I find it odd that people these days assume a business is a corporation these days, and claim it has tax benefits. For a small one man operation like myself, Sole Proprietorship offers me more tax protections because I am exempt from most federal taxes. No SSI, No Medicare, No Income Tax. Just capital Gains, which I can avoid by not showing profit.
CPT Jack. R. T.
US Army Resigned - Iraq Vet.
Level III MACP instructor, USYKA/WYKKO sensei
Professional Hunter/Trapper/Country living survivalist.
It depends. I believe the owners of corporations should be 100% liable for all damages they do to people they did not make a contract with. For instance in environmental cases, etc.
However, I do believe that it's ok to go bankrupt and not be liable with all your private money, as long everyone who gave you a loan signed a contract in which you made it clear that you are not liable with your private wealth, but only with the value of the company itself. Voluntary contractual agreements should be above any law, as long as they don't affect anyone who didn't sign the contract. Obviously in a free market, we would assume that these kinds of contracts are going to be to better terms for companies where the owner is completely liable. But even if not, it's not my problem if anyone wants to lend out his money uncarefully.
In regards to Bain, I don't really see any problems with it. Nor did Ron Paul, when I remember correctly. If it was indeed more valuable to loot the company's assets than to continue business, then that's exactly what should have been done. In fact, I don't see why anyone even sold his company to bain, if the value of it's assets was higher than what Bain was ready to pay for it. Why didn't they sell the assets themselves and followed the Bain-playbook? Are there any paragraphs in US-bankruptcy law that I don't know that would have only made the initial owner liable, but not Bain? That seems a little odd. The way I see it, nobody lost his rightful property, except a few banks foolish enough to agree to contracts with entities that are not entirely liable. These people should have seen it coming.
Correct me if I'm wrong, but isn't limited liability designed to protect the shareholders of a company, so that they can't owe more than their investment? I thought the main issue was that government has worked to support management at the expense of the shareholders by requiring those planning a "hostile" takeover to report their intentions to the SEC?
In very general terms, if you limit liability for one's actions, you lower the costs of somebody taking those actions and will make them more likely to engage in the particular behavior which lead to the liability. In a truely free market, both individuals and companies should not be protected from consequences of their actions.
Freedom is a state of mind. Nobody can take that from you unless you let them.
The kinds of limited liability that would exist in a free market are not the same as the kinds that exist as government creations.
I don't think you can say you have freedom if you have some law preventing people from forming corporations, which, by definition, would have to have some kind of corporate personhood.
I’m not a libertarian. I’m not advocating everyone run around with no clothes on and smoke pot.
How?
I don't advocate banning corporations, just get government out of it. But then tell me how a free market handles non-human ownership?Originally Posted by erowe1
Is it okay for a dog to enter a contract? No? Then why is it okay for my imaginary friend? Neither is a sentient being. Neither can sign its own name. That's all a corporation is - an imaginary friend who the government mandates must be treated like a real human being able to sign contracts and own property. How would a free market accomplish that?
On the other hand, the free market could very easily create partnerships among real human beings. Under existing common law those partnerships could combine capital, divide management, own property, sign contracts, etc. But they would not be immortal and would not have limited liability unless they negotiated it with each individual with whom they did business.
The proper concern of society is the preservation of individual freedom; the proper concern of the individual is the harmony of society.
"Who would be free, themselves must strike the blow." - Byron
"Who overcomes by force, hath overcome but half his foe." - Milton
A group of people enter a contract with each other where they all invest various amounts of money in a business in exchange for commensurate shares of ownership of it and they delegate the decision-making of spending that money to run the company to a board they elect and hire.
They give that company a name, and it enters into other contracts as its own entity. Other people and other companies freely and knowingly enter into contracts with it, even when such contracts include stipulations limiting the company's liability to its own assets, and not all the assets of all of its owners. These include contracts where the company buys, and thus, owns, things.
The owners of the shares of this company have the right to sell their shares to others. And it becomes potentially immortal.
Last edited by erowe1; 12-01-2012 at 12:47 PM.
I’m not a libertarian. I’m not advocating everyone run around with no clothes on and smoke pot.
It's more about if you use a corporate person to take out debt, use some of that loan to pay yourself, company goes bankrupt, and the creditors and other people the corporate person screwed over can't get their money back because the corporate person doesn't have it.... YOU DO!!!
A corporation would have to pretty well run to be immortal.
Stop the Looting and Start Prosecuting! Gold plated Tungsten IS Money!
We Must Dissent A colher não existe.
A government is just a body of people, notably, usually, ungoverned.
"You mean this entire war started because The Empire dressed as the enemy? That's exactly what happened in the last major war! Our government is so stupid!"
How would tortious liabilities incurred with respect to persons not party to any such contracts be handled?
Frederic Bastiat
When law and morality are in contradiction to each other, the citizen finds himself in the cruel alternative of either losing his moral sense, or of losing his respect for the law. - The Law Government is that great fiction, through which everybody endeavors to live at the expense of everybody else. - Government
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