>X-Sender: [EMAIL PROTECTED] >Date: Sun, 17 Dec 2000 01:38:51 -0500 >To: [EMAIL PROTECTED] >From: Bob Olsen <[EMAIL PROTECTED]> >Subject: Top 200: The Rise of Corporate Global Power >Mime-Version: 1.0 >Status: > > > > > Top 200: The Rise of Corporate Global Power > Top 200: The Rise of Corporate Global Power > Top 200: The Rise of Corporate Global Power > > > by Sarah Anderson and John Cavanagh > of the Institute for Policy Studies > > (The complete report with charts is at > http://www.ips-dc.org/top200.htm) > > > The profits of the Top 200 firms grew 362.4 percent, > while the number of people they employ grew by only > 14.4 percent between 1983 and 1999. > > >Thanks to Sid Shniad <[EMAIL PROTECTED]> > > >Top 200: The Rise of Corporate Global Power > >CONTENTS > >KEY FINDINGS >I. INTRODUCTION >II. OVERVIEW OF THE TOP 200 >III. POWER OF THE TOP 200 >A. ECONOMIC CLOUT >B. POLITICAL CLOUT >IV. CONTRIBUTIONS OF TOP 200 >A. JOBS >B. TAXES >V. CONCLUSION > >NOTES > >Table 1. Changing Profile of the Top 200 (1983-1999) >Table 2. Top 100 Economies (1999) >Table 3. Top 200 (1999) > >About the authors > >Sarah Anderson is the Director of the Global Economy Project of the >Institute for Policy Studies and the co-author (with John Cavanagh >and Thea Lee) of Field Guide to the Global Economy (New Press, >2000) > >John Cavanagh is the Director of IPS and a former international >economist at the United Nations Conference on Trade and Development. > > >KEY FINDINGS > >1. Of the 100 largest economies in the world, 51 are corporations; > only 49 are countries (based on a comparison of corporate sales > and country GDPs). > >2. The Top 200 corporations� sales are growing at a faster rate than > overall global economic activity. Between 1983 and 1999, their > combined sales grew from the equivalent of 25.0 percent to 27.5 > percent of World GDP. > >3. The Top 200 corporations� combined sales are bigger than the > combined economies of all countries minus the biggest 10. > >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. > >5. While the sales of the Top 200 are the equivalent of 27.5 percent > of world economic activity, they employ only 0.78 percent of the > world�s workforce. > >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. > >7. A full 5 percent of the Top 200s� combined workforce is employed > by Wal-Mart, a company notorious for union-busting and widespread > use of part-time workers to avoid paying benefits. The discount > retail giant is the top private employer in the world, with > 1,140,000 workers, more than twice as many as No. 2, > DaimlerChrysler, which employs 466,938. > >8. U.S. corporations dominate the Top 200, with 82 slots (41 percent > of the total). Japanese firms are second, with only 41 slots. > >9. 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. > >10. Between 1983 and 1999, the share of total sales of the Top 200 > made up by service sector corporations increased from 33.8 > percent to 46.7 percent. Gains were particularly evident in > financial services and telecommunications sectors, in which > most countries have pursued deregulation. > > >I. INTRODUCTION > >In 1952, General Motors CEO Charles Wilson made the famous statement >that �What is good for General Motors is good for the country.�1 >During the past decade and a half, General Motors and other global >corporations have obtained much of what they claimed was good for >them. They have succeeded in obtaining trade and investment >liberalization policies that provide global firms considerable new >freedoms to pursue profits internationally. They have also persuaded >governments to take a generally hands-off approach to corporate >monopolies, claiming that mega-mergers are needed for firms to >compete in global markets. > >This study examines the economic and political power of the world�s >top 200 corporations.2 Led by General Motors, these are the firms >that are driving the process of corporate globalization and arguably >benefiting the most from it. The report then examines the extent to >which these firms are fulfilling the second half of Charles Wilson�s >promise by providing �what�s good for the country� and global >society in general. The conclusion of our analysis is that >widespread trade and investment liberalization have contributed to >a climate in which dominant corporations are enjoying increasing >levels of economic and political clout that are out of balance with >the tangible benefits they provide to society. > >The study reinforces a strong public distrust of the economic and >political power of corporations. In September 2000, Business Week >magazine released a Business Week/Harris Poll which showed that >between 72 and 82 percent of Americans agree that �Business has >gained too much power over too many aspects of American life.�3 In >the same poll, 74 percent of Americans agreed with Vice President >Al Gore�s criticism of �a wide range of large corporations, >including �big tobacco, big oil, the big polluters, the >pharmaceutical companies, the HMOs.�� And, 74-82 percent agreed >that big companies have too much influence over �government policy, >politicians, and policy-makers in Washington.� > > > >II. OVERVIEW OF THE TOP 200 > >U.S. firms lead the pack > >Top U.S. firms faced stiff competition from Japanese corporations >throughout much of the late 1980s and early 1990s. In 1995, Japanese >and U.S. firms were nearly tied in the number of corporations on the >Top 200 list, with 58 and 59, respectively. Because the Japanese >economy has been in stagnation for nearly a decade, U.S. >corporations are once again dominant, comprising 41 percent of the >Top 200 in 1999. The countries with the most corporations on the Top >200 list are the United States (82), Japan (41), Germany (20), and >France (17) (see Table 1). > > >Fewer firms outside the industrial giants > >In 1999, South Korea was the only country with a corporation on the >Top 200 list outside North America, Japan, and Europe. In 1983, >Brazil, Israel, South Africa, and India also had firms on the list. >The merger boom of the past two decades, particularly among U.S. >firms but also in Europe, has further concentrated economic power >in companies based in the leading industrial economies. For example, >two of the top five firms in 1999 were the products of megamergers: >Exxon Mobil (No. 2) and DaimlerChrysler (No. 5). > >Services on the rise > >The types of firms in the Top 200 also reflect trends in the global >economy. During the past decade and a half, the World Bank and >International Monetary Fund have promoted reforms to lift controls >on investment in banking, telecommunications, and other services, >opening new markets for the global giants in these sectors. Hence, >the former dominance of manufacturing and natural resource-based >corporations among the Top 200 has eroded. Between 1983 and 1999, >the share of total sales of the Top 200 made up by service >corporations increased from 33.8 percent to 46.7 percent. One major >firm, General Electric, helped bolster the service sector component >of the list. While GE is best known for appliances, its financial >services division has grown so large (at least half of sales) that >the company has shifted from the manufacturing to the services >category. > > >Concentration > >In 1999, more than half the sales of the Top 200 were in just 4 >economic sectors: financial services (14.5 percent), motor vehicles >and parts (12.7 percent), insurance (12.4 percent), and retailing/ >wholesaling (11.3 percent). 2 > > >Stability at the top > >Despite some noteworthy shifts, more than half of the firms that >were on the Top 200 list in 1983 made the cut again in 1999. >Returnees totaled 103, although in 25 cases they were listed under >a different name, due to mergers, spin-offs, and name changes. The >most stunning ascendance among the Top 200 firms is that of >Wal-Mart. In 1983, the retail giant�s sales were $4.7 billion �far >>below the Top 200 threshold. By 1999, they had climbed to $166.8 >billion, making Wal-Mart the second largest firm in the world. > > >III. POWER OF THE TOP 200 > >A.ECONOMIC CLOUT > >Top 200 vs. Countries > >Of the 100 largest economies in the world, 51 are corporations; >only 49 are countries (based on a comparison of corporate sales >and country GDPs) (See Table 2). To put this in perspective, >General Motors is now bigger than Denmark; DaimlerChrysler is >bigger than Poland; Royal Dutch/Shell is bigger than Venezuela; >IBM is bigger than Singapore; and Sony is bigger than Pakistan. > >The 1999 sales of each of the top five corporations (General >Motors, Wal-Mart, Exxon Mobil, Ford Motor, and DaimlerChrysler) >are bigger than the GDP�s of 182 countries. > >The Top 200 corporations� combined sales are bigger than the >combined economies of all countries minus the biggest 10. 4 > > >Top 200 growing faster than rest of the world > >The Top 200 corporations� sales are growing at a faster rate than >overall global economic activity. Between 1983 and 1999, their >combined sales grew from the equivalent of 25.0% to 27.5% of >World GDP. > > >Top 200 vs. The World�s Poorest > >The economic clout of the Top 200 is particularly staggering >compared to that of the poorest segment of the world�s humanity. >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 (defined by the World >Bank as those surviving on less than $1 per day). > > >B POLITICAL CLOUT > >Campaign contributions > >The 82 U.S. companies on the Top 200 list made contributions to >2000 election campaigns through political action committees (not >including soft money donations) that totaled $33,045,832. According >to the Center for Responsive Politics, corporations in general >outspent labor unions by a ratio of about 15-to-1. The group also >found that candidates for the U.S. House of Representatives who >outspent their opponents were victorious in 94 percent of their >races. Unfortunately, campaign contribution data for non-U.S. >firms is not available. > > >Lobbying > >Of course global corporations also spend massive amounts each year >influencing the political system through lobbying. The exact amount >spent on these activities is not known, but of the Top 200 firms, >94 maintain �government relations� offices located on or within a >few blocks of the lobbying capital of the world �Washington, DC�s >K Street Corridor. > > >USTR Inc. > >Campaign contributions and lobbying are only the most visible >example of corporate political clout. For example, officials >with the U.S. Trade Representative�s (USTR) Office, who are >responsible for negotiating international trade and investment >agreements, routinely state that their primary responsibility >is to represent the interests of U.S. industry, rather than all >Americans affected by trade deals. This in spite of the fact that >the USTR, upon its creation in 1960, was deliberately placed in >the White House, rather than the Commerce Department, in order to >prevent it from being overly influenced by business interests. In >addition, trade negotiators are required to meet with >nongovernmental advisory committees, but these are overwhelmingly >dominated by representatives of large corporations. Recently, the >U.S. government went a step further and allowed representatives >>from corporations such as AT&T and IBM to join the official >delegation in hemispheric talks on electronic commerce in the >Free Trade Area of the Americas, which is due to be finalized by >2005. > > >Transparency > >The political influence of top firms is also evident in the >scarcity of publicly available information on their activities. >Leading corporations have fiercely opposed attempts to require >them to achieve a higher level of transparency. Just a few >examples of information that U.S. firms are not required to >reveal to the American public: >� a breakdown of their employees by country >� toxic emissions at overseas plants >� locations of overseas plants or contractors >� wage rates at overseas facilities >� layoffs and the reasons for layoffs > >In most cases, collecting company-specific data in countries >outside the United States is even more difficult. > > > >IV. CONTRIBUTIONS OF THE TOP 200 > >This section looks at the contributions the Top 200 corporations >make to society in terms of jobs and taxes. This is not to deny >that these firms may influence our lives in many other ways. >Particularly in the United States and other rich nations, it is >difficult to go through a day without direct contact with many >of these companies, whether you are watching a movie, shopping >in a super-market, driving a car, or depositing a check. > >Nevertheless, given their extreme levels of economic and political >power, it is important to take a hard look at whether these >corporate giants are indeed upholding their end of the social >compact. The corporations themselves, when lobbying for policies >to lift barriers to trade and investment, have promised that they >will lead not only to improved consumer goods and services but >also to significant job creation and an overall improvement in >social welfare. It seems only fair that the public should be able >to expect�at a minimum�that these colossal firms be major >providers of employment opportunities and that they bear their >share of the tax burden. > > >A. JOBS > >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. > > >Profit vs. Employment Growth > >Between 1983 and 1999, the number of people employed by Top 200 >firms grew 14.4%, an increase that is dwarfed by the firms� >362.4% profit growth over this period. > >Corporate analysts may see the dramatic increase in the ratio >between profits and employees as a positive sign of increased >efficiency. The growing gap between profits and payrolls is at >least partly the result of technological changes that has allowed >firms to produce more with less people. Automation is not always >a negative development, especially in the case of jobs that are >dangerous or otherwise undesirable. However, another factor is the >trend towards outsourcing, particularly among large industrial >firms. By shifting more and more of their production to >contractors, companies can distance themselves from potential >charges of labor rights abuses and other illegal behavior and keep >labor costs low by forcing contractors to compete for business >with an ever smaller number of giant purchasers. The giant firms >also have more freedom to hire and fire contractors to meet >shifting demand. U.S. corporations have been at the forefront >of this trend. > >Chrysler (known as DaimlerChrsyler since the merger with Daimler >Benz), for example, purchases almost all of its parts, from brakes >to seats, from suppliers. Hewlett-Packard relies on 10 different >contractors and IBM relies on 8 to make their products. In recent >years, Japanese electronics firms, including Mitsubishi, NEC, >Fujitsu, and Sony, have also begun to outsource. > >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, including in many countries where the Top 200 firms >are enjoying strong profits. (U.S. firms overall earned 19 percent >of their profits overseas in 1995).5 In the European Union, the 1999 >unemployment rate was 10 percent, compared to 4.2 percent in the >United States.6 The International Labor Organization estimates that >one billion people worldwide are unemployed or underemployed.7 >Joblessness around the world hurts the United States because it >reduces the capacity of consumers in other countries to purchase >U.S. products and can lead to social instability that has >international ramifications. > > >Wal-Mart Workers > >A full 5 percent of the Top 200s� combined workforce is comprised >of Wal-Mart employees. The discount retail giant�s workforce has >skyrocketed from 62,000 in 1983 to 1,140,000 in 1999, making it >the largest private employer in the world. The next largest, >DaimlerChrysler, has a workforce of 466,938�less than half the >size of Wal-Mart�s. Although Wal-Mart is indeed providing many >new jobs, the company is notorious for its strategy of employing >armies of workers on a part-time basis to avoid paying benefits. >The firm is also adamantly anti-union. In March, Wal-Mart >announced it was closing the meat department in 180 stores two >weeks after the meat cutters at one Texas store voted to form a >union � the first successful organizing drive at an American >Wal-Mart. > > >B TAXES > >Not too big to hide from tax collectors > >The Institute on Taxation and Economic Policy (ITEP) recently >released a study of federal tax rates paid by several hundred >major, profitable U.S. corporations. Forty-four of the U.S. >corporations on the Top 200 list were included in the study, >which revealed that not a single one of them had paid the full >standard 35 percent corporate tax rate during the period >1996-1998. Seven of the firms had actually paid less than zero >in federal income taxes in 1998, because they received rebates >that exceeded the amount of taxes they paid. These include: Texaco, >Chevron, PepsiCo, Enron, Worldcom, McKesson and the world�s biggest >corporation�General Motors.8 According to ITEP, companies use a >variety of means to lower their federal income taxes, including tax >credits for activities like research and oil drilling and >accelerated depreciation write-offs. > > >Tax Avoidance Internationally > >While company-specific data on tax avoidance outside the United >States does not exist, the trend towards lower corporate tax >burdens is also evident internationally. According to the OECD, over >the past two decades the share of total taxes made up by corporate >income tax in the industrialized OECD countries has remained about >8 percent, despite strong increases in corporate profits. 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.9 > > >V. CONCLUSION > >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. The main beneficiaries >of the market-opening policies of the major multilateral >institutions over the past decade and a half are these large >corporations, especially the top 200. > >This growing private power has enormous economic consequences, >spelled out in this report. However, the greatest impact may be >political, as corporations transform economic clout into political >power. As a result, democracy is undermined. This threat deserves >to be one of the major issues on the political agenda in the >United States and overseas. 7 > >NOTES > >1. Testimony before Senate Armed Forces Committee, 1952. >2. Corporations are ranked by sales, based on data from Fortune, > July 31, 2000. >3. Aaron Bernstein, �Too Much Corporate Power?� Business Week, > September 11, 2000. Note: In June 2000, 82 percent of those > polled strongly or somewhat agreed to this statement; in > September 2000, the figure was 72 percent. >4. Note: Calculated using GDP data from the World Bank, World > Development Report 2000, Table 12, p. 296-297. This table > includes 131 countries and excludes 74 additional economies > that have sparse data or populations of less than 1.5 million. >5. Business Roundtable web site, citing figures from the U.S. > Department of Commerce and Price Waterhouse. >6. OECD, Standardized Unemployment Rates (www.oecd.org). >7. ILO, World Labour Report 2000 (Geneva: International Labor > Organization, June 2000). 8 Based on a study of 250 large > U.S. corporations conducted by the Institute on Taxation and > Economic Policy, Washington, DC, October 19, 2000. 9 OECD, > �A World of Taxes,� July 7, 2000, on the OECD web site: > http://www.oecd.org. > > >Institute for Policy Studies >733 15th St. NW, #1020 >Washington, DC 20005 >tel: 202/234-9382, fax: 202/387-7915 >http://www.ips-dc.org >[EMAIL PROTECTED] > > (Six pages of charts not included in this message. > The complete report, with charts, is at > http://www.ips-dc.org/top200.htm) > > > > > ............................................ > Liberate democracy from corporate control > > Bob Olsen, Toronto [EMAIL PROTECTED] > ............................................ >
