Comment: Summary as I see it

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Summary as I see it

There are numerous different discussions regarding whether the corporate status is a good one under a libertarian environment. Here's how I see them breaking down.

The issue of liability is two-fold by five-fold. First there's direct liability where a product is sold that harms the buyer. (yes, services included - being brief here) I believe contractual liabiblity falls under this category in that if it's precluded by contract, then there can be no recourse other than that breaking the contract. That direct liability can be directed towards the business assets, the owners, the officers, the employees or the investors.

Second, there's indirect liability, or external problems which again can be targeted towards assets, owners, officers, employees and investors.

Different types of company and corporation structures allow different combinations of these liabilities to stand while deterring the rest. My libertarian stance is that regardless of business structure or 'directness of liability', if you profit from a direct liability related problem with foreknowledge, you and your personal assets should be liable. If you 'should' know beforehand but don't, you should only be liable to the level of your investment (skin - in terms of employees, etc.) If you had no way of knowing (or can prove you didn't) you should only be liable to the extent of current & future profits. In the case of an investor with a "loan" type of repayment (where profits do not affect the amount you get back), then you have no incentive to make the business more profitable and therefore lose culpability in a lawsuit. In short, the more you profit from and should/do know about a problem, the more risk you should shoulder.

This is applicable also to criminal charges that hold jail time. Although I do think the standard would be much higher, all those that are proven to know about the crime should be subject to it with punishment varying by the amount your profit is tied to that action.

What I believe this would do is to shift business investment away from the institutional, grand scale it is now back to the "more" local (relative term warning), lending system. I don't know of a societal benefit that occurs from having lots of people gain profit from a certain business making more profit. I believe the ultimate good comes from external people being limited to a pre-set, contractual profit for a limited time frame. (aka a loan, not long term investment) If you're going to make a lifetime income from profits taken out of a business, you should have certain responsibilities to society as any other employee.

The shift to this, if implemented, I believe would minimize the entire financial-ization of businesses. Gone would be the days where the news of a few on Wall St. can affect the entire economy within hours. The small businesses would need to get their money by convincing local investors (generically including banks) to share the risk or by offering local investors to blindly lend for an 'all or nothing' set interest return. Medium businesses would have the same scenario but would likely tap regional and maybe some national investors. Large and very large businesses would either have to make the case that shareholders on that scale are safe from liabilities or they would be forced into longer term loan type of help. This brings accountability to the business via the pitch that they give when courting money, but most of all, this halts the process of massive 'not me' profiting by those with all the money. As such, the wealthiest of investors would have increasing effort and risk required before they could make endless money by lending it. I think this would also stop the derivatives market as well as short and naked short transactions.

The last aspect that would benefit from this is that external control over a company's operation would be minimized. (Because they would hold unwanted risk) This brings accountability back to the owners, operators and employees of a company. To those who say that it would drive all business out of the country, I say fine. If a business, or entire industry, leaves, it will leave a hole which will be filled in by a new startup. Since a MUCH MUCH smaller cost of investment is felt by said company, it will be more profitable. The investors would not gain as much from their actions but would likely have more involvement unless they settled for a market set flat rate.

This has gotten long and I'm sure I missed some points so let's discuss.