Category: The Road from Democracy to Corporatocracy

Posted on

Facebook Libra

In August 2019, quietly and without much fanfare, Facebook made an announcement – they introduced their own cybercurrency. Called ‘Libra.’

You may wonder about the name, ‘Libra’ – not only is it the seventh sign of the zodiac, but it is also the name for a unit of weight in ancient Rome, equivalent to 12 ounces. The ‘L’ sign from Libra is still used to represent the British Pound today. Will it be backed by a Pound of sterling silver, though? Probably not. In fact, Facebook wasn’t totally clear on what it will be backed by, saying only “a collection of established financial assets.” Actually, in that respect, it sounds a bit better-backed than the “full faith and trust of your government,” but without knowing what that means, we can’t be sure. What is fairly certain is that Facebook Marketplace has made massive strides in taking market share from the traditional second-hand selling publications and websites that facilitated direct person-to-person transactions and is probably hoping to develop a financial relationship in this way with its users. Depending on how Libra catches on, this could be the start of a major trend.

Posted on

Corporate Growth

We have seen and continue to witness a massive growth in the value of certain corporations to the extent that their market capitalisations are greater than the GDP of many nations. With that kind of power to wield, corporate currencies are bound to be offered more and more. It’s not necessarily a bad thing, just as long as people know what they are and, most importantly – have options to use them or not. For example, at the beginning of September 2020, Apple’s Market Capitalisation hit the same level as the whole UK FTSE-100, the leading 100 companies in the United Kingdom. These corporations are now huge.

Market Cap of Apple versus 2019 GDP for selected nations

Now, bear in mind that just a few years ago, Apple was just above Mexico. So the trend is upward, then consider many nations are now forecasting a 2020 GDP slump of 10% or more. Apple may even be above the United Kingdom GDP before too long, perhaps even the end of this year.

Posted on

Corporate Tax Advoidance

Citizens are often frustrated by the apparent ability of the big corporations to dance rings about government tax collection using these methods that are unavailable to smaller businesses and individuals. For example, In the UK in 2010, HMRC waived a potential tax bill of £7bn from Vodafone. David Hartnett, the head of HMRC at the time, even later admitted that he might have made mistakes in some of his actions while settling potential high-yield tax disputes with multinational companies.

Also, Vodafone sold its stake in Verizon Wireless in 2013, to Verizon Communications in the USA. When it came to accounting for taxes, it claimed that a Netherlands Holding company owned the shares sold outside of UK tax jurisdiction and consequently paid no tax. This is all entirely legal, of course, and not a criticism of any corporation doing this, but the net effect of these kinds of deals on smaller businesses and citizens themselves is a bigger tax burden and an inability to compete fairly.

Posted on

Corporations

The concept of corporations goes back to Roman times and possibly still further. The basic idea is that a group of people got together to form a venture. Normally with profit-bearing motives. The word ‘corporation’ even comes from the Latin, ‘corpus,’ meaning ‘group of people.’ Part of the idea of corporations being that the venture could live on beyond the lifespans of normal people. Corporations really caught on as imperial trade ventures spread further and further afield, growing with the globalisation and taking us to the point today where these huge entities dominate national stock markets and their corporate footprint is everywhere. Most visibly seen in the products we buy and the logos we see all the time.

In terms of the relationship between governments, corporations, and the people, the view seems to be that the government is paternalistically representing the people and that corporations are off to the side regulated and taxed by the government, and people have the choice of whether or not to transact with them. In a way, they are almost considered to be a subset of the people, in the respect that many also own shares in the corporations, either directly or through their pooled investment schemes, like pensions. Also, people believe that the government is voted in by and represents the people, and the people only.

This old-fashioned view is questionable.