« 1040 Tax Mistakes | Main | Back Where We Started »

The latest offering from the Grassy Knoll gang is "Confessions of an Economic Hit Man" by John Perkins. The book has become a bestseller. In it, he claims that the world is governed by big, evil corporations who use "a combination of bribes, assassins and seductive women to enslave the poorest countries." In contrast, Sebastian Mallaby uses a combination of facts, reason and logic to expose this nonsense.

Perkins likes to say that of the world's 100 biggest economies, 51 are companies. This old chestnut is based on a fallacious comparison of companies' sales to countries' gross domestic product: Whereas GDP measures the amount of value added in an economy, sales lump together a firm's value-added with inputs bought in from suppliers. According to an apples-to-apples comparison done by the United Nations, just two of the world's top 50 economies were companies in the year 2000. Of the top 100 economies, 29 were companies.

That may still sound like a lot, but remember that companies compete against each other. In the world as Perkins dreams it, the top 100 or so firms are joined in a shadowy conspiracy. But the reality is that Exxon Mobil schemes to undermine BP and Shell, and General Electric plots against Siemens and Hitachi. Countries don't face a united corporatocracy. They play firms off against each other.

Posted by edelfenbein at February 27, 2006 9:44 AM