A Free-Market Path to Corporate Reform

Posted by $ CBJ 4 months, 3 weeks ago to Economics
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A libertarian perspective on the question of whether corporations are compatible with the free market.
SOURCE URL: http://www.libertyunbound.com/node/2109


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  • Posted by Owlsrayne 4 months, 3 weeks ago
    Corporations may have to rethink their outsourcing of components that are manufactured in Asian countries in particular China. Free market reform may happen sooner because of the potential near epidemic diseases occurring in that part of the world. They may have to bring may of those facilities back to the western hemisphere. If outsourced manufacturing could be done in stable Latin American countries product delivery times would shorter. there is a possibility that prices could rise a little.
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  • Posted by $ mshupe 4 months, 3 weeks ago
    Do you advocate the dissolution of corporations as a limited-liability association of individuals?
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    • Posted by $ 4 months, 3 weeks ago
      I don’t favor the dissolution of any existing corporation. I believe that a corporation has the same rights and responsibilities as any other group of individuals. Accordingly, a corporation should be treated under the law in the same manner as any other type of organization. If laws are passed to limit the liability of corporations, such limits should apply equally, for example, to sole proprietorships and individually owned businesses.
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      • Posted by $ mshupe 4 months, 3 weeks ago
        It seems the article is proposing the elimination of corporate entities, one of whose primary attributes, which is limited liability. This does not apply to corporate assets, it applies to personal liability. There are other statutes that deal with officer malfeasance.
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        • Posted by $ 4 months, 3 weeks ago
          The article is proposing that any limits on corporate liability should apply equally to all other types of businesses, such as partnerships and sole proprietorships.
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  • Posted by $ blarman 4 months, 3 weeks ago
    "we can identify specific government policies that enable and encourage corporate dominance"

    That's always been the problem. It isn't the "economies" which set these rules, but government players who seek to distort the market for their own gains.

    Should business owners be personally liable for absolutely everything, however? I don't believe such a thing is prudent and the existence of both current law and legal precedent enabling business owners guilty of especially egregious behaviors to be prosecuted individually provides the necessary feedback - not to mention the advent of social media where a company owner's missteps immediately become headlines.

    "Since corporations can own, buy, and sell one another, a privilege rightly denied to individuals, it is easy to establish a chain of corporate ownership to conceal the identity of the true owners, by setting up the controlling corporations in different domestic jurisdictions or in other countries."

    First, I'm not sure why one would interject slavery here. Business transactions - including the selling of a corporation to another - are voluntary transactions. The rest is nonsense. When you file for a corporate tax ID you have to state who the controllers of the company are and if you engage in fraud (such as the creation of shell companies) you can be prosecuted accordingly.

    "The competitive advantages conferred by government permit corporations to grow larger than they would in a free market..."

    For example health insurance companies. Again, the problem here is government-protected monopolization, not the free market.

    "The nonaggression principle logically leads to this conclusion: any activities that are legally and morally legitimate for corporations should be equally legitimate for all other private, voluntary groups of people."

    As the Citizens United SCOTUS case pointed out, regulations on corporations are regulations on the people who run the corporation. Corporations aren't independent entities except as a construction for legal/marketing purposes. They don't have wills of their own.

    "An unincorporated business should have exactly the same standing under the law as an incorporated business in matters such as taxation, liability, reporting requirements, and recognition of contracts."

    The entire reason one registers is to simplify ALL of that. Registration is a method of reducing redundant overhead. It serves a valid and efficient purpose beyond simply government oversight.

    I can't go on from here. While the author is trying very hard to promote some good ideas, he/she lacks the fundamental understanding necessary to make a sound case.
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    • Posted by $ 4 months, 3 weeks ago
      RE: “First, I'm not sure why one would interject slavery here. Business transactions - including the selling of a corporation to another - are voluntary transactions. The rest is nonsense.” The selling of slaves from one slaveholder to another was also once a voluntary transaction. The voluntary nature of a transaction is irrelevant if the item being bought and sold is not a legitimate product in a free economy.

      RE: ” When you file for a corporate tax ID you have to state who the controllers of the company are and if you engage in fraud (such as the creation of shell companies) you can be prosecuted accordingly.” That’s fine in theory, but in practice not so easy. As the article points out, “Suing a corporation is a difficult, expensive and time-consuming process — much more so than suing another person. A corporation can easily dissolve or go bankrupt, even as its owners continue to prosper. A judge’s approval is usually needed to “pierce the corporate veil” and sue the owners directly. Such approval can be difficult or impossible to obtain, especially in jurisdictions that advertise themselves as friendly to corporations.”

      RE: “. . . the problem here is government-protected monopolization, not the free market.” This government-protected monopolization is greatly facilitated by the privileged status of corporations in Western economies.

      RE: “ . . . regulations on corporations are regulations on the people who run the corporation.” Only in their capacity as corporate officers. The people who run the corporations are free to use their own money for any and all legal purposes.

      RE: “The entire reason one registers is to simplify ALL of that. Registration is a method of reducing redundant overhead. It serves a valid and efficient purpose beyond simply government oversight.”

      No, the entire reason most companies register is to obtain the anti-free-market privileges that corporations enjoy, especially “limited liability”. The major “efficiency” created by this process is enabling government to more efficiently exercise control over a corporation’s activities.

      And even if your above statements were true, validity and efficiency are not more important than protection of individual rights. As the article points out, and as we see around us every day, the legally privileged position of corporations makes it exceptionally difficult and expensive for individuals to sue or prosecute them. “Suing a corporation is a difficult, expensive and time-consuming process — much more so than suing another person. A corporation can easily dissolve or go bankrupt, even as its owners continue to prosper. A judge’s approval is usually needed to “pierce the corporate veil” and sue the owners directly. Such approval can be difficult or impossible to obtain, especially in jurisdictions that advertise themselves as friendly to corporations.”
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      • Posted by $ blarman 4 months, 3 weeks ago
        "The voluntary nature of a transaction is irrelevant if the item being bought and sold is not a legitimate product in a free economy."

        Granted. Is the argument that businesses are illegitimate products? If you try to argue that, you're also arguing that stocks and bonds are also illegitimate... You're also arguing to eliminate certain forms of business governance, specifically any collaborative efforts...

        "That’s fine in theory, but in practice not so easy."

        It's actually absurdly easy to sue a corporation - especially in the US where each party must bear their own litigation costs. What's harder is winning - especially proving injury and intent to the degree necessary to prove personal liability. But I must ask this specific question: WHY? Why is it specifically necessary in all but the most egregious cases to sue the owners of a company personally?

        "This government-protected monopolization is greatly facilitated by the privileged status of corporations in Western economies."

        Government-protected monopolies exist because of individuals in government seeking to profit from their power/position. I hardly see how being a corporation or not simplifies this as ultimately it still comes down to people - not the ephemeral entity called a "corporation." If you want to make a case, do more than simply restating your premise.

        "Only in their capacity as corporate officers. The people who run the corporations are free to use their own money for any and all legal purposes."

        Uh, corporate officers are the ones who "run the corporations..." They're also the ones who bear the brunt of the risk in running a corporation - and are compensated accordingly. I'm not sure what you're trying to say here...

        "No, the entire reason most companies register is to obtain ... “limited liability”."

        What are your specific objections to limited liability?

        "A corporation can easily dissolve or go bankrupt, even as its owners continue to prosper."

        Two out of three entrepreneurial endeavors fail. So you would punish them further for that failure? I'm seriously asking here because I don't think you're considering anything downstream. I'm not trying to protect egregious behavior like fraud or embezzlement - for which one may "pierce the corporate veil" - but what situations justify punitive retribution of the nature you are inviting?
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        • Posted by $ 4 months, 3 weeks ago
          Businesses are not illegitimate products. Corporations with special state-granted privileges that are not given to other businesses, are illegitimate products.

          I don’t have any specific objections to limited liability. I do have specific objections to governments applying a different standard of liability for corporations than for other types of firms. A government based on Objectivist principles would not discriminate between corporate businesses and non-corporate businesses, regarding the manner in which it fulfills its proper function of protecting individual rights. If specific limits of liability are objectively valid when applied to corporations, those limits are objectively equally valid when applied, for example, to business partnerships or sole proprietorships.
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          • Posted by $ blarman 4 months, 3 weeks ago
            A business is nothing more than a marketing tool. They are brands to associate consumers with goods and services. Business names and the marketing which goes with them are products of the mind. If you consider them illegitimate I guess that's up to you but I find nothing objective in such a declaration.

            "Corporations with special state-granted privileges that are not given to other businesses..."

            I agree that state-granted monopolies such as those in health insurance are unfair market distortions and should be eliminated. Beyond that, what is your example? And again, are those the faults of the businesses, or the government workers seeking to profit? I argue the latter.

            "I don’t have any specific objections to limited liability."

            You cite it as your major objection to the registration of businesses, yet you have no specific issue with it? I guess I'm confused as to what your opposition is, precisely, if not that.

            "I do have specific objections to governments applying a different standard of liability for corporations than for other types of firms."

            Such as? I'm looking for examples here because I'm trying to connect the arguments you present with the realities of life and I'm having a really hard time doing so. I have an MBA. I've studied business and business law and I'm really struggling to come up with real examples of the disparities you claim. Are there resource disparities based on the size of the business? Certainly. But legal disparities? You're going to have to cite some for me.

            "If specific limits of liability are objectively valid when applied to corporations, those limits are objectively equally valid when applied, for example, to business partnerships or sole proprietorships."

            I'd encourage you to speak with a business lawyer before you go too much further here, because the primary difference between corporation types is in their governing structure - not their legal liability. Even sole proprietors may register their businesses so they can separate their personal assets from their corporate assets for legal (and taxation) purposes. (BTW - you're far better off to register as an LLC than remain a sole proprietorship because of mixing of funds and the resulting legal liability.)

            My parents (one a retired electrical engineer with a Master's Degree and the other an MBA/CPA) run a business - registered as an LLC - out of their home. They have a registered business name because it helps them market their products more effectively. They maintain two sets of books - one for personal finances and the other for business expenses - so that they can accurately pay income taxes and protect their personal assets in the case of a lawsuit. They are treated no differently than an incorporated business or a partnership when it comes to legal protections. If someone wanted to come after my parents' personal assets as the result of a product recall, for example, they would have to demonstrate malice or fraud. Otherwise the only assets they can legally attach (assuming they win their lawsuit) are those of the business. They wouldn't be able to come after my dad's 401K, etc. or the house they live in.

            My sister is a lawyer and recently helped defend them in a lawsuit for ownership of the company where the plaintiff was trying to sue them personally and was denied because he couldn't demonstrate sufficient cause. They had to pay for that representation out of their own pocket even though they ultimately prevailed in the lawsuit - which took more than two years to resolve. My personal experiences tell a very different story than the one being presented here.
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            • Posted by $ 4 months, 3 weeks ago
              I think your personal experiences tell the exact same story as the one being presented here!

              Your parents’ story presents a compelling example of an aspect of our legal system that, in my view, violates free-market principles. Suppose your parents had been sued in a non-business-related matter. Shouldn’t they be entitled to the same level of asset protection – i.e., requiring the same level of “sufficient cause” – as was the case in the actual situation?

              Or suppose your parents had chosen not to incorporate their business? Again, shouldn’t they be entitled to the same level of asset protection – i.e., requiring the same level of “sufficient cause” – as was the case in the actual situation?

              If “a business is nothing more than a marketing tool,” why should your parents’ legal protections have been any different if they had chosen not to convert their “marketing tool” into a state-sanctioned corporation or LLC with its attendant expenses (such as registration fees and annual fees), reporting requirements, and other complexities imposed by the state, such as having a registered agent, board of directors meetings, etc.?

              I do not object to your parents’ right to protection of their property by the government. But I do object to the government making full enforcement of that right contingent upon them setting up a corporation and agreeing to submit to the state’s corporate requirements. As the article says, “An unincorporated business should have exactly the same standing under the law as an incorporated business in matters such as taxation, liability, reporting requirements, and recognition of contracts. Aside from protecting the rights of third parties, governments should have no say regarding any firm’s form of organization, purpose, or method of operation. Legal protections extended to corporations should be equally available to all other groups.”

              I think that equal treatment, such as that described above, is a necessary feature of any system of objective law.
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              • Posted by $ blarman 4 months, 3 weeks ago
                "Suppose your parents had been sued in a non-business-related matter. Shouldn’t they be entitled to the same level of asset protection..."

                It all has to do with the content of the suit. Let's say the suit was a personal injury suit because my father had initiated an automobile accident. Since it has nothing to do with his business, it doesn't make any sense to enable the injured party to go after my father's business interests. But is not the injured party entitled to apply for redress? Certainly. Since my father would be personally responsible, his personal assets would be the target for a suit seeking remuneration, would it not? I don't think you understand the legal differences you claim to find umbrage in.

                "Or suppose your parents had chosen not to incorporate their business? Again, shouldn’t they be entitled to the same level of asset protection – i.e., requiring the same level of “sufficient cause” – as was the case in the actual situation?"

                Again, no. One of the key steps a business owner must demonstrate when they are sued is that they have made a verifiable effort to keep their business affairs and personal affairs separate. A failure to show this such as with personal use of business funds or the co-mingling of business and personal funds exposes their personal assets to liability.

                "If “a business is nothing more than a marketing tool,” why should your parents’ legal protections have been any different..."

                Why should someone be entitled to legal protection they did not apply for nor qualify for? See below for more.

                "But I do object to the government making full enforcement of that right contingent upon them setting up a corporation and agreeing to submit to the state’s corporate requirements."

                So let's take a step back here and look at one of the key roles of government's judicial branch: to arbitrate disputes. It does so based on rules and guidelines set up and agreed upon by society - commonly through their elected officials in the legislative branch. The judge then applies those rules to the facts of the case and issues a ruling to be enforced by the executive branch. I have no problem with fairness and applying the same rules to everyone the same way. I do have a problem with extending reserved protections to those who have not met the threshold for qualification. That's like saying that just because Mexicans are people just like Americans they should be entitled to receive American drivers' licenses and be able to participate in American elections even though they haven't met the sovereignty requirement.

                Now you can certainly take issue with the methods by which one registers their business if there are disparities of note and I will be happy to join you in such. But the key here is that if one is going to apply to the State for redress of grievances, one doesn't get to apply their own arbitrary rules or conditions upon the State's involvement. One of those is commonly the requirement that a business register with the State. In doing so, they place dispute resolution into the hands of State judicial tribunals and accept their rulings. You don't get to have it both ways.

                "I think that equal treatment, such as that described above, is a necessary feature of any system of objective law."

                You are missing one very key ingredient here: that the circumstances must also be equal. Otherwise you are arguing that there is no difference between apples and oranges simply because both are fruit. Legal treatment is entirely dependent on the circumstances of the case and applying the laws the same to substantially equivalent facts.
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                • Posted by $ 4 months, 3 weeks ago
                  “Let's say the suit was a personal injury suit because my father had initiated an automobile accident. Since it has nothing to do with his business, it doesn't make any sense to enable the injured party to go after my father's business interests.”

                  Using this logic, no one bringing a personal injury suit would be able to go after, for example, the stock held in a defendant’s brokerage account, since those stocks are “business interests”.

                  ”But is not the injured party entitled to apply for redress? Certainly. Since my father would be personally responsible, his personal assets would be the target for a suit seeking remuneration, would it not?”

                  So ownership of a business is not a “personal asset”? And if 100% of a defendant’s assets are tied up in his business, the injured party is out of luck? This may well be the case in some jurisdictions today, but it is certainly not something that would be acceptable in a system of objective law.

                  ”I don't think you understand the legal differences you claim to find umbrage in.”

                  I understand the legal differences very well. I don’t agree with them.

                  ”One of the key steps a business owner must demonstrate when they are sued is that they have made a verifiable effort to keep their business affairs and personal affairs separate.”

                  Please show any evidence that a system of objective law requires such a distinction. The fact that such a requirement exists in today’s system of non-objective law is not an argument for its validity.

                  ”Why should someone be entitled to legal protection they did not apply for nor qualify for?”

                  Please show any evidence that a person should have to “qualify for” protection of their property rights by registering a corporation with the state, under a system of objective law. Legal protection should not be an “entitlement” that can be obtained only by jumping through whatever bureaucratic hoops the state chooses to set up.

                  ”I do have a problem with extending reserved protections to those who have not met the threshold for qualification.”

                  Please show any evidence that a set of “reserved protections” is permissible under a system of objective law. You seem to be treating today’s legal state of affairs as if it meets the “threshold” of moral validity under a system of objective law. It does not.

                  ”. . . if one is going to apply to the State for redress of grievances, one doesn't get to apply their own arbitrary rules or conditions upon the State's involvement.”

                  It is the State that is applying its own arbitrary rules as a condition for enforcement of a person’s property rights. And the State is creating a double standard in the process.

                  ”You are missing one very key ingredient here: that the circumstances must also be equal.”

                  If the only difference in circumstances is that one business is incorporated and another one is not, then in moral terms the circumstances are equal, and the business owners are entitled to equal protection of the law.
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                  • Posted by $ blarman 4 months, 2 weeks ago
                    "Using this logic, no one bringing a personal injury suit would be able to go after, for example, the stock held in a defendant’s brokerage account, since those stocks are “business interests”.

                    If the stocks are owned personally, they are personal assets. Seriously. This really isn't nearly as difficult as you're trying to make it.

                    (PS - it is incredibly rare that a judge would permit a plaintiff to attach stocks directly given that they don't really have a fixed value. In most cases, the plaintiff asks for remuneration in general terms to be taken from the property assets of the defendant and the defendant - if they lose the suit - must then liquidate enough personal assets to satisfy the remunerative request. One can settle for a direct exchange of specific assets - see "Fletch Lives" - but that isn't usually decided by the courts directly but in private settlement.)

                    "So ownership of a business is not a “personal asset”?"

                    The business is a separate legal entity. Control is determined by the structure of the business and who owns how much of that ownership stake. Are the shares of ownership or control in the company personal assets? Yes. But not the company itself.

                    "Please show any evidence that a system of objective law requires such a distinction."

                    You're the one supposedly arguing an "objective" system of law. The burden of justification falls to you - not me. I'm just pointing out the flaws in your proposition. For example:

                    Would you agree that in the case of a dispute, the first responsibility of the disputing parties is to try and sort the mess out among themselves? Sure. And if that fails, they can apply to an arbiter, correct?

                    So let's consider the case of the arbiter, who is primarily concerned with his/her own individual pursuits. Why should they take on the role of arbiter in the first place? They have to be compensated for their time/expertise, but they also have to be assured that their decisions are authoritative and are going to be respected. Otherwise they are wasting their time. That means that the two petitioning parties must accept the superiority and final judgement of the arbiter before the case is even heard.

                    When one registers a business, part of that process is declaring under what jurisdiction and rules that business may be the party of a lawsuit. Many businesses incorporate in Delaware because it has business-friendly rules. Few incorporate in California because they place the burden of proof on the business to defend themselves. The long and the short of it is that businesses choose jurisdictions for arbitration which conform to their needs. Your proposal would make it so that the consumer seeking to sue would get to arbitrarily decide for both parties where the suit would be heard and under what rules. Where is the respect for the rights of the business owner under your rules? Answer: they are necessarily subjugated regardless the merits of the suit.

                    "Legal protection should not be an “entitlement” that can be obtained only by jumping through whatever bureaucratic hoops the state chooses to set up."

                    Ummm... where does "legal protection" come from in the first place? If you want to deal with justice in a civilized manner that means establishing a governing body and ceding to it control over certain rulemaking authority, adjudication of violations of those rules, and law enforcement. In a representative society, all those things are hashed out by elected officials. Therefore that legal protection comes as a direct result of an individual taking specific action - i.e. qualifications such as voting, paying taxes, etc.

                    If you want to go anarchist, all you have is vigilante justice. You don't have systematic adjudication without the system.

                    "...under a system of objective law. You seem to be treating today’s legal state of affairs as if it meets the “threshold” of moral validity under a system of objective law. It does not."

                    That's your contention to prove. You're the one attempting to define an "objective" system of law so you can say whether or not you consider something either moral or immoral under that description or not. But can you persuade me to adopt the same? THAT is the real question.

                    "It is the State that is applying its own arbitrary rules as a condition for enforcement of a person’s property rights. And the State is creating a double standard in the process."

                    "The State" is just as nebulous a concept as a business entity. "The State" is a boogeyman and distraction. Who really makes decisions? Individuals. Can individuals who acquire power attempt to set forth and enforce laws which are inequitable? Certainly. Is it a moral definitive, however, that all rules created by elected officials are arbitrary or immoral, however? No. To argue any such is an absolutism easily defeated with the simple example of laws prohibiting murder.

                    Can we show examples where an individual's property rights have been infringed by certain laws? We highlight those all the time here in the Gulch. A couple of examples to me include the Obama administration's interpretations of the "navigable rivers" portion of the Clean Water Act as well as the current state of civil forfeiture laws regarding suspected criminal activity. I'm certainly not saying that infringements don't happen. I just don't agree that the nebulous concept of "government" is immoral per se as you seem to claim. Without the institution of government, you have no arbitration in the first place.

                    "If the only difference in circumstances is that one business is incorporated and another one is not, then in moral terms the circumstances are equal, and the business owners are entitled to equal protection of the law."

                    If one business is properly registered and another is not, the circumstances are materially different - no matter what you want to argue.

                    Simple example: A business in China manufactures consumer goods which it then exports to another nation - for example we'll use the United States. The consumer argues that there are material defects in a product. Where does one litigate the suit? In the United States... but why? Because by law, any firm seeking to do business in the United States must subject themselves to the jurisdiction of the United States. Take that away and where does the consumer go to seek redress? China? Are you beginning to see the problems that your definitions introduce?
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                    • Posted by $ 4 months, 2 weeks ago
                      I just don't agree that the nebulous concept of "government" is immoral per se as you seem to claim. Without the institution of government, you have no arbitration in the first place.

                      I’m an advocate of limited government, as understood in Objectivist terms. I never stated or implied otherwise.

                      If the stocks are owned personally, they are personal assets.

                      And if a business is owned personally, it is not a personal asset?

                      Are the shares of ownership or control in the company personal assets? Yes. But not the company itself.

                      So if you own 100% of the shares of a business, are they a personal asset or not?

                      "The State" is just as nebulous a concept as a business entity. "The State" is a boogeyman and distraction.

                      Really? You’re the one who brought up the State (with a capital “S”) in the first place. You said, “But the key here is that if one is going to apply to the State for redress of grievances, one doesn't get to apply their own arbitrary rules or conditions upon the State's involvement. One of those is commonly the requirement that a business register with the State. In doing so, they place dispute resolution into the hands of State judicial tribunals and accept their rulings. You don't get to have it both ways.”

                      So either the State is an actual law enforcement entity, or it’s a “boogeyman and distraction.” You don't get to have it both ways.

                      You're the one attempting to define an "objective" system of law so you can say whether or not you consider something either moral or immoral under that description or not.

                      Ayn Rand’s definitions work quite well for me:

                      “If physical force is to be barred from social relationships, men need an institution charged with the task of protecting their rights under an objective code of rules.” (The Virtue of Selfishness) Notice she says “an objective code of rules,” not “two objective codes of rules depending on whether you incorporate your business or not”.

                      “When men are caught in the trap of non-objective law, when their work, future and livelihood are at the mercy of a bureaucrat’s whim, when they have no way of knowing what unknown “influence” will crack down on them for which unspecified offense, fear becomes their basic motive, if they remain in the industry at all—and compromise, conformity, staleness, dullness, the dismal grayness of the middle-of-the-road are all that can be expected of them. Independent thinking does not submit to bureaucratic edicts, originality does not follow “public policies,” integrity does not petition for a license, heroism is not fostered by fear, creative genius is not summoned forth at the point of a gun.” (The Objectivist Newsletter)
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                      • Posted by $ blarman 4 months, 2 weeks ago
                        "So if you own 100% of the shares of a business, are they a personal asset or not?"

                        The shares? Yes. The business, no. One may argue that this is semantics as ownership is based on control, but it is an important legal distinction. Do you "own" the person who works for you - the employee? No. Is that employee part of the business? Yes. That's why there is a distinction between owning a controlling interest in the business (and the resulting liabilities) and owning the business itself even though this verbal distinction is commonly glossed over.

                        "So either the State is an actual law enforcement entity, or it’s a “boogeyman and distraction.” You don't get to have it both ways."

                        Good grief. When I used "the State" in that way it was with the explicit understanding - as I have stated numerous times - that the "State" is composed of individual agents. One doesn't get to decide which police officer is going to pull one over for a traffic violation nor does one get to choose (at least in most cases) which judge is going to hear a case. Thus, the more nebulous "State" is appropriately used in these cases to indicate the more general sphere while recognizing, however, that ultimately the real decisions are made by individuals. I'm not trying to have it both ways. Your use of government was as a generic blunt instrument devoid of ultimate individual responsibility - a notion I was trying to point out as being a straw man. When we argue against a "tyrannical government" we are in fact arguing that the individuals in control of that government are tyrants to some extent enabled by their positions of authority.

                        As to the quote, I agree that people in power in government have in the past and present (and likely future) acted to subject others to the coercive effects of their status to infringe upon the activities of others. They are tyrants of greater or lesser nature. The same can be said of those in positions of power in business (Zuckerman, Gates, Soros, Weinstein, etc.), so I'm not sure where you want to go with that.

                        If all men were angels we wouldn't need government (Madison) but I've yet to find a society of angels to sign up with. We build communities based on voluntary transactions and form governments to protect our abilities to pursue our own ends through these transactions. I'm not sure how one attempts to set up a society without adjudicators, and when one provides for adjudicators, one sets up government and specifies the rules for how those things are going to play out. If you want to explain to me how one actually goes about selecting an adjudicator in any other way than for both feuding parties to officially recognize that power and jurisdiction, I'm open to ideas.
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                        • Posted by $ 4 months, 2 weeks ago
                          Since I pretty much agree with your last two paragraphs, let’s take it from there.

                          From the portions of Ayn Rand’s quote that I highlighted, I think we can deduce that she was no fan of the methods by which corporations are formed and overseen by their government masters. As she said, “integrity does not petition for a license.” A corporate charter is essentially a license granted by a government, giving the corporation’s owners an enhanced set of protections in exchange for recognition of the government’s “right” to impose intrusive regulations on its activities.

                          You correctly note that tyrants exist in both government and business. My point is that the corporate system, as it exists today, protects such individuals in both realms and facilitates their bad behavior. As the article points out, “The competitive advantages conferred by government permit corporations to grow larger than they would in a free market, ‘crowding out’ other types of business organizations in the process. Eventually we arrive at an economic landscape dominated by corporate executives and their regulators, at the expense of everyone else’s freedom.”

                          You write, ”I'm not sure how one attempts to set up a society without adjudicators, and when one provides for adjudicators, one sets up government and specifies the rules for how those things are going to play out.”

                          My objection is not with adjudicators or the method of selecting them. My objection is rather that “the rules for how those things are going to play out” are flawed, giving corporations unfair advantages over individuals. I favor revising these rules to put people on a more equal footing with corporations, with the goal of arriving at at a more fair and level economic playing field.
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                          • Posted by $ blarman 4 months, 2 weeks ago
                            "A corporate charter is essentially a license granted by a government, giving the corporation’s owners an enhanced set of protections in exchange for recognition of the government’s “right” to impose intrusive regulations on its activities."

                            - First, there is no such thing as a corporate charter in the United States (with the possible exception of the Federal Reserve). The last charters were granted by the King of England to such notables as William Penn in order to establish colonies under a feudal system. For more than two hundred years, anyone in the United States can create a business or corporation. Licenses are only required for certain businesses such as waste disposal or food processing. (That isn't to say there aren't over-regulated localities such as California and we can certainly agree that Congress has abused several provisions of the Constitution including the Commerce Clause.)

                            So what is the license there for? Depends on the industry. In most cases it is a certification that you know enough about the subject matter and are reputable enough not to screw over everyone else. I'm certainly willing to admit that these can be a mixed bag and that we tend toward more of these than may be strictly necessary but I certainly feel it in my personal best interest to make sure that my garbage doesn't end up in someone's backyard but rather is properly disposed of (pun intended) in a landfill or incinerator. I'm sure there are other examples where a license is overkill. I'm certainly happy to discuss individual situations but you seem to take the very existence of these licenses as an affront to one's dignity rather than looking to see if they fulfill a necessary purpose.

                            The primary benefit (to the government) in registering one's business is that it facilitates taxation to pay for roads, law enforcement, etc. And while I agree that taxes should be kept to a minimum, I also recognize that there's no getting around them 100%. The primary benefit to the business is that registering gives them certain legal protections such as brand name, trademarks, patents, etc. as well as defined litigation rules. It isn't as if the business gets nothing out of the deal.

                            - Next, precisely what "enhanced protections" are you referring to? We've already hashed out limited liability and you have admitted you have no problems with it. So please detail out precisely what else you object to and let's keep the hyperbole to a minimum.

                            - Third, government derives its power from the citizens (Declaration of Independence) - not from businesses. Individuals just happen to engage in commerce in order to try to better their lives and with those interactions comes conflict. (I detail all this out in my book, BTW.) Those conflicts which can't be resolved between the two (or more) parties require an arbiter and thus we get elected/appointed officials and cede to them specific authority to set forth rules to head off conflict as well as how to deal with it afterward.

                            Can these authorities go beyond their mandates and powers to become tyrannical? Absolutely. We've been over this ad nauseum. So a well-regulated government includes the ability to remove such tyrants and replace them - and through these replacements amend the laws.

                            What other form of tyranny exists among those in government? Those trying to use their power to benefit their friends and get a kickback. As you note: "The competitive advantages conferred by government..." (emphasis mine)

                            To be more precise and accurate, it isn't regulation per se which causes this, but favoritism on the part of the individual in a position of governmental power with the eye toward personal profit. Take Davis-Bacon for example, which sets a minimum wage for all federally-funded construction projects. Were you aware that it was created as an inherently racist measure to force out of business black entrepreneurs who were bidding for road construction projects? The black entrepreneurs had put together businesses with better hires who created better roads for cheaper prices than their white competitors. Instead of reacting to the competition by becoming more efficient and providing better service at a lower cost, the white entrepreneurs went to their friends in the Legislatures and passed the minimum wage laws which just happened to mandate a minimum price which matched their going (white) labor rates. In exchange, the Legislators backing this received campaign financing from the road construction companies.

                            I abhor this kind of quid pro quo as much as you do and it should be eliminated wherever found. But to say that any form of regulation on a business amounts to an incestuous relationship is simply false. Instead of dealing in these broad generalities (which are so easily debunked) let's focus on specific instances.

                            "I favor revising these rules to put people on a more equal footing with corporations..."

                            So far, all I've seen from your proposal is that you would place unincorporated entities above incorporated ones. That's hardly fair or equal treatment. The rest is simply deflection to place blame on incorporated business and away from the real source of the problem: government tyrants. I'm right there with you in wanting smaller government with limited powers which operates within their enumerated powers and no further. Beyond that, I find the proposal severely lacking.
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                            • Posted by $ 4 months, 2 weeks ago
                              But to say that any form of regulation on a business amounts to an incestuous relationship is simply false.

                              I never said that. What I did say is that any regulations that apply to corporations should apply equally to firms that have chosen not to incorporate.

                              So far, all I've seen from your proposal is that you would place unincorporated entities above incorporated ones. That's hardly fair or equal treatment.

                              I have specifically stated numerous times that I think corporations and other types of business firms should be able to compete on equal terms. Neither one should have legal advantages that the other one does not possess.

                              Next, precisely what "enhanced protections" are you referring to? We've already hashed out limited liability and you have admitted you have no problems with it.

                              You answered your own question in the previous paragraph: ”The primary benefit to the business is that registering gives them certain legal protections such as brand name, trademarks, patents, etc. as well as defined litigation rules. It isn't as if the business gets nothing out of the deal.” Precisely – as I said earlier, a corporation’s owners receive an enhanced set of protections in exchange for recognition of the government’s “right” to impose intrusive regulations on its activities.

                              As for limited liability, I have no problems with it provided the same standards of liability are available to businesses that have chosen not to incorporate. I have repeatedly said that I believe a level playing field between people and corporations is a necessary prerequisite to a free economy, and that objective law requires equal protection of property rights. You have not yet shown how the privileged status of corporations is compatible with objective law, as that term is understood in Objectivism.
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                              • Posted by $ blarman 4 months, 2 weeks ago
                                "I have specifically stated numerous times that I think corporations and other types of business firms should be able to compete on equal terms. Neither one should have legal advantages that the other one does not possess."

                                I agree. The problem is that your proposals have precisely the opposite effect: granting undue leverage where it is not deserved. You're trying to game the system and I've demonstrated it multiple times through my examples. So far I've seen zero counter-examples... which would go a long way toward establishing the merits of your argument. Without those examples, your argument falls rather flat.
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