“The United States Corporation of Government (USCOG)”
Innovation surges when industry and government models change. Buggy whips. Land line phones. Railroads. The Soviet Union. Apartheid South Africa. All marked social and commercial innovation, both bad and good.
We are witnessing a new form of global human governance. The entrepreneurial opportunities surrounding this evolution are immense.
America has created a “United States Corporation of Government” (USCOG) — now the largest monetary corporation in human history, with a monopoly in the market it created for itself.
USCOG revenues doubled in less than 15 years. It behaves like old GM or AT&T, but will soon meet larger social-commercial innovation from India and China.
USCOG is very complex — but the “sound bite” version is…
A corporation is a legal entity with rights and duties, chartered by a legal system. It is measured in money.
Governments are a philosophy of human organization, and a process to resolve disagreements about implementing the philosophy. They have power to protect society from threats.
Healthy governments were not built on money. They influenced — nurturing the “social networks” of their citizens, and the philosophy in their charter.
They did not “sell products for their own account.”
The British Empire blurred the boundaries between “government” and “corporation” with entities like the East India Co., whose private armies helped hold the Colonies.
The USCOG is an even larger step in monetizing government. It is truly a company, and we can analyze it as such.
Structure. All levels of government in the U.S. have been unified into USCOG by the glue of “federal matching funds.” Towns need federal funds to pay for schools and police departments. Federal managers need local taxes to supplement deficit funds from Congress. This co-dependence unifies government money across all boundaries in the Constitution.
Finances: USCOG annual revenue is more than $6 trillion (all levels), in a $15.7 trillion economy.
Assets Under Management: Although revenues are only $6 trillion, USCOG manages trillions of dollars of assets beyond USCOG’s books. Your car contains thousands of dollars of mandatory air bags and electronics. These aren’t in USCOG’s budget, but they are explicitly managing your money. Same for health care, building codes, permits of all kinds, energy, roads, etc.
Philosophy. We measure and manage “society” using monetary value. USCOG increasingly monetizes the human social behavior it governs. Even formerly nonmonetary “barter” has been monetized by the IRS. (“You must include in gross income in the year of receipt the fair market value of goods or services received from bartering.” IRS Topic 420.)
Core Brand: “Zero Risk.” If you pay us, we will keep you safe from all kinds of dangers. Auto accidents, guns, germs, bad images on TV, depression, anxiety, kid’s toys, extreme thinking, words that make you feel bad, gluten, sugar, etc. (These are all paraphrased regulations.)
Product Line. USCOG sells thousands of “Social Value” products at prices they determine — monetizing “social value” with cost-benefit algorithms.
USCOG analysts identify threats to the zero-risk society, like smoking and auto deaths. Then they create Social Value products — “anti-smoking ads” or “tire pressure monitors (TPM).” They compute the cost of the ads (millions of dollars) or TPM ($200/car). Then they monetize social value by computing the cost of a life lost to smoking or tire blowouts. If the lost life costs more than the ad or TPM, then the product has social value, and USCOG analysts bill Congress for the salaries of the analysts and new employees who will manage new Social Value products.
USCOG does not price directly to consumers. Customers don’t know what they are paying for.
This is a great commercial business. Similar to the current pricing of mobile phone plans, but even more opaque.
Governance Structure: USCOG is controlled by two other corporations: the Blue Corporation (DNC) and the Red Corporation (RNC). Outdated Constitutional election procedures have been replaced by modern rules of the two unelected Corporations. While U.S. laws allow other corporations to enter the governance of USCOG, the Red and Blue corporations have structured both Legislative and Executive branches for their own use. (See reserved seats in SEC, etc.) While the revenues of these two corporations are only several hundred million dollars, together they control the $6 trillion USCOG budget.
Management Culture: The Red and Blue corporations fight on TV, but they don’t seem to mind who has the controlling interest in the USCOG, as long as it is one of them. They block new entrants using “co-opetition” (see Tea Party incident). Apparently duopoly control of a $6 trillion police-protected market is attractive enough for the two companies to ensure the survival of each other.
Largest Recent Corporate Campaign: USCOG is currently conducting a hostile takeover of the second largest industry in America: health care. The outcome of this campaign is far from certain, and early failures of basic information technology suggest that investors should not bet on anything at the moment. Although this takeover may increase the revenue of USCOG from $6.5 trillion to more than $9 trillion… in a $16 trillion economy… the possible structural dislocations from this top-heavy centralized scale may be like those induced by Irrational Exuberance bubbles in the past decade.
Other Systemic Risks:
USCOG may be the largest entity still using 20th-century legacy “pension” compensation. USCOG has recently refused to disclose its detailed financial statements, but it appears that USCOG plans to pay about 20 million people per year (of approximately 140 million) to work for 20 years and then pay them pensions for 30 more nonworking years, at current life expectancy. If health care improves life expectancy, this unfunded social liability will present risks to the USCOG structure, and the monopoly market of government products.
Unhappy USCOG customers may begin to outsource their own “government services” from more innovative overseas sources. eBay and Amazon have allowed customers to avoid the brick-and-mortar oligopoly, by getting products home-delivered from Hong Kong. USCOG faces similar examples:
- USCOG citizens have long been buying “medical tourism” hip replacements and cardiac bypass operations in Asia. As “Obamacare” ramps up, foreign health care providers are acquiring hospital ships to anchor in non-U.S. Caribbean waters. The flight time to these service centers can be shorter than the typical waiting time in the emergency room of your local hospital. Without the massive USCOG overhead rates, world-class health care is very inexpensive. A cardiac bypass can cost less than a Chevy.
- If future government “shut downs” continue to close state and national parks, local hotels may hire skilled park rangers from Mexico to keep these vacation spots open, while wealthy USCOG managers in Washington, D.C., are otherwise occupied. Scarce water and overflowing sewage in other areas of the country may induce USCOG customers to find lower scale solutions to immediate problems.
The world has never seen an organization like USCOG, and we can get frustrated trying to understand it. Nonmonetized democratic governments are messy and erratic. But if we realize that USCOG is a corporation that monetizes social value for its own profitable future, it becomes much more predictable. We can anticipate what USCOG will do by applying lessons learned from GM, Pan Am Airlines, Enron, Lehman Bros., AOL-Time Warner, and Washington Mutual.
The only uncertainty is that — unlike those corporate failures — USCOG controls the police power of the state, and the right to create money.
This is a true innovation in corporate governance.
This article originally appeared here on Forbes.com.