Texas Fund Would Be Privately Ordered Public Policy’s Purest Form

Recent corporate governance reforms in Texas have elevated managers’ discretion over shareholders’ voices, prompting critics to rightly observe that these measures silence retail shareholders by design.

Rather than simply lamenting this trajectory, we should recognize an opportunity to chart a different course—one that honors Texas’ commitment to private ordering while democratizing corporate governance in unprecedented ways.

A decade ago, the late Lynn Stout and I proposed what we called “privately ordered public policy.” These are institutional arrangements through which private actors voluntarily create structures that advance collective welfare without state coercion. We further developed the concepts of “citizen capitalism” and a “universal fund” with co-author Tamara Belinfanti.

Today, the convergence of Texas’ institutional capacity, corporate ecosystem development, and demonstrated philanthropic capital makes implementation genuinely feasible.

Texas stands at an inflection point. The state has built a formidable corporate ecosystem, establishing specialized business courts, launching the Texas Stock Exchange, and enacting pro-business legislation that has lured Fortune 500 companies from coast to coast.

Yet this success exposes a fundamental tension. As Texas strengthens its appeal to corporate management, everyday Texans risk becoming spectators in their own economic future.

Economic Citizenship

The Texas Fund would operate as a collective investment vehicle holding securities exclusively from corporations chartered, listed, or with a principal office in Texas. Each eligible person—who’s at least 18 years old with five years of Texas residency—would receive one non-transferable Texas Share conferring two critical rights: proportional dividend income and pass-through voting authority over the fund’s portfolio holdings.

This isn’t wealth redistribution through taxation. The Texas Fund would be capitalized through voluntary donations from corporations and high-net-worth individuals, a model validated by the $6.25 billion Michael and Susan Dell contribution to Trump Accounts and substantial investments in Texas’ existing educational endowments.

For corporations, donating shares would create a stable, patient, long-term shareholder base immune to activist pressure and quarterly earnings obsession.

The genius lies in the details. Texas Shares couldn’t be sold, hypothecated, or bequeathed. Upon a shareholder’s death, their interest would revert to the fund, marginally increasing all remaining shareholders’ stakes. This inalienability would eliminate speculative trading and ensure genuine temporal alignment between shareholders and corporate performance.

Texas shareholders would select their preferred proxy advisory services from a competitive marketplace, with fees paid proportionally by the Texas Fund itself. This would solve the collective action problem that has historically prevented retail investors from exercising informed voting rights.

By socializing proxy advisory costs across all shareholders while preserving individual choice, the Texas Fund would create genuine market incentives for new entrants to develop differentiated voting guidance.

Some proxy advisory services might emphasize long-term financial returns; others environmental sustainability; still others employee welfare or innovation investment. Texas shareholders would choose the proxy service whose priorities align with their values, and those services would succeed or fail based on their ability to serve actual citizen shareholders rather than institutional clients.

Texas Values, Solutions

Critics might object that this sounds utopian, but Texas has been here before.

In 1876, the state constitution established the Permanent School Fund, setting aside vast West Texas acreage that skeptics considered commercially worthless. When oil was discovered in 1923, that land began generating revenue that today supports a $56 billion endowment benefiting every Texas public school student.

Similarly, the Permanent University Fund has grown to $19.5 billion, transforming UT Austin and Texas A&M into world-class research institutions.

These precedents demonstrate that Texas possesses institutional capacity to manage large investment vehicles over long time horizons with professional competence. The Texas Fund builds on this tradition while serving distinctly different objectives: distributing economic benefits and governance participation to all eligible residents rather than to specific institutions.

Competitive Advantage

For the state’s corporate ecosystem, the Texas Fund offers strategic advantages that transcend typical incentive packages.

The Texas Stock Exchange has attracted over $250 million in initial investment from major financial institutions. But a new exchange needs more than capital. The Texas Fund would provide millions of locked-in shareholders whose economic interests align with Texas corporate success.

Similarly, as Texas competes with Delaware for corporate charters, the Texas Fund offers competitive advantages—privileged access to a large, stable shareholder base embedded in a circular ecosystem that promotes corporate and financial success throughout the Lone Star State.

Capitalism Without Coercion

The Texas Fund would honor core Texas values in ways that government mandates never could.

Texas has constitutionally prohibited income taxation since 2019. The state prides itself on limited government interference, individual opportunity over social programs, and voluntary association over bureaucratic dictate.

The Texas Fund would operate within this framework. No one would be compelled to participate, no taxes would fund the mechanism, and no government agency would exercise discretion over investments.

The Texas Fund would give ordinary Texans genuine stakes in their state’s corporate success, not as passive beneficiaries of trickle-down economics, but as active participants with real voting authority. It’s a proof of concept for democratic capitalism, showing that we can address concentrations of corporate power, restore individual economic agency, and align business incentives with long-term prosperity without abandoning market principles or individual liberty.

As Texas positions itself as a preeminent business jurisdiction, the question isn’t whether it will continue innovating. The question is whether that innovation will simply transfer power from one set of elites to another, or whether it will genuinely democratize economic participation.

The money is ready, and the infrastructure exists. Texas should seize this moment to lead not just in attracting corporations, but also in reimagining the relationship between capitalism and democracy itself.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Sergio Alberto Gramitto Ricci is an associate professor of Law at Hofstra University’s Maurice A. Deane School of Law.

Write for Us: Author Guidelines