"Hired Feet" Protest Low Wages—For Low Wages

Unions hire homeless to do their picketing for them--for 8 bucks and hour with no benefits:

The picketers marching in a circle in front of a downtown Washington office building chanting about low wages do not seem fully focused on their message.

Many have arrived with large suitcases or bags holding their belongings, which they keep in sight. Several are smoking cigarettes. One works a crossword puzzle. Another bangs a tambourine, while several drum on large white buckets. Some of the men walking the line call out to passing women, "Hey, baby." A few picketers gyrate and dance while chanting: "What do we want? Fair wages. When do we want them? Now."

Although their placards identify the picketers as being with the Mid-Atlantic Regional Council of Carpenters, they are not union members.

They're hired feet, or, as the union calls them, temporary workers, paid $8 an hour to picket. Many were recruited from homeless shelters or transitional houses. Several have recently been released from prison. Others are between jobs.

"It's about the cash," said Tina Shaw, 44, who lives in a House of Ruth women's shelter and has walked the line at various sites. "We're against low wages, but I'm here for the cash."

But don't worry. The union helped at least one person get a decent job:

William R. Strange, 41, said he started working as a for-hire picket two years ago when he lived in a homeless shelter on New York Avenue. He is now paid $12 an hour because he plays the buckets during the demonstrations.

A few months ago, after a day's picketing across from the National Geographic Society at 17th and M streets NW, Strange went inside and filled out a job application. He now loads trucks for National Geographic's warehouse at night. He still pickets during the day.

Germans have been renting protesters for a while now.

Via Marginal Revolution 's Markets in Everything series.

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  • ||

    hehehe This is even better than the nonunion catering exposé.

  • ||

    If the union members don't care enough about the issue-of-the-moment to picket themselves, then why should I care either?

  • ||

    At the end of Animal Farm you couldn't tell the difference between the pigs and the men. It's not at all surprising that the scabs and the goons look alike too.

  • Edward||

    No benefits. That's amazing. Unionized workers at GM get such good benefits that someone has described GM as a small welfare state that makes cars on the side. I guess that's why big business is pushing for universal healthcare. Why can't we just accept the notion that the fortunate and the well-off get to be healthy and losers get zip? Then GM could afford to compete with Asian makers, and we wouldn't have to unload the cost of healthcare onto the nanny state. But wait. Does GM need healthy workers? hmmm.

  • ||

    Hmm, not sure how a union employing the unemployable is hypocritically anti-union, unless this is just meant to be one of those snarky superficial things that doesn't really mean much. Oh, is $8 an hour not enough for a homeless person? Or should the unions be advocating homeless salaries on par with their trained workers?

  • ||

    I should have added:

    You are confusing the cumulative effect of unions with the goals of individual unions.

  • Rhywun||

    Eight dollars an hour to stand around and pretend to be a person pretending to be gainfully employed? Where do I sign up?!

  • Edward||

    Lamar

    If we wipe out the cumulative effect of unions, who takes up the slack?

  • ||

    Edward,

    Something most of the prez candidates (and you) seem to have missed: "Healthcare" does not equal "Health." Just ask Tammy Faye Makeup lady.

  • ||

    In Illinois picketers must be union members. Our business was being picketed and all we had to do to make them go away was to ask to see their union card

  • ||

    If we wipe out the cumulative effect of unions, who takes up the slack?

    Who picks up the slack? Unions are slack-makers. They are notorious for their make-work measures. The slack goes away simply because of the lack of labor cartels.

  • JimL||

    Oh, blessed irony:

    "Carpenters unions in Indianapolis, Atlanta, Baltimore, Miami, San Diego and Columbus, Ohio, also hire picketers, including the homeless, largely because the union members are busy working and aren't able to leave job sites, he said."

  • fyodor||

    Oh, is $8 an hour not enough for a homeless person? Or should the unions be advocating homeless salaries on par with their trained workers?

    If they claim that receiving a certain level of renumerance is a moral issue or right, then yes, it's hypocritical. If they (or you) are saying what you get depends on what the market bears for your level of skill, then they (and you?) would be agreeing with us!!

    FWIW, I certainly don't begrudge union members doing what they can (ethically) to put more money in their pockets. That's what we all do. When they claim moral superiority over it, they shouldn't be taken seriously at best, and their ethics should be questioned at worst. And then there's the whole issue of law that supports their activities....

  • ||

    It's always good to RTFA - here's the part that KMW left out while trying to paint all unions with a broad brush:

    The United Brotherhood of Carpenters is the only union that routinely hires homeless people for its picket lines, union leaders and labor scholars say.

    Now, one would think that a magazine interested in liberty would not be anti-union. But it's becoming increasingly clear to me that Reason is not libertarian, just pro-big business.

  • ||

    In Illinois picketers must be union members.

    Oh that's bullshit too. Hiring someone to do your picketing for you is bogus, but it shouldn't be a crime. Hiring someone to represent you is part of the American way of life. Just think of all the lawyers and models that would be out of work.

  • ||

    At least they're hiring American! Do you know how bloody cheap it would be to hire picketers in Calcutta?

  • ||

    Now, one would think that a magazine interested in liberty would not be anti-union.

    Why would one think that?

  • ||

    If they (or you) are saying what you get depends on what the market bears for your level of skill, then they (and you?) would be agreeing with us!!

    I never got the impression that unions were arguing against the idea that what you should get is commensurate with your skill/productivity. I thought they argue that they don't get compensation commensurate with their skill because employers have monopsony power (http://en.wikipedia.org/wiki/Monopsony), so try to counteract that through collective bargaining.

  • ||

    "Now, one would think that a magazine interested in liberty would not be anti-union."

    One would think that if one never thought for five minutes about the implications of 'fair' labor laws. Or if one had never seen the cumpulsory nature of union negotiations cost the national economy nearly a trillion dollars when the longshoremen protested the advent of bar code technology on the west coast.

    No, no one can see any reason at all to think that labor laws as currently written have nothing to do with liberty at all.

  • ||

    Nasikabatrachus | July 25, 2007, 1:31pm | #

    Now, one would think that a magazine interested in liberty would not be anti-union.

    Why would one think that?


    Freedom of assembly.

  • ||

    Freedom of assembly.

    And that has what to do with labor cartels?

  • Edward||

    "Something most of the prez candidates (and you) seem to have missed: "Healthcare" does not equal "Health." Just ask Tammy Faye Makeup lady."

    Something most right-wing morons (and you) miss is that the absence of healthcare does not equal "health." Just ask the millions of uninsured Americans.

  • thoreau||

    No benefits?

    The homeless people should unionize and demand better benefits for picketing. If they need to pad their protests, they can hire illegal immigrants under the table to carry signs.

  • ||

    JasonL
    Or if one had never seen the cumpulsory nature of union negotiations cost the national economy nearly a trillion dollars when the longshoremen protested the advent of bar code technology on the west coast.


    The conservative argument is that unions are bad because they have monopoly power and are therefore compulsory, so their harmful effects should be mitigated via such methods of right-to-work laws.

    Wouldn't this also apply to other monopolies as well though (natural or otherwise), such as power companies?

  • ||

    Why would one think that?

    Because banding together to gain leverage via collective bargaining isn't un-libertarian?

    Because unions sit down and negotiate contracts for their workers with the employer -- and libertarians believe contracts are the proper way to settle those types of disputes?

    I guess the question should be, why wouldn't one think that.

    DanT does have a point when he accuses Reason (and by extension many though not all libertarians) are really pro-corporate rather than pro-liberty.

  • ||

    Nasikabatrachus

    Freedom of assembly.

    And that has what to do with labor cartels?


    Freedom to assemble a cartel? *shrug*

    I'm not a big fan of unions, just like I'm not a big fan of other monopolies like utilities. I just find it hypocritical that people both on the left and right support one and oppose the other, even though they're really the same type of beast.

  • ||

    One would think that if one never thought for five minutes about the implications of 'fair' labor laws. Or if one had never seen the cumpulsory nature of union negotiations cost the national economy nearly a trillion dollars when the longshoremen protested the advent of bar code technology on the west coast.

    Right and corporations don't do this all the time? Corporations don't lobby for laws and regulations to protect their current business models and revenue streams and to protect against technology that might make their current business obsolete?

    Or that purely the domain of unions?

  • Edward||

    The past gains of the labor movement are the only reason many dull normals now have access to computers to spew anti-union rhetoric. The upside is that as those gains are eroded, the dull normals will slip into the silence nature intended for them.

  • ||

    I guess the question should be, why wouldn't one think that.

    I've never heard or read any libertarian say that labor unions per se are bad, only that state-mandated labor cartels are bad. Nothing in KMW's post suggested that she sympathized with the former position.

  • ||

    Something most right-wing morons (and you) miss is that the absence of healthcare does not equal "health." Just ask the millions of uninsured Americans.

    I don't recall claiming that it does, but perhaps you need to go back and read your own post.

  • ||

    brian:

    Labor can organize until the cows come home. If they get a monopoly, more power to them. Businesses should have the option to deal with unionized labor or not. THAT is where things go off kilter.

  • ||

    DanT does have a point when he accuses Reason (and by extension many though not all libertarians) are really pro-corporate rather than pro-liberty.

    Or at the very least, Reason tends include in its definition of liberty the "right of the powerful to be unencumbered in their ability to exercise that power". In Reason's collective mind, laws that exist to balance the interests of two groups are unfair to the group that otherwise would be able to take advantage of the other.

  • ||

    that state-mandated labor cartels are bad.

    Honest question: there are state-mandated labor cartels? I really don't know what you're talking about.

    The only state-sponsored monopolies I know of are the post office and (some) utilities.

  • ||

    The past gains of the labor movement are the only reason many dull normals now have access to computers to spew anti-union rhetoric. The upside is that as those gains are eroded, the dull normals will slip into the silence nature intended for them.

    Not really. Wages rise plenty without unions: labor cartels only serve the interests of their members, and they do so to the detriment of the wider labor market.

    See here for more.

  • ||

    JasonL

    Businesses should have the option to deal with unionized labor or not. THAT is where things go off kilter.


    But they do have that option. So what's all the complaining about?

  • ||

    Honest question: there are state-mandated labor cartels? I really don't know what you're talking about.

    Not precisely. Most unions aren't formed by the state, but there are various laws such as the Norris-LaGuardia Act that was passed in the mid 30's that force companies to deal with labor unions. See the link in my previous post for more.

  • ||

    Brian,

    Uh, no they don't. I own a company, my labor organizes, I fire them all. What happens to me?

  • fyodor||

    A few people here, including myself, have clearly stated how unionization can comport with libertarian principles but how it doesn't as it's currently practiced in the U.S. And then others go blabbing on as if none of this was ever stated. Ah, humans....

  • ||

    Nasikabatrachus | July 25, 2007, 1:48pm | #

    Honest question: there are state-mandated labor cartels? I really don't know what you're talking about.

    Not precisely. Most unions aren't formed by the state, but there are various laws such as the Norris-LaGuardia Act that was passed in the mid 30's that force companies to deal with labor unions. See the link in my previous post for more.


    From your link: "The [Norris-LaGuardia Act] made "yellow dog" contracts - in which an employee could be required to promise to refrain from union activity as a condition of employment - unenforceable in the courts."

    It's true that this restricted freedom of contract, but it hardly forced companies to deal with unions. Companies still could have simply fired anyone who joined a union without these yellow dog provisions.

  • ||

    Or at the very least, Reason tends include in its definition of liberty the "right of the powerful to be unencumbered in their ability to exercise that power". In Reason's collective mind, laws that exist to balance the interests of two groups are unfair to the group that otherwise would be able to take advantage of the other.

    So a free market in labor is exploitation? Laws that prevent union members from being prosecuted for violent acts during strikes are just balancing the interests of the various parties?

  • ||

    The corporate form is an ingenious device to provide for the amalgamation of capital while limiting risk to each individual investor.

    Yes, corporations do shitty things from time to time. But it galls me when folks equate corporations with unbridled avarice while they rush to check their 401(k) gains each month when the statement comes in the mail.

  • ||

    JasonL | July 25, 2007, 1:49pm | #

    Brian,

    Uh, no they don't. I own a company, my labor organizes, I fire them all. What happens to me?


    You hire people who aren't unionized? The whole market/freedom thing.

  • ||

    So a free market in labor is exploitation? Laws that prevent union members from being prosecuted for violent acts during strikes are just balancing the interests of the various parties?

    Just let me know when Reason runs a piece on the injustice of limited liability.

  • ||

    Just let me know when Reason runs a piece on the injustice of limited liability.

    And let me know you're sorry when you realize that Reason does not have a collective mind.

  • ||

    From your link: "The [Norris-LaGuardia Act] made "yellow dog" contracts - in which an employee could be required to promise to refrain from union activity as a condition of employment - unenforceable in the courts."

    There's also the Wagner act. To quote the article:

    The Wagner Act also forced employers to bargain "in good faith" with unions that were established by a majority of workers. Whether an employer had complied with the vague instruction to bargain "in good faith" would be determined by the all-powerful National Labor Relations Board.

  • ||

    And let me know you're sorry when you realize that Reason does not have a collective mind.

    But they do. Everything is collective.

  • ||

    Nasikabatrachus
    Just let me know when Reason runs a piece on the injustice of limited liability.

    And let me know you're sorry when you realize that Reason does not have a collective mind.


    It has a collective magazine, which represents many minds in one monthly issue.

  • ||

    The corporate form is an ingenious device to provide for the amalgamation of capital while limiting risk to each individual investor.

    Right - the shareholders get the returns, non-shareholders shoulder the risk. For some reason libertarians don't mind.

  • ||

    Nasikabatrachus
    The Wagner Act also forced employers to bargain "in good faith" with unions that were established by a majority of workers. Whether an employer had complied with the vague instruction to bargain "in good faith" would be determined by the all-powerful National Labor Relations Board.


    Ah, that sucks. But that's not the union doing it-that's the government.

  • ||

    The limited liability refers to the amount of capital contributed by each individual investor. that means if I buy a stock for $10, I can only lose my $10.

    I think Dan T. needs to understand the language of the debate: corporations get sued all the time and pay big time. It is an uninformed lefty myth that corporations are not liable for damages.

    As far as injustice goes, I believe it would be unjust to eliminate poor slobs like me from the market simply because there is no vehicle for me to invest my lousy $10.

  • ||

    Dan T.

    The corporate form is an ingenious device to provide for the amalgamation of capital while limiting risk to each individual investor.

    Right - the shareholders get the returns, non-shareholders shoulder the risk. For some reason libertarians don't mind.


    Shareholders get the returns because they risk their money. That's what stocks are really. More risk-->more return.

  • ||

    One more time-Dan T.: the shareholders get the return because they took the risk.

  • ||

    Further, labor unions in the US have at the end of the day contributed to a bunch of unemployable people more than any other factor I can think of.

    They insist that value to the company has nothing whatsoever to do with compensation, so they fight every piece of technology that comes along. They could have been organizations that help labor become more valuable and thereby higher compensated, but nooo. They instead acted as though there could never be a machine or a cheaper laborer anywhere else, and in fact minimized the value of their laborers.

    A lot of people are paying the price for putting their faith in union snake oil.

  • ||

    Ah, that sucks. But that's not the union doing it-that's the government.

    True, unions can't pass legislation (technically speaking, though they lobby quite a bit and it's safe to say they influenced the passage of the original legislation). That's why I drew the distinction between labor unions per se and the state-backed labor cartels we know as unions today.

  • ||

    "Ah, that sucks. But that's not the union doing it-that's the government."

    That is the idea, yes. There is nothing wrong with organized labor in the abstract, but there is a problem with US labor laws.

    I would go on, as above, to indict US labor unions themselves for gross negligence.

  • ||

    Well said JasonL.

    Carpenters Unions don't want talented people with a vision of the future or even the slightest understanding of modern mangement concepts pounding nails.

    They hire dimwits who don't mind forking over 20% of their pay for dues.

    In Oregon, unions routinely subsidize employers by kicking dues back to employers to pay back in wages. That way the dolts they hire can crow about making $25/hour without realizing that they are victims of a Ponzi scheme whereby the only true wealth is created at the upper echelons of union power structures.

  • ||

    Dan T has a retirement plan. I take all the risk and he gets all the benefit of those investments. Where's my cut Dan T?

  • ||

    JasonL wins.

  • ||

    One more time-Dan T.: the shareholders get the return because they took the risk.

    I guess what I should have said is that they get all the return but do not shoulder all the risk.

    As you point out, if you invest $10 you can only lose $10. But if you started a sole propriatorship for $10 and it lost $50, you'd be on the hook for that $40.

  • ||

    I think you're getting Dan T. You have just pointed out the magic of the corporate form.

    We'd all still be driving wagons made by the local wagon-smith if the only way to manage risk was to stick your own neck out.

  • ||

    Oh and Dan T.,

    Though many libertarians forget that businesses are not necessarily victims, they do understand it when they get to it

  • ||

    I meant " I think you are getting IT, Dan T."

  • ||

    I think you're getting Dan T. You have just pointed out the magic of the corporate form.

    We'd all still be driving wagons made by the local wagon-smith if the only way to manage risk was to stick your own neck out.


    I agree. So I guess the free market doesn't work?

  • ||

    $8 an hour with no benefits is 36% higher than the minimum wage was until yesterday.

  • ||

    Dan T. - Huh?

  • ||

    Dan T.'s got a point folks. The corporate form, and all forms of limited liability, are essentially gov't created risk subsidies. Let's at least recognize that gov't is doing more than merely protecting corporate property when it limits the liability of a corporation. I think corporate forms are useful, but to assume that libertarians can't be skeptical of corporate power misunderstands where that corporate power came from in the first place.

  • ||

    As far as injustice goes, I believe it would be unjust to eliminate poor slobs like me from the market simply because there is no vehicle for me to invest my lousy $10.

    It's actually even worse for poor slobs...

    If corporate shareholders have unlimited liability, and the corporation does everything in its power to prevent an employee from committing some horrible mistake or offense -- such as, say, opening the wrong valve in a chemical plant -- then that employee is entirely responsible for that event. There is no corporation to bail him out. There is no corporation to pay the costs to the larger society. The employee is ruined. The society is uncompensated.

    Without limited liability protecting shareholders' wealth beyond the company, there is no way they could or would trust employees. Most firms simply could not function.

  • ||

    I like the way libertarians switch back and forth between "corporations are distinct from individual management/shareholders" and "corporations are the same as management/shareholders" depending on whether the subject is legal liability or capital gains taxes.

  • ||

    I think corporate forms are useful, but to assume that libertarians can't be skeptical of corporate power misunderstands where that corporate power came from in the first place.

    How does limited liability produce or induce any more "corporate power" than unlimited liability?

  • ||

    Without limited liability protecting shareholders' wealth beyond the company, there is no way they could or would trust employees. Most firms simply could not function.

    So the free market doesn't really work?

  • ||

    limited liability of a corporation does not mean a corporation does not pay for its sins.

    think about it this way:

    Your neighbor builds you a wagon. It is a piece of shit. You break your leg. The liability of your neighbor is LIMITED by how much wealth he has.

    What is the difference?

  • ||

    How does limited liability produce or induce any more "corporate power" than unlimited liability?

    Mike, you just wrote yourself that without limited liability most corporations could not function at all.

  • thoreau||

    This is a fair comment on the debate tactics, if not necessarily a refutation of any particular points:

    joe | July 25, 2007, 2:33pm | #
    I like the way libertarians switch back and forth between "corporations are distinct from individual management/shareholders" and "corporations are the same as management/shareholders" depending on whether the subject is legal liability or capital gains taxes.



    And while there is much to be said for the benefits of limited liability, Dan T. is right to call out MikeP for this statement:

    Without limited liability protecting shareholders' wealth beyond the company, there is no way they could or would trust employees. Most firms simply could not function.



    I think the reality is probably a bit more complicated than that.

  • ||

    Your neighbor builds you a wagon. It is a piece of shit. You break your leg. The liability of your neighbor is LIMITED by how much wealth he has.

    No, in that scenario if my leg costs $100 to fix and my neighbor only has $90, he'd still owe me $10 as a debt.

    In a limited liability situation the only loss my neighbor would have to worry about is whatever he paid to build the wagon, even if he was a millionaire.

  • ||

    Dan T.,

    Do you think there would or would not be limited liability corporations in an anarchy? Unless you can present a reasonable argument that there would not be, please stop pretending that limited liability is either not free market or is exclusively a construction of government.

  • johnathon||

    I think it's cute how trusting Dan T is. The part of the article that he mentioned:

    The United Brotherhood of Carpenters is the only union that routinely hires homeless people for its picket lines, union leaders and labor scholars say.

    Of course they are the only union that hires homeless people! The union leaders say so!

    As for "labor scholars", that is pretty ambiguous.

  • thoreau||

    I'm fine with limiting liability, since it means that you can lose nothing more than what you put into the organization. This seems to lead to more economic activity in practice, more innovation, etc.

    The question is whether bankruptcy protection is then needed for corporations. Not knowing much about bankruptcy, I can only opine that limited liability and bankruptcy seem to serve overlapping and redundant purposes. But I don't know much about how it shakes out in practice, and whether there are distinct economic functions of each arrangement.

  • ||

    No, the limited liability would be capped at what your neighbor had invested in his wagon factory.

    Better yet, just forget it Dan T.

    Hope you enjoy the gains made by your retirement/investment accounts that have accrued out of thin air (by the miracle of the free market) while you have wasted our time here

  • ||

    The Carptenter's Union is the only one that gave more money to Republicans than Democrats in the 2000 election cycle.

    While we're discussing the unique political behavior of this organization.

  • thoreau||

    Do you think there would or would not be limited liability corporations in an anarchy?

    Well, if one wants to talk about anarcho-capitalism, where you still have organizations enforcing contracts and providing security, some of those organizations could promise their customers to never hold them liable for more than their stake in whatever enterprises they form.

  • ||

    Dan T.,

    Do you think there would or would not be limited liability corporations in an anarchy? Unless you can present a reasonable argument that there would not be, please stop pretending that limited liability is either not free market or is exclusively a construction of government.


    Since there's no such thing as true anarchy, that's a tough one to answer.

    Perhaps you could say that limited liability is not a construction of the government but rather the government not applying the construction of the enforcement of debt towards certain groups. The government can force me to pay back $1000 if I borrow it personally but if I own a share of a corporation that borrows it they cannot force me to pay back my share.

  • Gus||

    Forgive me fi I've missed something, but do the folks arguing against limited liability think people should should be able to sue the banks who gave loans to the people to whom they lost money? People run up huge debts and declare bankruptcy every day. How is a corporation being able to do this any different?

    If corporate law didn't exist wouldn't folks still be able to grab a homeless guy with nothing else to lose off the street, pool their money into into his bank account via small loans and write the terms of those loans so they are functionally equivalent to stock. What would be the difference? People would still be able to accrue more debt than they have assets.

  • ||

    thoreau: that is pretty much what we've got isn't it?

    Bankruptcy is indeed a whole 'nother story in my book. I don't know enough about it to really say, but I am convinced that there are abuses.

  • ||

    Hope you enjoy the gains made by your retirement/investment accounts that have accrued out of thin air (by the miracle of the free market) while you have wasted our time here

    But once again, I'm not criticizing LL as a concept. It seems to work pretty well, in fact.

    What I am pointing out is how pro-corporate Reason and Reasonoids are when you'll rationalize the government giving advantages to corporations while disparaging workers who want to improve their bargaining power by unionizing.

  • ||

    Gus,

    I'm not against limited corporate liability. I just don't believe in free lunches.

    I do think it was a mistake for the courts to declare corporations "persons" before the law, but that's a different matter.

  • ||

    Without limited liability protecting shareholders' wealth beyond the company, there is no way they could or would trust employees. Most firms simply could not function.

    Okay, let me rephrase...

    Most firms as we know them today simply could not function. I think there would be two mechanisms for this. First, it is unlikely that firms would get to such a size that the shareholders did not know the employees. And second, higher risk firms such as chemical plants or the like would not form in any event.

    I may in fact be wrong. Perhaps shareholders could produce a bulletproof enough legal foundation and management structure in an unlimited liability corporation that their assets are protected from employee error. Perhaps employees wouldn't have a problem signing an employment contract that puts all liability for their mistakes on them.

    It is a different world. It wouldn't be the first time that a different world that looked impossible in the context of the current world actually turned out to be a better world.

  • thoreau||

    Bankruptcy is indeed a whole 'nother story in my book. I don't know enough about it to really say, but I am convinced that there are abuses.

    I suspect that the airline industry has been shielded from a certain amount of creative destruction, enabling inefficient firms to maintain large industry shares rather than going under. I don't claim to know what would emerge into the vacuum, but you can only bail out the airlines so many times before concluding that it's better to see what else might come down the pike.

    Then again, I realize that airline survival has not been entirely a matter of corporate bankruptcy law.

  • thoreau||

    MikeP-

    What about liability insurance in lieu of limited liability? Every time I get into my car I run the risk of harming somebody to the point where his medical bills exceed my net worth, yet I drive anyway because I have insurance.

    Mind you, I think limited liability is a fine way to go, and we might as well stick with it since we have it. But I'm not convinced that it's the only way to go.

  • A.G. Pym||

    In the 1970's, here in south-central Washington State, the Hanford building boom brought thousands of union construction workers to the area, and their fondness for labor actions at the drop of a hat. They not wanting to give up their high-wage featherbedded jobs, when they'd go out on strike, they'd most of 'em just move down the road to another locale, while the local picketer's union (yes, there was such a thing) supplied "feet" such as these. I was still in Jr. High & High School, but I seem to remember that this union was registered with the state and everything - and they even went out on strike once. *sigh* I think they departed with the Owl Party ("Throw the rascals out!"), though.

  • ||

    "How does limited liability produce or induce any more 'corporate power' than unlimited liability?"

    Liability is an important factor in a corporation's ability to attract capital. The more you limit liability, the easier it is to attract capital. The more capitalized a corporation is, the more powerful it will potentially be. I don't think anybody disputes the idea that limiting a corporation's liability gives it more power.

  • ||

    This practice of hiring the homeless or others in sheltered living situations is not limited to unions. I volunteered for a non-profit organization that I think was doing excellent work benefitting people truly in need. At one point, I paid $25 for a seat on a bus they had chartered to take people to the state capital to lobby in favor of good legislation (reforming health care in prison).

    It turned out that many others on the bus hadn't paid to join the trip--in fact, they were being paid a "stipend" plus a "per diem" for meals on the o ne-day trip. I don't have much of a problem with this if it allows poor people to make a trip to the capitol and meeting their representatives that they couldn't otherwise afford. But I got more cynical when, on the day of the trip, half of our riders swtiched to another bus rented by a different non-profit that was offering a better deal.

  • ||

    thoreau,

    Corporate liability insurance is an excellent idea. It is actually better than limited liability because it would be priced commensurately with the risks.

    To those willingly dealing with the corporation, the insurance is essentially passed through to them as a cost since they are the ones being protected from holding the bag in a bankruptcy. The actual beneficiaries of such insurance are third parties: liability insurance could in fact be required to allow risky activities in third parties' neighborhoods.

    Remember, though... If limited liability corporations do not appear in the fabric of society, the insurance companies themselves are unlimited liability corporations. That's a lot of liability falling into few laps!

  • ||

    I don't think anybody disputes the idea that limiting a corporation's liability gives it more power.

    That's a fair point, though I would still point out that the "power" you speak of is actually government power.

    To argue against your point, limited liability offers a more diverse and less wealthy shareholder base which should distribute the "corporate power" better into the society.

    And to further play devil's advocate... In an unlimited liability corporation -- where there is so much more to lose -- the shareholders are more likely to seek and hold much more political power to see that the government runs in their favor.

  • Sandy||

    A union where I temped was the largest customer of the temp agency I worked for. Fully a third of the staff at any time were temporary workers.

    You see, they had such generous leave benefits that they couldn't keep the placed fully staffed. So rather than hire extra workers with expensive benefits, they paid $20/hour for temps (of which the temps received $10-11) with no...wait for it...benefits or leave.

  • ||

    MikeP: The power to which I refer is called market power, and it isn't the power of the market, it is the ability of a single corporation to manipulate the market. The more capital a corporation has relative to its competitors, the more ability it has to influence and control the market in which it operates.

    "limited liability offers a more diverse and less wealthy shareholder base which should distribute the "corporate power" better into the society."

    No, the corporate structure owes a duty to its shareholders to make money, regardless of whether the shareholder is wealthy or poor. There may be a few actions in which a shareholder vote could influence the decisions of a company, but given that mutual funds are the primary investors in corporations that are able to exert market power, this idea that a broad base of shareholders will act in the public interest is incorrect.

    "In an unlimited liability corporation -- where there is so much more to lose -- the shareholders are more likely to seek and hold much more political power to see that the government runs in their favor."

    There will always be an incentive to be corrupt, regardless of how business is done. Aside from that reality, there's really nothing to suggest that having "more to lose" would cause anything other than higher prices to account for the risk.

    I'm not sure what you're arguing against. I'm not against the limitation of liability, at least when it's reasonable. I just want libertarians to understand that corporations are able to accumulate the power they have because the government limits the downside. All in all, it's a pretty good system, but don't give me this free market crap about how government has no ability to question corporations when government gave them the tools to make it so big.

  • ||

    I'm not sure what you're arguing against.

    I am arguing that the limited liability corporation is not a construction of government, and that arguments based on that presumption are not well-founded.

    Limited liability corporations in an anarchy would look very much like they do today. They are a product of a legal system of contract, debt, and liability. The fact that today the government runs the legal system in no way implies that the government supports corporations to the detriment of some better form of organization more amenable to liberty or free markets.

  • ||

    To preempt someone's having to look up the relevant USC title...

    I am arguing that the limited liability corporation is not a construction exclusively of government.

  • ||

    The corporation itself is a legal construct and wouldn't exist without gov't creating it. 'nuff said. Argument over. You get nothing! You lose! Good day sir!

    "Limited liability corporations in an anarchy would look very much like they do today"

    Except that they wouldn't exist. Methinks you've hit the bottle a little early, know what I'm sayin'?

  • ||

    The USC is only one source of corporate law (yes, you're arguing that corporate law defines an entity that not created by law.......hmmmmmm, how's that again?). Besides, state law, especially Delaware, is where corporate law is found.

  • ||

    "I am arguing that the limited liability corporation is not a construction of government."

    You're arguing that it is a construction of ________________?

  • ||

    Just tap out already....

  • ||

    Except that they wouldn't exist.

    Who's to stop them?

  • ||

    You're arguing that it is a construction of ________________?

    ...a legal system of contract, debt, and liability. The fact that today the government runs the legal system in no way implies that the government supports corporations to the detriment of some better form of organization more amenable to liberty or free markets.

  • ||

    "The fact that today the government runs the legal system...."

    Always has, and always will, except maybe like Iceland in the 13th century. I didn't realize we were arguing about your Star Trek fantasy world. My bad.

    You are arguing that governments don't create the legal entity we call corporations, and instead, you argue, that corporations are created by a "legal system of" contract etc. Then you admit that the government controls the legal system (always has in modern times). The government creates the legal system, which creates the legal entity that is then governed by the government, and yet nothing in this chain of creation and control "implies" that governments support corporations?

    Since I need a drink I'll go ahead and say, for a person posting at a magazine called Reason....

  • ||

    Fair enough, Lamar.

    I think it is interesting to figure out which elements of government authority encode social order that would otherwise exist and which are constructed out of whole cloth. I find that approach offers great insight into right and wrong, freedom and tyranny.

    I understand if that's not your bag. Enjoy your drink.

    Ooooh, I can't resist...

    and yet nothing in this chain of creation and control "implies" that governments support corporations?

    ...to the detriment of some better form of organization more amenable to liberty or free markets.

    In other words, if there weren't limited liability corporations, there would be something else serving a similar purpose. I know of nothing else that would fill the vacuum. I know of nothing in a free society that would prevent limited liability corporations from filling that vacuum.

  • severin||

    The union is paying worse than Wal-Mart!

  • ||

    The idea of corporate personhood is not meaningful in any real sense. Limited liability is one of a few ways you can regulate pools of money.

    The argument that allowing more people to pool money, including the holders of all retirement accounts and anyone else with $10 invested is somehow a huge advantage to corporations at the expense of everyone else is absurd.

    Where do you think labor is going to work if you don't allow pools of money to be invested? Labor benefits AT LEAST as much as corporations from the current arrangement.

    Also lost in this is that the ability for Everyman to purchase shares is one of the greatest sources of wealth democritization this country has ever seen. Can you imagine what it would look like if only already wealthy people could start businesses, and ONLY those people could benefit from gains?

    Corporate personhood and limited liability are not favors done to corporations at the expense of everyone else, such that corporate investors have to pay for their lunch elsewhere. Look around and figure out what your working class would look like and through what mechanism class mobility would occur in thier absence.

  • ||

    lamar-

    Dan T.'s got a point folks. The corporate form, and all forms of limited liability, are essentially gov't created risk subsidies.

    IOW, directly analogous to "bankruptcy" for the individual?

  • ||

    joe-

    $8 an hour with no benefits is 36% higher than the minimum wage was until yesterday.

    How many low wage workers do you think will lose their (already meager) health benefits next year due to the increased costs of hiring/training/replacing workers?

  • ||

    How many low wage workers do you think will lose their (already meager) health benefits next year due to the increased costs of hiring/training/replacing workers?

    we could go to actual studies on this one, or we could just parrot the ECON 79 line that a raising of the minimum wage always increases unemployment.

    VM, wanna handle this one?

  • ||

    anon: Re: "IOW, directly analogous to "bankruptcy" for the individual?"

    Except that they're totally different, with different purposes, philosophical underpinnings, historical antecedents, societal effects and arguments for and against, sure they're similar or not.

  • VIKING DAMON||

    DEMAND KURV!!!!!!

  • Corporate Lawyer||

    I'm quite late to the thread, but I think it's important to point out a few things. Of course, let me acknowledge my biases - I am a corporate lawyer and do think corporations are generally a good thing.
    1) There is still a great deal of argument about the underpinnings of corporate law by academics such as Bebchuk, Lopucki, Romano, Woodward, etc., etc.... However, as a practitioner, my humble opinion is that limited liability and the other trappings of corporate forms primarily function to increase efficiency. I could craft contracts among all of the parties in a corporate relationship that would create everything associated with corporations. It would take a very long time and cost a lot of money, but it can be done. Having a corporate code simply reduces the need for lots and lots of clauses that would say what is otherwise already in the law.
    2) Limited liability is also not the bogeyman some people make it out to be. Corporation A and Individual B both have $50. Both are free to contract with you to limit their liability in your dealings with them to $50. If you agree to deal with a corporation, you accept that their liability is limited, and if you're worried about their assets you do your due diligence.
    3)What if you never agree to deal with a corp, and it injures you? Well, you still have a right to file a tort claim. What if the corp doesn't have sufficient funds to pay you? Sometimes you could pierce the corporate veil and get to the shareholders. Otherwise, does it really matter to you if you are injured in the amount of $50 and you are dealing with a corp with $25 instead of an individual with $25?
    4) Given that, how is limited liability a government created risk subsidy? By dealing with a corp, you accept their liability will be limited, so you are "subsidizing" their risk. If you don't deal with a corp, but are still injured, there is a chance to get around the limited liability. Any subsidies in that case result from the extent to which piercing the corporate veil is allowed, not in the limited liability itself is allowed.

  • ||

    anon,

    Zero, or something close to zero, if past studies of the minimum wage's effect on employment are predictive of the future. Which they probably are.

  • ||

    CorpLawyer: I understand your biases, and I agree that corporate law is generally a good method of establishing certainty and efficiency. Of course, limited liability is only a portion of corporate law and should be addressed separately:
    (1) You could draft contracts all day long, and even brilliant sections on enforcement, but without any force of law, I would laugh at them because you can't enforce them. There's always the Nigerian model of contract enforcement.... Sure, eventually my credibility would be shot, but I'd just change my name to Ginsu XIX or something and start over.
    (2) I agree that limited liability is not usually a bogeyman, and when it is, those are the corporate veil cases. I am merely acknowledging that the government's limitation of liability creates value for the entity and hence an incentive to engage in such business.
    (3) Your tort argument is rather poor since you are saying, what the hell, at least you didn't get injured by an even poorer individual, and piercing the corporate veil has nothing to do with the amount of damages, you know as well as I that it has to do with how the corporation is run.
    (4) You should be ashamed that your argument is "by dealing with a corp, you accept their limited liability," especially since you recognize that people don't always 'choose' to deal with a corporation. You make it sound like everybody runs around with a copy of Moody's to see which corporations they can deal with on a day-to-day basis. Not only is that argument wrong because the liability is limited in many instances where a choice was not made (that's enough to sink your argument right there), but practically speaking, why the hell would the government limit liability in the first place if it wasn't to provide a certain value to the corporate structure? For their goddam health or something?

  • Scooby||

    Lamar,
    (1) You could draft contracts assess and/or allege liabilities all day long, and even brilliant sections on enforcement, but without any force of law, I would laugh at them because you can't enforce them.

    Assuming the absence of a legal framework for enforcing contracts, why would "liability" be a word with any meaning whatsoever?

  • ||

    Scooby: Don't ask me, I'm wondering that myself. Ask Corporate Lawyer.

  • Corporate Lawyer||

    1) I agree, but I don't see what this has to do with corporations. There always has to be some enforcement mechanism for contracts. In the American system, we use courts and the police, but it is not inconcievable to envision some cyberpunk future where corporations provide their own enforcement through private security organizations. My point is that corporations are generally not treated better than individuals, partnerships, etc. in contract law (I can't think of any examples off the top of my head, but I suppose there might be some.) Indeed, you could argue that is some areas, such as adhesion, corporations could be treated worse. Corporations do rely on government power, but there is nothing inherent in the corporate form that requires unequal treatment by a government. Considering corporate law in the US is a mess of 50+ different systems, I don't want to get into the nitty-gritty, but if you'd like to discuss actual implementation of state laws, we can do that (I'm most familiar with Virginia and Delaware, FWIW).
    2)As a practical matter, I'm not sure why it matters that the government creates the limited liability through statute, rather than the the corporation imposing it through contract. Limited liability for torts may need to be rebalanced to prevent government subsidization of risk, but it does not inherently subsidize risk.
    3) I'm not sure what your point is. Are you saying that limited liability encourages shareholders to invest in risky businesses? What are the risks you are concerned about? I can think of at least two - 1) financial risk: ex. Shareholders are free to invest in firms that try and find the holy grail. When the business fails, should we punish them by extracting more money than they invested? 2) tort risk: a corporation is undercapitalized and does not have sufficient funds to pay those it injures or is involved in dangerous activities. In these situations, i can see the point of properly balancing the piercing of the veil.
    4) Why yes, I am ashamed. Mostly that you didn't understand my argument. I am more concerned with notice, than with consent. If I am a small business owner who wants to sell services or goods to others, I am almost certainly going to being dealing with corporations and will be "forced" to accept their limited liability. Again, does it matter if the coercion is in codification of limited liability or in its imposition through contracts? At least you are aware of the limited liability either way and can make the appropriate adjustment in the way you deal wit that business. In a freemarket economy, "stronger" (larger, more profitable, better negotiator, whatever) businesses will impose terms on "weaker" businesses. I don't see how this is a problem inherent in corporations. (I do give some weight to the argument that corporations are able to grow much larger than other business entities, but there are still huge partnerships. Furthermore, there are advantages to huge organizations, and that may be more worthy of another cost benefit analysis)
    Finally, I don't know why you are acting like limited liabilty is a unique feature of corporations. Every rational entity seeks to limit its own liability (or the other entities that make it up). Corporations happen to have it codified, but it could just as well be contractually imposed. One of the major reasons for including limited liability in a corporate code is so that it does not have to be inefficiently included in every single contract made by an entity. We can argue about the merits of allowing two parties to contract to limit liabilty, but this is not a problem with the corporate structure. Like I said before, it would take a while, but under general contract law, you could create an entity much like a corporation. Why does it matter if "ACME Corp" is a group of business people bound together by unwieldy but effective contracts, or one with a default set of rules codified by statute?

  • Scooby||

    Lamar,

    The corporation concept of liability itself is a legal construct and wouldn't exist without gov't creating it. 'nuff said. Argument over. You get nothing! You lose! Good day sir!

    "Limited liability corporations in an anarchy would look very much like they it does today"

    Except that they it wouldn't exist. Methinks you've hit the bottle a little early, know what I'm sayin'?



    "Liability" is a government risk subsidy to the demand side of the market. In an anarchy, "liability" doesn't exist, therefore any argument about "limited liability" would be moot.

    I'm not sure what any of that has to do with the hypocrisy of certain labor unions when they become employ labor. I hope you've enjoyed the troll chow.

  • Scooby||

    I'm back from lunch to see the monstrosity that is the second to last sentence of my post. Strike "become".

  • ||

    Corporate Lawyer: I'm a lawyer and I do the same thing. Instead of addressing the other guy's argument (i.e., that the limitation of liability creates value, and why gov'ts limit liability in the first place) I just restate what I said before with a feigned naive look on my face. At least you agree that corporations are able to exist owing to the rule of law provided by gov'ts, but why deny that limited liability is a benefit bestowed by that same gov't to provide certain incentives? The incentives are to invest, not necessarily in risky businesses, but in businesses in general. It's sort of the foundation for corporate law.

    You're not sure why corporations can't limit their liability through contract? Simple: if they could, they would, but they can't, so they don't. Is there any inherent reason to form a corporation other than the liability aspect, and perhaps certain tax reasons? The certainty of Delaware law?! Surely you know that there is a major disincentive to invest in a corporation if you know that your house is on the line.

    Scooby: Let's just admit that nobody has any idea what would happen "In an anarchy." Until it actually happens, let's stick to the real world.

  • ||

    You're not sure why corporations can't limit their liability through contract? Simple: if they could, they would, but they can't, so they don't.

    Lamar, they don't limit liability through contract because it is fabulously less efficient in their dealings than simply letting standing corporate law imply their liability.

    You have established that the "in an anarchy" argument doesn't work for you. What about the "common law" argument? Do you think that, absent statute, there would be limited liability corporations or not?

    Also, you keep saying that the government is limiting liability. Isn't it more accurate to say that the corporation is limiting liability, and that the government is simply standardizing the rules?

  • Scooby||

    Sorry, Lamar. I was just following the red herring that you and Dan T. dragged across the thread.

    Carry on with the 'jack.

  • Corporate Lawyer||

    Scooby:Excellent points.

    Lamar: So we're both lawyers, and apparently we're both ignoring the other person's arguments. Realistically, I should argue against corporate codes. Without corporations, I could call myself a business entity lawyer and spend all day drafting contracts to achieve what can be done in mere minutes with a corporate filing.
    You _can_ create contractual limited liability with contract law. Imagine a two person business, called ACME . They have a contract that says that they have contributed $50 each to their business and that neither is obligated to contribute any more funds to the business for any reason. The contract spells out their other rights and responsibilities. This language is often found in partnership agreements. Then, any time ACME enters a contract with another entity, they insist on limiting their liability for any breach of the contract. The amount limited would be the current value of the business. How is this not the functional equivalent of a corporation?
    Limited liability for tort is tougher. There is no privity, so it cannot be imposed by contract. Assuming a world without corporations, it could be approximated by liability insurance. When the government imposes limited liability for torts, it could be seen as providing a benefit, by allowing substitution of statutory protects for the payment of insurance premiums. However, I acknowledged this before and noted that it could be minimized or eliminated by requiring adequate capitalization and/or deciding when veil piercing is appropriate.
    There are many reasons other than limited liability for corporations: it's easier to pool capital, it is easier to make decisions, it makes certain assets easier to transfer, it allows for more efficient management of unrelated businesses, just to name a few off the top of my head.

    To avoid any further charges of avoiding your arguement, here goes:
    "Limitation of liability creates value" - Yes it does, which is why it is done in private contracts all the time. My point is that the government is not preventing partnerships/individuals, etc. from limiting their own liability contractually. My argument is that entities can do this anyway, but corporate codes make it easier. If corporate codes disappeared, "corporate" attorneys would get even richer drafting agreements to managing entities. The value _for corporations_ does not come from the limitation of liability, but from the efficiency gains. Limitation of tort liability does provide value not available to most other entities, but the excess value can be offset in other ways - higher tax rates, large capital requirements, and/or corporate veil piercing. I do not know if any state sets the right balance to avoid subsidizing corporations, as I have not studied the economics of these codes. But I do know that it is possible, and I am arguing about corporate forms in general.
    "Why governments limit liability in the first place." I admit this is a harder question - there are a lot of theories, and I am not an expert on the historical development of corporations. Certainly the incentive to invest is one reason. However, there is the idea that the corporation is owned by the shareholder, but that because it is managed by others, they are often in a better position to bear some of the risks. Finally, limited liability has not always been a feature of the corporations, although it is true that it was an essential feature in the development of truly private corporations, at least in American law.

  • ||

    How about Chief Justice John Marshall's definition: "A corporation is an artificial being, invisible, intangible, and existing only in the contemplation of the law." Check that quote out, it's one of the first cases to separate corporations from gov't control (Dartmouth) in 1819. It wasn't until the late 1800's and the rise of railroads that limited liability became a mainstay of corporate law. Corporations were born under the auspices of gov't control, the word franchise comes from the French root meaning privilege. Don't tell me that corporations existed in some vague time and place where they had nothing to do with government. The concept was created by governments and corporate privileges continue to be granted by governments.

    You ask about common law? Aren't you forgetting that the first modern corporations were chartered by the crown, if not a part of the crown itself? Think of the early East India companies.

  • ||

    That's a response to MikeP, not corporate lawyer.

  • ||

    Perhaps I am viewing this from a historical perspective, while others are viewing it from a more speculative perspective (i.e., that K law could approximate limited liability). I'm having a hard time defeating the argument that private contracts could approximate much of the corporate limitation of liability (recognizing that gov't enforcement of a contract is not the same as gov't granting a right). By contrast, my opponents in this polemic cannot get around the fact that corporations have historically been entities created or chartered by governments, and today's corporate law reflects that fact. Otherwise we may indeed have a system of private contract law limiting liability. What we have is a government granted privilege to do business, and part of the granted privilege is the limitation of liability. Each privilege represents value. All in all, it's a good thing. However, just as we can imagine a world of private contracts limiting liability, we can just as easily imagine a world of government mandating liability (like treble damages laws). This isn't a counterexample, just something to show it isn't that farfetched.

    Please patronize my new venture, Lamar Consulting ELC (Extra Liability Corporation....)

  • ||

    Lamar,

    I am indeed viewing the issue more speculatively. As has been admitted numerous times by people on all sides, limited liability corporations are significantly more economically efficient than alternative forms of organization of many classes of firms. Now that this fact has been recognized over the last 150 years, it is hard to imagine that limited liability corporations would not exist regardless of the particulars of the legal system. Nay, it would require egregious force from a government to prevent them.

    In small willful dealings with such companies, the issue of limited liability never comes up because the likelihood that a company will be in hock without a contract to an individual and to an extent that the corporation can't cover it is minuscule. In larger dealings, contracts can be signed, insurance can be bought by either side, or the limited liability and chance of bankruptcy can simply be accepted as a risk -- whatever is efficient. On the issue of third party or tort liabilities, there is certainly room for debate on government subsidy, and you are likely to find agreement among many here that corporations may be overly protected in such cases.

    So it is hard to say that the codification of limited liability into corporate law by government is providing a subsidy peculiar to corporations. It is simply codifying what would be there if nothing were codified.

  • Corporate Lawyer||

    I generally agree with Lamar's 3:19 pm statement. I think we've reached a point where we would just argue past each other - I disagree that limited liability is truly a grant of government power. I would argue that it is an acknowledgment that people could basically do the same things with contract law, and that a corporate code simply makes it easier to achieve the same thing. Yes, corporations are government created entities, but so are limited partnerships and other more esoteric organizations. I might be concerned if corporations were the only entities that were allowed to limit their liability and it was a right that came out of nowhere. Yes, the government can change the liability scheme around. However, it has always had that power. There are limits to limited liability in any context (based on contract law and public policy concerns). What I don't understand is why some people single corporations out as if they are the product of some government conspiracy to screw the common man (not that Lamar is saying this, just that I've seen it on H&R before).

  • Corporate Lawyer||

    MikeP's 3:43 statement is excellent and I agree with everything he said. I'll also add that corporate codes probably benefit small business and entrepeneurs the most by allowing them to take advantage of many of the same protections that big business have. Here's more speculation, but if the corporate form disappeared tomorrow, Apple and Halliburton and Walmart would still be around. They'd have to pay more to lawyers and would be less efficient, but the people most directly harmed would be the innovators and the small businesses.

  • ||

    No argument here about the benefits of limited liability. Generally positive for all.

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