Crunching Big Numbers, Understanding Short Lists
Give a writer some facts, numbers or basic information and ask him to use it to tell a story. See what happens. What kind of story does he tell? Is it plausible? Is it true?
Most of the time we unearth information from personal experience and observation. Other times we stumble over information sent by others that stimulates our imagination.
A friend* sent me a link to a top ten list of the world’s largest employers. I immediately saw a story. One told in numbers. As the impact of Big Data filters into our daily lives, you can expect more storytellers to mine these huge information warehouses to cull stories.
Let me explain the kind of story to expect in the future.
Mathematics conceals all kinds of interesting stories about how societies, economies, and governments are entangled. The language of numbers opens information doors to understanding the complexity of these relations. When we examine the numbers, we can draw conclusions about the dynamic relationship of private and public sectors within cultures and across cultural boundaries.
This is an essay about economic and political structures, allocation of power, concentration of resources, and how power is projected inside a political system. It is also an essay about how top ten lists influence our view of reality.
I’ve become suspicious of all the lists: top ten, top 50, or top 500. One reason is all of these lists share in common an implicit promise of completeness. The purpose of a list is to close off ignorance, which is ringed by information presented. It is as if a list has a roundness of knowledge that deflects our lack of understanding, knowledge or awareness. Lists create an illusion of knowledge at best and at their worst promote a lie or deception that doubt has been addressed and answered. The main danger of lists is they seduce us not only by the false promise of completeness by also by the allure of simplicity. A list masks the higher level of complexity it closes off.
When you examine any list you might think of playing chess in a dark room where you can’t clearly see the board or pieces. You know there are 32 pieces and 64 squares as part of the game. The average top ten list you read is addictive because you are playing in the dark like the rest of us and want the edge of knowing that you’ve discovered that what amounts to 10 moves will show you how the game is won. In the final part of the essay, I have a look at how difficult it is to play chess in the dark with lists with your cheat sheet to victory.
A list: The Top 10 Largest Employers in the World
Work is an essential component of any economy, whether based on capitalism, socialism or any other ideology designed to govern the business of extracting resources and energy, and distributing and allocating products and services. An employee’s ‘work’ is carried out under the authority and supervision of an employer. The employer may be the government; or it may be a private company. One way to understand any national system is to ask who are its largest employers. Identifying the major employers and the enterprises it controls tells a great deal about a country’s values, politics, beliefs, and policies.
If you were to draw a list of the world’s largest employers, including public and private, what would you expect to find on that list?
In 2012 the BBC produced a top ten list of the largest employers.
(Source: Wikipedia http://en.wikipedia.org/wiki/List_of_largest_employers )
In 2012, 30% of the world’s largest employers came from the ‘private enterprise’ sector. 70% were ‘state enterprises’ or government workers (though we don’t often think of soldiers as government workers that is indeed what they are). Leaving aside what the figures suggest about India where the Indian state railway has more employees than the Indian army, my attention is on the ‘big’ employers in the US and China. These two countries, with three employers each in the top-ten list, comprise 60% of the big employer list for 2012.
Take the US Department of Defense. There are “2.13 million active duty soldiers, sailors, marines, airmen, and civilian workers, and over 1.1 million National Guardsmen and members of the Army, Navy, Air Force, and Marine Reserves. The grand total is just over 3.2 million servicemen, servicewomen, and civilians.” (Source: http://en.wikipedia.org/wiki/United_States_Department_of_Defense ) Private contractors are no longer a niche but viewed as part of the total military force. (Source: http://www.fas.org/sgp/crs/natsec/R43074.pdf ) It is difficult to source the role of private contractors in the PLA. It is enough to note that the two top positions are military organizations organized, equipped, maintained and deployed by the government, with, at least on American data, a healthy percentage of private contractors part of the enterprise and who are supplied by private companies.
In contrast, the military footprint in China works out to 0.1825% of its population. Thus in roughly population terms there was a huge disparity in the size of the military in comparison to the size of the relative populations. America’s military employees are 5.6 times greater than China in terms of total population. Based on the BBC statistics, in terms of military to military comparison of numbers, in 2012 the US military was about 39% larger than the Chinese.
Roughly 143 millions were employed in the US in 2012. (Source: http://www.marketplace.org/topics/economy/visual-history-us-workforce-1970-2012 ), which works out to 2.2377% of the total work force being US Department of Defense employees. In 2012, China’s workforce reached 764.2 million and its military personnel was 0.30096% of this workforce. (Source: http://www.statista.com/topics/1317/employment-in-china/ ) In terms of comparing overall employment numbers between the two countries, the disparity between those employed by the military indicates that the US military as a percentage of the total work force is 7.44 times larger than the Chinese work force.
The statistics reveal something about the presence of the military employment footprint in the population and the workforce of the country. Size matters for a lot of reasons including politics and economics, not to mention the social component from having a large number of people in uniform. The military has a particular ‘culture’ based on rank, duty, discipline, honour and authority. Profitability doesn’t appear as part of this culture. Its primary duty (some may disagree) is to project power in order to instill fear, which will cause adversaries to bend to the will of political establishment in charge of the military.
What may come as a surprise is that Wal-Mart, owned by one family, employs almost as many employees as China’s People’s Liberation Army. And if Wal-Mart and MacDonald’s were to form an alliance, their combined employees would outnumber the entire American military with a significant number of employees left to take over part of the Chinese military as well.
In other words, the world’s two largest private sector employers have under their umbrella more employees than the world’s largest military. When you start to register the power employers have to influence the attitudes and values of their employees (not only the military runs boot camp for new recruits), the political influence of such employers’ wealth would attract the attention of politicians and their campaign staff. Beyond this obvious risk of system policy being wealth driven, there are other, deeper implications to consider.
Private Enterprise Employers
Wal-Mart and McDonald’s share, in a manner of speaking, certain similarities with military culture: there are no unions, recruits are assigned largely routine, frontline jobs that take stamina and discipline, they have uniforms, codes and little prospect of mobility up the chain of command. They are canon fodder for the elite. They are also paid less than soldiers.
Wal-Mart is a dystopia vision of what a peacetime military might look like if it had different uniforms and grunts were assigned to patrol aisles of merchandise with the mission of maintaining order and security. McDonald’s, like the US military, has bases established all over the world, siphoning money to shareholders in return for distributing dubious foodstuff with a dodgy health record and a tendency to make regular diners obese.
The average Wal-Mart grunt earns $15,576 per year or 13% less paid to a military private.
These two huge US employment giants weren’t created by an act of God or evolved from nature. Their corporate growth and success was largely luck, which in retrospect, we explain in stories about brilliant leadership. Myths are created to support the conclusion that their rise was inevitable. American exceptionalism has its privatized counterpart of this myth. Wal-Mart and McDonald’s were never destined to become the 3rd and 4th largest employer in the world by 2012. In fact, each company emerged in the domestic US market as a result of an ecological system comprised of culture, history, values, and laws, and like that if you changed the variables everything might have turned out quite differently. And their corporate success can be attributed, in part, to the protective umbrella of the US military which was funded by all taxpayers (including Wal-Mart and McDonald’s employees).
Another thought is, this private army of soldiers serving the domestic consumer appetites for food, gadgets, and aisles stocked fire-ladder high with consumer goods, is itself protected against intruders from abroad and can enforce its presence in the intruders backyard by using the military. Guns protect existing markets and they open new markets. That’s why the military is so important for a country on an economic march, whether grabbing resources, or opening new consumer markets.
The top ten list of the largest employers presents an opportunity to compare compensation paid to for those at the top of management with their counterparts in other sectors and the disparity between the top manager with the medium pay of a worker employed by that employer. If you want to know why Thomas Piketty’s Capital in the 21st Century with evidence of huge income and wealth disparity has struck a chord, a good place to start is an examination of the US military and Wal-Mart pay.
The salary of the Chairman of the Joint Chief Staff is $20,263.50 a month, and that of a private in the army is $1,467.00 per month. The Chairman of Joint Chief of Staff makes roughly fourteen times as much as a private in the army. That’s right. 14 times is what separates the top solider from the one pulling the trigger on the frontline. The army pay range from top to bottom is closer to a Denmark or Norway than to the big employers inside the world of private enterprise in the US.
Not only is the Wal-Mart grunt paid 13% than a private in the army, the CEO of Wal-Mart is paid 1,034 times the median salary of a Wal-Mart worker. (Source: http://www.huffingtonpost.com/2013/03/29/walmart-ceo-pay_n_2978180.html)The CEO of McDonald’s is paid 434 times the median salary of a MacDonald’s worker. In the rankings from the highest disparity between CEO and medium pay for a worker in the company, Wal-Mart is number 1 but MacDonald’s falls to number 5. Three companies pay their CEO at the following multiples of one medium worker: Target #2 at 597:1, Disney #3 at 557:1, Honeywell #4 at 439:1.
If you applied the Wal-Mart ratio of 1034:1, using the bottom pay (note this is likely lower than the medium pay of all soldiers) which is that of a private, the Chairman of the Joint Chief Staff would be paid $21 million a month, or $8.8 million a month if applying the McDonald’s 434:1 ratio. One person is in charge of the defense of an entire country; the other is in charge of selling consumer goods and services inside the same country.
It seems in the scheme of things someone is vastly under paid or overpaid in the military if the private enterprise system values apply to the military. The system that generates muscles has a wholly different compensation system than the underlying system it is designed to protect which is based on maximizing profit. One way to accomplish that goal is to underpay the hugely numerous military personnel, especially those at the higher leadership ranks.
The generals in the US military don’t own the tanks, forts, jet fighters, submarines, aircraft carriers, canons, rifles, and flame throwers. More importantly, the sons and daughters of the generals don’t inherit their father’s rank and step into his shoes on death as owners. While the generals stand in as leaders of the enterprise, they don’t own it.
The top Wal-Mart leadership is under the control of the Walton’s family. There are no congressional hearings, no public vetting, and no presidential appointment. When a family member of the Wal-Mart dynasty dies, his or her share is inherited most likely by another member of the family. Any family that has 2.1 million people working in it is business is, in effect, a kind of aristocracy. While the original meaning of aristocracy was ‘rule by the best’, it has come to mean control over the most. In our time of democracy, aristocracy and oligarchy have risen to new positions of power and influence that would have been the envy of dukes and earls of the past.
The Wal-Mart family given the size of its private workforce and the profits generated are a potent economic and political force. The influence of the Wal-Mart family, as its wealth accumulates, has a strong possibility of being expanded over multiple generations. And the accumulation of greater wealth, power and workers inside one family will likely persist as military generals come and go like store managers.
Complexity and story telling in the reign of Big Data
The number of employees isn’t necessarily the best way to ask who is in control of the world’s wealth. You can’t really understand the true lay of the pieces on the chessboard by limiting your study to the Top 10 List of the World’s largest Employers. The relationship of employee numbers to control of wealth is, for example, misleading when the real question is: who is in control?
The “The Network of Global Corporate Control” examines a data base that includes 37 million companies and finds that 147 companies in the world control 40% of the world’s global wealth. The Walton family, the one that owns Wal-Mart comes in as Number 15 on the list of the top 147.
While Thomas Piketty has used big data to break the code of silence and ideology around the issue of the wealth owned by the 1%, but there is another shoe to drop. Having shown the history of wealth concentration is useful. But it doesn’t necessary tell us how wealth translates into control. It is the nature of control that flows from wealth that allows us to move a step closer to understanding how economic and political power is financed and allocated and functions. The old adage of ‘follow the money’ needs to be refined to read: follow how the money is leveraged.
The 2011 study on global corporate control shows that: “Network control is much more unequally distributed than wealth. In particular, the top ranked actors hold a control ten times bigger than what could be expected based on their wealth.”
The underlying grid of connections emerges from Big Data. As our information accumulates, the emergent patterns will likely show correlations that are predicted by dogma and lists, or from our usual inventory of cognitive biases. In the future, others will look back at our ‘list mania’ as another example of how we played chess in a dark room and without a true understanding of how the game worked, and we compensated by simplifying it, dumbing it down to a game of checkers or draughts.
This essay has been a brief glimpse at the top ten largest employers of the world in order to make sense of how we are governed, compensated, and protect and exploit resources and markets. It is an essay about the perils of lists in a sea of complexity. Knowing who are the largest employers on the planet reveals an aspect of existing economic and political systems and the public institutions that carry out government pro-business and growth policies.
I suspect the BBC list is based on less than big data. It is crude and limited data. The time will arrive when we will have a better idea from much more complete data sets and links between data sets. It is what we have now. Kurt Gödel’s Incompleteness Theorem suggests that no data system will ever be complete; that contradictions will emerge. This sentence is false. A sentence we can never shake off, answer or ignore. It follows us like a black dog on a moonless night.
Meanwhile, storytellers can practice their skills by examining the numbers. They will be important in the future; when confronted with big data we will want plausible explanations of meaning. Also, storytellers will highlight what is missing from the existing numbers.
For example, it would be interesting to know in a Thomas Piketty statistical way whether the ratio of employees working for public and private companies in the top ten positions has been constant over time, whether the ratio is connected with concentrations of wealth and income, and the consequences of major economic events like recessions on downsizing, wage capping, and success of rival economic powers and systems in taking market share.
More data will provide answers as to whether the world’s largest private employers are best explained by the use of Western styled democratic systems, or whether they might have evolved in modified form from a Chinese styled system. Wal-Mart and McDonald’s might not have emerged from the chaotic American democracy without the presence of American coercive power at its back. The culture of the military, with its authoritarian command structure and democratic compensation system, may have played an essential role.
Other powerful US companies with fewer employees such as Microsoft, Google, Facebook, Apple, Hollywood filmmakers, and war equipment manufacturers have added members to the new emerging American aristocracy. Defense contractors, might reasonably be added to the employees of the Defense Department as the separation between public and private and between civilian and military is often artificial and maintained for political purposes. Thus allowing retired generals a second chance and career to cash in on the profitable side of violence.
I leave you to consider this data: Wal-Mart is committed to hiring 100,000 ex-military personnel by 2018. (Source: http://walmartcareerswithamission.com ) But they should keep in mind that grunts at Wal-Mart start at less pay than a private. This is a story that between now and 2018 will likely be told by some writer, somewhere, wondering about the complexity of our future life, which is unfolding. Now.
*Thank you, John Murphy.