One of the sillier modern ideas is that companies are more powerful and important than nation states. Arguments for this popular view cite high profit margins and gross cash piles – a record $1.8tn in America alone in the first quarter – versus indebted governments, or the global impact of companies such as Google and Facebook. But ask any bank, airline, mining or pharma executive who is really holding the strings.
The latest example of the absolute power of politicians over the biggest companies in the world exploded onto the front pages this week in the US. The National Security Agency, it seems, demanded that Verizon Communications provide three months worth of phone records of every American. The agency is also accused of demanding information from other telecoms companies, internet service providers and credit card providers. Tech companies including Microsoft, Apple, AOL, Yahoo, Facebook and Google are supposedly involved, although they all deny it. Civil libertarians are howling (before updating their Facebook pages with personal details), as are critics of the Obama administration.
What should investors think of it all? Shareholders in the companies involved seem unfazed so far. Indeed, Verizon stock has rallied 2 per cent since the story broke mid-week and shares in the others have also risen.