Chapter 38: Failure

Failure of a public service

Typically, there won't be enough tax to pay for every service, because it's human nature to register services for countless wonderful services, but not all can be funded.

This does not create deficits or national debt. Instead, some services become underfunded. And that underfunding plays a crucial role. It triggers the failure and liquidation of weaker services, allowing stronger ones to survive. It is evolution by natural selection, applied to public services. Underfunded services die automatically. There is no political rescue.

Liquidation must be defined in the service contract. Typically, it means selling assets, paying liabilities, and returning any remaining funds to the Central Bank, where they are reallocated to other services.

A service is underfunded when the tax allocated to it falls short of its tax budget for the period. Sometimes new services are registered but never receive enough funding to begin. Other times, services lose popularity over time, and tax support dwindles until they can no longer operate.

Contracts must specify what happens in these cases. Operators may deliver a reduced service, temporarily suspend operations, or eventually face deregistration and liquidation.

The constitution forbids contracts from guaranteeing future tax allocations or even continued registration. These risks fall on operators and investors. But they can be managed. Often, contracts allow operators to wait until a minimum level of tax is secured before loans are taken, equipment purchased, or work begins. If those conditions are not met in time, the service is liquidated.