Eric Werker, an assistant professor at Harvard Business School, has a novel proposal for rooting out the corruption afflicting developing nations. Allow multinational corporations to run for local office.
I'm itching to call this "a modest proposal" but that would improperly imply that Professor Werker is engaging in sly satire. On the contrary, he seems dead serious. A brief sketch of his proposal was published recently in Forbes Magazine, under the title, "KPMG for Mayor!" A more thoughtful, expanded version, co-written with Columbia Business School professor Ray Fisman, is a chapter in the forthcoming compilation "Capitalism and Society." (Thanks to iPienso for the tip.)
Yes. Never mind those of us who are convinced that one of the most corrosive forces working against the effective exercise of democracy in the world today is the political influence of corporations intent on pursuing their special interests. Maybe corporations wouldn't be so obsessed with serving their shareholders instead of society if they could maximize profits for their shareholders by providing social services! Brilliant!
According to Werker, representatives of multinational corporations (and non-profits) would be relatively immune to the pressures for self-dealing that afflict so many politicians in struggling democracies.
Companies and nonprofits have stronger incentives than do individuals to steer clear of bribes and kickbacks. A corruption scandal in Lagos could harm KPMG's reputation in New York or Shanghai. Moreover, foreign firms are bound by many laws of their home country and by international laws, notably the antibribery convention of the Organization for Economic Co-operation and Development. In addition, a company or nonprofit must demonstrate to its shareholders or donors that it can perform efficiently.
Note that the foreign origin of the company is considered a plus in this scenario. In his longer essay, Werker argues that one of the checks against any bad behavior would be legal action exercised in the multinational's home country: "Western human rights groups could ensure that companies would be taken to court for any violations of the relevant anti-corruption laws."
But one has to ask: What's in it for them? Why would companies want to do the hard work of governing themselves instead of sticking to the time-honored practice of buying politicians to do their work for them?
To state the obvious, companies must make money. How could running a local government be a profitable enterprise? In a word: taxes. Voters in corrupt municipalities currently pay taxes to finance mediocre government as well as embezzlement. They might very well be willing to pay the same, or higher, taxes to finance good government, which would include a profit margin to the elected firm.
This is diabolical. Instead of spending so much effort figuring out how to avoid paying taxes, corporations elected to local office would be entrusted with the job of collecting taxes. What could possibly go wrong with such a scheme?
Most hilariously, Werker theorizes that successful election to government office would actually cut operating costs for some businesses.
For example, successful firms or nonprofits would get free advertising through the popular press, eliminating their need for private marketing while increasing their ability to win elections in other locales around the world.
From a purely libertarian point of view, I can understand the attraction of Werker's model. In a perfect market-oriented society, companies should be competing with each other to provide the people good government. Just imagine the savings in campaign finance alone, as lean, mean corporations seek to provide the best political value for the lowest contribution price. In the U.S. corporations are already busy writing the text of free trade agreements, asking the Justice Department to put the kibosh on overly aggressive federal prosecutors, and determining the political direction of the EPA, USDA, and Department of the Interior. But it's messy. It would be so much simpler if everything could just be brought aboveboard.
And yet somehow, one imagines that when the ancient Athenians gathered in their Agora and cobbled together the first working democracy, this isn't exactly what they had in mind. Allowing non-citizens to run for office is one bold way of testing the limits of the definition of a "democracy." Allowing non-persons (yes, I know, legally speaking, a corporation is a person, but let's not go there) to challenge for the job of municipal dog-catcher is a truly radical idea.
But if we're going to take that step, let's not hold back. Why limit the new political participants to corporations? I can think of lots of other non-persons I'd be willing to vote for. Like TV shows! "Battlestar Galactica" would make a terrific governor of California. And who wouldn't want to be entertained by the sight of "The Daily Show" running against Goldman-Sachs for the job of New York State Attorney General? Tippiecanoe and Jon Stewart too!