New balance of power in the world

According to researchers at The Economist the largest American multinationals are more consolidated than ever before with a higher chance of survival than in the past. The researchers don’t actually put their fingers on the main reason, but my own is that large firms are far less diversified today than they’ve ever been before.

Their lobbying activities — compared with smaller businesses — helps also, as does their superior ability to cope with detailed government legislation. It’s no wonder therefore that small and medium sized businesses are struggling. Big businesses must also have been behind the recent spate of legislation raising the minimum wage. This is otherwise nonsensical and will only send more small businesses to the wall and increase employment among the unqualified young.

And, because all multinationals are increasingly picking their way fastidiously around the world to minimise their corporate taxes. they are now beginning to compete against nation-states rather than between themselves. Indeed, they are ganging up directly against governments — and winning — on some issues such as protecting the privacy of their communications.

Ever since civilization there has always been tension between principalities — or popes — and merchants. It’s now at new heights. With advanced governments all in debt from which almost all cannot hope to recover and modern multinationals in good heart, a totally new balance of power is now emerging.

2 thoughts on “New balance of power in the world

  1. My guess is that those governments which seek to weaken currencies for export advantages, and also stimulate flagging economies, will continue to do QE with the Central banks buying government bonds. Repayment of the debt is thus abetted by newly created money/credits. This debt can be cancelled by the Central Banks at will. It is a confidence game which has worked so far. A loss of confidence in the currency leading to a severe devaluation would be the end of that game I think.

  2. The Multinationals are playing off governments to seek tax free treatment if they locate one of their plants in a jurisdiction. Also playing off individual US states for the same outcome. In a tight job mkt and with elections run on job creation, the jurisdiction is often all too susceptible to offering multinationals deals if jobs are created.

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