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PaperclipPerfector  1yr ago (text post)   28473 thread views

Culture War Roundup for the week of September 11, 2023

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It seems fine to me. If you want to enjoy the legal benefits of limited liability or operating as a corporation rather than a natural person the government wants to know to whom those benefits are actually accruing. Incorporation and limited liability are ultimately creations of the government. What's the counter argument? That there's a natural right to be able to operate a legally distinct entity in a way that shields you from liability of that entity's operations? I'm skeptical.

It’s not. It’s an assault on privacy. I shouldn’t have to tell the government everything about my finances. It simply opens the door to all kinds of things that end up giving the government yet more power to direct the lives if it’s serfs. It can shut down and seize the assets of the investors of a business it decides aren’t good for the country. It can go after the personal assets of people who invest in businesses involved in crime-think. It can, as Canada has actually done, seize the assets of people who protest the wrong causes.

You already have to tell the government everything about your finances.

But this rule doesn't require you to "tell the government everything about [your] finances." It just requires companies to tell the government what natural persons ultimately own and operate them. Why shouldn't the government be able to get this information?

It’s not. It’s an assault on privacy. I shouldn’t have to tell the government everything about my finances.

This ship sailed long ago.

Thank people who began war on drugs 100+ years ago and pushed it into overdrive 50 years ago. It was all for your own good.

This reminds me of the “you didn’t build that” argument. Yes, government built roads but it doesn’t imply that because of that whatever the government wants the government can take.

Likewise, the grant of limited liability (premised on the idea that small investors wouldn’t want to expose their entire wealth to liability based on a small investment in Corp x) doesn’t mean it is reasonable for the government to do whatever it wants.

Why not? Where does the right to form a limited liability legally distinct entity come from?

That logic excuses totalitarianism. That government's reach and rights are limited even by the goverment it self as representative of society is a key element of civil and human rights where the idea is that they should constrain both the goverment and non governmental behavior.

If someone is going to throw that down the drain, then you can justify anything including actions that go against what a goverment says including of course any form of criminality. The logic that the goverment can do anything it wants its both wrong and incredibly unethical and is what brought to us Stalinism.

Huh? I'm lost here.

The legal protection from liability of forming a corporation is 100% a creation of government. I'm really not sure how you even conceptualize it absent a government that, you know, registers corporations and enforces concepts of liability to begin with.

Its the right of the goverment to do what it wants part that I object to here. Your "why not" seemed to support that. If not there is some misunderstanding.

I am not pushing a libertarian argument although I do favor a constrained goverment even when the goverment does enforce rights. Unironically society should force the goverment to restrain itself and have the controls and balances that leads to such situation.

If a limit to goverment power comes from the goverment that still distinguishes such goverment from one that does not accept such limits.

Its the right of the government to do what it wants part that I object to here. Your "why not" seemed to support that. If not there is some misunderstanding.

Yes there is a severe misunderstanding.

My position is that limited liability and fictitious entities are entirely a creature of governmental systems. In a government-free stateless system of contractual ethics, things would go quite differently, there would be no concept of limited liability.

Consider the following scenario, which I and my family and friends of mine have all faced many times:

X is a rich real estate investor. X forms ABC property corp, with X as primary shareholder and head honcho. X hires a number of contractors to build buildings for ABC Property corp, excavation to electrical. ABC Property corp fails before completion of the building due to economic circumstances, declares bankruptcy. The contractors are unable to collect money from ABC property corp beyond a possible subordinate lien on the half-finished building. X still has his non-ABC property, his house and his nice cars and his investment portfolio of other investments in stocks etc.

Under a stateless system, I see no ethical reason why the contractors wouldn't get together (along with their friends, patrons, hired thugs etc.) and go to X and say: You owe us money, you signed the contract, sell your house sell your Mercedes sell your stocks and pay us. Certainly historically, it wouldn't be uncommon for the contractors or their patrons to collect his violently, even selling X and his family! The only thing that would keep X free from liability would be his own capacity for violence, his own patrons and hired collections of thugs.

Under a state system, we shrug and say well actually your debt was owed by ABC not by X, X can't be held liable, no matter how rich he is or how much you need the money, he said the magic words and maintained the sacred rituals so his liability is limited. Occasionally insult is added to injury: X forms DEF corp and buys the ABC corp assets at a cut-rate price. That can only occur as a result of legal fictions, as a result of the state and the state's monopoly on violence. Primarily on utilitarian rather than ethical grounds: it is good for investors to be able to protect their assets from liability as it encourages investment. But without a state the idea of "X hired me and signed the papers, but when he did that he was the agent of ABC not X, he didn't sign the papers as X."

One comment brought up "You Didn't Build That!"; to me the argument that government's can't change the rules of LLCs rings of "Keep your Government Hands off my Medicare!"

The original limited liability corporations were private.

As long as government is enforcing contracts limited liability corps could exist anyways. Dutch merchants joined together to form expeditions to the East. Not all expeditions returned, but those that did made a ton of money.

Ok, why is it unreasonable for the government to want to know what natural persons are benefiting from their grant of limited liability?

It is unreasonable because it doesn’t stop with them “just knowing.” It is sorta like guns. Step 1 is figure out who has them. Who can object to that? Step 2 is more malicious but once you give up Step 1 then Step 2 becomes easier to implement.

So it sounds like your objection is to some hypothetical Step 2, rather than this actual policy.

Yes because I understand that by doing Step 1 you make Step 2 much more likely to occur.

I don’t see much of a benefit to Step 1 but see a big downside to Step 2.

What is the objectionable Step 2 that this regulation makes much more likely to occur?

My concern is that government will use this info to freeze assets of the Goldstein of the day.

I much more prefer some guaranteed sort of right of participation in the financial system then the ability to be opaque. LLC goal is to limit the downside risk of starting and running a business. Not to hide assets.

Not saying it is. But the current system isn’t broken. Why fix it?

Recall the government claims FATCA would collect untold billions. To date, the only people who’ve collected material money from it are the Big 4.

This is probably similar but more sinister.

It seems fine to me. If you want to enjoy the legal benefits of limited liability or operating as a corporation rather than a natural person the government wants to know to whom those benefits are actually accruing.

Step 1. Make it virtually impossible to operate a business without a limited-liability corporate structure

How is it virtually impossible to operate a business without a limited liability corporate structure? Many businesses in the United States are sole proprietorships which do not have limited liability.

How is it virtually impossible to operate a business without a limited liability corporate structure?

Very loose liability law meaning it's very easy to be sued into bankruptcy. Survivable if only the businesses go under, but if that can bankrupt the investors as well, you're not going to have any.

Yes, but that's because liability in the US is fundamentally rotten. Many countries have extremely strict caps on liability for a vast catalogue of different things, 'unlimited liability' is bullshit.

I don't disagree, but the bad reasons don't change the consequences.

For one, all your competitors are limited-liability.

"Many" is a weasel-word here. "Many" could be 5 businesses in the whole country. While there are some some sole proprietorships, you would be a fool to own one. Serious businesses are not run that way. Sole proprietorships are for hobbyists and the naive.

In the time it took you to write this comment you could have looked it up and found that most businesses in the US are sole proprietorships.

I did look it up and that information tells you nothing. Most of these "businesses" are a single person. How many have 10 employees? How many have 100?

So you knew it wasn't five businesses in the whole country?

Businesses that aren’t selling Etsy art are very likely to be incorporated via a single member LLC (unless the owner is a complete idiot).

Yes, you got me. You are technically correct (the best kind of correct). There are millions of businesses in the U.S. the vast majority of which have little revenue and no employees. These tend to be sole proprietorships.

If you want to sell Beanie babies on Ebay, the government is not standing in your way. Go for it. You're very unlikely to be sued and lose your house.

The second you hire employees, that goes out the window.

I retreat to my motte.

This data indicates otherwise.

A post long on assertion and short on reason or evidence.

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