Has the American government’s subservience to corporations compromised our democracy? Globalization has contributed to the proliferation of multinational corporations, otherwise known as MNCs. This prevalence provides more opportunities for profit maximization, the primary goal of a corporation.
In this pursuit of massive profits, MNCs use various strategies to affect the policy decisions of governments; they attempt to push and advance policies that are beneficial to their corporate goals. MNCs and corporate conglomerates retain massive financial power and can, therefore, exert significant influence on and greatly manipulate the democratic process.
Corporations can be sorted into two categories based on the locations of their operations.
Domestic corporations conduct their affairs solely within the borders of their home country. Multinational corporations have assets in at least one country other than their home country. MNCs are subject to different regulations and tax rules than domestic corporations.
The definition of state sovereignty is constantly being debated, however, the basic concept of sovereignty is generally agreed upon as “the possession of absolute authority within a bounded territorial space.”
A state’s absolute authority is affected when it is in a position where it has no choice but to submit to the demands of another individual actor, i.e. a multinational corporation. So, in order for corporations to have a significant effect on United States’ sovereignty and democratic processes, corporate influence must be strong enough that the state is essentially forced to submit to its demands.
According to a McKinsey Global Institute Growth and Competitiveness study, in 2007, there were 2,270 U.S-based MNCs. Although they accounted for less than 1 percent of all American companies, within the United States economy they:
- Employed roughly 19 percent of the entire private-sector workforce
- Earned approximately 25 percent of total private-sector gross profits
- Exported goods totaling 48 percent of total U.S. goods exports
- Imported goods totaling 37 percent of total U.S. goods imports
- Contributed to nearly 74 percent of all private-sector research and development spending
These percentages demonstrate the massive financial power American-based multinational corporations maintain in our country. Because these MNCs contribute so much investment, development, and employment to the economy, our government is often forced to submit to their policy requests. In order to successfully sway legislators and advance their interests, corporations employ various methods of political persuasion and lobbying.
Recently, corporate interests have gained a strong foothold in the heart of the U.S. government. Donald Trump, upon entering office, has made it his mission to advance corporate interests. The President formed an advisory board, composed of executives representing multiple U.S. MNCs. This platform allows corporations such as Uber, IBM, and PepsiCo to have a direct line of communication with the President himself. This open line of communication, as well as this position in an advisory capacity, gives corporate interests an unprecedented level of influence over the American government and their policy-formation.
Because the President himself heads a multinational real estate business, one could say that corporations have successfully obtained the power to formulate and enforce policies. This “corporate government takeover” can be seen in action right now; the President’s party passed a tax reform bill where—according to independent analysis—over 35% of the benefits go to corporations and extremely wealthy individuals.
Some Republican Congressmen have even publicly admitted that their needed campaign donations were contingent on whether or not they were able to pass tax reform that would benefit their corporate donors. As time goes one, we can only assume that the President and the Republican party will continue to prioritize and fulfill the demands of big businesses and MNCs.
This leads us to wonder; what is to come of American democracy?
