A good test for getting rid of anything is: if we didn’t have this, would we need it?
For example, let’s say you have a ratty old armchair. You love your chair, you do. It was a new chair once and fine, it reclines, and you have spent many cool evenings ensconced in it, drinking Henry Weinhard’s and munching Pringles, maybe indulging in a few controlled substances and watching Liquid TV (yes, the chair is that old). But many Pringles and not a little Henry’s have made their ways into its funky blue fibers, which are not, in any way shape or form, washable. And frankly, with the new set from Pottery Barn – you’re just not sure it goes.
Here’s one way to put the question. If you didn’t have your chair, and you saw it sitting on the sidewalk somewhere, would you say: “Dude, someone’s throwing out a perfectly good chair!” If so – definitely, keep it. If not…
Of course, to make the analogy accurate, the chair would have to be 231 years old, so full of beer and chips it makes a sort of slosh-crunch noise when you sit on it, have a huge sharpened coil that’s worked its way past the foam and stabs you in the ass on a regular basis, smell like a cross between a dead goat and an oil refinery, refuse to function at all without a staff of specialized chair administrators who must be onsite 24-7 and are extremely expensive and rude, and have expanded to fill the entire first floor of your house, with giant pseudopodia of ratty blue upholstery snaking out the windows and invading the neighbors’ lawns.
Obviously, I’ve stopped taking the tablets. I feel much better now. Everything is clear.
If central North America, a wonderful place full of awesome people, consisted of forty-eight perfectly normal countries which related to each other much the way present management relates to Canada, except maybe without the immigration nonsense, what would happen? Would we be reduced again to bondage under the steely paw of the British Lion? Would the French invade, or the Russians, or the Mexicans? Would armored spearheads strike northward from Juarez, not stopping until they refilled their radiators with the clean, cold waters of Lake Superior?
Or would our children, without a Department of Education, be uneducated? Without a National Security Agency, would we feel insecure? Without a Department of Energy, would our cars stop running? Without a State Department, would we… does anyone even know?
Your mileage may of course vary. But I think this answers the “why.” The “when” is also pretty obvious. That leaves “how.”
Unfortunately, I’m pretty sure it’s impossible to abolish the United States. I think there will still be a United States in 2076, 2176, 2776, and 3776. I don’t see any way around this at all. And if there is a way, it is probably pretty nasty, because let’s face it, these guys, whatever we think of them, have some impressive explosives.
So I think it makes sense to think about plans that (a) don’t involve blowing shit up, (b) are actually practical, and (c) otherwise come as close as possible to abolishing the United States.
My basic conclusion is that if the reason you want to abolish the United States is that you don’t like paying taxes, you are pretty much out of luck. In fact, under my plan, there will still be a United States and taxes will probably, if anything, go up.
But taxes are just payments from some Americans to other Americans. Think of them as rent. Why do you pay rent to your landlord? Because he owns the place. Why does he own the place? Do you know? Do you care? If you insist that everyone who owns something has to, in some deep spiritual sense, deserve it, what you need is not a country but an ashram.
If your landlord was like the United States, though… but I think we get the point. Which is that the problem is not all the money we send to Washington, but all the crazy things Washington does with it. If DC was just a big check-sorting facility, cashing checks from some Americans and cutting them to others, I for one would have much less of a problem.
Clearly, the United States – today – is not a check-sorting facility. It puts men into space and brings them back again, it is intensely concerned with Somalia, Nepal and Venezuela, it studies horticulture, heart disease and horse psychology, it has opinions on what we should and shouldn’t eat, drink, smoke or screw, and it ain’t shy about acting on them.
But what is it? And why is it here? What in God’s name is the purpose of the United States? As Jack Nicholson said in About Schmidt: “Who is this old woman who lives in my house?”
You need to think back to when you were taking the tablets. Most Americans have still not figured out that you can just hide them under your tongue, pretend to swallow and spit them out later in the bathroom. So they still think what they’re supposed to think.
The result is that they believe in the United States. They relate to it pretty much the way a Catholic relates to the Catholic Church. Oh, sure, there are problems, the Archbishop of Ouagadougou likes little boys, St. Peter’s roof leaks and the Pope is an atheist. The Church is always in need of repair. But its problems are occasions for renewed energy, not for throwing out the baby with the bathwater.
This sort of institution-worship, in the context of countries, is called nationalism. Nationalism is a sort of mental virus that makes its sufferers think that, although they can’t see a baby in the bathwater, although they have no reason at all to believe there was ever a baby in there, although an old oil drum full of rain and mosquito larvae is basically the last receptacle any mother would even consider using for the purpose of baby-washing, the water is deep and not exactly transparent, and there certainly could be a baby in there, so there probably is one.
Nationalism in the modern sense of the word was pretty much invented by a Frenchman, and major-league asshole, by the name of Jean-Jacques Rousseau. As this dickhead wrote, in his Considerations on the Government of Poland:
When first he opens his eyes, an infant ought to see the fatherland, and up to the day of his death he ought never to see anything else. Every true republican has drunk in love of country, that is to say love of law and liberty, along with his mother’s milk. This love is his whole existence; he sees nothing but the fatherland, he lives for it alone; when he is solitary, he is nothing; when he has ceased to have a fatherland, he no longer exists; and if he is not dead, he is worse than dead.
As anyone who’s ever watched the History Channel knows, this kind of crap has since been responsible for the murder of well over a hundred million people. Many of them, of course, in Poland – thanks for nothin’, Jacques. (On the flip side, you can’t say Hugo Boss didn’t make a cool uniform.)
So when the pills wear off, what is the United States? It’s actually very simple. The United States is an organization acting as a legal person. In other words, it is a corporation.
This particular corporation happens to own most of North America. It also happens to have a very unusual management structure, about which more in a moment. But to cement its corporateness in our minds, let’s change its name and call it “Fedco.”
Fedco is basically in two businesses. One of them is real-estate and the other is security. No one else is going to secure Fedco’s continent for it, so it has to insource.
Fortunately, when you have nuclear weapons and your only neighbors are Mexico and Canada, security isn’t exactly a difficult problem. It’s also important to consider internal security – Fedco won’t last long if its tenants can rise up and appropriate the property. But happily, at least for Fedco’s purposes, we’re a long way from the age of muskets. An AR-15 is a nice weapon, but it’s not much use against modern armor.
What we have here is a corporation with enormous assets and almost no costs. Fedco can jack our rent all the way to the top of the Laffer curve. As, in fact, it does – Democrats and Republicans may disagree on how to get there, but they agree on revenue maximization. And, with modern military technology, Fedco’s security overhead should be negligible.
So why is Fedco up to its eyeballs in red ink? Why does it funnel vast rivers of cash into so-called security measures that seem to have nothing at all to do with protecting its property? And into all other kinds of crazy things, for that matter? GE, Google and Microsoft are as big as many governments and certainly more profitable than any, and they may have executive jets, but none of them had a space program last time I checked.
In fact, when you look at Fedco’s management structure according to the normal theories of corporate governance, we understand perfectly why it’s so screwed up. Granted, it is a very extreme case. But all the pathologies are extremely predictable.
A normal corporation involves three classes of actor: customers, contractors, and creditors. Customers are people who pay the company for goods or services. Contractors are people who the company pays for goods or services. Creditors are people the company owes money to.
The absolute and inviolable rule of corporate governance is that a corporation is controlled by its creditors. Typically the class of creditors with control are the shareholders. Equity (stock) can be defined as the least senior tranche of debt – shareholders only get dividends if everyone else is satisfied. So equity returns are the most sensitive to the company’s performance, and he who holds the bag gets to carry it. But in a bankruptcy, for example, the whole cake shifts down a layer – shareholders are wiped out and debtholders become shareholders.
Shareholder-controlled enterprises scale extremely well for two reasons. One, all shareholders have exactly the same interest – making the company as profitable as possible. Two, the distribution of profits is simply defined as the distribution of shares. The result is that there is zero friction between shareholders.
A corporation controlled by its customers is sometimes called a cooperative. Cooperatives work fine for small enterprises whose customer base is homogeneous and whose management is relatively uncomplicated. But they tend to break down quickly at larger scales, because customers form factions which try to subsidize themselves.
If the cooperative is a fruit store, for example, people who like cherries may form a party that agitates for low margins, or even negative margins, on cherries. It’s easy to make this up by jacking up the price of peaches, and if there are more cherry-lovers than peach-lovers, this is exactly what will happen. The result is that people start screaming at each other and the whole enterprise explodes, the usual fate of cooperatives.
One of the many strange ideas associated with nationalism is something called “democracy,” which argues that Fedco should be a cooperative. According to democratic doxology, cooperatives provide the best customer service, because customers vote for better service.
Almost every intelligent person in the world today accepts this idea as sensible and obvious, but the same could once have been said for the divine right of kings. Its weirdness is easy to see if you imagine what would happen if, say, Starbucks replaced its conventional system of shareholder government with a political system in which customers elected management. Perhaps in frenzied rallies and debates of the Dark-Roast versus Really-Dark-Roast parties. The idea that this would result in better coffee is laughable.
Government may not be as complex and difficult a task as most of us think, but it is certainly more complex and difficult than serving standardized hot beverages. Thankfully, most of us now understand that politicians are just for show and cannot, under any circumstances, be allowed any real responsibility. The occasional cases in which this principle is violated serve primarily to remind voters of its importance.
So Fedco, while it still has a bit of the cooperative flavor, is mainly organized around the other model of bad corporate governance: control by contractors (essentially, employees). To be exact, most of Fedco’s decisions are made by its civil service.
As a general rule, an employee-controlled enterprise will never, ever be profitable. In fact, even its bondholders are lucky if they see any payments. The primary interest of contractors is, first, if they can get away with it, in distributing profits to their own pockets; and second, if they can’t, in expanding or at least protecting their own power bases. They will make as much work for themselves as they can get away with.
Of course, even the CEO of a company is a contractor. This is why corporations have boards, who work for the shareholders. (In my opinion, it’s an abuse to have any corporate employees, even the CEO, on the board.)
If you combine a shareholderless governance model with an enormous revenue stream, you have the perfect recipe for massive and permanent inefficiency and incompetence, and an enormous overgrowth of pointless, self-serving tasks. This is exactly what we see in Fedco. Of course, it could just be a coincidence.
The solution, in my humble opinion, is to make Fedco work like a normal corporation. This can be done by abolishing its current management structure and, retaining all the rights of and limitations on the existing United States, replacing its political system with shareholder-based governance.
A Fedco managed by its shareholders will naturally tend to devolve into a check-processing center, with a small expenditure on security. (If you’re spending more than $10 billion a year to secure the US, you’re probably spending too much.) Fedco can streamline itself further by delegating all tax collection to the now quasi-independent states – its shareholders care about the quantity of their dividends, not how they are raised. I suspect the Laffer maximum probably involves a lower, flatter and simpler taxation structure, but I’m just guessing.
The only problem is that Fedco, at present, has no shareholders (though many creditors). Converting Fedco from a gift of Providence, a light for the ages, a city on a hill, into an ordinary money-grubbing corporation, requires a complete equity restructuring. Who owns Fedco?
Frankly, I would be happy to undertake the responsibility. This would make me King Mencius the First, a position I believe is ideally suited for my temperament and skills. The only question would be who got to peel my grapes.
However, the purpose of any such restructuring is for it to happen. Therefore, the general principle of equity distribution is that equity should be distributed to the individuals most in a position to bring about the reboot.
For example, recipients of Fedco “entitlement” payments, such as Social Security, Medicare, and so forth, are excellent candidates for equity ownership, as their political power is proven. These individuals are unlikely to vote for any plan that shrinks their checks. Presumably eliminating unnecessary Fedco activities will provide cash that can actually boost the value of these proto-equities.
On the other hand, civil service employees should also receive equity, as they clearly have power, and the goal of restructuring is to align formal and actual power. Streamlining Fedco will eliminate an enormous number of civil service jobs, and these people are obvious opponents. Perhaps their objections could be overcome by receiving dividend-producing equities in proportion to their former salaries, so that their income decreased by 20% or so, but they didn’t have to go to work anymore.
There are also influential parties, such as journalists, professors, and so on, who are not part of the civil service proper, but seem to have some influence on public opinion. They, too, should have a stake in the new world of Fedco. Or they can donate it to the charity of their choice.
Many voters think of Fedco as primarily a charitable organization. And it’s certainly true that Fedco does many charitable deeds – although, as John Bright once said, he had often known Parliament to do a good thing, but never just because it was a good thing. Eliminating direct involvement in charity, and replacing it with Fedco shares owned by charities, is an excellent way to separate philanthropy from its ulterior political motivations.
Lastly, of course, Fedco shares could be distributed to voters themselves. However, I suspect that after the above there will be not much left to go around. Politics in the US today is a game of the powerful, and if you actually want to abolish politics, you have to deal with the existing power structure rather than the ideal form it pretends to be.
There is one very large problem that the above ignores: the bizarre, and clearly terminally ill, monetary system run by Fedco itself. Clearly, Fedco cannot pay dividends in its own corporate scrip. I don’t think this problem is unsolvable, but it certainly demands its own discussion.
A happy July 4 to all UR readers, in the US and outside it…