From: Randall Randall (randall@randallsquared.com)
Date: Thu Sep 11 2003 - 13:23:31 MDT
On Thursday, September 11, 2003, at 01:42 PM, Brendan Coffey wrote:
> On Thu, Sep 11, 2003 at 05:30:40AM -0400, Randall Randall wrote:
> It boils down to the simple fact that the state considers the
> biological
> bodies of its citizens to be its property. You don't own your body or
> brain, as far as (as far as I know) any modern state-entity (of which
> you might be a citizen) is concerned.
That does make sense.
>> Therefore, when I suggest the
>> abolition of that entire class of crimes, I don't mean that every
>> crime in the class should be likewise abolished.
>>
> This seems nonsensical to me. "When I suggest the abolition of an
> entire class of crimes, I don't mean that every crime in the class
> should
> be abolished." I don't understand.
What I mean is that, as I'd prefer that no State exist, there can
hardly be crimes against the State, though specific things that are
considered crimes against the State under our present legal systems
might still be criminal (murder, to use the example used before).
I'm just saying that the fact that States appropriate murder as a
"crime against the State" does not indicate that in a world without
States, murder wouldn't be a crime.
>> If we remove this obfuscation of offenses, so that all offenses are
>> against an individual or group of individuals, it's clear that
>> removing liability without the express consent of those who would
>> otherwise be able to collect damages is simply legalization of
>> aggression.
>>
> Huh, that's interesting. The problem that I see is that negotiating
> limitations of liability on a per-relationship or, worse, situational
> basis would make a market economy logistically prohibitive. There has
What? Trying to negotiate a limitation of liability seems like a
bald statement that you intend to employ force or fraud. I agree
that if many people attempted to get out of responsibility for
their actions before every transaction, you wouldn't have much of
a market. It hardly seems that the proper solution is to exempt
entire classes of people from the consequences of their actions,
however!
> to be some body of consensus about what patterns liability limitations
> generally fall into, so that one can pull the appropriate boilerplate
> language on cue and move directly into a transaction. State and
> federal
> contract and corporate law seems to be our current best stab at this.
> Most suggestions that I hear libertarian-types make for any systems to
> supplant this seem pretty laughable.
I agree that there would likely be a basic legal framework that nearly
everyone uses for market transactions. I don't expect that framework
to include consequence-free fraud, however.
More to the point, the more worrying problems are limited liability
with respect to people not engaged directly in a transaction with the
company. If a factory's pipes leak chemicals into groundwater that
maim the neighborhood children, the owners of the company should not
be protected from the liability of the company for the situation.
Negotiation of limited liability doesn't even apply here; the people
in the area may have had no market transactions with the factory
that would prompt them to enter a contract, so the only way that
limited liability would apply is by State fiat.
>> Instead of having a separate requirement for carrying insurance, why
>> not
>> let the managers/owners of the business itself choose whether to carry
>> such insurance? Removing some market feedback mechanism (liability
>> for
>> one's actions, in this case) always seems to require one or more other
>> changes. Each of these changes distort the market in other areas in
>> some (possibly small) way, which eventually look like "market
>> problems"
>> to politicians, who then campaign to fix them with more patches.
>>
> The subject is liability limitation, not liability removal. Right?
The "limited liability company" limits liability to the assets which are
owned through the company, but not other assets of the owners of the
company.
If you have an accident, you're expected to pay the costs to others
of that accident (and probably have insurance for that). If a limited
liability company has an accident, the owners are not expected to pay
the costs if those costs exceed the value of the company. So it isn't
that liability is limited for the company; it's that the company is a
way to remove liability from the owners of their own actions.
Rafal was saying, if I understand correctly, that the way to fix the
obvious problem of the owners not being liable is to legally require
the company to have insurance, so that the value of the company isn't
a limit to the possible damages. This seems like a kludge to me,
because it leads to more intervention. In a few years, someone will
notice that insurance rates are higher every year, since the insurance
companies have a captive market. So let's put a cap on insurance rates
to fix the new problem! But them someone has to decide what that cap
should be, and if they fail to predict what the level would have been
in a free market for insurance, the difference will cause other
problems.
It just doesn't end. You can patch these problems in every legislative
session, or you can remove the root cause. If you remove all the root
causes, you'll have a free market, and anarchy.
> And it seems like a fairly simple and obvious fact that, while it
> would be
> NICE if we lived in a universe where everyone had the luxury of
> sufficient
> time, knowledge, and mental capacity to evaluate all of their risk in
> any investment or other situation, we don't, and we're never going to.
> In order for there to be any non-institutional investment on any wide
> scale, there has to be some repository of trust, however cobbled
> together.
I have no problem with that statement, as worded.
>> If, instead, you just use a rule of "one is responsible for one's own
>> actions", and rigorously enforce it, then exceptions which arise will
>> be purely voluntary and can be contract-based. Liability cannot be
>> limited by fiat, but it can be assumed by contract, which will often
>> have the effect you want, above.
>>
> Again, I think this will lead to an established set of generally
> accepted
> liability-limitation formulas, which is essentially what we have now.
> When you see that my company's name is Brendan Coffey's Spiffy Con
> Job, LLC,
> you know a great deal about what liability I (contractually) accept
> and refuse.
>
> If you don't like LLCs, don't do business with one. I don't see that
> the
> system you're (vaguely) describing would be functionally different.
While people doing business with you are more likely to be affected
by you, this doesn't help the people who were just bystanders.
>>> Abolishing LLC would change little in the economy, except for some
>>> names,
>>> decreased reliance on stock for funding, increases in reliance on
>>> credit,
>>> and maybe increased use of commercial insurance by businesses. The
>>> non-professional investor would lose, and consumers would not gain.
>>
>> It seems to me that a statement that little would change in the
>> economy
>> is equivalent to a statement that you can centrally plan this aspect
>> of
>> the economy, and by extension, all aspects which it touches. I'm very
>> skeptical of this kind of statement, since I'm unaware of any clear
>> examples of the success of economic central planning.
>>
> So, how do you feel that LLC is different from a subchapter S or C
> corporation in its negative effect? Should incorporation in general
> be abolished?
I'm not up on the liability of owners of S corps, but C corps are
certainly limited liability companies, so everything I've been saying
applies.
If two or more people want to jointly own a venture, that's their
business, and their own problem to work out the details. When something
happens to cause that venture to acquire debt, however, I expect that
debt to be paid, and if necessary, I expect the owners to cough up the
value to set things right. The only exception I'll make is if the terms
of the debt itself state that only company assets can be used to pay the
debt.
This has probably been very boring for most people on this list,
but I hope I answered your questions about my opinion. :)
-- Randall Randall <randall@randallsquared.com> "When you advocate any government action, you must first believe that violence is the best answer to the question at hand." -- Allen Thornton
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