Corporation laws provide a low-cost way for many transactions to be covered under essentially the same "terms and conditions". This just cuts down the cost of writing contracts that generally have to repeat all the same stuff over and over again. Only the lawyers lose, which is generally a good thing!
Worse, imagine the situation if there were no standards, and each contract varied slightly from the next. Every transaction, of which you may have dozens each day (buying gas, lunch, etc.) would entail poring over a potentially book-sized contract. No good! Better to just look and see if there is an "Inc." or "Ltd." after the name.
While I agree that these "business" standards could be provided without the government (think of the Underwriter's Laboratory or the IEEE), the fact that they exist is good. The UCC is another government-sponsored business standard. These standards make ordinary life simpler and less costly.
For most larger corporations their "limited" liability is still a very large amount of dough. There have been lots of awards for 100's of millions that have been paid by corporations. So, unless you are part of a VERY large group, like United Airline pensioners, limited liability and unlimited liability are nearly the same. For smaller corporations, most vendors and customers are acutely aware of the risks involved; and transactions are negotiated/priced accordingly. Dun and Bradstreet credit ratings are routinely consulted. Mike's points about liability being transferred to very large corporations called insurance companies are also well taken.
That said, I am concerned, like Franklin, about the concentration of power in the modern corporation. But, I remain unconvinced that "limited liability" is the culprit; even less so that the state charter "granting" limited liability is responsible. More likely it is the entire plethora of laws, regulations, taxes, corporate welfare, state-sanctioned monopolies, and etc. that favor large corporations over smaller organizations, limited liability or otherwise.
Big government likes big business and big labor. They are very cozy together, sucking the lifeblood out of their smaller counterparts by rigging the game.
From: Mike Denny
Sent: Wednesday, October 05, 2005 8:48 PM
Subject: RE: [lpsf-discuss] Re: Prop. 75
As libertarians are warm and generous individuals who care about
freedom...and you aren't Libertarian, what are you doing on this list?
There's no conflict between contracts and inalienable rights except
those in the minds of those capable of imagining extreme examples (straw
man) that run contrary to the bulk of day to day reality.
A contract is not an inalienable right. This is not a conflict. This is
a clear understanding of what is and what isn't. A contract is something
offered in advance between buyers and sellers with conditions. Those who
expect the seller to beware have turned the nature of the transaction
around. The traditional term for transacting is "caveat emptor". See
http://en.wikipedia.org/wiki/Caveat_emptor. Short of fraud (and being a
limited liability organization isn't fraud) the limited liability
organization is a blessing to consumers on a budget...most of us.
What you are describing (as is Mr. Ellerman) is a complete upset of the
traditional understanding of risk, liability, reward and responsibility.
You are always welcome here but hopefully you will find more committed
friends with the Democrats.
From: firstname.lastname@example.org [mailto:email@example.com]
On Behalf Of Franklin Schmidt
Sent: Wednesday, October 05, 2005 8:14 PM
Subject: [lpsf-discuss] Re: Prop. 75
> Dear Franklin,
> vote for this for no other reason than to knock the union leadership
off their high horse....not exactly libertarian but it seems we can't
agree about what that means anyway.
I think we exactly agree on what libertarian means, and why I am not
libertarian. I am not interested in knocking down unions, but I do
have some interest in knocking down corporations. What would be nice,
and would benefit the Libertarian Party, would be to broaden the
meaning of "libertarian" to include everyone who wants more freedom,
not just the pro-corporate kind.
> It appears to me that my customers have chosen the reduced security
of my limited liability business in exchange for the reduced cost of
doing business with me.
I doubt your customers have thought this through. They probably do
business with you because they want your products or services. They
accept the limitation of liability because it is common and isn't a
dominant factor in practical decision making. If limitation of
liability only occurred in contracts, then customers would give this
question more thought because it would be negotiable. As it is, with
limited liability being an intrinsic part of a corporation, your
customers can't easily negotiate this point separately. So making
limited liability part of the corporate bundle, as opposed to part of
contracts, limits choice.
Suppose there was a form of business that allowed the business to kill
anyone who did business with them. (This is absurd, but that is the
point.) Someone doing business with a company of this kind could
include in a contract a restriction that the company would not kill
them, but this would not be the default. So smart people would either
not do business with companies of this kind or would have airtight
contracts protecting them. Not so smart people may do business with
such companies, especially if the companies are smooth talking and
downplay the the risks. Is this right? Should people be able to give
up their right to protection from murder just by doing business with
such a company? I think not. Giving up rights is a serious thing and
should only be possible through contracts, not through mere business
relationships. And that is the problem with limited liability
corporations, that anyone doing business with them is giving up their
right to full legal protection.
> And what does Mr. Ellerman's paper have to do with this subject?
The relevant part is the conflict between contracts and inalienable
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