PRIVATOPIA

Here's a brief on a fully privatized US "government" that I wrote over the holidays (click to read it in your browser: USA Inc.pdf). The draft is a little rough and needs some more work to fully incorporate the impact of additional trends. Once that is done and rich detail is added, it would be a wonderful magazine article.

The goal of this brief is to get people thinking about the future in a way that helps them make decisions today.

Comments

[Duncan Kinder]

John, the biggest flaw in your argument is that, if we were to follow it to its logical extreme, we also would have to "privitize" money.

And therein lies the rub. Because if its "your money," not only does it mean that I would no be entitled to have it ( which would be my tough luck according to your scenario ) but also that I might not necessarily want it.

Example: there are islands in the Pacific where all wealth in some big round wheel-type stones. The islanders all deal with one another by transferring rights in these stones back and forth between one another. Those stones may be valuable for those islanders, but - at the risk of sounding politically incorrect - they frankly do nothing for me. Under your scenario, we ultimately wind up as islanders with sets of stones that no one else particularly wants.

It's a funny thing, money. Unless in some sense everyone values it, it's not money. Therefore, it never can be entirely your money - it must be our money.

[Brad Spangler]

Regarding money -- actually, state monopoly currency issuance is counter-productive. The process of currency issuance inevitably succumbs to political considerations (instead of market discipline) when placed under political control. Also, notably, a pseudo-private state granted monopoly is only a disguised form of political control. Only open competition can provide authentic market discipline.

[Marcello]

"Unless in some sense everyone values it, it's not money."

Easy answer: gold. Although how well that will actually play out in practice is beyond my limited academic economic knowledge.

"Roads, waterworks, military bases, schools, parks, and much more were quickly sold at appropriate prices."

Define appropriate. Given that we are speaking about the government dumping its assets en masse on the market in desperation you can bet that the buyers will have to pay only a small fraction of the normal market value. Expect a lot of greasing in critical joints to further sweeten the deals.
That's more or less what happened in Russia when a lot of property passed from the bad government to the enlightened stewardship of the good capitalist oligarchs (sarcasm intended). And that worked like a charm, didn't it?

"Nearly all roadways, from interstates to local networks, became toll roads.Further, toll road wireless billing systems, run by private companies, were expanded to charge for infractions"

Good luck enforcing that. IIRC in Britain automatic infraction systems are already being sabotaged on a systematic basis.
To be honest this reminds of what I read about Saddam trying to make people pay electric bills back in the 90's. That turned out to be rather unhealthy for those poor guys who had to go door to door.
Then again I bet you would have better chanche of survival telling an iraqi he has to pay the electric bill than telling an american he has to pay to drive the car out of the garage and that during an ugly recession, no less.

"In-person private education became a luxury item reserved only for those that could pay for the extra services."

Yep I'm sure that it will work wonders for kids socialization...

I could go on but I got bored. Libertarian utopias can be fun to imagine. Reality, as always in these cases, is another matter.

[John Robb]

Marcello, I suspect you misunderstand my objective here. I'm not taking a position here, I'm running out a trend line to see what it generates.

[Duncan Kinder]

"Easy answer: gold. Although how well that will actually play out in practice is beyond my limited academic economic knowledge."

Not so easy.

A slab of gold would need to assayed to determine its actual quality.

The remarkable thing about coinage, which began about 600 BC, was that various governments began to stamp various quantities of gold and silver - hence certifying its quality and quantity. ( Yes, this was subject to manipulation - and that's a big subject ). But the point is that it was the certification of the metal's value and not the metal itself that established the coinage as money.

(I am glossing over a lot - for example merchants still had to have scales to weigh the coins. Still the basic concept remains. )

Much of the gold that flows back and forth is in the form of American Eagles or Krugerrands, gold of certified quality and quantity.

Still, Marcello, you do have a point; and I, myself, have often posted on this blog about how the value of gold stands as an inverse measure of the strength of the nation - state - the more valuable gold the less stalwart the nation-state.

But there would have to be some universally trusted certifying agency. And I doubt that any private corporation could achieve that.

[Marcello]

"I'm not taking a position here, I'm running out a trend line to see what it generates."

And I am just pointing out that, based on actual real world experience things are likely to play out differently. I was sarcastic because of the naive feel the piece had. Mind you if the shit hits the fan even in a massive way the people will still cope and find some way to survive.
Just maybe not all of them. And don't expect it to be nice.

[Flagg]

John - you and Neal Stephenson need to team up and co-author a book.

Marcello, I would beg to differ with your opinion. I didn't read one "nice" thing in that thought experiment he drafted. It was obviously written from the perspective of the corporatists, allowing for satirical effect. Jonathan Swift would approve.

Did you notice the throw-away line "The 45% of the U.S. population still outside of these service arrangements still suffer significant rates of crime and vigilante action is rife"? Or the other indications of a system in the turmoil of transition, such as the riot figures? Where in there is a utopia?

As for the education system imagined here - damn near anything would be better than what 50% of US students are served up each year. Who cares if your kids are "well socialized (what's that? knocked up at 16 and really good at playing football, but no handle on geometry, physics, English or history?) if they can't cope with a harsh new world? I could imagine a cyber-cafe type setup that would go well with the education system thrown out in the thought experiment, much like self-employed folks are beginning to do - places where individuals pursuing their goals share space and interact.

All in all an interesting piece of work.

[zenpundit]

"As for the education system imagined here - damn near anything would be better than what 50% of US students are served up each year"

The U.S. public education system has major flaws. The flip side is that it also has had strengths in terms of intellectual resiliency that supposedly "better", rigidly hierarchical and hyperstate-centralized systems still lack to this day.

Unfortunately, much of the effect of the "nationalizing" NCLB "reforms" will be to give our public schools all the weaknesses of foreign systems while doing only a little to remediate our own ( effectively, we are moving a demographic of kids who are marginal failures over to being marginally acceptable "passers" - at tremendous administrative cost. Complete diseconomies of scale here)

[adam]

John,

I rather liked this one, very much in the style of Total War 2006. As dystopia's go yours is pretty unremittingly bleak though - with police cameras aimed at people expressing political dissent in a manner not seen in the US since the 1920s.

http://www.amazon.co.uk/Total-War-2006-Simon-Pearson/dp/0340748567/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1199003738&sr=8-1

Minor issues: If 45% of the population haven't got access to the police you have something beyond the Wild West - more like Iraq, Sudan or Somalia. Particularly as urban insurrection / terrorism is involved. Most people's interface with the government will be via a SWAT team bursting into their house. Quite how people will run areas like Chicago or similar with a large, restive, (non-white) population is going to be interesting. Black Hawk Down in a poorer Chicago suburb?

Minor issue: Will slavery make a come back (yes, seriously). You're talking multi-millions of people with no income or home, throw in secession, and slavery for debtors / minorities (maybe called Indentured Labour, or with apologies to FM Busby Total Welfare) becomes a viable economic option. Burger chains like MacDonalds would save a mint using slave labour.

And whilst I'm on secession, what, no one joined Canada? (Joke)

Minor issue: Refugees. Millions are homeless, the cities are a free-fire zone, people are going to flee, probably around 10 million or so. This raises the question of where? The casualty rate would be enormous as well.

Major issue: presidential / national elections are now throughly broken, along with the concept of the United States. This, almost in passing, takes the constitution with it. As a result there is no reason to say that the President is the chairman of the board of the military (powerless or otherwise) - he's only their main, but not sole, customer.

Major issue: The Chinese Japanese and Europeans nations just caught up with US military supremacy - we now own the factories that produce the most advanced equipment in the US arsenal. At the same time the US military has been downsized to a colonial militia / internal security force. Dealing with that is going to take some doing and it means that US foreign policy went pear-shaped.

Major issue: Israel. Surely its no longer getting support from the US? The instant US support ends Israel almost certainly collapses or finds another backer (France?). A one state or a two state solution will be enforced fairly quickly due to Israeli bankruptcy.

As for the privatised money, the corporations will issue their own cash, just like the 17th Century, backed by their assets. They own 60% of the US infrastructure, so the currency is (pun intended) golden. If you work for XYZ corporation you get paid in their money, to use in their shops, at prices that they set. Actual internationally recognised money would become quite rare in normal people's experience.

Major issue: Foreign powers. The attitude of the European, Chinese and Japanese investors is key here - they may well invest in the US like its a fire-sale without end. As a result US national sovereignty is probably fatally wounded. Think of Cuba in the years 1938-1959 - Americans owned everything worth owning (except the sugar, which the US set the price on).

Even so, I rather like this as a (very) bleak view of the upcoming world. I rather hope that the US manages to get out of her debt obligations (ideally by paying them off), but not this way. Its still a possible scenario though.

[cyberpunk fiction]

You and I would work really well together.

[Marcello]

"It was obviously written from the perspective of the corporatists, allowing for satirical effect. Jonathan Swift would approve."

I admit it, my satire detector is burnt out.
Too many pundits and politcians seriously supporting positions which would be considered satire in a saner age.

[Bob Morris]

But what would hold it together as a country? not much. A bunch of citystates and corporatestates does not a country make. And they'd be competing with each other, maybe even fighting. "In today's news, the southeast Army of WalMart attacked a passing squadron of Blackwater mercs."

Also, even more than now, money would be needed to get the services. The underclass would grow and be resentful.

So, while such a distopian vision could come to be, I doubt it would survive for long.

[Cavolonero]

You've been beaten to the punch here ( 'Snow Crash' / 'Jennifer Government' ) However, this should be the logical outcome of what's happening now, so, best to think about it. The money issue is the key. ( My solution is to 'engerize' money , making x-currency = x-amount of energy. Energy being the only real thing that does anything. $1=10,000 calories for example. ) ?

[Coathangrrr]

One thing that isn't clear is who is making the laws such as "National Repossession Act of 2017" and the rules of the road. Is the U.S. government still able to have some effect on national policy? If not then how do the "citizens" have an effect on the corps, or do they?

[Duncan Kinder]

"As for the privatised money, the corporations will issue their own cash, just like the 17th Century, backed by their assets."

This is where the lead paint on Chinese toys story comes in.

The basic point is that, yes, corporations can issue cash, just as they now issue toys or other such products.

But can others trust it?

Unless they do, the stuff aint currency and the stuff is currency only to the extent that they do. It's "their money," not necessarily ours.

There had been some argument to the effect that it would be in the self interest of corporations to issue high quality lead free products and somebody above has asserted that - essentially - corporations would likewise be motivated to compete to issue lead free coinage, so to speak.

But, as the lead toy story tells us, this ain't the case. Cost cutting corporations can and will cut corners - or shave coins.

[Mark]

John,

Great material! It is easy to see this in a magazine. I'd play up the satire even more. Satire is a great way to lightly tread on these horrifying plot lines and still get people to think about the issues.

The biggest omission is the energy issue. Why not have Alaska secede? No one cares if Vermont secedes. New York and Alaska seceding has some bite.

As mentioned by adam, the issue of Neo-slavery ought to be addressed. One could argue that cheap oil ended slavery, and once it is gone, slavery will return. The traditional answer to debt is slavery, why ignore the history?

Other fun topics include:
Drug enforcement (let the police openly run drug distribution)
Elections (run elections monthly using American Idol for a model)
Internet issues (criminal global learning organizations, home fabrication, etc.)

As marcello points out, private property is only 'real' if the guy next door follows the rules. Thus, the willingness of everyone to comply is critical. Unfortunately for the model, compliance is trending down. Russia regained popular compliance after experiencing several years of poverty, anarchy and international humiliation. None of these changes will sound plausible without a similar period of US chaos.

[Cash]

If I'm reading the scenario correctly, you're describing a country where 60 percent of the population -- largely urbanized -- live in corporate-controlled "Green Zones" while the rest survive in more rural areas that lack resources the corporate culture needs. Hence the ability of Vermont and New Hampshire -- and Maine, I'll wager -- to secede successfully while (parts of) California is forced to remain in the system. Oddly enough, I'm halfway through writing a book set in just such a universe, about two generations after the split. A poster on another board, Life After the Oil Crash, has also written an extremely detailed description of a similar situation.

http://www.peakoilstore.com/forum/index.php?topic=9274.0

A question: What ensures the loyalty of the population to the standards and rules of the corporation? A privatized government is not a government, it's a corporation. With no legitimate government to hold the loyalty of the people, why should they obey the rules and regulations of people they don't elect, enforced by hired guns they don't employ through their self-approved tax dollars, in a non-country with 300 million firearms in private ownership, a national mythos based on gunning down the corporate property owner and his lackeys (See "Open Range" as a good recent example, or any John Wayne movie) and at least a generation and a half of whacked-out hackers and virus writers? Talk about Fourth Generation warfare!

[Duncan Kinder]

"What ensures the loyalty of the population to the standards and rules of the corporation?"

I presume they would be bought off with the privately issued money that somehow is circulating.

[dryki]

Yeah, Maine left with NH and VT. Sadly, Governor Miller was assassinated at the Town Hall in Effing Maine, sortly after ordering the 2nd Maine Militia to block the Portsmouth bridge.

The Feds let Maine go because the Mothers Out of Fuel Oil (MOFOs) has chainsawed down all the transmission towers taking power of state.

I don't see it mentioned in the thread, but this spins out Klein's Shock Doctrine quite nicely. Since finishing it only last week, I've noticed other writers channelling Klein too - and they have not read the book. Fits in well with articles like this at the telegraph - not your lefty rag:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/23/cccrisis123.xml

cfm

[adam]

Duncan

Maybe I am being cynical, but the reason that people take the corporate money is that its the only game in town. You don't have to take their cash, you could be paid in someone elses corporate cash, or Euros or even Pounds - all at a nicely vicious discounted rate of course, and yes HR would be informed that you aren't a "team player", and no the local shops don't take weird foreign money. Anyone who has attempted to spend a Bank of Scotland note in London will have experience of what I'm talking about. The money's there, it can buy goods and services, for the vast majority of people that is quite sufficient.

Cash,

"A question: What ensures the loyalty of the population to the standards and rules of the corporation?"

A good question:

a) Security. Number one by miles. In John's scenario a near majority of former Americans are at starvation point or living in an active free-fire zone. Or both. People that are hungry tend to support the people that can feed them. The corporations offer the option not to starve, combined with electric power and people with guns to protect corporate assets.

b) Solid Human Resources practises, and yes, as Duncan notes, that includes pay. Combined with an "us against them" world view this goes a long way to make people very loyal to a business. Just ask the Enron people.In Johns world living standards have dropped, for the lucky ones, to the 1920s. For the unlucky, living standards have dropped to the 1620s.

c) Being "loyal" to governments, rather than merely accepting that they are in charge, is a comparatively recent thing. The US Pledge of Allegiance that kids are expected to do was only really finalised in the 1940s and 1950s. Prior to the mid-20th Century loyalty really didn't matter for the vast majority of people, it was only the Cold War and the "threat" of communism that caused the change.

d) Cynically the corporations employ lots of large, sweaty, heavily muscled people with body armour, guns and tasers who, like Blackwater in Iraq, haven't even heard of either human rights or criminal responsibility. Even more cynically they can always just sling you and the wife and kids out of their nice safe town town to fend for yourselves. Finally what real legal rights do you actually have at this stage? The corporations have better lawyers and own more politicians for a start.

[John Robb]

Dryki. LOL. Check out who Klein quotes in "Disaster Capitalism"

http://www.povertyinitiative.org/resources/resource_documents_pdf/Disaster_Capitalism.pdf

Regardless, unlike Naomi, I just run the trends and not the politics.

[Cash]

"Being 'loyal' to governments, rather than merely accepting that they are in charge, is a comparatively recent thing."

Not all that recent. It was loyalty to a cause, the government, if you will, that sent men off to fight the Civil War and World Wars I and II. And there's still a good deal of patriotism floating around out there.

After the initial disruptions, I wonder if the situation in the areas outside the Green Zones will be as dire as we might expect. Certainly the living standards would decline to an 1890's level or thereabouts, but it's not like those areas would be without resources of food, material, and knowledge that would help them survive and organize. Here I'm thinking specifically of the Maine-NH-Vt area.

Anyway, a fascinating thought experiment. Thank you, John.

[Duncan Kinder]

"Maybe I am being cynical, but the reason that people take the corporate money is that its the only game in town."

Adam:

Having given the matter some thought, I've decided that - if call girls will accept the stuff - I'll believe you.

[Marcello]

"Having given the matter some thought, I've decided that - if call girls will accept the stuff - I'll believe you."

I think you are approaching the matter from the wrong angle.In some italian mines during the early 20th century the owners paid the workers with company minted coins, instead of the national currency. These coins could be used to purchase goods only in the company owned stores.
It was great for the owners, less so for the workers. But what else could they do?

[Duncan Kinder]

"I think you are approaching the matter from the wrong angle"

Happy New Year!, Marcello.

[adam]

"if call girls will accept the stuff - I'll believe you."

:-D

Happy New Year one and all!

Adam

[capitalistrunningdog]

Interesting read. Certainly not a utopia but an interesting possible future. However, I doubt things could move that quickly, the US government is like a dinosaur, it would takes it decades to realize its own death. And even given the scenario above, it is likely that the US Gov would try and retain its monopoly on military and police force, even if it started charging more "users fees" for them.

[TM Lutas]

It's an interesting brief but it needs serious work. The first thing that would happen would not be cutting spending in a massive collapse of confidence. The first thing that would happen would be inflationary money creation to get debt off the books and then the COLAs would get thrown out on Social Security and other mandatory programs. This would be much less painful for the political class than privatization and the loss of power.

It's the massive unfunded mandatory spending programs that are choking government balance sheets. The Federal government might have to take over state debts as states take over local debts but this is much more of a likely scenario in a collapse.

Yes, we'd have to exit the debt market for quite a bit and interest rates would be ruinous for a time but you'd end up with a 1st world nation with a ridiculously cheap currency and lots of space. That's a recipe for FDI coming to the US so long as we haven't outright expropriated anything and the US would bounce back on that investment.

You have to make your premises at least somewhat realistic, I think. This doesn't qualify, yet.

[FritzvVA]

John:

I noticed that you did not mdention anything about privatizing national intelligence services. I recommend highly the blog site run by R.J. Hillhouse, called "The Spy Who Billed Me" at the following URL: http://www.thespywhobilledme.com. She writes extensively and positively about the idea of privatizing (PROPERLY) the intelligence and security activities currently held exclusively under control by the government sector and Congressional oversight.

Great article, by the way, and evidently sparking quite a bit of chatter on the GG site. Keep it up. I look forward to the sequel to Brave New War, by the way, maybe with a few more specifics on how to prepare for the eventuality and responses to Black Swans.

[Duncan Kinder]

"She writes extensively and positively about the idea of privatizing (PROPERLY) the intelligence and security activities currently held exclusively under control by the government sector and Congressional oversight."

Of course, the original Elizabethan secret service under Sir Francis Walsingham was his own private operation and not a bureau with the British government.

The problem with John's Privatopia is that he appears to conflate "non state" with "corporate." It is not at all obvious to me that novel, non-state networked organizations should mesh any better with corporate organization than with state organization.

Indeed, if we follow the Van Creveld's logic in the Transformation of War, where he states that post-modern warfare is apt to be much more ad homenum than Clausewitz's war. In other words, corporate sponsors, principals, shareholders, financiers, etc. are likely to be direct targets of deadly force.

The bottom line is that the corporation is fully as much a Westphalian institution as is the nation state - so it appears contradictory to assert that corporations would prevail in a post Westphalian context.

[FritzvVA]

Duncan Kinder writes: "...the corporation is fully as much a Westphalian institution as is the nation state - so it appears contradictory to assert that corporations would prevail in a post Westphalian context."

Duncan, in your opinion, would it be too far-fetched to say that the Westphalian context IS the current means of accountability, and that without its under-pinnings, that the international community MUST develop some agreed-upon system to replace it to ensure accountability?

Here's why I ask: Without some means of accountability, there exists the possibility of overreaction. I posit this: In the event of an unnatural cloud over Miami, New York, Wilmington, Tuscaloosa, or even Bug Tussle, SOMEONE's going to be on the receiving end of some major payback. Without an internationally recognized means of accountabilty, it would appear that there is no chance for MEASURED RESPONSE, ... , only STONE AGE RESIDUE. That carries its own problems with it once unleashed.

Until some other method comes along, I still like the Westphalian idea for the sake of accountability. BUT I also am drawn to the idea that those nations who also subscribe to Westphalia (in order to maintain the legitimacy of armed force) should be able to do so using whatever appropriate balanced private or public means are available in order to limit the funding and bureaucratic burdens of their citizenries. As for the measures needeed to ensure the homogeneity of their citizenries, I'll leave that to another post in another topic area.

Looking forward to your ideas on this.

[Duncan Kinder]

I'm not sure that I follow you.

The Westphalian system does have the power of inertia, which is the most powerful force in the universe, behind it.

And it is human nature "to bear those ills we have than flee to those we know not of," which means that many if not most people will continue to cling to Westphalian systems until post-Westphalian alternatives become far more manifest than they now are.

But I don't follow what you mean by "accountability" or why that should matter.

[Ebon Krieg]

Now, tell me how this is progress? Continued Terrorist threats? I must say you are a true science fiction writer. To paraphrase Bradbury commenting on his art, "I don't try to describe the future, I try to prevent it." This vision is completely devoid of any color except bleak, bleak gray. Wait, there will be oceans of red as we stabilize our population and continue murdering brown people so that the US inc. can keep its ravenous growth for more and bigger profits from self destruction (at least in your lifetime.) Who gives a shit what will evolve from this. As Commander Guy says, "I'll be dead."