Salon Money | Exxon-Mobil: Bigger than Monica?

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The last hurrah for West Coast finance
By Kevin Kelleher
The departure of the last of the titans from San Francisco's biggest investment bank was marked by a disastrous frat party that time forgot
(11/25/98)
My guilty secret
By Heather Chaplin
Some people buy porn; I like to buy make-up -- in private
(11/20/98)
Halloween's hollow spree
By Heather Chaplin
How the season of candy-eating kiddies has become monstrously lucrative
(11/06/98)
The greatest gambling hall on earth
By Heather Chaplin
A view of the floor of the New York Stock Exchange
(10/23/98)
The geology of investing
By Dave Zgodzinski
What investors can learn from sedimentary rock
(10/16/98)
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[ T H E_.R E L U C T A N T_.C A P I T A L I S T ]________
Exxon-Mobil: Bigger than Monica?
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WHILE THE MEDIA AND CONGRESS BLATHER ABOUT THE CLINTON SEX SCANDAL, THESE FORMER COMPETITORS JUST CREATED THE BIGGEST CORPORATION IN THE WORLD.
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BY HEATHER CHAPLIN
For anyone still wondering why the American public wishes Congress and the media would stop obsessing about the Clinton sex scandal, the answer lies in the $80 billion Exxon-Mobil merger story.
While newspapers, network anchors, talk shows and Congress endlessly blather about Monica Lewinsky, they are underplaying one of the biggest stories of the century: An incredible year of merger mania, culminating in this week's Exxon-Mobil deal, creating the largest corporation in the world.
Something similar happened 100 years ago, when the country was poised on the brink of industrialization and a select few were becoming richer than God. The titans prowled the land like great dinosaurs, devouring everything in their path, molding the country into its 20th century form and becoming so powerful that the government had to rein them in. On the verge of the 21st century, the big boys are once again getting bigger, but so far there's little response from government or the media.
With combined revenues last year of $203 billion, Exxon and Mobil will become the world's biggest corporation, booting General Motors -- with its paltry $166.4 billion annually -- into a forlorn second place. It's the biggest merger in history and it comes at the end of a year of big mergers. There was Traveler's Group and Citicorp's $70 billion deal, BankAmerica and NationsBank's $60 billion arrangement, Daimler-Benz and Chrysler's $40 billion plan and Worldcom and MCI Communications' $34 billion engagement, not to mention the AOL-Netscape deal, which is shaking up the Web. And those are only a few of the more prominent corporate marriages.
The Federal Trade Commission, which must grant approval for all mergers above a certain size, says there were 4,575 merger proposals to be reviewed this year, valued at a total of $1.44 trillion. Fifteen years ago, those numbers were 903 and $80.6 billion respectively. Even if you go back to the last merger peak in 1987, the numbers are 2,170 and $577.9 billion, about half of what they were this year.
(It's worth noting that the FTC's budget for handling merger reviews has remained essentially flat since 1991.)
When a corporation becomes as big and as rich as these new Goliaths, it garners an extraordinary amount of influence in terms of determining consumer prices in its industry, squashing smaller competition, setting a political agenda and even influencing the direction in which the culture moves. But while that chain of influence is common knowledge, it's not sufficiently part of the common discourse. Most reporting on merger mania focuses on business culture (if I read one more story speculating on how two CEOs' personal management styles will gel, I may vomit) not the public interest.
I would think, as a nation, we'd resist big, faceless entities having such enormous power. Isn't that why socialist countries, with their centralized systems and lifetime leaders, have such a bad rap? Isn't that why our politicians keep declaring war on big government? But mega-corporations don't seem to inspire the same distaste. I guess all those cute logos and catchy tunes really work. Or maybe it's the fact that many Americans have hooked their fortunes to these corporations through individual stocks, 401K plans and retirement funds. Flush with virtual wealth, we're willing to see a friendly face instead of a ruthless business venture, forgetting the good times may not always last.
Or maybe it's the millions corporations are pumping into the political arena. It's a crude measurement, but according to the Federal Election Commission, businesses gave a total of $84 million in soft money to politicians last year. The New York Times has put that number at $115 million in the last 18 months. For comparison's sake, individuals gave $29.5 million and labor unions gave $3.5 million, according to the FEC.
Then there's lobbying. Mobil and Exxon together spent $10.5 million on lobbying efforts last year. But that's a drop in the ocean considering the total amount spent influencing legislation last year was estimated at $1.2 billion, according to the Times. Fourteen of the 25 most influential lobbying groups on Capitol Hill represent business interests, according to Fortune magazine. (Some others are the Christian Coalition, the NRA, the National Right to Life Coalition, the AFL-CIO, the Association of Trial Lawyers and, sitting on top of the heap, the American Association of Retired Persons.)
Add to the picture that voter turnout has essentially been on the decline since the 1960s -- turnout for the last presidential election was the lowest since 1924 -- and you can almost feel the scales tipping. The bottom line is that private, citizen power is diminishing while corporate power grows.
SALON | Dec. 4, 1998
Heather Chaplin's Reluctant Capitalist column appears every other Friday in Salon.




T A B L E__T A L K Does corporate character count? Exchange ideas on making big companies behave responsibly in Table Talk's Business and Personal Finance area R E C E N T L Y The last hurrah for West Coast finance By Kevin Kelleher The departure of the last of the titans from San Francisco's biggest investment bank was marked by a disastrous frat party that time forgot (11/25/98) My guilty secret By Heather Chaplin Some people buy porn; I like to buy make-up -- in private (11/20/98) Halloween's hollow spree By Heather Chaplin How the season of candy-eating kiddies has become monstrously lucrative (11/06/98) The greatest gambling hall on earth By Heather Chaplin A view of the floor of the New York Stock Exchange (10/23/98) The geology of investing By Dave Zgodzinski What investors can learn from sedimentary rock (10/16/98) - - - - - - - - - - - - - - - - Browse the Reluctant Capitalist archives - - - - - - - - - - - - - - - - Salon Columnists S A L O N E M P O R I U M FREE! 12-ounce bag of Salon Blend with a purchase of $30 or more. While supplies last.		[ T H E_.R E L U C T A N T_.C A P I T A L I S T ]________ Exxon-Mobil: Bigger than Monica? WHILE THE MEDIA AND CONGRESS BLATHER ABOUT THE CLINTON SEX SCANDAL, THESE FORMER COMPETITORS JUST CREATED THE BIGGEST CORPORATION IN THE WORLD. - - - - - - - - - - - - - - - - BY HEATHER CHAPLIN For anyone still wondering why the American public wishes Congress and the media would stop obsessing about the Clinton sex scandal, the answer lies in the $80 billion Exxon-Mobil merger story. While newspapers, network anchors, talk shows and Congress endlessly blather about Monica Lewinsky, they are underplaying one of the biggest stories of the century: An incredible year of merger mania, culminating in this week's Exxon-Mobil deal, creating the largest corporation in the world. Something similar happened 100 years ago, when the country was poised on the brink of industrialization and a select few were becoming richer than God. The titans prowled the land like great dinosaurs, devouring everything in their path, molding the country into its 20th century form and becoming so powerful that the government had to rein them in. On the verge of the 21st century, the big boys are once again getting bigger, but so far there's little response from government or the media. With combined revenues last year of $203 billion, Exxon and Mobil will become the world's biggest corporation, booting General Motors -- with its paltry $166.4 billion annually -- into a forlorn second place. It's the biggest merger in history and it comes at the end of a year of big mergers. There was Traveler's Group and Citicorp's $70 billion deal, BankAmerica and NationsBank's $60 billion arrangement, Daimler-Benz and Chrysler's $40 billion plan and Worldcom and MCI Communications' $34 billion engagement, not to mention the AOL-Netscape deal, which is shaking up the Web. And those are only a few of the more prominent corporate marriages. The Federal Trade Commission, which must grant approval for all mergers above a certain size, says there were 4,575 merger proposals to be reviewed this year, valued at a total of $1.44 trillion. Fifteen years ago, those numbers were 903 and $80.6 billion respectively. Even if you go back to the last merger peak in 1987, the numbers are 2,170 and $577.9 billion, about half of what they were this year. (It's worth noting that the FTC's budget for handling merger reviews has remained essentially flat since 1991.) When a corporation becomes as big and as rich as these new Goliaths, it garners an extraordinary amount of influence in terms of determining consumer prices in its industry, squashing smaller competition, setting a political agenda and even influencing the direction in which the culture moves. But while that chain of influence is common knowledge, it's not sufficiently part of the common discourse. Most reporting on merger mania focuses on business culture (if I read one more story speculating on how two CEOs' personal management styles will gel, I may vomit) not the public interest. I would think, as a nation, we'd resist big, faceless entities having such enormous power. Isn't that why socialist countries, with their centralized systems and lifetime leaders, have such a bad rap? Isn't that why our politicians keep declaring war on big government? But mega-corporations don't seem to inspire the same distaste. I guess all those cute logos and catchy tunes really work. Or maybe it's the fact that many Americans have hooked their fortunes to these corporations through individual stocks, 401K plans and retirement funds. Flush with virtual wealth, we're willing to see a friendly face instead of a ruthless business venture, forgetting the good times may not always last. Or maybe it's the millions corporations are pumping into the political arena. It's a crude measurement, but according to the Federal Election Commission, businesses gave a total of $84 million in soft money to politicians last year. The New York Times has put that number at $115 million in the last 18 months. For comparison's sake, individuals gave $29.5 million and labor unions gave $3.5 million, according to the FEC. Then there's lobbying. Mobil and Exxon together spent $10.5 million on lobbying efforts last year. But that's a drop in the ocean considering the total amount spent influencing legislation last year was estimated at $1.2 billion, according to the Times. Fourteen of the 25 most influential lobbying groups on Capitol Hill represent business interests, according to Fortune magazine. (Some others are the Christian Coalition, the NRA, the National Right to Life Coalition, the AFL-CIO, the Association of Trial Lawyers and, sitting on top of the heap, the American Association of Retired Persons.) Add to the picture that voter turnout has essentially been on the decline since the 1960s -- turnout for the last presidential election was the lowest since 1924 -- and you can almost feel the scales tipping. The bottom line is that private, citizen power is diminishing while corporate power grows. SALON \| Dec. 4, 1998 Heather Chaplin's Reluctant Capitalist column appears every other Friday in Salon.