The interests of nation-states and global companies have diverged.

There was a time when the fortunes of the biggest companies rose and fell with the fortunes of their home nations.  That is why Charlie Wilson could credibly say in 1953 that "What's good for General Motors is good for the country," and why it would have been hard to imagine GM wanting to weaken America economically or in any other way.  However, those days are gone, says Zachary Karabell in Time magazine's Curious Capitalist column.

The companies of the S&P 500 now make about half of their sales outside the U.S., and if you remove geography-bound utilities and railroads, regional banks and a fair number of retailers, the percentage is higher. Tech and industrial firms such as 3M, Hewlett-Packard and Intel derive two-thirds or more of their sales beyond the U.S. That means that even if the U.S. economy is a total wash, they can access other markets to maintain their growth. The same might be said of a German conglomerate like Siemens, a Dutch powerhouse like Philips or a Korean company like Samsung.

These global companies can be very profitable even if the economy in their "home" nation is in the dumper. A rise in their earnings and stock prices is no longer a leading indicator for an economic recovery at home.  They do not need to support national policies that are good for the economy as a whole, or for the broad population or the government itself.  Indeed, such policies are likely to be antithetical to the interests of these companies.  Karabell concludes:

As companies report their earnings for the second quarter of 2010, it will be harder than ever to escape the fact that corporations now inhabit their own thriving economy, unencumbered by many of the ills of nation-states. That may be exhilarating (if you're an investor) or troubling (if you're a citizen), but either way, it's time to let go of the false belief that as goes the economy, so go companies and their stocks.

Comments

[Sandy]

Seems as if we are no longer a country made up of citizens but an entity that charters corporations and provides units to consume what the corporations produce. We are consumers not citizens. And since the Citizen's United decision the corporations, even the ones not chartered in the US, will possibly decide who our elected leaders are.