Re: Nations as Corporations
- Original Message - From: Wei Dai [EMAIL PROTECTED] One factor that keeps large corporations honest is the threats of hostile takeovers and bankruptcy. Unfortunately neither of these seem likely to apply to a large nation-as-corporation. Imagine creditors trying to force everyone else to leave the U.S. after a bankruptcy because they now own all of the shares. What if a foreign power began buying up large numbers of shares and assigning them to its foreign agents? How many shares would Al Qua'ida buy? Other questions/observations I have: will shareholders receive dividends? Would immigration's effect on dividend size affect shareholders' demand for one immigration policy or another? If the government refused to issue more shares, but simply bought one back on the open market to issue to each new child and charge the parents's for the cost, this would be an interesting way to stabilize population. Would it make more sense to organize a nation like a not-for-profit corporation? Since the modern state is often regarded as already being organized like a corporation, I assume this thread is about organizing the literal nation itself as a corporation. Does this not mean an internal labor market in which the managers would be responsible for training, job assignments, and promotions (and wages and salaries), so that involuntary unemployment and welfare schemes would be non-existent? Would social security and medicare be run like a pension system? But what would they be invested in? With the nation (not just the state) as corporation, there presumably would not be any use for a stock market, so pensions would have to be funded entirely out of corporate (national) profits. If the whole apparatus of state were so funded, there really would be no need for taxes per se. (Perhaps this thread should be nation as conglomerate.) Would corporate divisions or subsidiairies compete against each other or receive protected territories? Could the corporation hire employees who were not shareholders? Could one become a shareholder without moving here? What if most of our shareholders eventually lived overseas, while our residents were mostly employees? If only shareholders may be employees, and foreigners may not own shares, does that mean no overseas employees permitted unless they are shareholders stationed abroad? The nation could not be a multinational corporation? Would a social stigma to selling one's share evolve? In one survey, 25% of US respondents said they would change their religion for 2 million dollars, but only 16% would give up their US citizenship for the same sum. Go figure. How would we preserve an independent judiciary (essentially an arbitration system)--although that is a challenge under any system? The US judiciary already seems to be increasingly politicized. Would the only restraint on our CEO be contractual agreements and decisions by the Board of Directors? If so, we would not need a legislature anymore. New laws-regulations could be drafted by legal experts as the CEO directed. John Hull wrote: 1. The program will prevent poor from coming to the States. I think that's wrong, but I respect your view if you feel otherwise. So you think its wrong to demand that poor people respect private property rights (since the corporate-nation would be the private property of the shareholders). But if you want to forcibly confiscate a share or two from Berkshire-Hathaway and donate it to me (since I can't afford to buy them), I won't complain very loudly :) Seriously though, if no limitations are placed on immigration, the effects would likely be unpleasant for many of the people who already live here and do, in fact, think of themselves sort of as shareholders (citizens) of the nation. (In olden times, the kingdom was viewed as a sole proprietorship owned by the king and national identity was weak or non-existent. Soldiers were mercenairies beholden only to their employer, not to the people. Multicultural states were much more stable under sole proprietorship-monarchies than under conditions of republican nationalism.) Do you mean that you want to benefit a select few of the foreign poor at the cost of depressing wages and opportuny for the native poor of your own country and raising the net cost of public services (according to labor economists), or do you mean that you want mutually open borders as a matter of principle? In either case, what effect will this have on the native lower classes' sense of belongingness, national loyalty, willingness to make sacrifices and avoid free-riding, etc.? Does the logic here not ultimately lead to an every-man-for-himself mentality that ultimately shifts loyalty from the nation-state to the family with whatever repercussions that may have for political stability? Now, I will readily agree that the concept of transferable national shares may well have the effect of eroding social capital, but so does your view that foreign
Re: Nations as Corporations
--- Alypius Skinner [EMAIL PROTECTED] wrote: 'John Hull wrote: 1. The program will prevent poor from coming to the States. I think that's wrong' So you think its wrong to demand that poor people respect private property rights That's a bit of a non sequitur. :) Nope. All I was saying is that poor shouldn't be prevented from immigrating simply for being poor (and that the proposed citizenship structure would do that, a view that has been well challenged). Furthermore, that people should be allowed to move from country to country fairly unhindered--taking the fleas with the dog. No insightful economic arguments here, it's just a value that I have (and interjected). Alypius Skinner [EMAIL PROTECTED] wrote: Ken Lay, Bill Clinton (Hillary in 2008), what's the difference? Lay might even be an improvement. Hillary in 2008? Ooof. Humor aside, I'm not sure I agree that Lay-esque leadership would be an improvement. You remark how stupid and apathetic voters are, it seems to me that in that environment someone more clever than I could come up with a scheme to build stock prices in the short-run, get paid, and bail out of office. The world has certainly seen its share of bad leaders, but that doesn't mean that they couldn't be worse. I think that the proposed scheme would shorten political time horizons by linking reward to a very short-term phenomenon, and thereby produce even greater incentives for bone-head moves. I feel that if leaders' primary compensation comes in the form of going down in the history books in a good light, then they'll be more inclined to think in the longer term. Obviously, I don't have a general argument to back this up. It is also obvious that one could easily pick out plenty of counter examples, which I could not counter with counter examples because we're dealing with a hypothetical. I would like to hear an argument as to why linking reward to an extremely short-term phenomenon would produce better leaders on average. I'm not throwing down the gauntlet...it's just something I'd like to hear. --- Alypius Skinner [EMAIL PROTECTED] wrote: But all the incentives for that scenario (embracing mercantile excesses) already exist. That must be true to some degree since people keep putting Pat Buchanan on TV. But I submit that those incentives arise from your aforementioned voter ignorance stupidity: some people support schemes that are ultimately harmful for the nation the world and will vote for the slobs who enact such policies. The proposed scheme, IMO, creates an *institutional* incentive for such mercantilist policies because they can, at least in the short-run, hurt the rest of the world alot more than they will hurt us. Thanks for reading my stuff, jsh = ...for no one admits that he incurs an obligation to another merely because that other has done him no wrong. -Machiavelli, Discourses on Livy, Discourse 16. __ Do You Yahoo!? HotJobs - Search Thousands of New Jobs http://www.hotjobs.com
Re: Nations as Corporations--how to price?
Suppose, for the sake of argument, that you wish to speculate in U.S. Citizenship Stocks, UCS for short--pronounced yuks. By low sell high, and all that sort of thing. Assume that: 1. An individual is free to own many UCS 2. Non-human legal entities may own UCS 3. There is no legally recognized disenfranchised class, in line w/ Mr. Hanson's affirmation that one may be stopped and asked for proof of citizenship. Anyone without at least one UCS who cannot be deported is shot on sight. Fatally. As a speculator in UCS, how would you go about estimating a fair price? Do you think taking the break-up value of the States gives the fair price? Recall that one must be able to go somewhere after selling; no foreign visa, no sale. Terminally curious, jsh __ Do You Yahoo!? HotJobs - Search Thousands of New Jobs http://www.hotjobs.com
Re: Nations as Corporations
Hi. I'm on vacation, and can't respond to this thread much now, but will when I get back in a week and a half. But for now let me confirm that we can think of this discussion in two steps. One, assuming that a CEO maximized share value of a nation, what would they do wrong or right. And two, what institutions could get them to maximize share value. The first question is interesting even if we don't know the answer to the second question. Robin D. Hanson, Asst Prof Economics, hanson.gmu.edu MSN 1D3, George Mason Univ., Fairfax, VA 22030 --- [EMAIL PROTECTED] wrote: I feel fairly confident in believing, however, that he did not mean that the financial incentives would produce CEOs with a militaristic or glory-seeking bent. So do i.
Re: Nations as Corporations
In a message dated 8/14/02 8:21:54 PM, [EMAIL PROTECTED] writes: However, the two statements are compatible. In society there are minorities with little power and other minorities with much power. For example, a country could have a ruling elite with much wealth and power, and also despised minorities with little power. Fred Foldvary Well minorities can't generally be both overpowered and overly-powerful as you first claimed in self-contradiction. Either they as a general rule run things or as a general rule get overrun (or neither), but not both. To say that currently some small groups get a good deal of what they want and that other small groups don't probably describes the current situation, and probably predicts the outcome of Professor Hanson's set-up, but not in a way that clarifies anything about either. David Levenstam
Re: Nations as Corporations
On Thu, 15 Aug 2002, Misha Gambarian wrote: On the other side, if we allow people to buy more than one share (as it happens in real corporations) - then I think we can expect that rich people will buy many shares (as they do in existing real corporations) to get political influence more directly than now and USA will become oligopoly with poor people having less power than they have now. Ok. Assume 280 million shares (approx. current population). Current GDP is approx. 10 trillion. I have no idea what the current valuation of the stock of wealth in the US is, so let's just assume a lower bound share price as being 1/n of the PDV of income flows (GDP). The present value of an infinite income flow of 10 trillion dollars at 5% interest is about 200 trillion dollars. Dividing that by the number of shares, we get about $700,000 share value. The share price can't go much lower than that because, in the limit, somebody could buy all the shares, enslave everyone, and get output that would be some fraction of current output (lower since it would be expensive to keep everyone as slaves). But, to get the majority necessary to do that would require an investment of at least half the market valuation -- $100 trillion. While I think capital markets are fairly efficient, I find it quite implausible that anyone could raise that kind of money to run a hostile takeover. And, absent that, just buying another $700K share to get one more vote would be ridiculous. Even if all the rich folks in the country liquidated all of their resources to buy shares, they still wouldn't have any significant increase in their control rights. Bill Gates has what, about $62 billion? If he sold everything, he could buy about 89,000 shares. Out of 280 million. That's still less than a tenth of a percent of the shares. Fears (or hopes!) of oligopoly are greatly overstated.
Re: Nations as Corporations
Eric Crampton wrote: [EMAIL PROTECTED]"> On Thu, 15 Aug 2002, Misha Gambarian wrote: On the other side, if we allow people to buy more than one share (as ithappens in real corporations) - then I think we can expect that richpeople will buy many shares (as they do in existing real corporations)to get political influence more directly than nowand USA will become oligopoly with poor people having less power thanthey have now. Ok. Assume 280 million shares (approx. current population). Current GDPis approx. 10 trillion. I have no idea what the current valuation of thestock of wealth in the US is, so let's just assume a lower bound shareprice as being 1/n of the PDV of income flows (GDP). Here you assume that all GDP income is distributed as dividents - doesn't look probable. If people assume that their normal income is dividents this still doesn't work, because of income inequality. [EMAIL PROTECTED]"> The present value ofan infinite income flow of 10 trillion dollars at 5% interest is about 200trillion dollars. Dividing that by the number of shares, we get about$700,000 share value. If we assume 5% interest on deposits, then $700,000 represents income of $35,000/year - pretty good for not very rich USA citizen. I think with this share price we will have huge emigration from USA to, for example, Bahamas. I think share price will absolutely never be so high - I think we can speak about 50-100,000 as top estimation. If price is 5, then . Of course, You have a point - if USA 'Costs' 10 trillion, then 1/280million part of USA should cost $700,000. But I doubt that it will work this way. We probably have no dividents, market isn't very liquid and so on. For example, in Russian Voucher program it was expected that Voucher (for which was sold very substantial part of Russian industrial property would cost about $10,000 - but actually they cost about $10. There is two more questions. First, what happens with people who sell their shares. a) They can be effectively expelled from USA. It will probbaly lead to USA without underclass, with much less crime and slightly higher cost of living. Doesn't look very probable, through. (INS and border quard look uncapable to achieve this). b) They will be expelled, but unefficiently (more or less like mexican illegal immigrants now). It will lead to larger underclass than now without rights, probably more crime. c) They can just lose their voting rights, but still have right to work and live in USA. In this case I expect price of share to be very small, probably less than $10,000 - and in this case Gates can buy 6,000,000 votes and more or less make USA presidents (No president will be able to ignore him). I this case we will come to oligarchy pretty quickly. Second question, what will happen if somebody sells his share and then dies? Or just dies ? does his share dissapear? It doesn't look just if somebody bought share, come to live in USA, and then was suddenly expelled when previous owner died. On the other side, if shares stay, there becomes constant supply of shares from old persons, and we cannot expect shares price to be high. (people will spend retirement in Mexico instead of Florida, in cheaper coutry and having substantially more money.) [EMAIL PROTECTED]"> The share price can't go much lower than thatbecause, in the limit, somebody could buy all the shares, enslaveeveryone, and get output that would be some fraction of current output(lower since it would be expensive to keep everyone as slaves). But, toget the majority necessary to do that would require an investment of atleast half the market valuation -- $100 trillion. While I think capitalmarkets are fairly efficient, I find it quite implausible that anyonecould raise that kind of money to run a hostile takeover. And, absentthat, just buying another $700K share to get one more vote would beridiculous. Even if all the rich folks in the country liquidated all oftheir resources to buy shares, they still wouldn't have any significantincrease in their control rights. Bill Gates has what, about $62billion? If he sold everything, he could buy about 89,000 shares. Out of280 million. That's still less t han a tenth of a percent of theshares. Fears (or hopes!) of oligopoly are greatly overstated. As I tried to argue above, we can expect share price to be much lower than $700,000 (at the least at the start), and possibility of oligopoly can be much higher that you think. Mikhail Gambarian Major of Economics, Erasmus University
Re: Nations as Corporations
On Thu, 15 Aug 2002, Misha Gambarian wrote: Here you assume that all GDP income is distributed as dividents - doesn't look probable. If people assume that their normal income is dividents this still doesn't work, because of income inequality. Not assuming that at all. Just trying to get a handle on the break-up value of the country for purposes of assigning some minimum valuation. The break-up value shouldn't be less than the value of the assets in the country, and the value of the assets in the country should be reflected in the current earnings stream (GDP) generated thereby. Bahamas. I think share price will absolutely never be so high - I think we can speak about 50-100,000 as top estimation. If price is 5, then . The valuation I used assumed that any single owner could appropriate the entire earnings flow of the country. If the corporate charter of the United States prevents the enslaving of people in the country who aren't shareholders, then my numbers would be a rather high upper-bound and the actual price would be lower. How restrictive do we expect the corporate charter to be? And who will enforce it? The Constitution was supposed to have been some kind of binding document, but the Constitution now seems to just increase the costs for government to engage in certain types of activities rather than preventing them altogether. H. For example, in Russian Voucher program it was expected that Voucher (for which was sold very substantial part of Russian industrial property would cost about $10,000 - but actually they cost about $10. Well, the official estimates of the value of industrial property was rather too high in that case, no? First, what happens with people who sell their shares. a) They can be effectively expelled from USA. It will probbaly lead to USA without underclass, with much less crime and slightly higher cost of living. Doesn't look very probable, through. (INS and border quard look uncapable to achieve this). b) They will be expelled, but unefficiently (more or less like mexican illegal immigrants now). It will lead to larger underclass than now without rights, probably more crime. c) They can just lose their voting rights, but still have right to work and live in USA. In this case I expect price of share to be very small, probably less than $10,000 - and in this case Gates can buy 6,000,000 votes and more or less make USA presidents (No president will be able to ignore him). I this case we will come to oligarchy pretty quickly. If there are 240 million shares, Gates would need an order of magnitude higher number of shares to be able to get a controlling interest. Six million out of 240 million is still pretty small potatoes. Second question, what will happen if somebody sells his share and then dies? Or just dies ? does his share dissapear? It doesn't look just if somebody bought share, come to live in USA, and then was suddenly expelled when previous owner died. On the other side, if shares stay, there becomes constant supply of shares from old persons, and we cannot expect shares price to be high. (people will spend retirement in Mexico instead of Florida, in cheaper coutry and having substantially more money.) Presumably the estate would hold the share, and then sell it to the highest bidder. If the only source of new shares is from the sale of current shares (either through emigration or death), the price of shares would be quite high. The sum of people wanting to move to the United States plus people being born in the United States is much higher than the current mortality numbers. As I tried to argue above, we can expect share price to be much lower than $700,000 (at the least at the start), and possibility of oligopoly can be much higher that you think. Valuation will depend on the nature of the corporate charter and, critically, on whether that charter can be made self-enforcing. If a majority shareholder is not bound by the corporate charter, then we can quickly become his slaves and he can appropriate all revenue, unless the total amount of extraction from a slave state is lower than the maximal taxation from a free state. In either case, the total valuation has to reflect the PDV of the maximum amount that can be appropriated by a single majority owner. Mikhail Gambarian Major of Economics, Erasmus University
Re: Nations as Corporations
On Thu, 15 Aug 2002, john hull wrote: to pay. Do you think a firm would take the risk of plunking down that kind of money for a multi-generation debt? It would likely depend a lot on how property rights over shares work out and how liens on shares would be treated. If the market price did settle around $700K, then it would be unlikely that an indentured servant would pay off his share in his lifetime. However, he could pay off some fraction of his share and his estate would inheret a fractional share. So long as the company bringing in the indentured servant could maintain its property right over the part of it that isn't paid off, the system should work. I am curious why you used GDP as the basis for share calcualtion. I'm not attacking it, I just don't it's appropriate. Seemed like a decent starting point for getting a total market valuation. I'd more than welcome alternatives. In the limit, the market valuation of the country is the market price of the assets in the country (the break-up value). I have no way of guessing at the valuation of the current stock of wealth in the country, but the stock of wealth should be reflected in the current price of outputs. The stock of capital should be equal in valuation to the present discounted value of the stream of revenues flowing therefrom. Of course, I'm also treating the population as part of the capital stock in doing this. Eric Best wishes, -jsh __ Do You Yahoo!? HotJobs - Search Thousands of New Jobs http://www.hotjobs.com
Re: Nations as Corporations
Imagine that a nation like the US were run like a corporation. To live How would you enforce shareholder rights and monitor managers? For corporations inside nations, one could appeal to the state for law enforcement or start a lawsuit. What recourse do shareholders have in such a worlds? Fabio
Re: Nations as Corporations
These are very interesting questions! This would clearly affect the decision to have children in one of two ways (that I can think of): 1. Couples would have fewer children if they had to purchase a share for each child they had. 2. Couples would have more children if they were granted a share for each child they had. I'm sure there are many more consequences, though. Imagine that a nation like the US were run like a corporation. To live (and vote) here, you'd have to own a share. You could sell your share and leave, and foreigners could come if they bought a share. The corporate management would be given financial incentives to maximize the market value of these shares. They could issue more shares if these new shares were handed out to previous share holders in proportion to the shares they currently hold. What would go wrong or right with running the US this way? Would management focus too much on making immigrants happy, versus people already here who are reluctant to leave? Would there be too many or two few people here? Would government spending increase or decrease? Would we get less desirable immigrants, relative to picking and choosing among applicants? Would the homeless prefer to cash out and leave, rather than stay and beg here? Would people tend to leave when they retire? Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323 -- John A. Viator, Ph.D. Beckman Laser Institute 1002 Health Sciences Road East University of California Irvine, CA 92612 (949)824-3754 (949)824-6969 fax [EMAIL PROTECTED]
Re: Nations as Corporations
How would we know what price to charge for a share? Would the U.S. have a monopoly? Or would it compete with other nations? What would we do about people who try to sneak in without buying a share? Will people be required to proove at any time they own a share or be deported (or worse)? Would it be one share, one vote in an election for management? Could a person end up with more than one share, buying from people who leave? Cyril Morong
Re: Nations as Corporations
--- Robin Hanson [EMAIL PROTECTED] wrote: Imagine that a nation like the US were run like a corporation. To live (and vote) here, you'd have to own a share. You could sell your share and leave, and foreigners could come if they bought a share. The corporate management would be given financial incentives to maximize the market value If you own a share, that implies that this is a cooperative, where each person owns one share and has one vote. What would go wrong or right with running the US this way? The problem is central planning. The US corporation would be a giant enterprise subject to the inefficiencies of any large organization. Also, minority interests would be overpowered as they are now. Would government spending increase or decrease? If the members vote as citizens do now, it seems to me that the government would be under similar special-interest influence, and there would be little change in government spending. Fred Foldvary = [EMAIL PROTECTED]
Re: Nations as Corporations
Cyril Morong wrote: How would we know what price to charge for a share? There's be an open market which would set prices. Would the U.S. have a monopoly? A monopoly on rights to live in the US, but other places are substitutes. What would we do about people who try to sneak in without buying a share? Same as you'd treat people who stole stock. Will people be required to proove at any time they own a share or be deported (or worse)? Yup. Would it be one share, one vote in an election for management? Yup. Could a person end up with more than one share, buying from people who leave? Yes, but it seems unlikely many would do so. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Nations as Corporations
Fred Foldvary wrote: Imagine that a nation like the US were run like a corporation. To live (and vote) here, you'd have to own a share. You could sell your share and leave, and foreigners could come if they bought a share. The corporate management would be given financial incentives to maximize the market value If you own a share, that implies that this is a cooperative, where each person owns one share and has one vote. OK. What would go wrong or right with running the US this way? The problem is central planning. The US corporation would be a giant enterprise subject to the inefficiencies of any large organization. But as with any corporation, the leaders could use decentralized planning, or break the corporation into pieces, if they thought that would maximize stock value. They could dismantle most regulation, if they thought that would help. Also, minority interests would be overpowered as they are now. And as they are in any corporation. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Nations as Corporations
Fabio wrote: Imagine that a nation like the US were run like a corporation. To live How would you enforce shareholder rights and monitor managers? For corporations inside nations, one could appeal to the state for law enforcement or start a lawsuit. What recourse do shareholders have in such a worlds? Are state-enforced lawsuits really what keeps large multinational corporations honest now? If not, then the concept here is to use mechanisms similar to whatever large corporations now use. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Nations as Corporations
In a message dated 8/14/02 3:37:34 PM, [EMAIL PROTECTED] writes: The problem is central planning. The US corporation would be a giant enterprise subject to the inefficiencies of any large organization. Also, minority interests would be overpowered as they are now. Would government spending increase or decrease? If the members vote as citizens do now, it seems to me that the government would be under similar special-interest influence, and there would be little change in government spending. Rereading the two passages, I wonder if there isn't a contraction. In the first passage we have minority interests overpowered, but in seeming contraction we have in the second passage special interests with influence. How other is a minority interest different from a special interest? Or are we talking about corporations in the first rather than the voters in the second. In the case of corporations, a minority holder ofte can, and does exert considerable interest, especially over a publicly-held corporation. Ross Perot gained some of his millions by using his minority stake in GM to harass the GM board of directors until they paid him off. Unrelated to the question of minority interests, could Americans participate in any other organizations? Or would everything be controlled by the corporation? Could Americans start other corporations, partnerships, sole proprietorships? Seperate churches and recreational or philanthropic organizations? Or would everything have to be done under the auspcies of the corporations? David
Re: Nations as Corporations
It's not clear (to me, anyway.) If new people were extremely productive, it seems that managers may want to encourage that type of person to be born, so they may give parents free shares for the child. If new people aren't very productive, then giving away shares for free doesn't make much sense. John A. Viator wrote: This would clearly affect the decision to have children in one of two ways (that I can think of): 1. Couples would have fewer children if they had to purchase a share for each child they had. 2. Couples would have more children if they were granted a share for each child they had. Yup. And which policy would profit maximizing managers choose? Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323 -- John A. Viator, Ph.D. Beckman Laser Institute 1002 Health Sciences Road East University of California Irvine, CA 92612 (949)824-3754 (949)824-6969 fax [EMAIL PROTECTED]
Re: Nations as Corporations
Are state-enforced lawsuits really what keeps large multinational corporations honest now? If not, then the concept here is to use mechanisms similar to whatever large corporations now use. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Multinationals come in different flavors. Those based in Western nations and that have assets that can be seized after litigation are probably kept in line by fear of lawsuits and jail terms. I have no idea how share holders keep faith in firms based in dodgy Third World nations. Probably some kind of trust, where paying out dividends and respecting voting rights signals that future investors will be treated well. But how often does this occur? Are these multinationals not based in 3rd world not trying to avoid shareholder rights? Fabio
Re: Nations as Corporations
--- [EMAIL PROTECTED] wrote: minority interests would be overpowered as they are now. would be under similar special-interest influence Rereading the two passages, I wonder if there isn't a contraction. There is no contraction, but one could read into it a contradiction. However, the two statements are compatible. In society there are minorities with little power and other minorities with much power. For example, a country could have a ruling elite with much wealth and power, and also despised minorities with little power. Fred Foldvary = [EMAIL PROTECTED]
Re: Nations as Corporations
On Wed, Aug 14, 2002 at 01:24:12PM -0400, Robin Hanson wrote: Imagine that a nation like the US were run like a corporation. To live (and vote) here, you'd have to own a share. You could sell your share and leave, and foreigners could come if they bought a share. The corporate management would be given financial incentives to maximize the market value of these shares. They could issue more shares if these new shares were handed out to previous share holders in proportion to the shares they currently hold. This seems very similar to having a poll tax, with the following twists: 1. You can voluntarily pay a higher tax and get proportionally more votes. 2. Management is given incentives to maximize revenue from poll taxes. (Other forms of taxes can be collected but management does not have direct incentives based on their revenues.) They're similar in the sense that they look the same to people who have access to perfect capital markets. I'm not sure how much this helps in analyzing Robin's proposal, but at least it gives a different approach to thinking about the problem. My variant may be an improvement since it allows people who would benefit most by living in the U.S. to enter even if they do not have access to credit. One effect that becomes apparent in my variant is that management would want to make income taxes more progressive and use the revenue to subsidize the poor so that they can afford to pay a higher poll tax. I think the effect carries over to Robin's system - subsidizing the poor at the expense of the rich increases the total market value of the shares. More generally, management would want to subsidize the marginal shareholder-residents at the expense of the non-marginal shareholder-residents. This amounts to de facto price discrimination even though all shares supposedly have the same price on the open market. On Wed, Aug 14, 2002 at 04:50:19PM -0400, Robin Hanson wrote: Are state-enforced lawsuits really what keeps large multinational corporations honest now? If not, then the concept here is to use mechanisms similar to whatever large corporations now use. One factor that keeps large corporations honest is the threats of hostile takeovers and bankruptcy. Unfortunately neither of these seem likely to apply to a large nation-as-corporation. Imagine creditors trying to force everyone else to leave the U.S. after a bankruptcy because they now own all of the shares.
Re: Nations as Corporations
If we assume that most people of USA have exactly one share, then changes from current system are mostly in immigration law - citizenship is for sale, and people are rewarded if they leave country and drop citizenship. We can expect much more rich immigrants and huge increase in government (INS) policy toward them - government will begin to actively attract wealthy immigrants. On the other side, poor americans will emigrate to probably cheap countries and live there on the money that they will receive for their share. (Or they will sell share and live as underclass without voting rights (and may be right to work and so on)) Both changes look attractive for me. I think we cannot expect big changes in voters behavior - so may be elected officials will be more or less the same (but with different motives, if they are rewarded for share price). We can expect, that generally market for shares would be small (not very liquid), so effect of wealthy people wanting to be USA citizens can be very strong (so, for example, their expected interest in low taxes can make taxes smaller, than now). On the other side, if we allow people to buy more than one share (as it happens in real corporations) - then I think we can expect that rich people will buy many shares (as they do in existing real corporations) to get political influence more directly than now and USA will become oligopoly with poor people having less power than they have now. Mikhail Gambarian Robin Hanson wrote: Imagine that a nation like the US were run like a corporation. To live (and vote) here, you'd have to own a share. You could sell your share and leave, and foreigners could come if they bought a share. The corporate management would be given financial incentives to maximize the market value of these shares. They could issue more shares if these new shares were handed out to previous share holders in proportion to the shares they currently hold. What would go wrong or right with running the US this way? Would management focus too much on making immigrants happy, versus people already here who are reluctant to leave? Would there be too many or two few people here? Would government spending increase or decrease? Would we get less desirable immigrants, relative to picking and choosing among applicants? Would the homeless prefer to cash out and leave, rather than stay and beg here? Would people tend to leave when they retire? Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
