Corporation Nation-States [2]

Writing for Forbes earlier this year, a former British ambassador to the U.N. listed the rise of the corporate nation state as one of the reasons for the nation state’s eventual demise.

“Multinational corporations… operate globally, unrestricted by borders.  The biggest tech companies are now richer than most countries, and foreign Governments find it very difficult to tax them properly on the profits they make.

“If the Nation State system of governance were to come to an end, what would take its place? That takes us into the realm of even greater speculation.  Fiction offers some ideas – a World Government depicted in much science fiction; huge competing blocs, as in George Orwell’s 1984; the return of empires or the city state system of medieval Europe; or post- apocalyptic tribal units beloved of film writers.  None of these alternatives currently looks at all likely, but I think it unwise to assume that the current Nation State system will inevitably exist in 100 years time. “

The Beginning of the End of the Nation State? Forbes (Jan. 3, 2019)

Ever heard of an “anarcho-capitalist”? Me neither. But Doug Casey is one, and in his Mises Institute article The End of the Nation State he said this:[1]

“Even though things are starting to look truly grim for the individual, with collapsing economic structures and increasingly virulent governments, I suspect help is on the way from historical evolution. Just as the agricultural revolution put an end to tribalism and the industrial revolution killed the kingdom, I think we’re heading for another multipronged revolution that’s going to make the nation-state an anachronism.

“Why would that happen? Because of what ‘the evil genius Karl Marx’ called the ‘withering away of the State.’ By the end of this century, I suspect the US and most other nation-states will have, for all practical purposes, ceased to exist.”

If the nation state ends, what will replace it? And particularly, how will the replacement shape economic policy? Anarchist Casey welcomes the end of the state’s role in determining economic policy — which he thinks is fouling it up anyway:

“The way I see it, Thomas Paine had it right when he said: ‘My country is wherever liberty lives.’ But where does liberty live today? Actually, it no longer has a home. It’s become a true refugee since America, which was an excellent idea that grew roots in a country of that name, degenerated into the United States. Which is just another unfortunate nation-state. And it’s on the slippery slope.”

Free market purists trust multi-national corporations to do a better job than national governments, but one issue neither can escape is rising economic inequality, which has recently been given a new twist. This is from a Harvard Business Review IdeaCast:

“Stanford economist Nicholas Bloom discusses the research he’s conducted showing what’s really driving the growth of income inequality:  a widening gap between the most successful companies and the rest, across industries. In other words, inequality has less to do with what you do for work, and more to do with which specific company you work for. The rising gap in pay between firms accounts for a large majority of the rise in income inequality overall.

“BLOOM:  “We’ve looked in the US over the last 35 years, so going back to 1978. And what you see is firstly, there’s a huge increase in inequalities. That probably comes as no surprise to anyone.

The rich have got richer, the middle has kind of tapered along, and the poor have actually done worse over time. But what was amazing in our data is the vast majority there, so something like 70% or 80% of this increase in inequality can be explained by the firm you work in.

So inequality has gone up dramatically. But actually for most people, what’s happened is their colleagues have got richer or poorer with them. So inequality is mainly across firms. And actually, inequality within firms has really not increased that much.”

A widely-cited Deloitte article issued after the 2007-2008 recession reviewed the growth of income inequality and offered corporations some marketing advice:

 “Given the expectation of essentially two different types of consumers (affluent consumers with rising income versus low- and middle-income consumers with stagnant incomes), companies can either choose to target only one consumer group or undertake to segment the market and target each group separately. Targeting all consumers uniformly—that is, selling all things to all people—will likely be less effective.”

Mind The Gap:  What Business Needs To Know About Income Inequality, Deloitte (Jan. 1, 2011)

Attending to your marketing strategy addresses an issue faced by governments and corporations alike:  the need to generate revenue. Both also need to distribute that what’s left of that income after expenses, and according to commentators like Casey and Bloom, they both have some work to do on that topic.

More on corporate nation-states next time.

[1] The image above is from the article.

Author: Kevin Rhodes

Kevin Rhodes draws insight and perspective from his prior career in law, business, and consulting, from his studies in economics, psychology, neuroscience, entrepreneurship, and technology, and from personal life experience.

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