Thursday 07 Oct 2021 | 00:09 | SYDNEY
Thursday 07 Oct 2021 | 00:09 | SYDNEY

Why don't companies buy countries?


Sam Roggeveen


3 May 2012 15:16

Dilbert creator Scott Adams seems to have an out-of-left-field idea a week. Here's a recent one that intrigued me:

I wonder when the first multinational company will form its own country to avoid wars, government red tape, and corporate taxes. It feels inevitable. I assume it will involve seasteading.

The current notion of seasteading involves floating cities that are outside the control of existing nations. That concept has its appeal, especially as a way to test new forms of government. But existing corporations already have their own form of government called management, and despite its warts, it generally works.

Imagine, for example, that one of the world's beloved companies such as Apple or Facebook someday decides to start its own country on the sea. The company's existing management structure would need to add several functions, such as education, healthcare, and police. The corporate government would look a lot like the Chinese government. In other words, it would be efficient in terms of profit, while giving up freedoms that employees are already accustomed to giving up. For example, company employees don't have freedom of speech when it comes to criticizing management. Somehow we live with that restriction and it doesn't seem too onerous.

There would be no taxes for permanent residents of the company country. Public services would be funded from corporate profits. Every paid service in the country, from banking, to insurance, to groceries, would be company-run. The accounting would be transparent and the profits would flow to public services.

Or, instead of creating a new country, why doesn't a corporation just buy an existing one? 

Apple, for instance, has US$98 billion in savings. Wouldn't that be enough to convince a small country to cede its sovereignty to Apple? It could be a European micro-state or some small dependency of a major country. Yes, this would free Apple from the onerous demands the US government currently makes. But there are also plenty of positive externalities from being under the thumb of Washington, such as a huge higher education system and reliable infrastructure (roads, electricity, water).

I don't think Adams' idea is completely serious, but it does inspire you to think differently about the identities of states and corporations.