Are corporations taking over the world?

John W. Schoen • Profile • E-mail

So who really is running the world these days? Answer Desk readers have plenty of opinions. Some, like Marilynn in Baltimore, suspect that Wall Street merger mavens and big corporate interests are gradually usurping government's role in setting up a "New World Order" that will ultimately have the greatest impact on average Americans' lives. For many readers, it's obvious: all you've got to do is "connect the dots."

Most times when one mentions a "New World Order" it is brushed off as a conspiracy theory. There seems to be a rush to mega-mergers and private equity buyouts. Do you think that there really is a plan for a "New World Order" where governments are replaced by a kind of corporate serfdom?
-- Marilynn, Baltimore, Md.

Mega-mergers and buyouts seem to run in cycles. In the 1960s, led by a wave of railroad mergers, huge “conglomerates” gobbled up smaller companies. The "junk bond" merger mania of the 1980s was built on something called a "highly confident" letter: You didn't even need to have the money, you just announced to Wall Street that you were "highly confident" you could get it. Then you went to one of your cronies at a savings and loan, they printed up the paper you needed, and investors eagerly snapped up that paper because, after all, it was a "done deal." The inevitable collapse of the S&L industry cost taxpayers over $100 billion to clean up.

The current merger craze is, in many ways, the flip side of the 1990s IPO mania. Instead of taking new, private companies public, money is flowing into funds that are taking established, public companies private.

There are a number of reasons for this, not the least of which is that investment bankers get big fees whether the company goes public or private. The hangover from the IPO bust also made it tougher to bring a company public — especially after Congress passed laws that make it harder for companies to make up earnings and otherwise mislead potential investors. Private equity firms are also reading the same playbook that the '80s raiders used: Buy an "underperforming" company, chop it up, sell off pieces, squeeze profits out of what's left and — Voila! — take it public again. More fees all around.

As for corporations muscling governments out of the way, there's nothing particularly new about that either. Some large, global companies have as much reach and influence as half the members of the United Nations, with revenues that match or exceed the GDP of many  countries. As for our government's pliability, just take a look at how much money flows from the industries that get government help (agriculture, banking, energy, etc.) to the members of Congress passing laws that make these companies more profitable.

The part we have trouble with is the idea that this is all part of a "plan." Conspiracy theorists believe oil prices are determined by a select group of powerful, wealthy men who secretly conspire to amass bigger personal fortunes at the expense of the rest of us. Global trade laws, this thinking goes, are dictated by a secretive band of CEOs and IMF officials who work out their deals in palatial Swiss mountain retreats. Wall Street, in turn, is a single, unified entity that sets the country's monetary agenda via placement of one of its most powerful in the White House (Robert Rubin under Clinton, now Henry Paulson under Bush) where he can pull the strings of the elected politician puppets we citizens fancifully believe are really in charge.

The master plan (isn't it obvious by now?) is being carried out by the Federal Reserve Bank —an illegal, unconstitutional self-perpetuating body, answerable to no one, that traces its lineage back to original robber baron, John D. Rockefeller. Meanwhile, representatives of the various nodes in this network of global corporate power brokers periodically fly their Gulfstreams to a super-secret golf resort on an unmapped military base in Arizona and collectively plot the next move. The Answer Desk in-box is peppered weekly with the gripping details of this ever-evolving conspiracy.

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