Paul Marin, Columnist
Ideology: Liberal Republican | Writing from: Romania

It is safe to say that most Romanian politicians seek office to enrich themselves rather than to serve their constituents. Romanian members of Parliament and local leaders pay mostly out-of-pocket for prohibitively expensive campaigns, costing from fifty thousand euros to up a few hundred thousand euros – money they often later recover through racketeering and bribes. The ones with the remnants of what to used to be good intentions are either incompetent — some cannot understand basic economic principles or the basic beliefs of their parties’ ideologies — or are crippled by the lack of political will to address the difficult issues Romania is currently facing.

Take the case of Transportation Minister Radu Berceanu. In late May, Bercenau, an important leader of the governing Democratic-Liberal party, admitted during an interview that his party deliberately lied about the country’s fiscal situation in the run up to last fall’s presidential election. Even worse, he acknowledged that the Democratic-Liberals artificially kept the economy afloat through public spending to secure President Traian Basescu’s reelection — despite knowing that such policies would incur higher costs for the country in the future. In such circumstances it is not surprising that the Romanian government has not been able to deliver a coherent response to the economic and social challenges of the country.

The governance problems plaguing Romania — as well as many former communist countries or other developing nations — appear to be: the politicians’ desire to profit rather than serve their country, the general incompetence of the governing classes, and the inherent difficulty of democracies to, in absence of a grave external threat, carry through unpopular but necessary reforms. There appears to be, at least in theory, a system of government capable of simultaneously and effectively addresses all three roots of bad governance has never been tried in human history — private, explicitly for profit, governance.

One possible way such a regime would function is by having a state hire a private company, such as McKinsey or Booz Allen Hamilton, to govern with unchecked power for a given period of time in exchange for a fee the respective country would pay the corporation. The state would sign a contract with a private company outlining the objectives for company’s term in office, a system of payment based on the company’s performance, a system for performance verification, the limits of the company’s power while in office, and for means for the state to enforce those limits. Such a contract would be public and would require a supermajority vote in either the country’s legislature or in a public referendum.

While not a textbook democracy, the for-profit, private government regime’s actions would reflect the real will of the people. The aim of such a regime is not to institutionally ignore the will of the people, but to instead make sure that the community’s wishes are most effectively served. Under this system, the people and/or their representatives select the direction their country will take by setting clear goals in their contract. They also chose what private entity they consider most capable and cost-effective to fulfill the objectives they set. The people only forgo the right — and the responsibility that comes with this right — to make the complex and difficult decision on how to attain their national goals.

Moreover, such a system of government would not be authoritarian. The contract signed between the state and the corporation would contain built-in safe-guards such as protections for civil rights, the preservation of local elections and of a degree of decentralization of power, a mechanism for settling contractual disputes between the state and the governing corporation, and functions for the elected government. Private, for-profit government would not mean an end to the electoral system.  An elected government would maintain control over foreign policy and over the armed forces, so conflicts of interests could not arise if a country were to hire a foreign or multinational corporation. The elected government would take over the act of governance in case of nullification of the contract, and this elected government would chose to renew the contract, or set up a public auction for the next governing contract of the country.

For example, Romania would hire McKinsey to govern for six years. The contract would stipulate that McKinsey would be paid 100 million euros for each yearly percentage increase in real GDP per capita; 10 million euros for each step up in Transparency International’s Corruption Index, and 100 million euros for each significant advancement in the standards of healthcare and education in Romania as decided by criteria set by specialists in the Ministries of Healthcare and of Education. Working towards these goals, McKinsey would have full legislative and executive power over domestic policy within certain limits set by the contract and by the judicial branch of government. For example, McKinsey would not decide foreign policy or command the armed forces. Also, McKinsey would not be able to limit civil rights such as freedom of speech, freedom of assembly, habeas corpus, etc. Finally, the judicial branch of government would not fall under McKinsey’s control. Judges would be appointed by the sitting Prime Minister and would be confirmed by Parliament. Upon ratification, the contract would become Romania’s de facto constitution for its entire duration. The enforcement burden for the contract would lie with the Romanian Armed Forces, Romania’s most respected and trusted secular public institution. The RAF would enforce the decisions of the Romanian Constitutional Court, which would decide whether McKinsey had at any time violated the terms of the contract. Such a decision could only come as a result of a clear complaint by a Romanian citizen or the sitting Prime Minister.

The main benefit of this privatized, for profit, system of governance is that it associates the self-interest of a single entity, the private corporation’s in this case, with the interest of the entire community. Now, those seeking to enrich themselves through governance can do so legitimately without destroying the country’s rule of law, institutions, or jeopardizing its future. Furthermore, special interests could no longer counterproductively influence policy as campaign donations and public protests would be irrelevant to the company’s decision making. The only concern of the company is making money — that is, fulfilling the contractual goals that earn it money.

Objective and honest governance would not be only advantage of the for-profit, private system of government. To appear competitive, corporations seeking to win the Romania deal, for instance, would hire the most competent and most intellectually diverse policy experts and civil servants it could find. To attract such talent, the respective company would have to pay high salaries, which would make the career of a civil servant more attractive to Romania’s talent — few of whom actually pursue a career in public service nowadays. Finally, by virtue of having unlimited political will as a result of having electorally unchecked legislative and executive power for its term, the company would be able to implement difficult reforms such as restructuring Romania’s obese state apparatus, its corrupt law enforcement systems, and a long overdue overhaul of the educational system. Such issues have not been tackled in any meaningful way in the last decade by any governing party, regardless of how large its parliamentary majority was.

While unprecedented, such a radical system of government could, albeit remotely, fit the current psyche of Romania. Rightfully so, Romanians consider the entire political class as corrupt, incompetent, and capable of brainwashing the most bleeding-heart young idealist or the most cynical yet well-intended populist leaders. Although there is no more than the anecdotal evidence of my many conversations with cab-drivers over the years, the one trait of the ideal politicians that everyone agreed upon is that Romania’s elected leaders are rich so that they do not steal as much from the taxpayer. Additionally, most Romanians are politically apathetic and do not value representative democracy too much, a significant proportion of them preferring a “strong leader.” Finally, since the fall of communism, the private sector has administratively outperformed the state and sometime outsmarted it in avoiding taxes and law enforcement; Romanians are aware of these realities. These beliefs held by average Romanians suggest openness to a system of government that appears competent, incorruptible yet self-interested, and with the ability to rule “strongly.” Private, for profit government, fits these criteria.

However, this rosy picture of private, for profit governance relies on two problematic assumptions. First, a fundamental underlying premise of this proposal is a utopian view of the private sector and of self-interest. Sometimes, fully unregulated self-interest can produce disastrous results – environmental pollution and financial meltdowns being recent examples. While self-interest has been a decisive factor in the world’s current prosperity, self-interest and free markets have also accounted for significant injustices and mistakes in human history. Second, the case for private, for profit government makes the philosophical assumption that there is one objective and universally applicable truth. Should there have been more than one policy paths towards a given social end, there would be no need for motivated experts to choose how a country would achieve its goals. But the proposition that there is a single objective and universal truth is highly debatable — it has been one of the most contentious debates in philosophy, both ancient and modern.

It is unlikely that a radical idea like private, for-profit governance will be implemented in Romania or in any country in the foreseeable future and perhaps beyond. Nor it is clear that such a system of government would actually deliver on the benefits it theoretically stands to. Yet, despite its revolutionary, utopian, and potentially dangerous nature, it is a proposal worth studying and debating, and eventually, at least, considering implementing. After all, mankind has certainly engaged in more dangerous political experiments.

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