If you ran a company like a democracy, it would be bankrupt within the year.
If you ran Walmart like a democracy, every worker in each of the 10,784 stores would vote the company into a benefits-fueled hole. We don't run companies like this, so why countries?
If you ran Walmart like a democracy, every worker in each of the 10,784 stores would vote the company into a benefits-fueled hole, deeper into debt every quarter. You’d have greeters and shelf-stockers making $150,000 with two months of vacation and free PlayStations every Christmas.
We don't run companies like this, so why countries?
In Ernest Hemingway’s The Sun Also Rises, there is a dialog about bankruptcy. “How did you go bankrupt? Two ways. Gradually, then suddenly.” It’s easy to become impatient, to become disillusioned and discouraged when things still putter along miserably. It's time to make some hard decisions.
But think about how fragile decision-making is.
Take any given person you know. How often do they make correct decisions? How often do you make correct decisions? I make mistakes every day. Sometimes it’s drastic mistakes like buying a BMW, and sometimes it’s significant successes like buying TSLA. (BMWs go to zero. Apparently TSLA keeps going up).
Now, extrapolate that bad-decision-making ratio out to 300 million plus Americans. If a single person can’t make consistently good decisions, how on earth can you expect every person in a country to make the right decision? It’s almost statistically impossible.
I’m honestly surprised a country can do collectively anything right, given the sheer amount of bad decisions that are made by every single one of us, every day. It takes something else to cause a tectonic shift. Something far greater than the individual.
But just like bankruptcy is usually the final compilation of many bad decisions, good things happen in the same way. A single good decision never fixed the world, but many, many small good decisions eventually result in a sudden shift towards good.
Democracy
I am no fan of democracy, because when it works (as it often does) it only works because at least 51% of people are making slightly better choices. The instant 51% of people make slightly worse choices, it all goes into the toilet for everyone.
There is a reason that no good company is a democracy. If you look at the most successful companies throughout history, they are not governed by mob rule. They are either governed by an autocratic leader or a very small group of autocrats on the board.
By all intents, Walmart is a successful company. But it is controlled by relatively few stakeholders. If you were to give over decision making power to every associate at HQ, or even worse every worker in each of the 10,784 retail units, it would swiftly become an absolute nightmare. Your workers would choose to get paid more, to increase benefits, to reduce working hours, and whichever other costly ideas you can come up with.
We obviously don’t let this happen. So why are we letting it happen to an entire country?
Here we are: a country where 60% of households get more from the government than they contribute. 180,000,000 people take more than they give.
If you look at the bottom quintile, it’s even crazier. The bottom 20% of Americans pay roughly $400/year in taxes, but take over $16,000/year in wealth transfers.
This 20% can vote just like you. If you’re in the top quintile (not too hard, a family income of $217,000/year) then you are part of the 66 million Americans in the top quintile who pay the majority of all taxes. These folks in the top quintile are paying an average of $54,000/year. You’re supporting almost four people in the bottom quintile. (This is only counting official taxpayers: the reality may be worse).
If Walmart — or any large company — were to give over the reins, I’m not sure how they would ever be taken back. At that point it’s sort of like taking candy back from a crowd of children.
Instead, Walmart, like any normally operating profitable company, is run by a relatively small board of directors, and indirectly by stockholders.
Stockholders have a vested interest in a company’s long-term success. Their hard-earned capital is on the line. They want stability and profit. They will not take a short-term benefit (vacation for everyone, free PlayStations) because they know it will curtail their long-term benefit (dividends and an ever-increasing share price).
Stockholders bear risk. And, interestingly, in public companies, every share gets a vote. If you own more shares, your decision has more weight in the future of the company.
So why don’t we weight decision making for countries?
Why does a net contributor (property owners, taxpayers, employers) have exactly the same decision making power as someone who isn’t even trying to work, yet gets housing and money and cell phones from those who are?
I’ve often thought that the simple solution would be limiting votes to those who are net contributors (i.e. anyone who pays more in taxes than they receive in benefits).
Ironically, if this happened, the pool of net contributors would actually increase. Since the productive class would vote to shrink entitlements, a whole lot more people would find themselves working, paying taxes...and thus able to vote.
The health of the country, as well as the economic health of the people themselves, would be far better in the long-term.