Nations and Corporations LO5969

John O'Neill (
Mon, 4 Mar 96 10:04:19 +1100

Replying to LO5937 -- was: LO & Big Layoffs
[Subject line changed by your host...]

> If this trend continues, nations and organizations will need to find new
> ways of connecting to, and motivating, people.

There is an underlying assumption here that NATIONS will be an important
economic factor in the future.

Consider some of the following issues that have arisen out of the "New
World Order":

- nations can spend a disproportionate amount of their GDP to ensure their
security militarily, or they can enter alliances with other nations -
those countries that have chosen the first route, recent history suggests
have not survived for the long run

- alliances can be purely along military lines (e.g. NATO, Warsaw Pact),
or can encompass other areas such as economic links (e.g European Union,

- the aim of forming alliances based on economic links is to create
dependencies between nations economies to the extent that if another
nation attacks one of the nations you are economically dependent upon, it
is the same as attacking your own economy - economic dependencies can be
in the form of resources (Japan is the stand out example here), or it can
be in the form of increasingly specialised services (e.g. the outsourcing
of America's software programming to India).

- creating alliances based on economic links has side effects. Big,
multinational companies have increasing impacts on individual nation's
economies, and the international future's markets can wreak havoc with
economic indicators in very short periods of times.

Ireland actually had a scheme that provided tax breaks to multinationals
to setup operations in their countries. Once the multinationals had setup
operations and got going, Ireland tried to revert to their normal company
tax rates, and the multinationals promptly moved their operations to a
more amenable nation.

The implications here (and certainly experienced in Australia) is that
multinationals are able to dictate and choose which nations they will
operate in and get sizeable tax breaks - in other words, multinationals
can make huge profits and ignore all the social and infrastructural
obligations of being part of a social community.

Who are the decision-makers in multinationals? Technically the board and
CEO - but they are ultimately responsible to the shareholders. The
shareholders tend to be a small percentage of the nations population or
increasingly pension funds (superannuation).

Pension funds have been shown to be required to make short term profits to
meet "industry expectations" of performance. The strategy favoured by
these funds is to invest in companies that will employ strategies to
maximise short term profit e.g. downsizing. There are two effects here.
Firstly, having a pension fund pull out of your stock drastically reduces
your stock price (which obviously has serious consequences for public
companies). Secondly, the effect of the downsizing is to take away some of
the jobs of the people who are investing in your pension fund !!!! This
doesn't sound very sustaining to me.

In Australia, investors in pension funds have _no_ say in how their money
is invested, and therefore what strategies they expect companies to

My conclusion from all this is that the democratic rights our grandfathers
have fought so hard to achieve have been eroded by the need to form
economic ties between nations, and the resulting concentration power in
the hands of a small number of shareholders, and more importantly, pension

One "solution" is to enable investors in pension funds to have a say in
how their money is invested. However, this assumes you have a job. Youth
unemployment in Australia is running at about 30%, 80% of Australia's
youth are being forced to higher levels of education because of the lack
of jobs - the shareholder/investor model denies people of "voting age" the
right to democratically vote.

There are many threads that talk about the confusion and uncertainty of
the current business environment, and I agree if you continue to operate
within the paradigm that the nation state is economically important.

However, I believe that a new economic paradigm is being formed based on
the notion that nations in themselves are no longer the dominant factor
economically, but economic dependencies (or economic links) between
nations is the important factor (this is kinda like the fact that people
by themselves in orgs don't learn, but *networks* of people do).

I think the paradigm of dependencies between economies has huge
implications for the work we're trying to do with learning organisations,
especially when we start moving from the Western, individual based
societies to the Asian, collective societies.

John O'Neill
DSTO C3 Research Centre, Australia


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