When Companies Become Countries

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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.

The big worry with this model is the “company store” abuse that was common during the early days of the United States. In some cases, an employer would take advantage of its monopoly on goods and services to gouge its employees, turning them into virtual slaves. But I think that risk can be addressed by accounting transparency, and by capping the compensation of top management to a multiple of the average employee pay. It also helps if employees can choose to leave whenever they want. That keeps management in line.

Wages in the company country would be low while still attracting top talent, so long as the cost of living islow, taxes are non-existent, and the lifestyle is awesome. Employees could earn less while saving far more, especially if they own equity in the company.

This prediction assumes that traditional governments continue to bankrupt themselves and strangle their own industries with red tape. That feels like a safe bet. But the main reason a company might want to form its own country is to attract the best minds, and the lowest cost of labor, from all over the world without any immigration issues.

Do company countries seem inevitable or unlikely to you? [From When Companies Become Countries]

One thought on “When Companies Become Countries

  1. delialopez

    That seems really close to what our government has done now! They control all companies, decide what we are allowed or not allowed to eat, drink or smoke. They decide what we are allowed to do or own and profit on every item we buy. We must get permission from them to do anything. We created this government to secure our rights we have allowed it to become an overbearing monster from whom we must get permission to catch a fish. It has a virtual monopoly and we are close to slaves. A recent denial of an attempt to renounce American citizenship is icing on the cake. If you wish to buy your freedom it will cost you 30% of everything you own and almost 800% more people were willing to pay to leave in 2011 than left for free in 2008 before they passed the exit tax law.

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