Companies are the new countries

[we vs us]

Excellent piece of commentary from Time (who'd'a thunk?) regarding the changes to our geopolitical and geo-economic set up over the last few years. 

http://www.time.com/time/magazine/article/0,9171,2105976,00.html
(I reprinted the whole thing from behind the pay wall)

The occupy the world economic Forum protests that took place on the outskirts of Davos in late January were small but pointed. One protester held a sign that read, IF VOTING COULD CHANGE ANYTHING, IT WOULD BE ILLEGAL. They captured a sense of frustration with capitalism, sure, but more important, frustration with government. In 2008, after Lehman Brothers fell and the global recession began, the conventional wisdom was that we were entering an era in which government would take back power from business. In fact, just the opposite has happened.

The high-profile political figures disappointed at Davos: German Chancellor Angela Merkel was angry and depressed by turns, and U.S. Treasury Secretary Tim Geithner was even more defensive and combative than usual. Europe remains a mess, the U.S. recovery is fragile, and emerging markets--the only bright spot in recent years--are slowing. Politicians have few solutions to the huge problems of the day: labor bifurcation, debt and inequality. Markets want answers, but leaders can't provide them, in part because bold action carries too much political risk for them.

Meanwhile, the top companies seem to exist in a world apart: they are booming. If there was a metatheme to this year's World Economic Forum, it is that the world's largest companies are moving beyond governments and countries that they perceive to be inept and anemic. They are operating in a space that is increasingly supranational--disconnected from local concerns and the problems of their home markets.

The problem was voiced succinctly by an Apple executive who said recently in a New York Times story, "We don't have an obligation to solve America's problems." It's a sentiment that was echoed on TIME's Davos Debate panel in Davos: business leaders blamed for not sharing the $2 trillion in wealth sitting on corporate balance sheets argued that they did create jobs and prosperity--just not in the U.S.

It's an argument that has more moral weight than you might think. You can say that creating jobs in China and India, for example, increases global well-being more than creating them in the U.S. would, since per capita GDP in those countries is so much lower. Nitin Nohria, dean of Harvard Business School (HBS), told me that as an Indian immigrant, he has some sympathy with that argument. Yet, he says, "companies are also becoming aware that if everyone feels the way Apple does, there will be a tragedy of the commons. We do rely on the health of our home markets, and multinational firms can't turn their back on them."

Economist Clyde Prestowitz, writing in Foreign Policy, notes that while Apple may not feel obligated to solve U.S. economic issues, it expects Uncle Sam to protect intellectual-property rights and to keep
waterways safe so that it can deliver its made-in-China products.

It's a problem that will only deepen. President Obama stoked enthusiasm for a U.S. manufacturing revolution in his State of the Union speech. But a new and very sobering HBS survey of 10,000 high-powered alumni puts things in perspective: most of the firms bringing jobs home are making rational, not national, calculations. Rising energy costs mean it's now cheaper to manufacture at home, a situation that can quickly reverse.

Conversely, many firms sending jobs abroad are doing it not to get lower wage rates but because skills overseas are better, at least in relation to wages. It's a scary trend that speaks to the growing bifurcation in Western labor markets. Experts like Nobel laureate Chris Pissarides say we can't innovate or educate our way out of this problem.

So where does that leave us? Do the people running global companies have any responsibility to their home markets? Should they even be taking on roles that beleaguered and indebted states can't handle anymore in areas like education, health care and infrastructure development? (GE High School, anyone?)

There was also a growing sense at the forum that the U.S. should get serious about industrial policy and start subsidizing and pushing strategic industries as hard as China does or even slap tough tariffs on the goods of competitors that don't abide by international trade rules.

The bottom line: if the U.S. and Europe can't keep good jobs at home, they risk becoming "just a nice place to take a vacation," as Merkel said in her keynote speech. It came into sharp relief at Davos that the core idea of the Enlightenment--free-market capitalism and democracy go hand in hand to create the best society--is evolving. And the struggle to create a new model may well pit nation against nation, corporation against government, poor against rich.

Occupy that.

My question is this:  if the nation state as we know it is finally, explicitly eroded to second-class status, does that mean larger organizations (IMF, World Bank, NATO, G8etc) have to take precedence in order to offset the global power of the corporation? If not them, then what?  It's obvious that the global corp connection to its "home market" is always tenuous at best, to what degree can they be relied upon for job creation and if they CAN'T be relied upon, what will fill the gap?

 

[heironymouspasparagus]

Wasn't this already covered some time back...oh, yeah.  1984.  George Orwell.  Corporation Nation.


It's probably the pre-condition the aliens put on the planet before they will reveal themselves and come in to 'save' us...



The corporate connection to its home market is tenuous because of some of the things we have gone on about for quite a while - they are able to buy the power and influence to get the laws written to allow them to do what they want to do, independently of the nation.  Eisenhour saw it coming and tried to warn us...

[TheArtist]

Reality check for the USA.

The US represents only about 5% of the worlds population.

The rest of the world has discovered capitalism and we have all discovered that we live in an ever more permeable, interconnected, global market.

Again.... The US represents only about 5% of the worlds population.

Think things through to their likely conclusion.

Denmark once strutted across the global stage as a giant full of wealth, power, and influence.  But they are just a small country, bigger fish caught on to what they were doing, started doing it, and who gives a rats arse about Denmark today?   Nice little country btw, not meaning to put them down.  The US, while larger than Denmark, or the UK who was also once a great global power, is still only about 5% of the worlds population.  A world where national borders are becoming more and more market/information/wealth/people, etc. permeable all the time.  Ultimately, who is going to give a rats arse about that small number, out of which only an even smaller percentage of its people have real wealth and power (and they live more "globally" all the time)?  How can that small number of peope be expected to "police" the world?  Something is going to have to shift, not only with this country and its mindset, but with the world and how it works.  Will take a generation or two, but the direction and general results are pretty clear.

[nathanm]

business leaders blamed for not sharing the $2 trillion in wealth sitting on corporate balance sheets argued that they did create jobs and prosperity--just not in the U.S.

Well, if you consider working conditions we in the western world outlawed a century ago "prosperity," then yes, I suppose they do. Who cares about abusive labor practices, so long as they aren't here in the US, eh?