On: The Guardian view on global corporate tax: a $500bn prize that states must...

The editorial’s premise is correct in its diagnosis of the disease, but dangerously naive in its prescribed cure. The prize is not $500 billion. The prize is sovereignty itself. The question is not whether to seize it, but which sovereign will seize it, and by what mechanism.

They speak of a “global effort” as if it were a town meeting, a collective handshake. They ignore the scale. What is proposed is a treaty, a compact between nations. But treaties are not self-executing. They require a sovereign power to enforce them. Who shall be that enforcer? A council of nations? Such a council has no revenue of its own, no army, no courts. Its authority is a phantom, sustained only by the continued consent of its most powerful members. The moment a major power - a nation with the capital markets and the naval reach to define terms - finds its interest diverges from the compact, the compact dissolves. To say a single leader “cannot veto” it is to mistake the parchment for the power. He need not veto; he need only decline to enforce, and the structure collapses.

Follow the revenue. The proposal aims to make multinationals “answer to governments.” But to which government? The one where the profit is earned, or the one where the parent is incorporated? The history of confederation teaches us that distributed authority migrates to the center with the strongest treasury. Without a centralized fiscal authority with the power to assess and collect, you have not created a new system; you have created a new arena for jurisdictional arbitrage. The companies will simply answer to the government that offers the most favorable terms, and the others will be left with the mission statement.

They design for the best case, assuming nations will act against their immediate fiscal interest for a collective good. That is not how sovereigns behave. One must design for the worst case: assume each signatory will seek loopholes, will interpret rules to favor its own champions, will quietly undermine the pact while publicly praising it. The mechanism must make betrayal more costly than compliance. I see no such mechanism here. I see a hope.

It is the old error: believing that a problem of engineering can be solved by an act of philosophy.