Mary Meeker's Rx for Restoring USA Inc.: Liquidate the Oldsters!

Mary Meeker's gargantuan new report on the state of the nation is festooned with pretty charts, data galore and one very silly guiding metaphor: "USA Inc." In a related cover piece for Bloomberg BusinessWeek, the former technology stock analyst turned venture capitalist suggests thinking of the U.S. as a corporation -- and an underperforming one at that.

Addressing "shareholders" -- you know, what fusty old documents like the Declaration of Independence used to call "citizens" -- Meeker asks rhetorically:

What would USA Inc. be worth? Who would want to buy its shares? And what would a turnaround expert recommend for a company that lost more than $2 trillion ("net operating cost") in 2010?

I took a deep dive into these questions a little more than a year ago, and I'm finally up for air. I reached three conclusions. First, USA Inc. has serious financial challenges. Second, its problems are fixable. Third, clear communication with citizen-shareholders is essential. If the American people embrace the need for bold action, their political leaders should find the courage to do what's right.

Well, a turnaround expert would probably recommend divesting non-core assets like New Hampshire, labor unions and Charlie Sheen before selling us to the highest bidder. But that means we'd all have to learn Mandarin. As for her stated conclusions above, they're as incontestable as sunrise.

Still, let me take a shallow plunge into Meeker's deep dive and suggest another possibility that may not have occurred to her -- that the U.S isn't an Inc. at all. Nor is it an LLC, general partnership or Subchapter S Corp. Rather, it's a... what's the word I'm looking for... country.

I'm not a stockholder in the good 'ol USA; I'm a stakeholder. If I did own shares in Uncle Sam, I could simply liquidate my holdings, double-down on emerging markets and stash my winnings in the Cayman Islands. Thing is, I wouldn't do that even if I could. Because what Meeker doesn't seem to understand is that if Americans are invested in anything, it's what this country stands for, not what financial claim we can make on the Treasury.

Senior discount
The only reason the federal budget resembles a corporate annual report to Meeker is that she struggles to conceive of a nation as anything more than the mother of all profit-and-loss statements. Except that the U.S. is no more like a company than a company is like the government. Sure, there are superficial parallels that work fine as PowerPoint slides. But that's roughly where the similarities end. As Matt Yglesias evocatively put it:

A state is fundamentally an ethical enterprise aimed at promoting human welfare. A business isn't like that. If you're trying to look at America from a balance-sheet perspective the problem is very clear. It's not "entitlements" and it's not "Social Security" and it's not "Medicare" and it's not "health care costs" -- it's the existence of old people. Old people, generally speaking, don't produce anything of economic value. They sit around, retired, consuming goods and services and produce nothing but the occasional turn at babysitting. The optimal economic growth policy isn't to slash Social Security or Medicare benefits, it's to euthanize 70 year-olds and harvest their organs for auction.

[Note to self: Sked meeting with Yglesias at Lugar's to brainstorm euthanasia pitch -- need marketshare data???] Meeker's no dummy, of course. She concedes from the outset that the U.S. isn't like a corporation at all. We're in metaphor-land. So why premise a 468-page report on the state of the union on an idea that you acknowledge is fundamentally false?

I suspect it's because she started with a predetermined conclusion, which in this case is that the U.S. needs to slash its debt. That's something companies do rather well; governments, not so much. But the thing about reasoning backward from metaphors is that it only works if they're true.

Unlike Andrew Mellon -- who famously advised Herbert Hoover to "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate" in order to "purge the rottenness out of the system" -- Meeker is clever enough to veil her reactionary fixes in the staid language of a technocrat. Still, the best you can say about this effort, whatever she claims, is that it's a thought experiment. And not a very thoughtful one.

Now if you'll excuse me, I'm late to outsource my grandmother.

Thumbnail and Mary Meeker photo from Wikimedia Commons
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Alain Sherter

Alain Sherter covers business and economic affairs for CBSNews.com.

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