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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?
 
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Apr 17, 2012
May I recommend Friday by Robert A Heinlein?
 
 
Apr 13, 2012
I think there is potential for a VPC (virtual private country) where you could have dual citizenship. You could remain a citizen of a country based on the geography of where you live. You would pay taxes for specific services that are purely based on geography (roads for example) but you could then be a citizen of a virtual country where you would get all of your non-geographical based services.
 
 
Apr 12, 2012
I think this would work as long as profits were constantly used to buy up real estate of other countries to gradually take over lands by voluntary conquest, freeing the residents from a system that steals money from them and only gives them a 1 in x Million vote in how it's spent. I'd like for Apple, Amazon, Google and other entrepreneurial companies to start this, buying up of vast tracts of land to create theme park style societies where they get first exposure to new technology and an intelligent integration with cheaper upgrades, of future products. A city close to Amazon's huge warehouses might be a start. I envision something like Walt Disney's Epcot City that never got finished. A voluntary system is the goal, as opposed to the violently-funded coercive taxation that government uses.
 
 
Apr 11, 2012
It is adorable of you to think that all of a company/country's profits will go right back into public services. Nobody gives anything away. People go into business to make money, and no amount is enough. Calling itself a country won't change a thing.
 
 
+3 Rank Up Rank Down
Apr 11, 2012
Let us not forget the VOC.

http://en.wikipedia.org/wiki/Dutch_East_India_Company
 
 
Apr 11, 2012
Scott, I think you missed some relevant issues.

First: The corporate seasteading should be safe, which means prevented from military or terroristic attack - it would be an easy target for every assault ordered by their competition or country state. How do you imagine protecting a floating islands or sea platform - with a power shield like in Star Wars movie? The only case of relatively safe seasteading would be analogs of actual tax paradises like Monaco or Lichtenstein in Europe, or Dutch Antiles, Caymain Islands etc. But they play for every business or government with money - so their every "customer" is involved in protecting them. The situation with corporate state would be quite different - do you think, that everyone in the world loves iPhone so much to protect Apple state? Well, I think at least Steve Ballmer doesn't ;)

Second: Corporations desperately need country states with their citizens. Country states are markets, they provide natural resources, they have armies to deploy with corporate products, hospital to equip, they need fuels to burn and roads to drive. And they governments with politicians to corrupt. I've read a comment, that it makes more sense to buy a whole country or just naturally protected area (i. e. Lichtenstein or Andorra) and to make it's own corporate state - and I think it's more realistic situation. Unfortunately...
 
 
Apr 10, 2012
"Countries are mostly defined by physical borders. You can live outside a country and still be a citizen of it, but that's the exception, and even then, you were probably born there. But why stick to that outmoded idea in this age of information? What about a system where countries were defined by choice? Suppose you could choose to be German, or Chinese, or whatever, without the bother of actually moving there. In effect, you could vote for which system of government you prefered by becoming a citizen of the country that practices it."

- This is brilliant. Scott - please address!

In essense, this is what humankind evolved from. We started with tribes/families: you were born into it, and were part of it as long as you stayed in a physical boundery and paid ownership fees (tributes) to the local boss. It worked until...

Religion: then you were born into it or (sometimes) had a declaring ceremony when you became a functional adult. Everybody in a specific area was in it, and you were as well even if you left the area. A good religious person still sent fees (tithes) back to the boss (pope) far away. There were some benefits outside the area: other religious folks of your sect trusted you more, you get married more often, had business partners. It functioned as a reputation metric, dating service, and spiritual bodyguard service with maybe childcare and heath services. Until...

Governments: also born into it, and had all of the above even if you left.

Now we have trade unions, professional unions, guilds, gamer clans, etc. Why not extend this out? Why can't I not ship all the countries online and pick the ones with the best taxes, human rights, health care, and then simply 'join' - pay them my taxes and get the benefits. In return they actually have a REASON to change their laws to stay competitive.
 
 
Apr 10, 2012
Besides, isn't Machiavelli's 'Il principio' required reading for CEOs nowadays?
 
 
Apr 10, 2012
This will not happen any time soon, or I should say.... As long as we have wonderful almost tax free, the city of Zog, where some of the biggest companies of the U.S. are calling this place "international headquarters" with not much than a receptionist and a small lobby to answer any calls (got to cover your ass in the loophole), companies already avoid all the pros mentioned by this article. Some companies are so confident of their loophole that have just a P.O. box in this remote, quiet, little known town in the Swiss alps. Forget the Cayman Islands that carries the stigma of drug money being laundered, but a picturesque town in the Swiss Alps...now that brings class to a distasteful technique used by the companies that will have an office building with hundreds of office workers, managers, executives and the C.E.O. spend every work day in Texas and call that their Northamerican operation and a P.O. box in Zog as their international headquarters.
 
 
Apr 10, 2012
Again and again you minimize the evil of a dictatorship that kills more people than anybody. The lack of privacy you experience on facebook is in no way comparable to living under a dictatorship. And anybody who thinks the Chinese state is an example of good government never bought their baby formula.
 
 
Apr 10, 2012
This is what you get when you turn oil drilling over to a private company with "no red tape".

http://en.wikipedia.org/wiki/Piper_Alpha

I can live with red tape. The implication of that sentence is that I will at least, or maybe at most, be alive.
 
 
+9 Rank Up Rank Down
Apr 10, 2012
Companies already have almost complete freedom in choosing the places and employees that cost the least and profit the most, whilst not having to pay the overhead that comes from a functional society. Creating their own country will only add all those costs.

Just like with your idea of millionaires creating their own society at sea, you misunderstand the current situation: it is those millionaires and companies benefiting from the current system, not suffering from it.
 
 
Apr 10, 2012
Dear Scott,

you do know precious few about China, right? Efficiency and no red tape...?
 
 
Apr 10, 2012
Why would a corporation want to be a country when it can dump so many responsibilities on whatever country it's operating in? Say you're paying wages low enough that employees qualify for (and need) food stamps. Your host country is paying a chunk of your labor costs. For that matter, your host country absorbs other expenses related to keeping your workforce alive and under control, environmental costs, infrastructure, and maintaining an artificial advantage in your market ("incentives", friendly patent / trademark / copyright / contract laws, etc). Whatever you're paying in taxes -- if your lawyers are lame enough to let you pay anything -- you get back in value. Corporations are really closer to terrorist organizations than countries, anyway. They locate their official headquarters wherever their money buys the most power, and move elsewhere when that becomes uncomfortable, leaving the local government to deal with the sanctions and drone bombers. And corporations already have the power to move their legal headquarters to whichever state -- or country -- has the weakest laws and regulations. Of course the upshot is a race between governments, local and global, to betray local citizens and smaller businesses to keep a Job Creator in town, even if same is actually damaging the local economy.
 
 
+5 Rank Up Rank Down
Apr 10, 2012
What about all those companies which are HQ'd in the Cayman islands or the Virgin Islands etc. I can buy glasses online, half the retail price that are made in China, shipped all the way from New Jersey to Australia and billed from Amsterdam. So they already have done this, no floating man made island is necessary.
 
 
Apr 10, 2012
This concept is one of the key plot points in the popular novel _Snow Crash_.
 
 
+6 Rank Up Rank Down
Apr 10, 2012
>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 accounting transparency can be enforced by ... ?

>It also helps if employees can choose to leave whenever they want. That keeps management in line.

Unless the employees whose choices matter all get concentrated into management, and the remainder are happy to gamble their freedom on a chance to step on someone else's (Horatio Alger syndrome).
 
 
+4 Rank Up Rank Down
Apr 9, 2012
Cruise lines seem like a good candidate. They already register their ships under foreign flags, why not their own? Just take an old ship, drop anchor in international waters, and you've got the new corporate headquarters!
 
 
Apr 9, 2012
I wonder if the opposite -- will countries move closer to being corporations? I don't know if it will actually happen, but that seems like a better change than corporations becoming countries.

Countries are mostly defined by physical borders. You can live outside a country and still be a citizen of it, but that's the exception, and even then, you were probably born there. But why stick to that outmoded idea in this age of information? What about a system where countries were defined by choice? Suppose you could choose to be German, or Chinese, or whatever, without the bother of actually moving there. In effect, you could vote for which system of government you prefered by becoming a citizen of the country that practices it.

Countries would then be forced to compete for the top "talent" -- in this case, wage-earners -- just as corporations are. And just as corporations do, if you wanted to join a country, you would have to interview with them, so they could weed out undesirables. There would have to be a system for sharing things between countries like infrastructure costs. And everyone would get a by-default membership in whatever country they physically reside in, just like today, to avoid an "unemployment" problem.

But it would certainly encourage countries to focus on their top performers, instead of their lowest, which is what seems to happen today. That would provide more incentive to BE one of those top performers. And then people would complain about how the rich are treated better. Hmm, now I'm starting to wonder what the difference would really be.
 
 
Apr 9, 2012
If your corporation wanted to own a country, why not Liechtenstein? You would probably be safer from physical attack buried in the Alps than you would be out in the sea, all naked to pirates, tsunamis and whatnot.

You wouldn't have to reinvent international law, either. There are already many large corporations that enjoy Liechtenstein's tax haven. So you simply buy up as much of the country as you can and then somehow blackmail the ruling family into giving your corporation a better deal than everybody else.
 
 
 
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