are disgusting. But lashing out at all corporations are childish. This article is attacking the top 50-200 companies... They aren't even hitting the Fortune 500/Global 2000 range. What about us small companies? Are we all evil too? The 5 person Linux consulting shop, are they doing the devil's work? Lash out at irresponsible multinations, not all corporations.

Now, the comparison of corporations to countries (sales vs. GDP) isn't fair. GDP measures value added. Sales measures value. Value added isn't necessarily profit, but it is the gross margin of sorts. If I buy lumber for $100, and turn it into $200 desks, I contribute $100 to the GDP, but $200 to my sales. This disparity helps get their "scary" figure of 51 corporations being larger than the countries... I'd guess that with fair numbers, the number of companies drops to 20 or so in the top 100. With less than 200 (last I checked) nations recognized by the UN, large multinationals participating isn't so strange.

Additional example of how to lie with statistics... 6. Between 1983 and 1999, the profits of the Top 200 firms grew 362.4 percent, while the number of people they employ grew by only 14.4 percent.

Well, that is a useless statistic, how many companies were in the top 200 both times?

Think about it, darwinian selection allows us to pick the top 200 companies now and compare it to the top 200 from 20 years ago. The companies that make more money per man-hour rise up, those that make less sink. Obviously the top 200 will be more efficient than 20 years ago. Compare the same companies. Also, IT reduces layers of management, so companies are flatter now. The top 200 companies are smaller for the same amount of productivity. That's been the goal, reduce costs. Those people get redeployed through the economy. We create more widgets/person, and consumers benefit. Our unemployment number is less than 5%, that isn't massive people thrown out of work. Those losing jobs are finding new ones.

Also, it doesn't mention if 362.4% is in real dollars or not? Given that this is a anti-multinational piece, I would assume not. Keep in mind that if we assumed NO increased efficiency and no substitution of more effective, the firms would have increased about 250% just because of inflation. Factoring in the 14.4% employment increase that they refer to, and we are up to 285% increase. Given productivity of 1%/year (we've been at 2% for the past few years), we're over 300%.

So, based on raw size and productivity gains, we expected the top 200 firms to increase in the 300% to 305% range. When you consider the timing of these years, 1983 a recession year to 1999 a boom year, we also get more warped numbers. Profits would be way down in a recession depressed economy. You took a valley and a peak and measured the change. Let's put another 30% into the profit numbers to compensate... assuming 15% lower in recession or 15% higher in boom (in reality, I'd put the swing higher than that), we're up to a 335% increase.

I think that our ability to subsitute and pick and choose the top 200 firms explains the remaining 27.4%, in fact, I would suggest it explains more than that.

There are REAL problems with some of the multinationals. The ability of governments to interfere in the economy gives companies an incentive to lobby. There is a mess. However, let's not use bogus statistics to invent this nonsense. Let's be a little more reasonable.

The persuit of wealth is NOT evil. Being a bad person is evil. Do not confuse the two.

Alex

Inappropriate Comparisons to GDP

[podom]

Preface: IAAL (Libertarian)

There are several things that disturb me about this report, but I am particularly disturbed by its falacious logic. Many of the issues raised seem unrelated and should be examined seperately.

The ascendancy of international business: it is my opinion that we would not have the current situation without collusion by world governments. Though many people feel that libertarians support big business vis-a-vis their advocacy of limited government regulation, its just the opposite in some cases. It is my opinion that the current situation has arisen as a result of government intervention in the economy. To quote the report:

"Of the U.S. corporations on the list, 44 did not pay the full standard 35 percent federal corporate tax rate during the period 1996-1998. Seven of the firms actually paid less than zero in
federal income taxes in 1998 (because of rebates). These include: Texaco, Chevron, PepsiCo, Enron, Worldcom, McKesson and the world's biggest corporation--General Motors."

Obviously, these companies have clout, and they get what they want. Whatever the case may be today, they achieved their current status with the help of a lot of governments, especially that of the US. Tax breaks, foreign policy decisions and US neocolonialism have helped big business become what it is today. More government regulation hardly seems to be the answer; more like reform corporate law to limit the US government's ability to help corporations get what they want.

Comparison to GDP: GDP is defined, roughly, as the total value of goods and services produced by a nation within that nation. These companies are part of countries' economies and contribute -- to a greater or lesser extent -- to the GDPs of a lot of countries. They are not seperable concepts.

When IPS says "General Motors is now bigger than Denmark", I would have to say, "So what?" Their report also says that less than 20% of US companies' sales are made outside of the US. Isn't it more meaningful, then, to compare GM's income to the US GDP overall and -- seperately -- look at the per capita US GDP vs. that of Denmark? Denmark is not that big a country. Its population is far smaller than that of the US (july 2000 est. population 5,336,394); I'm sure the GDP of Monaco is smaller than the income of an awful lot of companies, but this is meaningless because Monaco has a population of about 30,000!

This report makes some interesting points, but I for one, don't think it does so very well. Take this paragraph, for instance:

"Still, Americans may be less concerned about the growing gap between profits and employees
because of the country's record low unemployment rate. What is often ignored in the mainstream
media is the fact that unemployment problems remain prevalent elsewhere in the world...Joblessness around the world hurts the United States because it reduces the capacity of consumers in other countries to purchase U.S. products..."

What was this report about again? It's supposedly bad that big companies are making more profits utilizing fewer employees, and the reason that Americans should be concerned is...because that makes people in other countries less able to buy our goods? Something seems circular here...

Yeah, maybe big US corporations don't like this report, but it's conclusions are mostly of the scare tactic variety. Still, the quality (or lack thereof) of IPS's report should not be construed as an endorsement of big business worldwide practices. I, too, feel that businesses wield too much political and societal influence. I just don't think IPS has any answers.

Phil

Why do the big get bigger ?

[sane?]

I thought the idea was the bigger the corporation, the slower moving and more like a dinosaur it was ?

I thought the small, agile, companies were going to rule in this era of increasing change ?

What went wrong ?

Some of those stats explain part of it; companies that are countries in all but name (you are now entering Walmartland). They have the size to weather a few years of storms, and the size to gobble up any smaller player they want.

The smaller companies can nibble around the edges, but seldom do they want to take on a massive company head on - potential agility counts for nothing when you've a rampaging elephant bearing down on you and you've been hamstrung by their rules and regs.

However, at heart those companies are just people. If you want to change the way the company acts, change the way the people act. If its socially unacceptable to drink and drive, make it socially unacceptable to profit from others misery, to act like sheep rather than citizens in the company setting.

In short, how worried are you really ?

You can make stats say anything

[Xaiver]

Whenever I see compilations of statistics like this, it always sets me off. Some things to consider when reading this:

1) Countries, like businesses, are not homogeneous. All nations, like companies, are wide ranges in size. One fact they mention is that the 200 largest corporations are larger than all but the 10 largest economies in the world. That's great, except that the 10 largest economies in the world constitute 2/3 of the world's population. If we extend the list to the top 12 economies we get Mexico and Russia, which make the percent of the world's population even greater.

To illustrate the non-homogeneity of nations, consider how many of the smallest countries it would take to equal the populations of India and China.

http://www.polisci.com/almanac/economy/fifty.htm

2) They are comparing the GDP of nations to sales of corporations. What is the majority of GDP made up of? Corporate revenue. It's a roundabout way of saying that large companies are bigger than smaller companies and rich nations are richer than poor nations.

3) They fail to mention the number of shareholders that own and control the top 200 companies. Using a small number such as 200 creates the illusion of a boogeyman when saying there are millions of individual shareholders which own stock directly or through pension plans and mutual funds doesn't sound as scary. Granted, the ownership isn't distributed equaly across the world's population, but it still isn't lopsided as they try to make it appear.

4) The Top 200s' combined sales are 18 times the size of the combined annual income of the 1.2 billion people (24 percent of the total world population) living in "severe" poverty. The implication here is that they are causing poverty. If Microsoft and GM disappeared tomorrow, would that benefit those who are poor? Yes. The poor are poor. Large companies are located in rich nations (as they mention). This is a roundabout way of saying that rich nations are richer than poor nations. Using corporations to illustrate the point isn't necessary and is done only to make a political statement.

5) Of the U.S. corporations on the list, 44 did not pay the full standard 35 percent federal corpo-rate tax rate during the period 1996-1998. Seven of the firms actually paid less than zero in federal income taxes in 1998 (because of rebates). These include: Texaco, Chevron, PepsiCo, Enron, Worldcom, McKesson and the world's biggest corporation--General Motors. Yes. That is because most of those companies have loses in some years which offset profits from previous years. They only used a 2 year window. If you take a loss you don't pay taxes. If you make a profit, you may apply losses from previous years. You are only taxed on profit, not revenue. Also, distributed profits are taxed when they are passed on to shareholders. Also, note the type of companies listed. Most of them are in industries that require very large capital investments.

Other explanations can be provided for each point. I'm not saying that there aren't valid points to be made here, but their use of stats and facts is very suspect. It seems that their whole argument can boil down to: Corporations are bad.

Whenever you see stuff like this from anyone with a political ax to grind (from any side of the fence), read it carefully and do the math yourself.

IPS

[GPLwhore]

IPS is a leftist think tank in Washington. They have their own agendas and this piece of "work" reflects it very well. Some of the more ridiculous points in that report:
Sales vs. Workers While the sales of the Top 200 are the equivalent of 27.5% of world economic activity, these firms employ only a tiny fraction of the world's workers. In 1999, they employed a combined total of 22,682,166 workers, which is 0.78% of the world's workforce.

Great, we are getting better productivity than ever. This point is suspiciously similar to the ones made by various unions in XIX century directed against industrial revolution (which included destruction of machines etc .. all in the name of workers)

The organization attributes this decline in tax rates to the use of "tax havens" and intense competition among industrialized countries as they attempt to lure investment by offering lower taxes.

This is why France and EU want to punish countries with significantly lower tax rates. For obvious reasons they cannot get at US so for now they are after smaller countries.

As citizen movements the world over launch activities to counter aspects of economic globalization, the growing power of private corporations is becoming a central issue.

...and replace it with what ? Until these people propose something better instead I think we are going to be better off with what we have now.

Is this me or seems like Slashdot seems to be completely dominated by leftists and liberals. When was a last time you saw any story presented from conservative point of view?