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They’re few, rich and vulnerable?

Pearls of Wisdom:  “If you offer to do demonstrations at a science fair hoping to pick up some networking business cards, your profession has just slid off the deep end”

Picked up at Susie Madrak’s site, this study purports to show who are the richest of the rich and how they are interconnected in a network of influence and interdependency.  I read it briefly last night but it was math intensive and it was starting to give me math anxiety (the bane of my existence.  Not the math, the anxiety.), which is never a good thing when you’re trying to get to sleep.

This is an excerpt of the Discussion section of the paper The Network of Global Corporate Control:

The fact that control is highly concentrated in the hands of few top holders does not determine if and how they are interconnected. It is only by combining topology with control ranking that we obtain a full characterization of the structure of control. A first question we are now able to answer is where the top actors are located in the bow-tie. As the reader may by now suspect, powerful actors tend to belong to the core. In fact, the location of a TNC in the network does matter. For instance, a randomly chosen TNC in the core has about 50% chance of also being among the top holders, compared to, e.g., 6% for the in-section (Tbl. S4). A second question concerns what share of total control each component of the bow-tie holds. We find that, despite its small size, the core holds collectively a large fraction of the total network control. In detail, nearly 4=10 of the control over the economic value of TNCs in the world is held, via a complicated web of ownership relations, by a group of 147 TNCs in the core, which has almost full control over itself. The top holders within the core can thus be thought of as an economic “super-entity” in the global network of corporations. A relevant additional fact at this point is that 3=4 of the core are financial intermediaries. Fig. 2 D shows a small subset of well-known financial players and their links, providing an idea of the level of entanglement of the entire core.

One thing is for sure, this group of 147 individuals might look like a tight little network but as I have learned from looking at proteins closely that initially look invulnerable, there are always weak spots that can be exploited.  A little push here, a bond broken there and the whole shebang is rendered unworkable.  It’s probably no different for spheres of influence like wealth networks.  What we need is someone who can analyze the network with some kind of sensitivity analysis program.  (For all we know, someone is already busily analysing this. Not me.  That s%^& just makes me nervous.)  I’m *sure* that it can be done.  The parameters of power and money most likely are the same for all of the major players. And once we know where the weak spots are, ooo, baby, I wish I had the big bucks to bet on how it unravels.  I could buy my own pharma and employ all my friends.  By the way, this looks like old data from before October 2008 because Bear Stearns and Lehman Brothers are included in the 147 firms.  Recent historical data shows just how vulnerable and interdependent this network is since the collapse of Bear Stearns and Lehman Brothers threatened to derail the entire global economy.  It also shows how 147 firms can hold the world hostage.  It looks like the authors are publishing their oldest stuff first, which suggests they have something newer coming up.  I can hardly wait.

Hmmm, I just noticed that my 401K manager is on the network.  Better move my money first…

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