Have corporations become too powerful?
Few would disagree that the world's biggest companies appear to have as much influence — if not more — than sovereign nation states.
David Rothkopf argues in his new book, "Power, Inc.: The Epic Rivalry Between Big Business and Government — And the Reckoning That Lies Ahead" that there "are probably 2,000" private-sector companies who have "more impact, more leverage and more global reach than 50 to 80 countries." These corporations are increasingly exerting their power and clout in the legislative and regulatory spheres, resulting in a new and alarming world power structure.
"They're bigger and more powerful than most people have imagined, including people who really ought to be paying attention to these things," Rothkopf says in an interview with The Daily Ticker. "We need to rein in and balance out this power."
Rothkopf uses ExxonMobil (XOM) and Wal-Mart (WMT) as two examples of corporations where the balance of power has tilted in favor of big business. Exxon, the world's second largest company after Apple (AAPL), operates in more than twice as many countries as Sweden has embassies.
Exxon's annual sales, which totaled $350 billion in 2011, were almost equal to Sweden's GDP. Exxon spent more money on political lobbying than Sweden did on its foreign policy in 2010, Rothkopf notes. As for Wal-Mart, one of the largest employers in the world, its employees greatly outnumber the populations of more than 100 countries. Wal-Mart's sales revenues are higher "than the GDPs of all but 25 countries," according to Rothkopf.
There are many more eye-popping examples in Rothkopf's "Power, Inc."
Investment firm BlackRock has more assets under management ($3.5 trillion) than China has in hard-currency reserves. International Paper owns more land than the country of Panama. And the $33.5 billion-endowed Gates Foundation gave more to charitable causes worldwide in 2010 than the World Health Organization had in its annual budget.
The influence of big business on politics has intensified after the Supreme Court ruled in favor of the Citizens United case that allowed corporations and unions to give unlimited campaign contributions. These millions of dollars in donations to super PACS have forever changed how elections in the U.S. are managed and operated. The movement to overturn the Supreme Court's landmark decision has been mounting at the state and national level but it will require a constitutional amendment to reverse the damage already done.
Rothkopf says there are government policies that can offset and counteract the phenomenon of corporate power.
"We need to get money out of politics, we need campaign finance reform, we need shorter elections, federally financed elections…and we need a fair tax system in this country," he says. "Money has such a huge and disproportionate and corrupting influence on politics."
If the U.S. does not fix these imbalances, Rothkopf warns, it will lead to income inequality, financial crises and very possibly a less competitive U.S. Furthermore, unchecked special interests have already squashed important and necessary legislation on climate change, financial regulation and labor and health issues he says.
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- David Rothkopf