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Author Topic: Question #1 (of a few)  (Read 25634 times)

nomad

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Re:Question #1 (of a few)
« Reply #15 on: August 15, 2002, 10:14:00 pm »

Thank you all for your responses.

Maestro - You are barking up the same tree as I my friend... I could not have laid out the argument better myself.

McGrath - I agree with 90% of what you state as well.

Jason - I must disagree - corporations, as instituted, are incompatable with a free society. They are responsible to no one and are only meagerly held in check by volumes and volumes of laws and regulations. To anyone who would disagree I would ask, "Why were all of those laws and regulations created in the first place?" Because of abuses - the same goes for the banking sector, the insurance sector, the stock market, etc. These abuses were made profitable because of limited liability. They are not, have not, and cannot be controlled by market forces alone - especially under the current system - they are monsters.

Freedom necessitates responsibility - without responsibility freedom becomes tyranny. There can be no such thing as "limited liability" in a free society.

Here is a sub-question to my original - how is a stock market compatible with a free society?

JD
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Reaper

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Re:Question #1 (of a few)
« Reply #16 on: August 15, 2002, 10:25:21 pm »

Actually, I would say that regulation enables the abuses which SUPRISE means more regulation.

The problem isn't the abuse of power.  The problem is the power to abuse.

Government passes laws/regulations specifically for the purpose of shielding companies/corporations from responsibility for their actions.  That is the root of the problem.  No person, company, corporation or state (sovreign immunity is crap) should be excused from resonsibility for thier actions.  However, in punishing or forcing restitution from a large organization it is important to realize not all participate or know what is being done.
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Reaper
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Re:Question #1 (of a few)
« Reply #17 on: August 16, 2002, 01:14:09 am »

The government as you say is born pregnant.

The only thing that can be done is to bind it down in the chains of the constitution.

If the government actually were restricted by the constitution, as it is supposed to be, there would not be any where near as much incentive to 'buy' candidates.

I think the income tax is what really set it off beyond control. Now that it has unlimited access to everyone in the countries money AND a judiciary that willfully ignores the plain meaning of the constitution it is beyond hope.

Removing those two things would leave it very little power left to abuse, sell or pander.
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Dex Sinister

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Re:Question #1 (of a few)
« Reply #18 on: August 16, 2002, 03:31:11 am »

There is non-voting and voting stock.  If you buy non-voting stock or bonds you are either buying some of the corps productivity, or lending them money, respectively.  Neither should generate any responsibility for the actions of the company, since neither gives you the ability to change the company's policy (other than taking your money away).  Voting stock, _does_ create a level of responsibility that should be legally binding as well as morally binding.

There is no particular reason that voting stock creates any level of responsibility - other than, as has been pointed out, when the stockholder controls a majority of the stock and is probably already on the board of directors.

Voting stock simply gives one the right to vote for the board of directors - it does not in any way guarantee that one's choices or wishes will be carried out. If I own 10 shares of IBM stock, I possess about as much control over the company as an ant does, other than the fact that I am able to place issues on the ballet during an annual meeting. It rather sounds as if you wish to assign "blame" even to those who vote against every member of the board of directors.

 
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I am glad this topic came up.  I was going to write an essay considering the idea of dissolving all corporations in favor of partnerships, with both silent and standard partners.  The primary changes that would occur would be that the barrier against personal fiduciary responsibility would be removed and the corporation's status as a legal person would be revoked.  

This would be a classic example of an extremely bad idea. You have noticed, I’m sure, the baseless “product liability” lawsuits brought by a number of cities against gun manufacturers, in the attempt to drive them out of business by bankrupting them with legal fees. Can you explain how bankrupting all the owners of all the gun manufacturing businesses in the country would serve the cause of freedom, in the event that a clever lawyer manages to come up with an argument that a jury buys? And after all gun manufacturers went out of business, who would be insane enough to start another one, knowing in advance that they placed their family’s welfare in direct risk by doing so?

Why, in fact, would anyone want to start or perform any sort of business with the slightest risk involved, if they knew that they, personally, were putting their family at risk in doing so?

Knowing that most idiotic warning labels are the result of lawsuits against companies, or to attempt to forestall lawsuits, ya’ll corporation haters might want to think about these warnings, and the idiocy that preceded them before suggesting that corporate shareholders take personal responsibility for corporate actions.

Product Warnings:
“Do not use to pick up anything that is currently burning.” – Vacuum Cleaner instructions.
“Do not use to pick up gasoline or flammable liquids.” -- Vacuum Cleaner instructions.
“Warning: Remove label before placing in microwave.” -- Moet White Star Champagne.
“CAUTION: Risk of electric shock. Do not open.” – On a Sony Trinitron.
“For best results, remove cap.” – On Nabisco Easy Cheese.
“For adult external use only. Avoid spraying in face or eyes.” – On Bath & Body Works Linen Spray.
“Warning: Do not reuse the bottle to store beverages.” – On Liquid Plummer bottle.
“If swallowed, promptly see doctor.” -- Energizer AAA 4 Pack.
"Warning -- Remove lock before driving." -- On a car lock which loops around both the clutch pedal and the steering wheel.
"Kills all kinds of insects! Warning: This spray is harmful to bees." -- On a can of insect spray.
"Caution: The contents of this bottle should not be fed to fish." -- On a bottle of shampoo for dogs.
"WARNING WHEN MOTOR IS RUNNING- THE BLADE IS TURNING!" -- On a lawnmower.
"For external use only!" -- On a curling iron.
“CAUTION! - Do NOT swallow nails! May cause irritation!” -- On a box of household nails.
"Not for highway use." – On Golf Cart.
“"Safe to use in households with pets. Warning: Fresh Care is NOT intended to be sprayed directly on pets." -- On Clorox Fresh Care: (for cleaning out odors from fabric)
"Warning: This product can burn eyes." -- On a curling iron.
"Do not use in shower." -- On a hair dryer.
"Do not use while sleeping." -- On a hair dryer.
"Do not use while sleeping or unconscious." -- On a hand-held massaging device.
"Recycled flush water unsafe for drinking." -- On a toilet at a public sports facility in Ann Arbor, Michigan.
"Shin pads cannot protect any part of the body they do not cover." -- On a pair of shin guards made for bicyclists.
"This product not intended for use as a dental drill." -- On an electric rotary tool.
"Caution: Do not spray in eyes." -- On a container of underarm deodorant.
"Do not drive with sunshield in place." -- On a cardboard sunshield that keeps the sun off the dashboard.
"Caution: This is not a safety protective device." -- On a plastic toy helmet used as a container for popcorn.
"Do not use near fire, flame, or sparks." -- On an "Aim-n-Flame" fireplace lighter.
"Do not eat toner." -- On a toner cartridge for a laser printer.
"Not intended for highway use." -- On a 13-inch wheel on a wheelbarrow.
"Caution! Contents hot!" -- On a Domino's Pizza box.
"Caution: Hot beverages are hot!" -- On a coffee cup.
"Do not use orally." -- On a toilet bowl cleaning brush.
"Warning: Do not use on eyes." -- In the manual for a heated seat cushion.
"Do not use for drying pets." -- In the manual for a microwave oven.
"For use on animals only." -- On an electric cattle prod.
"Remember, objects in the mirror are actually behind you." -- On a motorcycle helmet-mounted rear-view mirror.
"Warning: Riders of personal watercraft may suffer injury due to the forceful injection of water into body cavities either by falling into the water or while mounting the craft." -- In the manual for a jetski.
"Do not use as ear plugs." -- On a package of silly putty.
"Warning: knives are sharp!" -- On the packaging of a sharpening stone.
"Not for weight control." -- On a pack of Breath Savers.
"Twist top off with hands. Throw top away. Do not put top in mouth." -- On the label of a bottled drink.
"Do not use intimately." -- On a tube of deodorant.
"Warning: has been found to cause cancer in laboratory mice." -- On a box of rat poison.
"Cannot be made non-poisonous." -- On the back of a can of de-icing windshield fluid.
"Caution: Remove infant before folding for storage." -- On a portable stroller.
"Do not iron clothes on body." -- On packaging for a Rowenta iron.
"Beware! To touch these wires is instant death. Anyone found doing so will be prosecuted." -- On a sign at a railroad station.
"Warning: do not use if you have prostate problems." -- On a box of Midol PMS relief tablets.
"Product will be hot after heating." -- On a supermarket dessert box.
"Do not light in face. Do not expose to flame." -- On a lighter.
"Choking hazard: This toy is a small ball." -- On the label for a cheap rubber ball toy.
"Not for human consumption." -- On a package of dice.
"May be harmful if swallowed." -- On a shipment of hammers.
"Do not attempt to stop the blade with your hand." -- In the manual for a Swedish chainsaw.
"Do not dangle the mouse by its cable or throw the mouse at co-workers." -- From a manual for an SGI computer.
"Warning: May contain nuts." -- On a package of peanuts.
"Do not eat." -- On a slip of paper in a stereo box, referring to the styrofoam packing.
"Warning: May cause drowsiness." -- On a bottle of Nytol, a brand of sleeping pills.
"Warning: Misuse may cause injury or death." -- Stamped on the metal barrel of a .22 calibre rifle.
"Do not use orally after using rectally." -- In the instructions for an electric thermometer.
"Turn off motor before using this product." -- On the packaging for a chain saw file, used to sharpen the cutting teeth on the chain.
"Not to be used as a personal flotation device." -- On a 6x10 inch inflatable picture frame.
"Do not put in mouth." -- On a box of bottle rockets.
"Please remove before driving." -- On the back of a cardboard windshield (for keeping the car from getting too hot when parked).
"Remove plastic before eating." -- On the wrapper of a Fruit Roll-Up snack.
"Not dishwasher safe." -- On a remote control for a TV.
"Do not put lit candles on phone." -- On the instructions for a cordless phone.

Dex }:>=-
« Last Edit: August 16, 2002, 03:34:56 am by Dex Sinister »
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Dex Sinister

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Re:Question #1 (of a few)
« Reply #19 on: August 16, 2002, 04:45:12 am »


Jason - I must disagree - corporations, as instituted, are incompatible with a free society. They are responsible to no one and are only meagerly held in check by volumes and volumes of laws and regulations. To anyone who would disagree I would ask, "Why were all of those laws and regulations created in the first place?" Because of abuses - the same goes for the banking sector, the insurance sector, the stock market, etc. These abuses were made profitable because of limited liability. They are not, have not, and cannot be controlled by market forces alone - especially under the current system - they are monsters.


Ah, the old “we must need these regulations, because we have these regulations,” argument. You do realize, of course, that this reasoning has no substance? We must need speed limits on interstates, because we have speed limits. We must need concealed carry licenses, because there are laws against concealed carry. We must need mandatory warning labels on CD’s and cassettes, because we have them. <LOL>

Sure, let’s talk about banking – that’s an excellent example. We must need banking regulations, because everyone knows that the Savings & Loans did wacky things and cost the country billions, right?

Banks and S&L’s are not controllable by market forces alone: They have absolutely no need for depositors to trust the bank or S&L enough to store their money there. <Hmmm> That doesn’t seem exactly right, does it? Oh, that’s right – I forgot that banks and S&L’s don’t need to maintain a reputation as a responsible and trustworthy institution, because they have a magic talisman on the door. It says, “Deposits guaranteed by the F.D.I.C.,” so I don’t have to take any personal responsibility whatsoever to determine whether this is a safe place to store my money. “Hey, this must be a really great place, they pay 1 point under prime interest on all deposits, and have the lowest loan rates around!!! Wow, I’ll put my retirement savings here!”

Returning to reality, it is complete silliness to think that consumers cannot control corporations: The Ultra-Christians have made a good stab at putting Procter and Gamble out of business a number of times, just because their logo has a moon and 13 stars on it. The question is, has the government numbed the brains of consumers so that business reputation and good name are meaningless, and consumers no longer think before purchasing? Do you honestly expect me to believe that the entire S&L debacle would have happened if the S&L’s had to withstand the scrutiny of millions of customers, rather than a few government auditors? Sure, not everyone understands banking, but some do, and everyone is capable of studying reports by rating organizations.

And of course, when individuals don’t possess government guarantees that everything will always be okay, then when individuals are duped, the damage is automatically contained, not spread through society, and everyone else becomes that much more wary.  


Quote

Freedom necessitates responsibility…


Yup – the responsibility to evaluate risks for yourself, or to contract with people who can, not to whine that “corporate owners must pay” when government-encouraged lemmings all plunge off the cliff of fiscal irresponsibility.

The responsibility is with the consumer to pick a good auto mechanic for herself, not to wait until the government guarantees that all auto mechanics are the same and establishes labyrinth rules and regulations regarding auto repairs, and then pick an idiot and whine because she cannot sue the stockholders of the incorporated repair shop.

Reality: There are reputable businesses, and shady businesses. There are good risks and bad. There are talented people and talentless people. Good businesses and people will be good regardless of the laws – the laws are not necessary to restrain them, any more than laws are necessary to restrain you from becoming a mass-murderer. The restraint of the dishonest in business is reputation and the intelligent consumer. The enemy of this restraint is government guarantees and standards.

Dex }:>=-
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SnowDog

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Re:Question #1 (of a few)
« Reply #20 on: August 16, 2002, 04:48:18 am »

But what constitutional basis is there for limited liability?

It's an implementation detail!

The purpose is not to shirk the responsibiliy, but to place it more in line with the people who make the decisions. Let's take your idea that non-voting stock would be issued, with the same rights as common stock, with the exception that the holders would not be allowed to vote. I, too, believe that this is the likely result of breaking-down the limited liability barrier. Given that all responsibilities of the corporation to both types of shareholders are equal, EVERYONE would buy the non-voting stock, with the exception of those who controlled the company. In every case, there would be only a handful of people who owned voting rights, and in many cases there would be only one person owning this stock, given the tremendous risk he would be putting himself in, if he did purchase such stock. Bill Gates would own Microsoft. He would be personally responsible for every decision that Microsoft made. If Microsoft went bankrupt, he would personally be ruined and penniless. Given the large number of people involved in running a major corporation, why should he be responsible for every decision made by everyone in his corporation, to this degree. Why would he want to stay involved with this company, for more than a few years? How could he sleep at night, with the uncertainty that he might wake-up with some serious lawsuit threatening him, the next day? Every day? Remember the Texaco/Pennzoil Lawsuit, in the 1980s. Pennzoild sued Texaco and WON for 11 BILLION dollars. A decision by a mid-level manager, (as I remember it), would have put Texaco out of business, if the judgement had not been reduced. Under your model, the ONE owner could have been wiped-out and made penniless, even though he was not involved in the mistakes his company made.  Implementing Limited Liability in a corporate structure is an attempt to correct this type of injustice. It's not designed to shirk responsibility.

Make those who commit volitional wrongs, responsible for those wrongs. Hold those people accountable for their misdeeds. Fraud, (as in Enron's case), is wrong. If those responsible cannot be prosecuted, then change the law, but don't hold 'other' people responsible simply because they have ownership.

Craig (Houston)
« Last Edit: August 16, 2002, 04:50:47 am by SnowDog »
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marciesmom

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Re:Question #1 (of a few)
« Reply #21 on: August 16, 2002, 08:42:49 am »

Fully-informed juries and well-placed constitutionalist judges will go a LONG way toward curbing some of these abuses.  It will take YEARS to weed out all the thousands of regulations given to corporations by the fed and state governments, but well-placed judges and juries can set things right by one correct ruling.  ('Course, that means you gotta get the judges in place, and you gotta inform juries. . . .but that might be easier than getting rid of all those regs!)
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Reaper

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Re:Question #1 (of a few)
« Reply #22 on: August 16, 2002, 08:47:57 am »

"For external use only!" -- On a curling iron.


Now that's kinky!  Who would have thought of doing that on their own?
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maestro

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Re:Question #1 (of a few)
« Reply #23 on: August 16, 2002, 10:10:26 am »

I've been informed of a well-written article that answers the vast majority of my questions and works out most of the issues I have with corporations in a libertarian society:

http://www.anti-state.com/mccracken/mccracken1.html

Given this information I must re-evaluate my idea.

However, in response to Dex Sinister's comments, I agree that removing incorporation would be a painful thing, but so is privatizing roads, and removing social services.  The problems that you brought up are problems with a corrupt tort system, and are an entirely separate issue.

And to SnowDog, being able to sue someone into bankruptcy for an honest mistake is a problem itself, and holds no bearing on the theory I described.  The problems you mentioned exist regardless, and merely result in the death of a corp instead of a bankruptcy of an individual.
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JasonPSorens

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Re:Question #1 (of a few)
« Reply #24 on: August 16, 2002, 10:37:51 am »


"Why were all of those laws and regulations created in the first place?" Because of abuses - the same goes for the banking sector, the insurance sector, the stock market, etc.


No, that's not really true.  The government regulated them because the government likes regulation, and politicians like to demagogue against "evil corporations."  Of course there have been abuses, but these can be handled by the tort system if they are truly cases of violations of rights.

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These abuses were made profitable because of limited liability. They are not, have not, and cannot be controlled by market forces alone - especially under the current system - they are monsters.


The market system is the only effective way to discipline corporations.  When corporations pursue their business honestly, as most of them do, they generate huge benefits for the economy.  What's your alternative: socialism?

Quote

Here is a sub-question to my original - how is a stock market compatible with a free society?


Err, a better question is, How could banning a stock market be compatible with a free society?  The stock market is a wonderful example of free trade in action.
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LaissezFaire

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Re:Question #1 (of a few)
« Reply #25 on: August 16, 2002, 10:52:23 am »

No, that's not really true.  The government regulated them because the government likes regulation, and politicians like to demagogue against "evil corporations."  Of course there have been abuses, but these can be handled by the tort system if they are truly cases of violations of rights.

You shouldn't discount that many corporations are the ones advocating increased regulations.  Higher regulations lead to higher barriers to entry which leads to increased profits.

Quote
The market system is the only effective way to discipline corporations.  When corporations pursue their business honestly, as most of them do, they generate huge benefits for the economy.  What's your alternative: socialism?

Again, when did advocating the free market become advocating for "corporations"? (all of them? just the good ones?).  You are correct that most businesses are honest, but we must never forget that a large percentage of the Fortune 500 feeds at the State trough.

Contrary to Ayn Rand, Big Business is not our friend.  What we have today is socialism for corporations...which is just as unjust as any type of Statism.
« Last Edit: August 16, 2002, 11:03:17 am by mcgrath »
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JasonPSorens

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Re:Question #1 (of a few)
« Reply #26 on: August 16, 2002, 11:11:56 am »


You shouldn't discount that many corporations are the ones advocating increased regulations.  Higher regulations lead to higher barriers to entry which leads to increased profits.


Absolutely.  But corporations aren't a threat unless you have big government.  They are a big threat when combined with big government.

Quote

Again, when did advocating the free market become advocating for "corporations"? (all of them? just the good ones?).  You are correct that most businesses are honest, but we must never forget that a large percentage of the Fortune 500 feeds at the State trough.


I would say a minority of the Fortune 500 are on net subsidized by the government.  Most businesses on there are there because they supply goods and services that customers want.  There are a few egregious exceptions, like ADM.
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Re:Question #1 (of a few)
« Reply #27 on: August 16, 2002, 11:42:57 am »

Stockowners of a corporation have liability for all decision of the management of that corporation.  It is just that that liability is limited to their investment in the company.  To attempt to extend that liability beyond those limits would severely limit access to capital.  Since corporations are state based legal entities, any state (the FSP) could make changes to the rules of incorporation eliminating this protection.  However, corporations can, and do, incorporate in the states that provide them the best financial and legal benefits.  If any state were to present an environment that was perceived to be risky or anti-corporation, you could, and probably would, reduce the number of corporations willing to do business in that state.

OK, now for the judgment part.  I thought that part of the FSP was support for a free-market economy.  Wouldn’t any state legislation that 1) limited access to capital, and 2) potentially restricted the entry of sellers into a market be a form of protectionism, similar in result to tariffs and government licensure?  It seems that this forum has attracted both free-marketers, and anti-capitalists.  Free markets are critical to a free society, attempting to restrict the growth of corporations, or partnerships, or companies would seem to me to be incompatible with a free-market based society.
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Re:Question #1 (of a few)
« Reply #28 on: August 16, 2002, 11:49:06 am »

I am far from being an anticapitalist.  I am free-market, but I have reservations about limited liability corporations.

Removing government support _also_ lowers available capital.  Just because something makes it more difficult to run a business doesn't mean that it is anti-business.  I question the right of the government to grant limited liability in the first place.  That limited liability creates an artificial level of security for the investor, which is why capital is increased in this situation.  

But should we abandon our libertarian ideals for the benefit of maintaining artificially high levels of capital?  

However, once again the article who's address I posted above ameliorates most of my concerns and shows how the limited liability construct can be market-driven, rather than state-driven, and that it _is_ a feasible system within libertarian ideals.
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LaissezFaire

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Re:Question #1 (of a few)
« Reply #29 on: August 16, 2002, 12:24:00 pm »

But is capital really increased by limited liability? To quote a famous frenchman "What is seen and what is not seen" - though limited liability may protect investors, the capital is still wasted when the corporation fails.  By protecting investors from paying for their errors, the State encourages ventures that waste capital.

A wonderful insight I had from a discussion with Lee McCracken on the issue of torts/reguations:  As torts/reguations are controlled by the State, these are really actions of price fixing.  If the State-mandated penalties are too high, the State encourages frivolous lawsuits.  If they are set too low, the State encourages companies to violate the property rights of others.  

Therefor the TRUE price for justice can only be discovered through a free market system of justice.
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