Government as Public Corporation
With democracy, the people eventually vote themselves largesse from the public treasury. Deficits ensue. Constitution writers can dream up limits: balanced budget amendments, enumerated powers, checks and balances, and so forth. It doesn’t work. The people find a work around. As voters they own a government; eventually they want the profits.
Perhaps we should borrow a page from the modern monarchists and simply formalize the arrangement. Government is a sovereign corporation. Democratic government is a sovereign corporation in which each citizen owns one share – a consumer cooperative, as it were. Maybe that corporation should pay a dividend, instead of having shareholders constantly thinking up sneaky ways to get their hands in the public till. Ditch the welfare state and give every citizen an equal amount of free money from the government.
The result would not be libertopia. Self-interested citizens would want to maximize tax revenue in order to maximize their dividend check. But our theoretically limited government often goes beyond the Laffer maximum in order to use the tax code to indirectly redistribute the wealth. Worse yet, we have hundreds of programs and hundreds of thousands of bureaucrats and social workers to figure out which category of largesse you deserve. Naked aggression/people power/might makes right would be simpler and fairer. All those smart people currently bonded to the government teat would be banished to the private sector, receiving no more from the government than the bums on the other side of the tracks. Who knows what sorts of interesting businesses and foundations they would set up if so released into the wild?
Would this fix the deficit problem? Or would the people vote themselves a dividend beyond the ability of government to pay? Or worse, would they vote for a dividend and a welfare state to boot?
We cannot say without doing the experiment. But the private sector provides some clues. Corporations pay big money to top management in order to keep management’s interests aligned with the shareholders. Pay someone a mere $100K to run General Motors and the CEO can make far more money in kickbacks from suppliers than from serving GM. This doesn’t always work, of course. Sometimes greedy or overly ambitious CEOs milk the businesses they run anyway.
But the people are the shareholders, not the CEO. So this payment principle is a bit of a stretch. For democratic government we have finely dispersed ownership. A somewhat closer analog would be the mutual insurance company. Hmmmm, if we could get government to behave as conservatively as a mutual insurance company, we’d be doing rather well…