A Democracy Where Less Than 0.1% Control a Quarter of the Jobs

By: Graham_Summers

Graham’s note: the following is an excerpt from The Phoenix World Views Digest, my socio-economic-political newsletter devoted to presenting what’s really going on in the world. In today’s piece I propose that the US is in fact an oligarchy in which a small handful of corporations “call the shots” via lobbying efforts and other forms of legalized “bribing” of public officials.

Last week I discussed how the US has shifted from a Democracy to an Oligarchy. Today I thought we’d look at some facts detailing some clear numbers that support this claim.

The classic paradigm for thinking of the “American experience” involves the use of a “melting pot” or “patchwork” metaphor. The basic idea is that the US is a single entity comprised of a wide variety of ethnic/ social groups. This metaphor in turn is used to support the view that the US is a Democracy: a place where “your vote counts” no matter who you are.

However, to me, an examination of the real socio-political hierarchy in the US reveals that this entire “patchwork” ideology is a myth perpetuated in order to convince the general populace that they somehow matter or have an impact on the US political structure and proposed legislative policy.

Indeed, dividing the US population based on issues of race or gender means breaking it into fairly sizable groups. Indeed, even the issue that produces the largest single majority (race) still has a sizable percentage of the population (25%) in the minority category.

In contrast, dividing the US population between individuals and large businesses involves splitting it into a MASSIVE majority (greater than 99%) and an extremely tiny minority (less than 0.1%).

And while dividing the population based on race/ gender/ etc. produces a majority group that is generally believed to have greater political clout/ influence, when you divide the US between big business and individuals it is an extremely small minority that maintains an exorbitant amount of power.

Let’s take a look at the numbers…

According to the latest census data, there are roughly 900 companies that produce annual revenues of $2.5 billion or more (the largest revenues bracket for any US business). These are the “big boys” in the US economy. And when I say “big,” I mean BIG both in terms of size and political clout.

Collectively that these firms:

• Control roughly 25% of US jobs (26 million jobs out of 112 million total).
• Pay out nearly 30% of US salaries ($1.1 trillion out of $3.9 trillion).
• Produce 42% of all revenues ($9.3 out of $22 trillion).

Control at most large-scale corporations is based on a centralized hierarchy in which the most critical decisions are decided by a select group of individuals. For simplicity’s sake, I’m going to use Exxon Mobil’s corporate structure as a proxy for large-scale corporate management numbers.

According to its latest 10-K, Exxon has 19 Executive Officers (CEO, CFO, etc). When you add in Exxon’s Board of Directors, you’re looking at roughly 30 individuals “at the top of the corporate food chain.”

Multiplying this number by the number of large-scale corporations in the US (900) we arrive at a number of roughly 27,000 individuals who “call the shots” for large US businesses.

I realize this is very selective analysis, but even if we choose to assume 100 individuals at the top, (rather than 30), AND include smaller US-based companies (those that produce annual revenues of $500 million or more), we’re still talking about only 3,000 companies and 300,000 individuals “in charge.”

Now, the total US population is roughly 308 million, so we’re talking about less than 0.1% of the population dictating the primary business/ economic/ political decisions.

Now you realize what I meant when I said that issues of race, gender, and the like are Shadow issues that distract us from the real issues of power/control in the US.
I believe these Shadow issues elicit strong emotional responses from all of us, but in reality all they do is distract us from the fact that roughly 0.1% of the population controls the US’s economic policy in the private sector, as well as in the public sector (via lobbying efforts, campaign donations, etc).

Thus I propose that big business is the man behind the curtain, the “individual” moving various puppets (the politicians) via monetary-based “strings” (donations and lobbying efforts).

We are told that have a primary role in the election process in the US due to it being a voter-based Democracy. This much is generally true. However, it is large-scale corporations that make the largest donations to political candidates. And unlike individual voters who can only pick one candidate in the voting process, Big Business can back both parties financially to insure that whoever wins will look upon them and their ideas favorably.

And they usually do.

While most of us have to choose which candidate to vote for, big business typically backs both parties to insure that whoever wins is “in their pocket.”  Consider the donations from Commercial Banks in the 2008 election:

 
The public consensus is that Republicans are the “big finance” party, but the above numbers clearly show commercial bank contributions are split evenly between the two parties.

This is nothing new. Indeed, even if we include all commercial bank contributions going back to the 1990 elections, the total amount ($221 million) is still split 41% vs. 59% between Democrats and Republicans: hardly a skewed breakdown. And when you’re talking about donations in the hundreds of millions, even 10% of this is still a HUGE amount of money compared to what US individuals donate.

Below is a list of the top 25 corporate donors from 1989 -2009. Only a third of these are uneven (those are bolded). The remainder (2/3) of contributions are roughly equal (anything greater than a 60/40 split was deemed uneven).

With this understanding of the US political process, it is obvious to me why
every major economic policy introduced or maintained in the last 30 years has largely benefited Big Business, specifically executives, and no one else.

To continue reading this piece (you can download the whole article free) and learn more about The Phoenix World Views Digest, click here.

Good Investing!

Graham Summers

http://gainspainscapital.com

PS. If you’re worried about the future of the stock market, I highly suggest you download my FREE Special Report detailing SEVERAL investments that could shelter your portfolio from any future collapse. Pick up your FREE copy of The Financial Crisis “Round Two” Survival Kit, today at: http://www.gainspainscapital.com/MARKETING/roundtwo.html

Graham Summers: Graham is Senior Market Strategist at OmniSans Research. He is co-editor of Gain, Pains, and Capital, OmniSans Research’s FREE daily e-letter covering the equity, commodity, currency, and real estate markets. 

Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.

Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.

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