Dan Drezner complains about the “Corporation X has sales bigger than the GDP of Country Y” comparisons on the grounds that “GDP measures the value-added that an economy generates per year, so the proper and correct comparison is between a firm’s profits and GDP.” (For example, an on-line retailer might have huge net sales but very few employees and little value added. So might an oil refiner.) Kevin Drum responds that GDP is a measure of total activity, not profit, so sales is a better analogue to GDP than profits.
Without addressing the question why Drezner thinks the claim that corporations have now come to rival countries in size — which, true or false, is a positive not a normative claim — has a “left” political spin, it seems to me that neither Drezner nor Drum is right. The right analogue to GDP, which as Drezner says is a sort of value-added measure, would be … value added: that is, a firm’s sales net of its purchases of raw materials and intermediate goods (that is, wages plus depreciation/amortization plus profits plus taxes paid). Value added is going to be lower than sales, but obviously much higher than profits.
I’m not sure how easy it is to extract from an annual report or 10-K. It’s also not a perfect measure, because there’s a big difference between the supplier-customer relationship between me and FedEx and the supplier-customer relationship between WalMart and one of its captive suppliers.
A much simpler measure would be employment. Multiply a firm’s headcount by some sort of population-to-employment ratio (about 2 for the U.S.) and you have the size of the population that the firm supports. Wal-Mart has 1.8 million employees; McDonald’s is second with 450,000. (Both of those numbers may be exaggerated by high ratios of part-time to full-time employees.) That makes Wal-Mart about the size of a smallish state or a tiny country: Oklahoma or Connecticut, Namibia or Moldova.