| The Corporate Influence on Life |
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Corporations are able to reinforce their influence over the global economy by spending vast sums of money affecting political decisions, and public opinion. This level and type of corporate activity is ultimately to the detriment of democracy, society and the environment. 17th Oct 06 ~ STWR Writers Turn on the TV or read any news paper and it is not difficult to find a news story about another multinational corporation announcing record profits. According to Market Watch, U.S. corporate profits have increased 21.3% in the past year and now account for the largest share of national income in 40 years [1]. The Economist agrees, reporting recently that American corporate profits have risen by 60% over the past three years [2]. In fact, corporations have been so productive in recent years that of the 100 largest economies in the world, 52 are now corporations and only 48 are countries. Unsurprisingly then, they have a significant impact on the global economy - seventy percent of world trade is now controlled by just 500 of the largest industrial corporations, and in 2002, the top 200 had combined sales equivalent to 28% of world GDP. Most business people would applaud ‘economic globalization’ as it indicates the enormous potential of commercial activity to create wealth and prosperity. Economists would undoubtedly agree as growing profits prove that market forces are the most efficient means of distributing goods and services around the world. Politicians are basking in the light of the economic growth that these profits reflect. And the public? Well, those in the more affluent countries appreciate their access to an ever-wider choice of affordable goods and services. But is this the whole story? Is it feasible that the very assumptions that form the basis of corporate activity go against the most important human needs? And what about those people in less developed countries, do corporations help or hinder their social and economic development? And maybe most importantly, just how influential are corporations given the almost unlimited financial resources they can apply to further their cause? These and similar questions are addressed in a recent article by ‘Share The World’s Resources (STWR)’, an organization campaigning for a fairer global economy. The in-depth article, which can be accessed here, presents an alternative view of corporate activity, and examines the effect of neo-liberal policies on the developing world and affluent countries. The article suggests that mainstream assumptions about the activity and impact of corporations are quite misleading. For a start, economic globalization has the effect of concentrating wealth, through corporations, into the hands of a few. For example, the top 200 corporations that create almost a third of world GDP, employ less than one percent of the population. The New York Times recently reported that wages and salaries now make up the lowest share of the nation’s gross domestic product since records began in1947 [3]. Clearly the wealth generated from corporate business is not well distributed. Unfortunately, corporations are not even distributing their wealth through their taxes. According to the Centre for American Progress “At a time of rising corporate profits, the US Government Accountability Office (GAO) reports that 95 percent of corporations paid less than 5 percent of their income in taxes, and 6 in 10 paid nothing at all in federal taxes from 1996 through to 2000”. The corporate share of taxes paid fell from 33 percent in the 1940's to 15 percent in the 1990's. The public’s share of taxes has risen from 44 to 73 percent. Most corporations are based in the US and the EU. However, those that suffer most by their activities are the least developed countries. It is estimated that almost half of the world lives on less than two dollars a day. Of these, 800 million people are starving to death and around 50,000 people die each from poverty. Poverty reduction is not keeping pace with population growth; and inequality- the gap between the rich and poor, is widening. Why have corporations and commercial activity failed these people? STWR, along with many other civil society groups, believe the answer lies in the pursuit of a ‘neo-liberal’ economic agenda, which is based on self interest and competitive economics. Since the Second World War, the US and increasingly Europe have been the main architects of the global economy. Through international agencies such as the WTO, IMF and World Bank, the economically dominant nations have created an uneven playing field, on which they stand to gain the most in any game of trade, foreign investment or even aid. Developing countries have been left with little choice but to comply, although many countries, most notably those in Latin America, are openly rejecting the neo-liberal regime. Corporations are able to reinforce their influence over the global economy by spending vast sums of money influencing political decisions, and public opinion. Over 30,000 corporate lobbyists are based in Washington and Brussels, vastly out-numbering the US Congress and European Commission staff that they lobby. In the US, corporations and their agencies spent $9.7 billion lobbying Congress between 1997 and 2000, about $4.5 million per year per member of Congress. Their links to government in the US are well known, and are becoming increasing apparent in the UK. But they spend much more influencing public opinion. The projected global advertising expenditure for corporations in 2006 is over $427 billion dollars. STWR maintain that this level and type of corporate activity is ultimately to the detriment of democracy. To counteract this, STWR propose a range of measures designed to restructure corporate commercial activity, rendering it subservient to public need. These include:
Most importantly, STWR go on to postulate an alternative global economy based on global cooperation instead of self interest and competition. They suggest that a fairer global economy must embrace the most beneficial aspects of the market economy to provide many of the goods and services people enjoy. However, resources that are essential to life, such as land, food, water, education and healthcare must not be commoditized for private profit. Their provision is a human right and a matter of urgent welfare for the majority of the world. These essentials should instead be cooperatively owned by the global public and shared internationally according to need. In this way STWR propose that the existing aid and development structures can be replaced, and the economic development of poorer nations can proceed much more rapidly. They also suggest that a renewed and democratic United Nations system take a key role in the coordination of this new global economy. The article also examines other important topics, such as the history of corporate influence, the relevance of economic growth, privatization and corporate responsibility. Economics considers how best to allocate resources, whether in a local community or around the world. The article succeeds in challenging the view that unregulated market forces are the most efficient means of resource allocation, given the market’s failure to benefit those in extreme poverty. Sharing essential resources to meet basic human needs seems a logical and efficient alternative. Regulating the remaining commercial activity is the only way to ensure that businesses, above all else, serve the needs of the public. The entire article can be found here.
Notes: [2] Corporate profits: Breaking records The Economist, 10th February 2005 [3] Real Wages Fail to Match a Rise in Productivity - New york Times, 28th August 2006 © Copyright 2006 Share The World's Resources (www.stwr.org)
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