Continuing the philosophical discussion started in the "The ushers have gone TOO far" thread...

[ftyuv]

[quote DeltaOne81]I did open up the 'why abolishing government would not bring chaos' article - it seemed to be the most appropriately titled. It had a section on law enforcement, which did not even once discuss the consequences of having portions of society that could not afford to pay for such things.

It refuted ideas about corrupt organizations, or practical considerations, or average cost, etc - all of which I am basically willing to buy. But it took no look or consideration of what would happen to those who could afford no protection, and the impacts it would have on everyone else as well.

I also looked at the others, just in case, and searched them for the phrase 'police' and 'enforce', and found no references to this either (only things like 'enforcement of contracts').

As far as I'm considered, until I have a reason to believe that those who cannot afford protection would be protected in some way, and would not be made victims of theft and homicide, there is no further discussion. Its a no go. The wrongness of allowing this to happen makes the 'wrongness' of 'lawful theft' look like childs play.[/quote]

This is what I was going for, only better put.

[Rosey]

I'll deal with the rest of your (lengthy) response when I get the chance.  But I'll address this now because it's low-hanging fruit:

[quote DeltaOne81]Lastly, its an interesting twist to blame Enron, WorldCom, et al on LLC protection. In many ways, I see your point and its accurate. However, we would have no viable economy without LLC protection. Who would dare try to start a small business if its failure (and a substantial majority of small businesses fail) meant that you were substantially personally indebted. And small businesses create a majority of our jobs and innovation.[/quote]
I don't know whether your judgment about economic growth here is correct or not: I suspect not, and rather believe that the owners of businesses would simply be a lot more circumspect about their activities.  But you have admitted that the problem originates with government, not business, and that's all I wanted to see.  If not for the government protection provided to LLC's, these kinds of abuses simply would not happen because the responsible people would find themselves personally liable.

You can't have it both ways: either the people responsible for the actions of an LLC (e.g., Enron, Worldcom) are liable or they are not.  If they are liable, these abuses do not occur; if they are not, these abuses are likely to occur because there's profit to be made and little potential for personal loss.  Which situation do you want?  Decide, and then figure out which system gives you the desired properties.

Cheers,
Kyle

[DeltaOne81]

[quote krose]I'll deal with the rest of your (lengthy) response when I get the chance.  But I'll address this now because it's low-hanging fruit:
But you have admitted that the problem originates with government, not business, and that's all I wanted to see.  If not for the government protection provided to LLC's, these kinds of abuses simply would not happen because the responsible people would find themselves personally liable.[/quote]

False dichotomy anyone?

Its the fault of both. The government blame lies as far as creating a system which allows 'limited liability' - which I still maintain (and have read in several economic sources, so its nost just a personal hunch) is a vital requirement to having an economy where people are not afraid to try new ideas and create wealth.

How could you ever have an 'American dream' is the only people who could ever start a company were those who could afford the substantial liability insurance costs (beyond what we already have). Allowing the business to be a separate entity from you is absolutely critical. How could you ever have small business and innovation if everyone was putting their personal well-being on the line everytime?


That said, the government created this structure - which may be imperfect - but its the business who chose to break the law or act immorality. Lets take the example of Enron, whose primary crime was deceivingly recording their revenue before it was collected. How would you charge them with such when there were no laws against it? If there's no standards or laws that they are forced to obey, what could they possibly have done wrong?

Oh, sure, they did economic damage to you, but wasn't it you who freely chose to work for them? Why are they responsible for your own bad decision?

Secondly, what they did to their workers was basically force them to hold large qualities of Enron stock, and only have select opportunities to sell. In an anarchistic world, would that just be part of the contract being employer and employee? If you agreed to be hired by them, then you agreed to the rules of their plan, no? Since you just make a free choice to work for them, who's to enforce and say what they did was wrong?

Besides, if you did sue them - for what I don't know - whats to prevent them from only agreeing to accept the ruling of the private justice firm who was founding and is run by former Enron lawyers, who still have weekly golf games with the CEO? Who's to tell them no? Who's to insure impartiality?

(You said its expensive to fight. It would cost them next to nothing to write you a letter on occasion that just said 'no').

Oh, sure, you can disagree, take it to an arbitrator, but who's to say they won't only agree to accept the results of an arbitration firm who was founded and run by former Enron lawyers, who....

Oh, and what if you can't afford to pay the private justice firm to judge the case or a lawyer to prosecute it, or the jury to judge it, or the arbitrator to arbitrate it? And considering you just lost all your retirement savings at Enron, that's quite likely. No justice for you then?

You could make an argument that the lawyer would likely work contingent on a percentage of any win, but the others won't. So what do you do then? Enron sure as heck isn't going to pay the fees to be judged at a firm they don't agree to - and they're bankrupt anyway.


So police protection and now the justice system are only for those who can afford to pay? I'm not saying thats what you want. I'm saying that the consequence of your proposal.

[KeithK]

[quote krose]
I don't know whether your judgment about economic growth here is correct or not: I suspect not, and rather believe that the owners of businesses would simply be a lot more circumspect about their activities.  But you have admitted that the problem originates with government, not business, and that's all I wanted to see.  If not for the government protection provided to LLC's, these kinds of abuses simply would not happen because the responsible people would find themselves personally liable.
[/quote]No, some individuals would continue to do morally suspect things on the hope that they could get away with it. (I'm not sure how enforcement works in a prospective anarchy and what "getting caught" means, but whatever.)

The problem I see is that this would greatly restrict the cost of capital.  Without LLC protections, I am finanically liable for the actions a company that I invest in.  Now a company can injure folks through gross negligence and therefore be subject to massive damages.  No amount of liability consciousness short of stopping all economic activity will prevent this possibility.  When this happens, the investor (stockholders) could easily end up having liabilities greater than their original investment through no direct action of their own.  This risk would be a massive disincentive to investment, particularly in growth industries.  Reduced flow of capital means reduced economic growth.

I'll take a few Enron's from time to time if it means overall growth for the economy. That's a good risk/reward tradeoff in my book.

[DeltaOne81]

Hey Keith,

You and I made essentially the same argument. ::drunk::

Lets just stay away from post-season tournaments ::bang::

[Rosey]

[quote KeithK]When this happens, the investor (stockholders) could easily end up having liabilities greater than their original investment through no direct action of their own. This risk would be a massive disincentive to investment, particularly in growth industries. Reduced flow of capital means reduced economic growth.[/quote]
LLC's do offer useful protection for shareholders who aren't involved in the day-to-day business of the company, but I'll point out that this indemnity could be explicitly written into the shareholder contract, backed up by insurers and reinsurers that are presented to potential shareholders explicitly to get access to the capital you claim would not be available in such a system.

Such a system still has better incentives than we have today, because it requires companies involved in potentially risky operations to explicitly obtain significant insurance and pay for it so that any losses resulting from disputes resolved out of their favor are covered by someone; and because this protection costs something and will necessarily involve oversight by the insurers, companies that want access to large amounts of capital are less likely to engage in behavior that is likely to result in damage disputes.

The real problem with LLC's is that they offer protection for officers in their roles as officers!  That's just screwy: they are the ones involved directly in day-to-day operations, and should be held personally responsible for the consequences of their decisions.  Now clearly, the justice system got a bunch of the guys involved in Enron, Worldcom, etc. (except for that rat bastard Ken Lay, who managed to die before serving a day in prison), but corporate officers that get thrown in PMITA prison are orders of magnitude fewer than those who get away with whatever abuse for which they are basically immune under government LLC protection.

Cheers,
Kyle

[DeltaOne81]

Seems like insurance is an incredibly massive industry in this world.


So again, I'll ask, what happens to the small business owners who can't afford the insurance to get investors or to protect themselves? You've thrown a big wrench in the framework of capitalism.

But more importantly, in terms of enforcement, who's to say that the executives and offers can't purchase insurance likewise? (or the companies purchase it on their behalf). Certainly you couldn't have a law that said they can't. They can and I would imagine that most would, no?

So if they're now insured for this, where is their incentive to not do it? Completely gone. Their protection has changed from their LLC structure to their insurance, but you've progressed nowhere on the front of self-enforcing business ethics.


The road to hell is paved with good intentions - I think that can apply equally to liberal, conservatives, libertarians, and yes, anarchists, at different times and different ways.

I've yet to see a path here that actually improves much of anything (although I'm willing to continue to listen), merely changing the way that people get away with things or act immorally.

And still tripping over the concept of what becomes of the people who can't afford this 74 important types of insurance, and how that effects the rest of society.


I think many people give the free market too much credit, too much faith. The free market is incredible... at one thing. When people talk about it being 'optimal' all they really mean is 'pareto optimal' - meaning that there is no way to make someone better off without making someone worse off - i.e. nothing is 'wasted' that serves no value.

Now, don't get me wrong, thats great, its very important. And it should be highly respected, but it doesn't say a darn thing about optimal (or even acceptable) social outcome. It doesn't say anything about morality or criminal behavior. It doesn't guarantee stability or honesty or any kind of justice. It doesn't even guarantee a good economy.

You could have a world filled with crime, death, and destruction... immoral scheming and trickery... backhanded business dealings and reneging on contracts... weak economy, high unemployment, and difficulty raising capital. And the free market is perfectly fine it - it does not have a solution for it, nor does is it even aware of it - its completely not in its view.

The efficiencies of a free market are great and important, but lets not pretend their anything more than what they are.

[Rosey]

[quote DeltaOne81]Seems like insurance is an incredibly massive industry in this world.[/quote]
Insurance companies would replace police, fire protection, almost all agencies like the FDA, and the military.  Of course, they probably contract out most of this rather than do it in-house.

So again, I'll ask, what happens to the small business owners who can't afford the insurance to get investors or to protect themselves? You've thrown a big wrench in the framework of capitalism.

It is possible that small businesses would be covered under a rider of the owners' insurance, in the same way that your personal possessions are still protected from theft in your car under your homeowner's insurance.  But the answer you're probably looking for is that those who can't afford expensive insurance will simply buy cheaper insurance with fewer protections and higher deductibles, just like they do today.

But more importantly, in terms of enforcement, who's to say that the executives and offers can't purchase insurance likewise? (or the companies purchase it on their behalf). Certainly you couldn't have a law that said they can't. They can and I would imagine that most would, no?

So if they're now insured for this, where is their incentive to not do it? Completely gone. Their protection has changed from their LLC structure to their insurance, but you've progressed nowhere on the front of self-enforcing business ethics.

What insurance company would explicitly insure a high liability?  Before signing the contract, they would have to have assurances in place that the person they were insuring was not going to engage in some activity that would place their assets at risk.  Assurances = oversight.  This means that the executives and officers would---in the absence of any legislation like SOX attempting to enforce transparency---have to be transparent to the people who have a direct stake in their behavior: those providing indemnity for that behavior.

Cheers,
Kyle

[ftyuv]

You still haven't addressed what happens to people who can't afford things like police protection, fire department protection, etc.  Your car analogy I addressed by pointing out that some people can't afford cars.  Are you willing in your system to have the poorest sector of society literally without any policing, fire departments, schools, assurance that their food meets minimal health requirements, etc etc etc?

[cth95]

Kyle,

     I would be very willing to bet that you did not have to work to pay your own rent, tuition, bills, etc. when you were in college.  Either you have absolutely no idea what it is like for someone to live paycheck-to-paycheck or you have somehow wiped this experience out of your mind.  

     How do you think those with limited means would ever be able to afford any of the securities and abilities you propose at a level of quality that would allow them to compete,let alone simply live safely?  For example, say I am mugged and I kill someone in self-defense, but I have no money for a quality defense in your free-market, unregulated society.  If the family of the mugger I have killed is far wealthier than I, what chance would I have of a successful defense?  Of course, there is no legislative body to enact laws, and no neutral body to enforce laws, so the family of the person killed would probably just pay someone to kill me in revenge.  If I had no money I would be in deep shit.  A case like this between two wealthy families, however, could easily turn into a mini-war until one family is wiped-out or surrenders.  

     Also, if all of  the roads are privatized, are we going to have to pay a toll every time we turn from one road onto another?  You may think that we have poor roads now, but they are certainly passable and usable.  We maintain some level of consistency in our roads by voting out legislators who do not put enough into our road budgets to meet the level of satisfaction of the majority of their constituents (read average citizen, not the most discerning individual).  If hundreds or thousands of companies are in charge of road maintenance, how do you propose any consistency among them all?

    Lastly, say a private owner does not allow me to use his road because I am black, white, a woman, whatever?  Your answer would be to sue him.  If he has far more money than I, and there is no neutral, regulative body to oversee the lawsuit, how could I have any chance of winning my right to use that road?  Again, there are no laws in your society, so there would be no case anyway, and any private owner could prevent access or use of anything for whatever reason they want.

     I have no idea where you originally came up with your idealistic beliefs, but they have absolutely no basis in reality.  Your vision would eventually create a society in which only the most elite, wealthiest individuals would have any possibility of security and success.  The only way I could see this vision making sense is if you believe that we humans should live entirely in a true survival-of-the-fittest world similar to the rest of the animal kingdom.  If that is the case, I can understand your argument, but I can not agree with you.

[ftyuv]

[quote cth95]a true survival-of-the-fittest world similar to the rest of the animal kingdom.[/quote]
Actually, various studies have shown that some (could be all, I don't know) species of primates have complex social structures in which survival of the fittest is overcome by empathy and deference to a social hierarchy.  In other words, humans were solving problems with methods that included taxation-type-things before there were humans.

[DeltaOne81]

[quote krose]
What insurance company would explicitly insure a high liability?  Before signing the contract, they would have to have assurances in place that the person they were insuring was not going to engage in some activity that would place their assets at risk.  Assurances = oversight.  This means that the executives and officers would---in the absence of any legislation like SOX attempting to enforce transparency---have to be transparent to the people who have a direct stake in their behavior: those providing indemnity for that behavior.[/quote]

What assurance? Using what crystal ball? What kind of scammer would tell you beforehand that he plans to scam you? Or in a different scenario, easily someone could start out with noble intention but become corrupt in the process, I'd venture that's generally how it happens now, don't ya think?

Obviously you'd only be able to get away with this once, but that's all most people would need, right?


Oh, and we haven't even touched education yet, which only the well-to-do could afford, making it basically impossible to ever improve your station in life. Plus all the things mentioned by ftyuv and cth95.


I still think it appears you're relying on a mechanism for solutions to social and societal problems who's job isn't to provide anything of the sort.

[mttgrmm]

As with Fred, you are building a scenario that simply wouldn't occur because there are disincentives to that activity.

disincentives how?  by whom?  who determines which men are eligible to become re-po men?  whoever is biggest?  whoever is strongest?

presuming all governments, the U.S., the U.K., every other Eastern and Western governments are eliminated, what is the organization that provides social order?

who decides where the roads go or where the police stations are?  which companies, and how do they rise to be in a position to determine the basic needs of humans (food, water, shelter, transportation, etc)?  what if someone decides not to pay this company for the use of the road, who, then, prevents them from using the road?  do you not need a security force to prevent these non-paying individuals from using the roads?  if so, how is this different from a government?

I guess my point is, what is the alternative?  why is it that every society  has made strides to establish a government of some variety (dictatorship, democracy, republic, socialist, whatever...)?  if your system, devoid of any "government" is so logical, why is it that no human society has succesfullly implemented such an oranizational structure?  what makes you smarter than ben franklin, john hancock, thomas jefferson, and every other member of the congressional congress?  why didn't they think of the "let's let companies make up everything under a free market" premise?

a bit pompous, no?

[KeithK]

[quote cth95]Also, if all of  the roads are privatized, are we going to have to pay a toll every time we turn from one road onto another?  You may think that we have poor roads now, but they are certainly passable and usable.  We maintain some level of consistency in our roads by voting out legislators who do not put enough into our road budgets to meet the level of satisfaction of the majority of their constituents (read average citizen, not the most discerning individual).  If hundreds or thousands of companies are in charge of road maintenance, how do you propose any consistency among them all?[/quote]

Of all of Kyle's general suggestions privatized roads are the most reasonable and workable, at least when we're talking about larger roads (highway scale but possibly also major local roads).  There are private roads now and there is a long history of them (see tunrpikes).  Yes, you'd have to pay a toll to use the road and possibly frequently.  But at this point tolls could be collected electronically without significant disruption to traffic. I see nothing wrong with drivers paying for the amount they actually use the roads - from one point of view it's more fair and equitable than charging everyone a similar amount.

Local roads and side streets would be harder to manage privately because the traffic flow is not as straightforward.  It might be possible but it would be harder to manage.  Hypothetically, transitioning from the existing system to a privately managed one would likewise be easier for major roads.

Lastly, say a private owner does not allow me to use his road because I am black, white, a woman, whatever?  Your answer would be to sue him.  If he has far more money than I, and there is no neutral, regulative body to oversee the lawsuit, how could I have any chance of winning my right to use that road?  Again, there are no laws in your society, so there would be no case anyway, and any private owner could prevent access or use of anything for whatever reason they want.

I'm guessing that Kyle response to the discrimation example wouldn't be sue the owner of the road (on what basis would you sue?) but to say that the market would provide an alternate road to short circuit the discrimatory road. After all, if someone prevents a substantial portion of the population from using the road then he is leaving money on the table for someone else to come and take, so to speak.  In the real world I think this would only work to some degree; it would fail in some cases (Deep South in the Jim Crow era), would be somewhat wasteful of resources (duplicate roads) and take time to equilibrate (time to build duplicate roads to respond to the initial discrimation).

[KeithK]

[quote mttgrmm]I guess my point is, what is the alternative?  why is it that every society  has made strides to establish a government of some variety (dictatorship, democracy, republic, socialist, whatever...)?  if your system, devoid of any "government" is so logical, why is it that no human society has succesfullly implemented such an oranizational structure?  what makes you smarter than ben franklin, john hancock, thomas jefferson, and every other member of the congressional congress?  why didn't they think of the "let's let companies make up everything under a free market" premise?

a bit pompous, no?[/quote]
The fact that no society has ever chosen a particular system in no way implies that it's not workable or logical. Since when have people acted logically in most or even a majority of situations? Historically, most systems of government have been relatively autocratic in nature.  This isn't "logical" in the sense of promoting the greatest good, only in the sense of promoting the interests of those in power. The Founding Fathers created our system of government in reaction to systems existant in England and Europe.  Even as a constitutional originalist I don't believe that they somehow created the perfect system of government.  As humanity develops we may well come up with better models.

Promoting a system that is radically different from the existing one isn't being pompous.  It's just being radical.