Multinationals vs. the Nation State

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We might be in the early stage of a World Government Revolution.

I’ve had enough of the carry-on that comes from world ‘leaders’. It’s frustrating that the money we pay in taxes finds its way into giant government pits of emptiness. I ain’t getting value for money.

Maybe there’s a better way to run the world? Imagine a world where leadership is egalitarian. A world with decentralised boundaries and borders. Probably the best way to describe it would be The Great Global Liberation. Essentially a world where there’s no ‘government’ per se.

I may be the ultimate optimist, but imagine…a world free from central control and economic mismanagement? Throw the concept of a nation state away; it won’t be the way the world works in the future. Multinationals are poised to wrestle control away from government. It’s a new world order.

Over the next 5 weeks, I’m going to step you through how the world will decentralise and nation states will fall to multinationals. There will be no power in armed forces, but power and real freedom through technology.

Government will lose monetary power and the flow on effect is they will lose governing power. The current course of huge debt and ‘worry about it later when the economy is flying’ won’t last. It hasn’t worked, and is unlikely to in the future.

I’ll show you in today’s essay that a number of technology companies are larger than most countries. And over the next 5 weeks I’ll also show you;

  • Why a multinational would run a country better,
  • How government will and already has lost their grip on power because of technology,
  • What the future will look like, and
  • What you can do about it to seize the opportunities

Who’d Win? Gillard, Abbott…or Ballmer, Brin, Bezos, Page, Ellison, Cook?

I did something I thought I’d never do. Numerous hours of research and armed with my trusty iPad, I went to JB-HiFi. And got them to price-match me an Apple MacBook Pro. They did, and it was mine.
At that point I thought I’d converted to the Dark Side…well at least the fruity side of the PC vs. Mac debate.

Little did I realise that the world of Apple had already flooded into my life long ago. It started with a Macintosh Classic in late 1990’s, then an iPod in 2004, an iPhone in late 2007, an iPad and Apple TV in 2012 and now a MacBook Pro in 2013.

I was an ‘Applophile’ and didn’t even know it. Opening the box to my MacBook I realised these products were a part of my existence. They didn’t make me who I am, but they did have a strong impact on how I operate in the world.

But it wasn’t just my Apple stuff. It was the laptop I’d had since about 2006. The Windows OS I’d run since I was 5. The Google Android Phone I’d had for the last 2 years. The kitchenware I’d bought from Amazon and the endless number of devices I’ve run Oracle’s Java platform on.

And it got me thinking. These technologies and companies have contributed more to my happiness, productivity and view of the world than any government has.

I know that’s a fair jump to make, but at the time of unboxing the MacBook there was some pointless tit-for-tat between Gillard and Abbott on the TV. It was simply unbearable to watch.

I did a quick mental run through of the dollars I’d contributed to these technology companies. Over the course of many years, it had totalled a lot. I also ran through the taxes I’ve paid to the government over my working life. Funnily enough it totalled significantly more.

I then tried to determine where I felt I was getting real value for money. It was an easy determination.

Apple, Microsoft, Google, Amazon and Oracle won convincingly.

I decided to run a mock election. I put Tim Cook, Steve Ballmer, Sergey Brin & Larry Page, Jeff Bezos and Larry Ellison against Julia Gillard and Tony Abbott. In a landslide defeat, the two political leaders were comprehensively beaten.

At this point I also realised that perhaps I’m not alone in my reasoning. Might there be millions, or even billions of other people worldwide that share the same view? I don’t know if that’s true yet, but I’m looking to hear people’s thoughts on this.

My initial point here is technology multinationals have a greater impact on the social fabric in today’s modern age than political systems do. This is something I’ll go into more detail on in Part 3.

Appcrozonglecle: (p. Ap-kro–zon–gool–cool) def. A Very Big Company.

But let’s look at the financial position of these multinationals vs. some Nation States. Because I’m certain they’re bigger economically that most countries.

The financial statements of Apple, Microsoft, Amazon, Google and Cisco are amazing. Here’s the revenue these tech giants had for the 2012 financial year.

From highest to lowest, Apple $156.5 billion, Microsoft $73.7 billion, Amazon $61.3 billion, Google $50.1 billion and Oracle $31.1 billion.

Revenue


Now as a point of comparison let’s have a look at the GDP of a select few countries. New Zealand, Belarus, Sri Lanka, Croatia and Uruguay.

GDP


Funnily enough the five tech companies are on par with these countries in terms of the final total value of the goods they make each year.

Let’s take stock of that. Apple sells per year in product what the entire country of New Zealand creates per year in GDP.

Imagine if you combined Apple, Microsoft, Amazon, Google and Oracle together and made one big company. Let’s call it ‘Appcrozonglecle’.

Their combined revenues of $372.6 billion put them as the 31st largest country in the world. Bigger than Columbia, Denmark, Singapore and the United Arab Emirates.

Then what if we look at their cash positions combined — that is, how much cash to these tech giants have in their coffers?  For a start, if they wanted to, Apple could have bought Cyprus. And had change to wipe the total external debt of Singapore for the fun of it.

That’s right. Apple on its own has enough cash to eliminate the total external debt of Cyprus and Singapore; over $130 billion.

These multi-nationals have greater economic power than hundreds of countries in the world. They are financially managed more effectively too. And they all turn a profit regularly (except for Amazon).

Add to this the combined direct workforce of the five tech companies mentioned. The total population is over 400,000. Factor in the indirect jobs they create and the numbers head into the millions.

There’s so much money flowing through the doors and so much cash hoarded. It’s not unrealistic to think one, or a couple, of these tech giants could buy their own country.

It would be the reversal of what happened during the GFC. Instead of countries bailing out companies, we’d have companies bailing out countries.

The up side could be assuming power and control over the governing body. Apple might create their own sovereign nation.

Of course I’ll expand on this over the next few weeks but for now, understand that economically the power has already shifted from the nation state to the multinational. So what comes next?

Regards,

Sam Volkering
for The Daily Reckoning Australia

Join The Daily Reckoning on Google+


Ed Note: Sam Volkering is assistant editor and analyst for a new breakthrough technology investment service to be launched by Australian Small-Cap Investigator editor Kris Sayce. The breakthrough technology service will introduce cutting edge investment ideas from the technologies of the future, including medicine, science, energy, mining, and more.

From the Archives…

The Higher the Market, the Harder the Fall
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India’s Balance of Trade — a World out of Balance
9-05-13 – Greg Canavan

How the Dow is Just Wall Street’s Marketing Tool
8-05-13 ­– Dan Denning

Watch Out For When Australia’s Terms of Trade Goes Back to ‘Normal’
7-05-13 – Greg Canavan

The Greatest Wealth Transfer in History
6-05-13 – Bill Bonner

Sam Volkering
Sam is Editor for Money Morning and it's small-cap and technology analyst. He spends his time hunting down the most exciting stocks on the planets, whether they’re potential-packed volatile small-caps or tech firms transforming our future through cutting-edge technologies. You can find more of Sam’s work over at Australian Small-Cap Investigator, where he shares the best small-cap stocks he finds on the ASX, or at Revolutionary Tech Investor where he reveals the latest breakthrough tech investment he’s discovered.
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6 Comments on "Multinationals vs. the Nation State"

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Luke
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Sam An easier position to take is how much money would they need to A) Buy a country completly out of Bankruptcy (Ie Cyprus, Ireland, Greece) B) Buy the population of a country to overthrow a government (Venezeula – Free toilet paper for everone who shoots a public servant) C) Buy enough mercenaries to take over a country (Ie In Oz we spend around 20bill in defence from memory – so they might need 30-40bill worth of mercenaries and equipment) Next – Which countries would companies like to own. Which companies can afford to take over which countries. If a… Read more »
ADL
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Sorry to break this to the apple fanboys but you can’t eat an ipad, you can’t live in a macbook….and you most certainly can’t burn an iphone for warmth as much as I’d like to…

deToke deVille
Guest
Speaking of “governance” whether public OR private/corporate/legal entity: it appears that Russia MAY be signalling that Ivan has ‘the book’ on the CIA. In Libya, too? KO-FI.gure! For the first time since _________,the State Dept. will know what the US is up to? I like Kissinger there, but there are other answers which might be better, or at least as good. So, if you can beat Kissinger, there, leave a note on the fridge with who you think is better…? Can John Kerry handle the truth? Yet? Did you hear he has a rash? He told his wife he got… Read more »
Ross
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What are you on about Slewie? Ivan Glasenberg, Ivan Slee, or Ivan Tolstoy (on Dr Zhivago). Ivan Glasenberg and the Monte Carlo crew have just rolled their nominal chair and Reuters are calling for him to come out of the closet and take the joint role. Don’t think that’s a sign that the Rich’s, the Clinton’s, and the CIA are in that much trouble just yet. In the matter of who runs who its a bit like Kosovo, or Chicago. Besides Glencore’s new Viterra unit controls the barley stocks that make my beer so surely its another Ivan. Talking of… Read more »
GregAlways
Guest

Hmmm,

Sam, these are some great points you raise. Maybe ADL, but they’ll be able to construct their own infrastructure:

http://www.youtube.com/watch?v=JdbJP8Gxqog&feature=youtube_gdata_player (it gets awesome at the 4:30 mark..)

You say “but imagine…a world free from central control and economic mismanagement?”

Surely we could use Tassie as a test case for such A territory – they’re in the economic doldrums down there. Some inspired visionaries in charge could really change something…But it’s not we’ll get. The shame.

Jason
Guest

1. What side of the road does everyone drive on under ‘world government’?

2. What about that nasty problem of Peak Oil?

3. Nobody wants to be the minority, so more like World War than world government.

wpDiscuz
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