When Companies Become Countries - Dilbert Blog

When Companies Become Countries

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?