Government Versus Corporate Power

By: inoljt,

The twentieth century featured a great debate in the world between the communist system and the capitalist system. This was a debate over whether private enterprise ought to exist in the world. Today most countries believe in the answer posed by the capitalist system; they believe that private enterprise ought to exist and is generally more efficient than the government.

Nowadays private enterprise and corporations are thriving. Very few countries even speak of “nationalization,” in which the government takes over private enterprises, anymore. Most people in the country work in the private sector. This speaks to its power.

Nevertheless, the world’s biggest employers are in fact not private. Take a look at this fascinating graphic by the Economist:

The world’s biggest employers are dominated by the government. Seven out of ten of the entities here are government-run; the two biggest are the militaries of the United States and China.

The three private employers are Walmart, McDonalds, and the Hon Hai Precision Industry. The Hon Hai Precision Industry, also known as FoxConn, is a Taiwanese electronics manufacturer.

By country, four of these employers are Chinese, three are American, and one each are British, Indian, and Taiwanese. It’s interesting that while a Taiwanese company makes the list, a Japanese corporation or government employer does not. Europe also seems to punch below its economic weight in this graphic.

For all its love of private enterprise, the biggest employer by far in the United States is government-run. The same holds true for China, the United Kingdom, India, and probably many other countries as well. All in all, despite the strength of the private sector, government still packs quite a punch.



Earnings - who knew?

Cross-posted at River Twice Research.

With a slew of major companies reporting earnings so far, it's clear that expectations were severely skewed to the negative. Once again, Wall Street analysts overshot - this time to the downside. The substantial margin expansion reported by Intel; the higher-than-anticipated profitability of IBM; and the blow-out quarters of Goldman Sachs and JP Morgan all stand in contrast to sentiment just a few weeks ago, which was grim and getting grimmer. So what happened?

First, the robust results of some of the banks so far is the result of trading revenue and changes in accounting rules rather than a sudden improvement in losses from bad loans. Still, income is income, and the more they generate, the easier it will be to absorb those losses from consumer, commercial and business loans that will continue to go sour for some time.

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