It’s probably worth a separate entry, rather than a mere update. Anyway, Greg Swann actually has a few new entries up regarding this discussion. The one I’m going to point you to is the one on Information Hiding. Sure, it makes good points in support of his argument with me, but that’s far and away the lesser of any reasons to go read it. Go read it. Take a few minutes, because it really gets to the essence of what is the total and complete permeation of the state into every nook and cranny of society.
To clarify, my primary defense of the corporation is from the perspective of one who has started one, grown it to 30 employees (without investors), and runs it as we speak–although now with a very capable management team. I’m no longer involved in day-to-day operations whatsoever. My actions and involvement are now of a strategic nature. I’m looking ahead, way ahead, and just like the 8,000 and 11,000 ton ships I used to direct, I understand the difficulty of changing course, stopping, or reversing. Business is far and away the most complex endeavor human beings can undertake. Did you get that? It’s true. All that is what I’m defending.
Liability limitation was the least of my concerns in forming a corporation. I did it because it’s pretty much what you’ve got to do if you’re going to be in the ballgame and deal with banks, insurance companies, lawyers and other vendors. It just is. We’ve never carried substantial debt, and the damages we could inflict upon anyone is relatively minor.
At the same time, liability limitation, or at least mitigation, is an essential value. Insurance serves such a role and that’s why it’s such a profitable industry. I simply think that businesses and individuals themselves would seek to find ways to limit and mitigate liability in a true free market. Imagine how paralyzing it could be–especially in an extremely complex business where dozens, hundreds, and possibly thousands of people are making decisions on your behalf–to commit to any venture without near total certainty regarding all possible outcomes and associated risks.
There’s another aspect to this, which for lack of a better term, I’ll call it’s-just-business amorality. Greg’s notes about bankruptcy are a fine example, and I’ve had this discussion a lot. It’s not well-advertised, for obvious reasons, but business-guys like me and everyone else who writes off losses every year want and value bankruptcy (for me, that means: in concept). Lots of libertarians object to the immorality of bla bla bla letting people walk away from their debts bla bla bla, and they should pay restitution for whatever and as long as it takes bla bla bla… Well, excuse me, but I just want to make a reasonable effort at collection for 60-90 days, turn it over to an agent, and if he can recover 50% or more, great, and if not, well, then, I’m not throwing any more good money after it and I’ll just build it into costs. Most businesses have under a 1% loss rate, and 5% or more is unheard of. We’re not in the business of holding up the moral fiber of society. We’re in business to make money, and when collecting on non-performing accounts reaches the point of diminishing returns, we want to walk away. Since our accounts receivable is unsecured, bankruptcy represents for us an objective bright-line standard by which we know for sure that it’s not worth another penny of our capital or a second of our time to pursue.
Want proof? The company I run negotiates and settles over 250 accounts per month on behalf of people with hardships, i.e., health problems, loss of employment, divorce and other family problems…and sometimes, irresponsibility with things like drugs, alcohol, and/or credit. These accounts total to more than $1 million of debt, and ever month, we persuade creditors to voluntarily walk away for an average of 35 cents on the dollar.
The only reason that can happen is because it’s just as I’ve said. Businesses, for the vast most part, are not and are never going to be interested that libertarians want people to always and forever make full restitution because it’s the right thing to do. I’m a libertarian, but also a businessman, and I’m not even interested–in the slightest. The fundamental reason for that is businesslike. The time and money spent to pursue non-performing accounts can be better used in securing new accounts.