Comics

Union Sundown

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With the Service Employees International Union (SEIU) and the Industrial Brotherhood of Teamsters splitting from the AFL-CIO, the future of traditional unions in the U.S. is clearly up in the air.

This San Jose Merc-News account suggests that the schism may rejuvenate organizing efforts: "Some Democrats said Monday they hoped the warring factions would come back together. Others suggested the competition would jolt organized labor out of its decades-old slumber." That might include new efforts to organize in Silicon Valley:

"Both factions, the one that's leaving the AFL-CIO and the one that's staying, say they are going to put more emphasis on organizing. So we can expect there is going to be more organizing in Silicon Valley," said Bob Brownstein, policy director for Working Partnerships USA, the research arm of the local AFL-CIO South Bay Labor Council. "But exactly which industries are going to be affected, it's too soon to say. That's going to be a strategic decision, not a philosophical one."

Whole thing here.

Back in 2000, Reason Contributing Editor Mike McMenamin took a long look at "why the AFL-CIO's cynical survival strategy is doomed." With the SEIU and Teamsters in mind, McMenamin got to the basic reason why: "The fact is that unions achieve less for the working poor than the market does."

Whole thing here.

Lyrics to Bob Dylan's 1983 tune "Union Sundown," which here.

A Stan Lee/Marvel Comics No Prize to the first reader who successfully explicates the line "They used to grow food in Kansas/Now they want to grow it on the moon and eat it raw."

NEXT: Bus-ted

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  1. A Stan Lee/Marvel Comics No Prize to the first reader who explicates the line “They used to grow food in Kansas/Now they want to grow it on the moon and eat it raw.”

    Kansas is known as the bread basket of America. Classic sci fi has people growing food hydroponically, then the food is pressed into brown/gray wafer, that tastes like cardboard.

    The scene from 2010 where Roy Scheider and John Lithgow are sitting talking just after John has woken up and he is eating one of these wafers and they talk about how bad it tastes.

  2. Nick-the explanation is simple: drugs. Lots of them.

  3. Haven’t unions outlived their usefulness? It was great when they protested black lung coal mines and 12 year olds working commercial fishing boats, but what is their cause now? Pushing wages higher so that we can’t compete with China? I can’t really get on board with that.

  4. What is a union but a protection racket operating with the blessings of government?

  5. Pray tell, in what universe are corporations “part of the market” but unions aren’t?

  6. Sadly alkali, you’re exactly right. Just as sadly, by that logic government is “part of the market”.

  7. The only union I ever belonged to was the teacher’s union when I taught high school. Yeah, a lot of the complaints about it are justified. But if I were still teaching I’d HAVE to support the union, because as irritating as the NEA was, the administration at my school was worse.

    Before there were unions, you had management oppressing the hell out of the workers. Now the pendulum often goes the other way, with unions being exploitative. What we need to do is not eliminate one or the other, but find some sort of middle ground.

  8. The west coast longshoremen shutting down the country a couple of years ago was nothing more than an advertisement to the whole country that nobody was less interested or capable in looking out for the interests of the average Joe than the unions. They cost the country several hundred billion in GDP, and for what? To prevent the docks from adopting the awesome modern technology of the bar code scanner.

    Unions for the last several decades have done absolutely nothing but make labor more expensive than machines and more expensive than foreign competition. They have failed their membership in every way you can fail. By acting to protect specific types of jobs instead of acting to protect the interests of workers in a modern economy, they have left their membership completely incapable of surviving when the inevitable change in job description comes. They are dinosaurs.

  9. Unions, in their honest form, seerve as a way to equalize the power balance beetween management and workers. Look, despite Francisco D’Anaconia’s ramblings, the fact is that management and labor have diametrically opposed interests.
    For any corporation, the goal is to get the most work out of people for the least amount of money. For workers, it’s precisely the opposite. Without collective bargaining, the company holds all the cards; they can always find more labor, provided that people leave in dribs and drabs.
    While I agree that unions should not be able to compel membership, they are necessary.

  10. “For any corporation, the goal is to get the most work out of people for the least amount of money. For workers, it’s precisely the opposite.”

    Which is grand for the workers as long as there is no substitution for their services. What is of value to workers is to be able to demonstrate productive value to the company, not to demonstrate that you are absolutely the worst possible solution to a company need.

  11. So we can expect there is going to be more organizing in Silicon Valley,” said Bob Brownstein, policy director for Working Partnerships USA, the research arm of the local AFL-CIO South Bay Labor Council.

    If you think Lou Dobbs is up in arms now — wait until the SEIU organizes programmers and developers in CA. Jobs will move to India, Indonesia, Singapore and the eastern bloc at an unprecedented rate. This oughta be fun.

  12. “Pray tell, in what universe are corporations “part of the market” but unions aren’t?”

    Good question. Unions might still exist in a completely free market. I can’t say the same for giant corporations.

  13. One reason unions will likely make inroads into the tech industry is because of the huge number of software companies that require 80- or 90-hour workweeks, not just during “crunch time” but ALL the time. Maybe people wouldn’t be so pro-union anti-management if so many managers didn’t take the attitude, “You can earn a living OR you can have time for a life outside of the office, but you damned sure can’t do both.”

    Generally speaking, the good companies who treat their employees well aren’t the ones where the unions are making inroads.

  14. Pray tell, in what universe are corporations “part of the market” but unions aren’t?

    All human interactions are part of “the market.” Question is whether “the market” is free, coerced or a mixture of the two.

    Both corporations and unions get protections from the government which are not merely protections against abuse of rights and which therefore seem unjust to those of us who advocate freedom. Does improperly protecting one “side” justify improperly protecting the other? Well, best to remove such protections from both sides, but in lieu of that, taking the unfair protection of one side as a given…who the fuck knows. Who do I look like, Solomon?

  15. Jason-You make a good point, but that’s really a question of poor policies within unions, not of the efficacy of the idea of unions.

  16. “…For workers, it’s precisely the opposite.”

    Jason, you could say the same thing most individuals with or without a union, especially in the kinds of jobs in which unions are prevalent, where they may be relatively little chance of signficant advancement or a sense of achievement. I wouldn’t consider seeking one’s self-interest to be contrary to capitalism.

  17. “For any corporation, the goal is to get the most work out of people for the least amount of money. For workers, it’s precisely the opposite.”

    If your attitude as an employee is to do the least amount of work possible for any reason, you are a parasite on the economy and a drag on the country.

    Taking wages for performance, then deliberately not performing is a violation of the employment contract and, let’s face it, theft.

    Theft as a rationale for unions aptly describes their raison d’etre, but it doesn’t make an honest man of the theif.

  18. “…say the same thing about most individuals…”

    “…where there may be relatively little…”

  19. Some large corporations prefer to bargain with a union. It helps them avoid the messiness of dealing with individuals.

  20. Most of what I would like to say on this has already been said and already been discounted.

    But to the person who said that a bad performer is a thief, I offer this nugget of wisdom from the great Peter Gibbons:

    “That’s my only real motivation is not to be hassled, that, and the fear of losing my job. But you know, Bob, that will only make someone work just hard enough not to get fired.”

    Give people a better motivation than to not be hassled or fired, and you won’t have to worry about unions. Not to mention things like employees stealing and trashing printers, or employees writing computer viruses that round every transaction down by a fraction of a cent.

  21. I don’t see anybody holding a gun to programmer’s heads making them work 90 hour work weeks. They can always leave and go to work somewhere else, rather than get on the “Senority First” union job train. Programmers would regret very, very much joining any kind of union – they would lose the rapid advancement aspect that the job offers, plus moving from job to job would be very, very difficult. Take it from a former Teamster that unionizing programmers would be suicide for the profession, or at least the parts of it that make up for taking the crap we take.

  22. gary,

    I don’t think I would consider an attitude to be an enforceable fact of a contract. Further, at the risk of stating the banally obvious, if a union and a business were to freely enter into a contract that granted workers certain forms of slackfulness, said contract would override your personal sense of being thieved.

  23. Taking money without delivering as promised is theft, no matter how you cut it.

  24. Jason Ligon writes:

    The west coast longshoremen shutting down the country a couple of years ago was nothing more than an advertisement to the whole country that nobody was less interested or capable in looking out for the interests of the average Joe than the unions.

    Who were the unions supposed to be negotiating on behalf of if not their members? Wouldn’t a union that was serving interests other than those of its members be corrupt by definition?

    Number 6 writes:

    While I agree that unions should not be able to compel membership …

    No union has the power to compel membership. It is true that some unions have negotiated closed-shop contracts, but query why that should be illegal. (Suppose I own a restaurant and make an exclusive deal with Coke to supply me soft drinks. Should the government invalidate the contract so that Pepsi can sell me soft drinks too?

    gary writes:

    If your attitude as an employee is to do the least amount of work possible for any reason, you are a parasite on the economy and a drag on the country.

    Yes, Comrades, let us all work harder to further the work of the great revolution.

  25. I don’t know why morale is so low in the software industry. We do all our firings on Friday afternoon to minimize the chances for tension.

    And those new kids we’re bringing in from Singapore are first rate!

    We’re even thinking about piping in Michael Bolton songs over the PA. Boy, I tell you, I love all his music!

  26. I refuse to work for any company that plays music by that no-talent ass-clown. And I’m not changing my name. He’s the one who sucks.

  27. gary,

    Your blinders are working much better than your rhetorical skills! 🙂

    thoreau,

    You make a good point. But you’ll probably find that unions are most successful in businesses and industries where providing the kind of motivation of which you speak a hard sell.

  28. I don’t see anybody holding a gun to programmer’s heads making them work 90 hour work weeks. They can always leave and go to work somewhere else

    And this attitude that finding a new job, especially while working 80 or 90 hours at the old one, is as easy as wanting it, ties in perfectly with yesterday’s discussion of “Why the hell don’t more people vote libertarian?”

    In theory, these ninety-hour weeks mean that some software companies are competing by giving their programmers enough time to have a life, so that in theory the talented programmers all flock there. Yet this isn’t happening. Maybe the trope “Employers, and employees without a union, have equal bargaining power” isn’t quite true?

    Unless you believe that, just as Person X sometimes lies awake at night worrying about what would happen to him and his family if he lost his job, so too does the CEO lie awake at night worrying about what would happen to his corporation if Person X decided to quit. One-hundred-percent equal.

  29. I’ve come around to the fact that unions aren’t a bad thing in concept, but the ones we have are a fairly bad implementation of them, mostly because of what could be termed as collusion between unions, governments, and employers. In my understanding there is some forced membership in unions (not universal), but there are also limits such as only having one union represent all workers of a class. So if you and your buddies, who you think are better workers than the other shlumps, wanted to form your own union and negotiate with the employer separately, you are barred from doing that, and compelled to join the union of the shlumps if you want union representation. If you have problems with the management of a particular union, you can’t just go to another one and ask to be represented by them, but have to get a majority of your co-workers to kick the old one out and bring in a new one.

    So basically, it’s anti-competitive actions, enshrined in law because unions don’t want competition from upstarts. Employers, as much as they don’t like the union they’ve got, probably would less like dealing with a bunch of different ones, so they’re not particularly keen on changing it, plus if it’s totally down to a Yes/No vote on unions, it’s probably easier to resist organization of your workers. And government, as individuals, like having everyone pushed into big groups, as it’s easier to count on votes, easier to push interests, and easier to say you’re helping ‘everybody’, when you aren’t. At this point, the worker is way down at the bottom of priorities for all these groups.

  30. sort of an aside here – what do you all think of the modern idea of the corporation? I’ve been thinking a lot recently about how that became the standard organization of a business, and how it grew out of the trusts of the 1880s. I don’t think that a group of individuals can be treated as one, but then again, without corporations the modern economy wouldn’t be possible, because an individual can’t take on the amount of debt a corporation can, corporations distribute risk in business ventures, etc. etc… Any thoughts from historian/econ types around here?

  31. Goddamn…

    “…where providing the kind of motivation of which you speak is a hard sell.”

  32. Randolph–
    I personally have thought that if corporations are to be given the legal status of a person then they should also have the shortcomings of a person–no corporation should exist for more than 100 years, corporations who commit serious enough crimes should be given the corporate death penalty, etc. Yes, I’ve heard the arguments that this would hurt the shareholders, but screw them–instead of CEOs doing things like dumping toxic waste into a reservoir with the excuse that “We have a duty to save money and pass it to our shareholders,” they can now say “We have a duty to stay on the right side of the law, so our shareholders don’t get cheated out of their invenstment.”

  33. So, if a businessman bought up a bunch of other shops in town so he had a monopoly, everybody here would say that he should be free to do that, and would probably applaud his excellent business skills.

    If some businesses formed a cartel, as illegal as that might be, most people here would say that they should have the freedom to enter into whatever agreement they want.

    Hell, if somebody hired a bunch of people, getting them to sign exclusive contracts so that they’ll only work for him, and then sold their services to local businesses (so he became the go-to guy for getting an electrician or secretary or whatever type of service he was selling), people here would applaud his business savvy.

    And if he got the businesses to sign exclusive contracts with him, so he had exclusive contracts on both the supply and demand side, we’d all be admiring his business sense.

  34. Jennifer,

    Nothing in life is one-hundred percent equal. By your logic we might as well legalize theft if it’s by the poor against the rich. Whatever your disagreements with libertarians on matters of employment, please understand that the libertarian position is not based on some notion of absolute equality in all negotiating positions.

  35. You know what, I do want to express myself, okay. And I don’t need 37 pieces of flair to do it!
    [flips off boss]

  36. Jennifer,

    Interesting suggestions – I can think of more than a few corporations that I would like to have dismembered… I guess I’ve just been struck by how many people take the idea of the corporation as a given. In a society without government/business collusion, could they exist? What structure would large-scale providers of goods have without the ability to incorporate? And how nice would a world without Sarbanes-Oxley and the PATRIOT act be for people who want to keep their business dealings to themselves…

  37. ooh wow, I should preview once in a while

  38. Jennifer,

    In what ways do corporations have the “legal status of a person” to which you object? I have often heard this complaint, yet when I ask for particulars, the complainers have never been able to comply. Perhaps you can fare better? I’m genuinely curious. Yes, yes, I do know some court decision supposedly granted this status at some point. But again, what particulars about this is unfair? In lieu of any satisfaction on this matter, I will assume that the court was merely ruling on the right of corporations to be represented as such in court. That is, they can sue AND be sued AS a corporation. Which may or may not be good or right, but is not likely worth getting very upset about.

  39. thoreau,

    I’m no expert on union law, but I do believe that unions get certain protections from the government. Such as I think it may be illegal to fire someone for organizing. And there may be others. Corporations, OTOH, are protected by limited liability. And maybe there are others for them, too. Take away protections from both sides and I for one would say fine, let the chips fall where they may, and I think we’d likely all be better off for it.

  40. I’ll support whatever union will help me get my stapler back.

    And if they won’t help me, I’ll burn their headquarters down!

  41. Fyodor-
    No, I’m not saying that employers and employees should be absolutely equal; I’m just saying, as I’ve said before, that governments aren’t the only organizations whose power over those beneath them needs to be kept in check in order to maintain a free society.

    As for corporate law, I haven’t studied it, but everything I’ve read talks about the fact that, with the exception of voting rights, corporations are “given [by the government] the legal status of a person.” A person who cannot vote, but is technically immortal and cannot be imprisoned regardless of the crime committed. Which is why at the very least I support the notion of a corporate death penalty–not for the individual members of the corporation, of course, but for the corporation as a whole, and all of its assets.

  42. Pray tell, in what universe are corporations “part of the market” but unions aren’t?

    Well, corporations generally exist as totally voluntary associations of investors and employees. No one is ever required to invest in or work for a corporation. Corporations are a pretty straightforward example of good market activity, and don’t enjoy any particular exceptions from the laws regulating the marketplace.

    Unions, by contrast, as they currently exist are a nexus of involuntary relationships. Most corporations would rather not have to do businesss with unions, but may be forced to by law. Many members would rather not be associated with a union, but have no choice in states that don’t have “right-to-work” laws (unless they want to quit their profession or move to another state, of course). And don’t even get me started on the unions long history of using violence as a tool of negotiation and discipline.

    In a nutshell, unions exist in their present form only because federal law gives them a series of exemptions from laws everyone else has to comply with. There is no comparable exemption for corporations.

    I personally have thought that if corporations are to be given the legal status of a person then they should also have the shortcomings of a person–no corporation should exist for more than 100 years, corporations who commit serious enough crimes should be given the corporate death penalty, etc.

    What, there’s a law against a natural person living more than 100 years? New to me. And since a corporation can never commit crimes directly, since it can only act through live human beings and can never have the requisite mental state, no corporation can be convicted of murder or other capital crimes. Its (human) agents can be, but not the corporation. To think it can is to commit a category error.

  43. Corporations, OTOH, are protected by limited liability.

    No, they are not. There are no legal provisions that limit the liability of corporations.

    Investors in corporations can lose 100% of their investment, but assets that are not invested in the corporation cannot be seized by the corporation’s creditors. This is what is generally meant by “limited liability.” It is a protection for investors against a corporation’s creditors, not a protection for the corporation.

  44. RC-
    The law that prevents a person from experiencing more than 100 years of active adulthood was written by nature–if you can figure out a way to change it I’d be more than happy to invest in your proposal.

    Personally, I’d like to see corporations return to the version they had in Victorian England–shareholders were actually RESPONSIBLE for the corporations in which they invested. So if you own stock in a corporation which runs up a huge amount of debt, you don’t just lose your stock investment; you’re also responsible for your share of the corporate debt as well. That would put some wind into the sails of “corporate responsibility.”

  45. No, I’m not saying that employers and employees should be absolutely equal

    I didn’t say you said that. I only said that libertarians are not saying what you said we said.

    And just like all others who complain about this legal status of a person thingy, you can’t come up with any nefarious details or examples either. As the saying goes, color me unimpressed, at least until someone comes up with something concrete that I should actually be concerned about.

  46. Unions primarily benefit low skilled workers in fields where there is low variation of skill and productivity among workers. It protects their jobs and wages because the labor pool for low-skilled jobs is so large.

    Software programmers are the exact opposite of this. Their labor pool is smaller, the skill variation is quite large, and the productivity can vary tremendously (often due to management). There is no benefit to unionization for programmers and to those fools who think unionizing might somehow protect their jobs from India, have you heard of the MANUFACTURING INDUSTRY?

    nmg

  47. R.C. Dean,

    Corporations are a pretty straightforward example of good market activity, and don’t enjoy any particular exceptions from the laws regulating the marketplace.

    Except they help limit liability in some significant ways. Indeed, such diffused responsibility often proves problematic.

    In a nutshell, unions exist in their present form only because federal law gives them a series of exemptions from laws everyone else has to comply with.

    Special laws regarding liability and the like also apply to corporations. Indeed, corporations as we know them wouldn’t exist were it not for the state.

  48. Highway writes (with a couple comments from me in brackets):

    In my understanding there is some forced membership in unions (not universal) [closed-shop contracts, see my comment above], but there are also limits such as only having one union represent all workers of a class [the technical term is bargaining unit]. So if you and your buddies, who you think are better workers than the other shlumps, wanted to form your own union and negotiate with the employer separately, you are barred from doing that [on a union basis], and compelled to join the union of the shlumps if you want union representation. If you have problems with the management of a particular union, you can’t just go to another one and ask to be represented by them, but have to get a majority of your co-workers to kick the old one out and bring in a new one.

    So basically, it’s anti-competitive actions, enshrined in law because unions don’t want competition from upstarts.

    I agree with some of this. The historic justification for some of these measures is that they prevented union-busting by fraudulent means and they tended to prevent strikes that had bad effects on the economy at large. That said, the measures do discourage competition among unions, which is bad for consumers of union services (read: workers).

  49. RC Dean,

    This is what is generally meant by “limited liability.”

    Right. And it is what non-incorporated businesses and individuals do not enjoy. Non-incorporated businesses and individuals can be sued for everything they’ve got. It’s an important advantage. Don’t leave home without it!

  50. Fyodor-
    This is cut and pasted from the “Asset Protection Executive Solutions Wealth Preservation” site (NOT some anti-capitalist propaganda page):

    WHAT IS A CORPORATION?

    A corporation is a legal ?person? formed separately from those who own and operate the corporation. As an ?artificial person? the corporation?s debts and taxes are separate from its owners (shareholders) or its officers and directors, thereby offering the greatest personal liability protection of all business structures. And because the corporation continues to exist even after the death of a shareholder, it offers tremendous estate planning advantages as well. . . .Corporations are created, (not born), with the legal status of a person. They are, in effect, created of legal age, in any state that the owners choose (it will be only authorized to operate in the state of incorporation unless the corporation is specifically ?licensed? to do business in another state), have the ability to contract, make loans, make sales, pay expenses, etc. Although they obtain their own social security number (known as an employer identification number or EIN number), they have no social security taxes to pay for themselves because they are not physical persons. They do have the need to file tax returns, open checking accounts, have a headquarters, and the list goes on and on. The common difference between corporations and people is that corporations have only one function, namely, to turn a profit for the stockholders. They are created by operation of law by their state of incorporation.

  51. RC Dean writes:

    Unions, by contrast, as they currently exist are a nexus of involuntary relationships. Most corporations would rather not have to do businesss with unions, but may be forced to by law. Many members would rather not be associated with a union, but have no choice in states that don’t have “right-to-work” laws (unless they want to quit their profession or move to another state, of course).

    These are rather non-libertarian understandings of “involuntary,” “force” and “no choice.” No one is forced to hire anyone. No one is forced to take any particular job.

    If you shed no tears for the person who complains that the corporation won’t deal with him unless he signs their boilerplate contract, you should not be shedding tears for the person who complains that he can’t hire any ironworkers without dealing with the union, and you should not be shedding any tears for the person who wants to work in a union shop but would “rather not be associated” with the union. When people aggregate their economic power, either as investors or workers, it is not an accident that they are less pleasant for third parties to deal with. That is, in fact, the point of what they are doing.

  52. I’m a programmer, and I don’t know what Jennifer is talking about. I’ve been working for 10 years, and maybe put in a 70 hour week one time. Normally, I work 40-45 hours. It happens that I’m talented, but the only difference between me and the hangers on I’ve had to drag through project after project is that they spend less time working when they are in the office, and more time rambling incoherently about Linux, and stuffing Ho-ho’s down their fat gullets.

    I change jobs whenever I get bored, every 2 years or so, and it never takes too long, or is very difficult. The last thing on earth that I want is to be lumped together with the unwashed Asperger’s cases that make up programmerdom when it comes time for salary negotiations.

  53. One reason unions will likely make inroads into the tech industry is because of the huge number of software companies that require 80- or 90-hour workweeks, not just during “crunch time” but ALL the time.

    It’ll never happen. Most of us in the I/T industry have an almost genetic hatred of unions.

    Culturally, the tech industry is a highly competitive meritocracy. Most developers that are working 80 to 90 hours a week are doing it because they want to, rarely have I ever heard of (and never worked at) a shop that ever required those kind of hours. Any time a manager ever caught me doing that, he’d usually tell me to knock it off.

    When I was working on a trading floor, I had a boss that wanted me to join the telecom union so I would be able to support the phone system as well as supporting the trading systems. I pointed out that if I did that, I might be able to support the phone systems, but the union would prevent me from doing the systems administration, programming and DBA work that was my primary function, as well as limiting the number of hours I’d be able to work. I further informed him that if he wanted me to join a union, he’d also better be prepared to pay my union dues, because I damn well wasn’t going to pay a nickle to belong to any union.

    Keep the unions out of the tech industry! We don’t want to end up like the auto industry!

  54. alkali, regarding the longshoreman strike:

    “Who were the unions supposed to be negotiating on behalf of if not their members? Wouldn’t a union that was serving interests other than those of its members be corrupt by definition?”

    My point is exactly that they didn’t help their own people by doing this any more than the UAW helps its people by making its own laborers appear undesirable next to machines. Unions should be involved in training, they should be involved in amplifying the value their employees add rather than trying to demonstrate at every turn that a company who can find any other solution than dealing with union employees is better off.

  55. RC,
    So if you don’t like your corporation and the way it treats you, you should find a new job is fair. However, if you don’t like your union and have to get a new job, that’s unfair. Where’s the difference.

    Look I think unions are shifty and corrupt, but so are most corporations (shit so much of my company’s senior management is related through marriage and other crap, you’d think it was run by Italian gansters and it’s Fortune 500). There needs to be some balance of corporate power and labor power. It seems that most pro-union libertarians acknowledge the weaknesses and protections that unions get, while you don’t see that sort of honesty from the anti-union folks. I haven’t seen RC Dean, for example, talk about all of the exemptions and protections corporations get from the government, but just the nasty unions.

  56. “governments aren’t the only organizations whose power over those beneath them needs to be kept in check in order to maintain a free society.”

    kept in check by whom? the govt? wherever a private entity’s “power” is being “kept in check” that is not a free society. if you’re talking about free market checks and balances, great, but unions that live by the market can also die by the market. if you’re talking about oppressive laws/regs to keep in check the big bad corporations, forget it.

    btw, define “those beneath them.” are you advocating absolute economic equality? so what if someone is “beneath” me, or “above” me, economically speaking? that is part of freedom too.

  57. one more point about “corporate personhood.” it provides not only shareholder immunity, but employee immunity too. do you want some retired shareholder held personally liable for some frivolous negligence claim, or some assembly line worker held personaslly liable if a product defect kills someone?

  58. Jennifer,

    Okay, fine (and thanks).

    Now, what particular implications of this do you find objectionable? From your previous posts we already know that you don’t like it that corporations are not limited in longevity as humans (currently) are. But you haven’t told us why such unlimited age is bad, other than that is is different from what occurs with actual people. Why should I care if a corporation “lives” forever? Jealousy? We also know that you object to limited liability, which I’ve addressed as well as being a biased and unfair protection that puts corporations out of the realm of the totally “free” market. Anything else?

  59. Jimmy-
    If I’m your boss and I can in an instant take away your income, you’re beneath me. And while I should have no obligation to give you lifetime employment, I shouldn’t have more or less unlimited power to do whatever I want–“From now on, you are not allowed to walk through the office but must perform cartwheels for my personal amusement. If you don’t like it, quit!because as we all know, jobs are a dime a dozen these days.”

  60. jobs are a dime a dozen these days

    In the words of a fair-to-middling American, there you go again! The point is not that jobs are somehow a dime a dozen, but that no one has a right to a job. Plus that any employer who gratuitously mistreats his employees puts himself at a distinct competitive advantage. Sometimes an employer mistreats employees because he sees some particular advantage to doing so that outweighs the disadvantages. And as we all know, sex is a pretty powerful motivating force. But for the most part, the market keeps employers in line, exceptions that prove the rule notwithstanding.

  61. Jennifer:

    I actually disagree with this : “And while I should have no obligation to give you lifetime employment, I shouldn’t have more or less unlimited power to do whatever I want…”

    A job is an agreement between parties. Nothing more and nothing less. How easy it is for you to find a job has nothing to do with constraints on the terms of your current job. I can certainly imagine someone paying someone else to do cartwheels. I can imagine such a job being incorporated into another job offer (i.e. “Now what I’m looking for is a good software engineer who can do cartwheels. I love cartwheels.”) If an employer could theoretically offer to pay you to do it, it can be part of an employment agreement.

  62. Jimmy-
    In the interest of personal responsibility, yes. If an assembly line worker does a piss-poor job and somebody dies or is seriously injured as a result, why the hell SHOULDN’T he be held responsible? And while nobody should have to pay our for “frivolous” negligence claims, legitimate negligence claims are something else.

    Fyodor–
    Basically my complaint with the “corporations are people too” fiction is that the corporations are ABOVE people in many ways, by being shielded from too much responsibility. As I said before, I favor the Victorian way of having the corporation be legally indistinguishable for the individual or group who owns it. Right now, once a shareholder shells out the money to buy stock, their responsibility is over. As it stands now, if I decided to incorporate my little eBay business (not that it would be worthwhile, given the small dollar amounts involved), Jennifer, Inc. can run up hundreds of thousands of dollars in debt to pay Jennifer Person’s hundred-thousand-dollar salary, and then Jennifer Inc.’s creditors are left holding the bag while Jennifer Person takes the money and runs–and it’s all legal. Screw that. Jennifer Person ran up the debts–Jennifer Person should pay them.

  63. Here in New York, at an undisclosed location, tech workers are already semi-unionized (by a union that does utterly nothing for them other than collect dues). You can pay your monthly dues to the union and get nothing in return, or you are allowed to opt out of union membership, and all you have to do is pay a small monthly administrative fee that just happens to be the exact same amount as the union dues.

    An administrative fee?

    -Keith

  64. Jason-
    If you want to hire a cartwheeler then fine, but it should be UP FRONT in the employment contract; you shouldn’t be able to hire a software engineer, have him uproot his life to come work for you, and then say, “By the way, you have to do cartwheels, too.”

    But I forgot to say that at first–I don’t care what an employer puts in the initial employment contract, but I don’t think they should be allowed to change the contract later at will. Like the Bush supporter who fired an employee for having a Kerry bumper sticker on her car–if he had a no-bumper-sticker policy from the get-go that would be one thing, but he basically invented that rule on the spot.

  65. To get back to the original topic, of unions splitting:

    Regardless of what one thinks of unions in principle, in practice they leave something to be desired. If the split leads to some shake-ups and reforms, well, that’s a good thing. If at the very least it leads to competition, well, that’s probably a good thing.

    Which may seem strange, since the idea of collective bargaining is strength in numbers. But strength in numbers has to be balanced against the ills that can plague large organizations.

  66. Fyodor-No one has said anyone has a right to a job. Nor has anyone here said that government ought to support unions. A union can, after all, be a voluntary association. (And should be.)

    If you honestly think that gratuitous mistreatment of employees is uncommon, than I’d suggest that your experience with corporations is limited. I have seen a mother be told that if she left work to see her kid in the emergency room, she would be fired. She quit, the rest of the employees went back to work.
    The boss is at no disadvantage when workers are easily replaceable.

    Look, it’s very simple-give people power over others, and they will abuse it unless there are contervailing powers to keep them in check. The union is a recognition of that.

  67. Jennifer,

    I can see the logic of changing the terms of employment after hiring being potentially actionable (though I know my own employee handbooks includes the clause “and other duties as assigned”). But I also think the damages should be no worse than any problems actually caused by the breaking of the contract, such that a person should not be able to argue that he suffered worse for keeping the job than he would have if he had quit–or if he had never taken the job in the first place.

  68. jimmy writes:

    one more point about “corporate personhood.” it provides not only shareholder immunity, but employee immunity too.

    Not true. For example, if you are driving a corporate car for some corporate purpose and you get in a wreck, you can be sued.

    do you want some retired shareholder held personally liable for some frivolous negligence claim, or some assembly line worker held personaslly liable if a product defect kills someone?

    A strawman — it is always bad if someone is held liable on a frivolous claim. But I don’t see why in principle an employee shouldn’t be sued if their on-the-job negligence harms somebody.

  69. These are rather non-libertarian understandings of “involuntary,” “force” and “no choice.” No one is forced to hire anyone. No one is forced to take any particular job.

    Well, federal law requires that a company do business with a union if a certain workers vote for it. That sounds pretty traditionally involuntary to me.

    Some states also requires workers to join a union in order to hold some jobs. That sounds less than libertarian to me, also. The closed shop situation is unique to unions, and distinguished from whatever requirements a corporation may impose, because it is imposed by the government, and is in not voluntary in an important sense.

    Right. And it is what non-incorporated businesses and individuals do not enjoy. Non-incorporated businesses and individuals can be sued for everything they’ve got.

    And a corporation can be sued for everything its got. See how this works? The (legal) person directly and actively involved in whatever created the liability can lose everything.

    This includes employees – there is no protection against liability for them. They can be sued if they personally screwed up, but generally aren’t because they don’t have enough money to interest plaintiffs and their lawyers.

    Depending on the situation, investors in an individual or partnership may or may not be liable.

    If you give ten grand to your brother for his business, it is not at all clear that you are personally liable for anything and everything he does. It depends on the facts and circumstances, but you may well be found to have insufficient involvement in whatever created the debt to be liable for it.

    Partners are generally deemed to have taken an active role in their partnership and have individual liability, but there are limited liability partnerships, where only the active general partner has individual liability, and the passive limited partners do not expose personal assets to the partnership’s creditors.

    What gives corporate investors the protection against liability is the passive nature of their involvement. Their only involvement, typically, is their investment, so there is no good reason to expose more than that investment. If they are actively involved, then they are individually liable for their individual actions.

    Corporations aren’t some magic, liability-dissolving creation. They are a fairly straightforward application of common-sense notions of personal responsibility.

  70. I don’t care what an employer puts in the initial employment contract, but I don’t think they should be allowed to change the contract later at will.

    Ah, but employment contracts are inherently unequal in favor of the employee. The employee can leave at any time without any real consequences. Employment contracts are practically unenforceable against employees, outside of a few clauses (confidentiality, maybe a non-compete).

    Because employment is essentially “at-will” from the employee’s side, that means it is essentially at-will from the employer’s side as well. This means that, just as the employee can quit for any or no reason, the employer can fire the employee for any or no reason (with the important exception of reasons barred by discrimination laws).

    Just as the employee can leave because she is sick of all the Kerry posters in the cafeteria, the employer can fire the employee for having a Bush sticker on her car.

  71. Number 6,

    I was making a distinction that I thought was pertinent to Jennifer’s issues when I said that no one has a right to a job. And I certainly have no problem with unions organizing without government support. I don’t know enough about the circumstances of your example to know if it qualifies as “gratuitous” or not, but whatever. I’ve indeed had enough experience with the neurotic behavior of middle managers to not be shocked that this could happen. Anyway, the other employees saw what happened and made their choice to stay. I would say that’s a reflection of how much they valued their jobs. We can cry about it, write songs or epic poems about it, but ultimately we don’t live in a perfect world (shocker, I know), and if some people consider working for such an employer to be better than quitting, who am I to say they’re wrong? And if they want to organize without the help of government coercion, fine. Just bear in mind that unions are no panaceas. They may help in some ways, but they create a new set of problems. As for the woman who quit, good for her. I bet she found something better anyway.

  72. Just as the employee can leave because she is sick of all the Kerry posters in the cafeteria, the employer can fire the employee for having a Bush sticker on her car.

    Hee hee hee. Actually it was a Kerry supporter who was fired by a Bush supporter, but I’m sure your switching them around was purely accidental, not an example of partisanship, RC.

  73. But back to the original topic of unions, companies who treat their employees well generally aren’t the ones who find their employees unionizing. The companies who make a habit of firing people because their kids are in the emergency room, or firing people for refusing to perform dangerous tasks that are not in their job description, are the ones who worry about unionization. So if you own a company and your employees vote to form a union, before blaming the union you should first wonder what the hell you did to make your employees think they needed one.

  74. Anyway, the other employees saw what happened and made their choice to stay. I would say that’s a reflection of how much they valued their jobs.

    Fyodor-
    You’re surprised to discover that not many people can afford to give up their source of income for a matter of principle? I’d say it was more a reflection of how much these people valued being able to eat and afford a place to live.

  75. What gives corporate investors the protection against liability is the passive nature of their involvement.

    Perhaps you have this backwards! What enables the passive nature of investors’ involvement is the protection against liability!

    Anyway, an individual’s liability is not normally limited to assets used in the activity that caused the harm for which he is being sued, so why should it be different just because the activity is being done for a corporation?

  76. I read that the AFL-CIO counts more than 600,000 federal workers among its membership.

    Break off teamsters, other service workers, etc. and perhaps it will become even more clear to the average working person that the AFL-CIO is the average working person’s worst enemy.

    When I think about them using my tax money to pay government employees, who fund these unions… When I think about those unions using that money to fund elections and, thereby, influence the budget, etc… …It just makes me want to vomit.

    It’s a self-sustaining protection racket and the only loser is the American taxpayer.

  77. Fyodor-I know it’s not a perfect world. I also know that people screw each other given half a chance. That’s the only reason I favor unions, provided they’re voluntary.
    As for that company-that was my official “I just graduated with a worthless degree, and now will work for a while at a godawful job” experience. That example was not isolated.

    Here’s what usually happens: the company pays enough for the employees to get by, but no more than that. Changing jobs takes time, and it’s difficult at best if you don’t have savings to tide you over. Therefore, you’re likely to put up with virtually anything to keep your horrible job.

  78. You’re surprised to discover that not many people can afford to give up their source of income for a matter of principle?

    And you’d evidently be surprised to discover that no, I’m not surprised.

    I’d say it was more a reflection of how much these people valued being able to eat and afford a place to live.

    Yes, that’s the whole point of my saying that we don’t live in a perfect world. And that’s why commerce that provides people the money for such things are a good thing. Government enforced unions interfere with that commerce and with that flow of money.

  79. Jennifer’s statement:
    I’m just saying, as I’ve said before, that governments aren’t the only organizations whose power over those beneath them needs to be kept in check in order to maintain a free society.

    But hasn’t it historically been that those organizations, such as companies, that needed to be kept in check were allowed to abuse because of the actions, or non-actions, of the government? Where you had situations of tyrranical treatment of employees and the local prosecutor looked the other way from charges of cruelty, unenforced contracts, etc., or the local cops stepped in to help the employer ‘restore order’ by quelling protests or returning runaways to company towns? Or areas where the employer holds undue power over employees by blackmail, say that they are illegal aliens and he threatens to turn them over to INS? Or where industries use their large capitalization to influence politics to get anti-competitive legislation enshrined in law? If the government were on the side of the people, or even a neutral arbitrator of contracts, I don’t think those kind of abuses would have been possible. It was the political clout of those employers that allowed the abuses in large part.

  80. Number 6,

    Since we both favor allowing unions to voluntarily organize, and since I’m guessing we would agree (though neither of us has directly addressed the issue yet, I think) that unions can’t do nearly as much as valuable job skills to improve a worker’s situation, I don’t really know what we’re arguing about. I’ll only add that lots of people hate their jobs and their employers, whether they’re in unions or not. From what I’ve seen, unions shuffle around the terms and nature of the misery, but I don’t know if they reduce it all that much.

  81. Highway–
    Agreed. But then, any organization that is powerful will also be corrupt, be it government, corporation OR union. That’s why everybody’s got to be vigilant in regards to ALL of them.

  82. Jason Ligon – “Unions for the last several decades have done absolutely nothing but make labor more expensive than machines and more expensive than foreign competition. They have failed their membership in every way you can fail. By acting to protect specific types of jobs instead of acting to protect the interests of workers in a modern economy, they have left their membership completely incapable of surviving when the inevitable change in job description comes. They are dinosaurs.

    Sounds like the government as well! 🙂

  83. Ok I’m rather late to this thread so my apologies if this point has been made since I’ve only skimmed the comments. But one thing struck me as completely misguided. The notion that somehow limited liability is a benefit to the corporation which is therefore a detriment to the employees and is somehow supportive of pro-union arguments is simply wrong. RC Dean has already pointed out that limited liability is for the passive investor and not a general legal principal for corporate responsibility, civilly or criminally, as to the assets of the corporation. But more critically, it is employees who benefit more than anyone from the limited liability of passive investors. Without it, no rational investor is going to buy a $1000 of Boeing stock if the possible downside is losing their home should the 787 project fail and sink the company. This is true across the economy, millions of jobs are made possible by companies investing in projects that might fail but often earn a profit leading to expansion and more jobs. Take away that ability to invest in risky projects, which is what would happen if some retiree, say, stood to lose everything on a bad corporate decision, and you wipe out the ability and willingness of companies to employ millions of people. So whatever other arguments one might put forth to support unions, limited liability is no part of them.

  84. Fyodor- I’m not sure what we’re arguing about either. I agree with your comment about job skills, and I doubt that unions are a good idea among those who possess in-demand skills.

    As far as people hating their jobs: there’s a reason so many people love the movie Office Space. The man has a point when he says that humans aren’t meant to sit in little cubicles, staring at screeens.

    In my case, I’m making a hell of a lot less money than I could be at a corporation, but I also don’t mind going to work in the morning. That’s worth a lot.

  85. I’m sure your switching them around was purely accidental, not an example of partisanship, RC.

    Actually, I switched them around just to show that it works regardless of partisanship. Its a principled thing, you know?

    Anyway, an individual’s liability is not normally limited to assets used in the activity that caused the harm for which he is being sued, so why should it be different just because the activity is being done for a corporation?

    Major confusion here. The first thing that needs to be established is whether an individual’s involvement in some activity or other is sufficient to hold the individual liable. Only when liability is established do you get to the question of what assets can be tapped to pay the debt.

    What some of us are struggling with is whether mere passive investment is sufficient to make you liable for anything and everything that the person you invested in does.

    In a number of situations, including but not limited to investment in corporations, mere investment has been found to be too passive to warrant the imposition of liability.

    However, in other situations, including but not limited to corporations, investors who are actively involved have been held individually liable for their individual actions, regardless of their status as investors.

    If someone who is actively involved in a corporation is found individually liable, then I don’t see any reason why their liability would be limited to their investment.

    What those who want to do away with the limited liability of corporate investors need to do is demosntrate why someone who is a mere passive investor should forfeit their assets to pay the liabilities of the company they invested in.

    If I invest in Microsoft, and Microsoft gets hit up by the EU on some anti-trust/copyright fine, then next time I visit France I don’t think I should be hauled into court and made to pay everything I own to cover Microsoft’s fine.

  86. But how do non-governmental organizations get the power to be corrupt? I just got through saying that they get it from the government. Does a company have the power to jail you? Do they have the power to send their goons after you? Only if they don’t think they’ll get caught, and they don’t think they will when they’ve got the government in their pocket. They could blacklist you, but isn’t that collusion, which is supposed to be against the law as well?

    Back to unions and keeping jobs you hate: I think another reason why this is an issue is that people think of ‘a job’ as something you have, where you go and put your time in, and you get paid for putting the time in. No wonder people hate their ‘jobs’. I feel it’s more correct to think of work as adding value to the product. You think your effort adds value to your product. Like most humans, you probably overvalue your work. Employers, conversely, try to pay you closer to the value of your work, and will try to lowball you. But if there are situations where something is badly in error in the value calculation, you get big distortions.

    Like the software developers having to work 80 or 90 hour weeks. That’s because they are being paid more than their value added to the product at a 40 or even 60 hour week. This is evident by the willingness of someone else to step into that spot if the first person leaves due to working conditions. Was there deception when the contract was enacted? If so, then take it up with the contract enforcers (the goverment). If not, then perhaps the person is severely overvaluing their contribution. I think this is an issue in software now, like it was in the industrial revolution, because what was previously a skilled position, demanding high pay, has been changed into a much more mundane position, assisted by technology and education. But none of the workers want to acknowledge that their position of value has been undermined by an influx of people wanting the same overvalued deal the pioneers got. Eventually these distortions will work out, if left to a market system. But all bets are off if a union steps in, freezes wages at current levels, and then ratchets up from there.

  87. What those who want to do away with the limited liability of corporate investors need to do is demosntrate why someone who is a mere passive investor should forfeit their assets to pay the liabilities of the company they invested in.

    No, we only need to show that corporate passive investor’s should face the same legal environment that anyone else does. I’m not saying that the law should not consider level of involvement in liability. That said, the rest of your post seems to imply that there really is no such thing as limited liability by claiming that individuals can indeed be held accountable for corporate actions. That would seem to contradict the info in Jennifer’s “WHAT IS A CORPORATION?” post. Anyway, if corporate actors were to face the same legal environment as anyone else, why incorporate? I find it hard to believe it’s done just for estate planning advantages. Is that really the only substantial reason to incorporate?

  88. . That said, the rest of your post seems to imply that there really is no such thing as limited liability by claiming that individuals can indeed be held accountable for corporate actions.

    I didn’t read his post that way at all. Not to speak for RC but it seems clear that he is saying those who are actively involved in the corporation can be held liable, but not Grandma Moses who’s retirement consists of GE stock.

    The economic reason for limited liability is to help achieve an efficient level of risk taking in terms of business investment in risky projects as I discussed above. The result has been unprecedented improvement in the standard of living and wealth of society. To do away with it would be truly to do away with a primary reason for our prosperity.

  89. RC Dean said, “The employee can leave at any time without any real consequences.”

    I don’t think that’s exactly true. Isn’t *not having a job* a “real consequence”?

    As a Californian, I think unions as they’re currently run are evil, evil, evil. Public-sector unions — teachers, prison guards, even cops and firefighters — have basically ruined the state government. Of course, the Legislature let them do it, but when the unions pick the Democratic nominee, and the Democratic nominee runs in a gerrymandered district and has a 99% chance of winning… well, you get the idea.

  90. RC Dean said, “The employee can leave at any time without any real consequences.”

    I don’t think that’s exactly true. Isn’t *not having a job* a “real consequence”?

    It’s simply a consequence of your choice to leave. I would assume he was referring to potential legal consequences of abandoning your employer who might have needed your skills. Specifically that neither side faces legal sanction for terminating and “at-will” agreement.

  91. I see the existence of unions as a great point for anarcho-capitalists and mini-archists to split on.

    As a mini-archist myself, I see unions as a lingering liability for inept government in 19th and 20th centuries. If individuals can go to the government for adequate protection of their rights, there’s no reason for a union to exist. …But I can understand why an anarcho-capitalist might argue that as a non-governmental solution, a union is preferable to government.

    On another topic, now that the AFL-CIO seems to be shedding service workers, truck drivers, etc., it exposes their underbelly to criticism as a job protection program for government workers. …So I’ve been turning some old Union/Mao slogans over in my head, changing them just enough to turn against their original masters. For instance, “The machinery of capitalism is oiled with the blood of the workers.” became, “The pension fund of the bureaucrats is funded with the broken dreams of the taxpayers.” …I’ve got a million of ’em!

  92. No, we only need to show that corporate passive investor’s should face the same legal environment that anyone else does.

    They pretty much do. It is very hard to hold someone personally liable if their only role is as a passive investor, regardless of what they invested in. This is because the “legal environment” generally requires some form of direct or active involvement before you are held liable for most things.

    I gave an example above where you invest 10 grand with your brother for his unincorporated business. If that is all you do, and he runs up debts, I don’t see any way that his creditors get into you for what he owes. That is exactly how “limited liability” works, only without the formal incorporation for the business.

    The exception to this is good old fashioned general partnerships, which are very much the exception these days because they “overextend” liability to people who may have no knowledge or involvement in whatever went wrong.

    Seriously, why should merely investing in a company make me liable for every single thing it does, with or without my knowledge or involvement? Can anyone make a principled, moral/ethical argument for this?

    For a company of any size, you can’t even demonstrate the most basic “but-for” causality link between your investment and anything the company does (that is, you can’t show that, but for your investment, the company wouldn’t have done whatever caused the liability). And without but-for causality, you can’t even begin to demonstrate the kind of proximate causation that can support personal liability.

    I don’t think that’s exactly true. Isn’t *not having a job* a “real consequence”?

    Well, I meant no real consequence under the employment contract.

  93. “The economic reason for limited liability is to help achieve an efficient level of risk taking in terms of business investment in risky projects as I discussed above. The result has been unprecedented improvement in the standard of living and wealth of society. To do away with it would be truly to do away with a primary reason for our prosperity.”

    Brian,

    Wouldn’t the efficient level of investment be reached when we internalize all of the costs of our decisions. Making risky pojects more attractive for corporations doesn’t seem like the best idea from an “economic efficiency” standpoint.

    From the standpoint of the “increased standard of living” that you spoke of: This seems like a case of Bastiat’s famous “what is seen and what is unseen” fallacy. For example, in the absence of large corporations with limited liability there might be many more self-employed individuals and small businesses that would operate more efficiently than the muli-nationals. Consequently, our standard of living might be even higher than it is now.

  94. Wouldn’t the efficient level of investment be reached when we internalize all of the costs of our decisions.

    That happens even under limited liability. My decision is to invest in the corporation. If it incurs crippling liabilities, I will lose my investment, and thus will internalize my share of the costs of the corporation’s decisions. Limited liability only ensures that I don’t internalize more than my share of the costs.

    Making risky pojects more attractive for corporations doesn’t seem like the best idea from an “economic efficiency” standpoint.

    But limited liability does nothing to protect the corporation from risky projects. It only protects its investors from the risk of losing more than their investment in the corporation.

    If every time you invested $10 in Boeing, you made yourself liable for the billions of dollars the Boeing owes, and the billions more it might owe in the future, well, that doesn’t seem likely to result in rational or efficient economic decision-making, does it?

  95. If every time you invested $10 in Boeing, you made yourself liable for the billions of dollars the Boeing owes, and the billions more it might owe in the future, well, that doesn’t seem likely to result in rational or efficient economic decision-making, does it?

    But that’s not how it worked in Victorian England, RC. Instead, the idea is that, since you now own .00000000001 percent of Boeing stock, you are liable for .00000000001 percent of Boeing’s debts.

    What is wrong with personal responsibility?

  96. “Instead, the idea is that, since you now own .00000000001 percent of Boeing stock, you are liable for .00000000001 percent of Boeing’s debts.”

    Since stockholders are technically the “owners” of a corporation, I think this is exactly right Jennifer.

  97. . For example, in the absence of large corporations with limited liability there might be many more self-employed individuals and small businesses that would operate more efficiently than the muli-nationals. Consequently, our standard of living might be even higher than it is now.

    Well that would ignore the obvious benefits to society available from exploiting economies of scale. To take advantage of those opportunities where economies of scale can be advantageous requires some pooling of individual resources. However, if you were on the line not only for your own share of the resources but everyone else’s as well it would be hard to ever get anyone to pitch in, as it were, for the benefit of all.

    If you’re going to deny the benefit in many areas from economies of scale you’ve got a lot of economic theory to overturn which is going to take some serious evidence.

    But it bears repeating since there is a lot of misconception out there – all limited liability means is that if you’re in for a dollar, you’re not on the hook for a billion. Seems quite reasonable when looked at in that way and it is no more a legal construct than the alternative of applying joint and several liability to every shareholder. One legal regime or another must be chosen, but neither is more “natural” than the other.

  98. And the problem with Jennifer’s personal responsibility argument is that it would require just that – personal responsibility, for some decisions of the corporation. But that isn?t the case. No regular shareholder has any say in how stupidly the corporation invests its money ? nor should they in most economic theory. That?s what professional managers are for. If they’re going to be required to dig even deeper in their pocket if those managers make a bad choice, they simply won’t invest – or at least not nearly as much. That hurts society in the long run more than whatever putative benefit such a scheme would claim.

  99. Jennifer,

    I don’t think it is a bad thing in general at all – we ought to have more of it. But first, what benefit would your scheme achieve? Where is the problem that would be better under such a scheme? Second, your post that I was responding to was about being shareholders being responsible for a share of the total debt accrued by the corporation. But isn’t that an issue between the lender and the borrower? If banks don’t want to lend to a corporation absent the personal guarantee of it’s shareholders, presumably nobody is forcing them to do so. So I guess I don’t see the real issue here.

  100. Ugh, sorry for the typos – in a hurry to get to a meeting – shouldn’t be a double “being” but even worse: it’s = its… I hate that one 🙂

  101. Brian,

    Re: Economies of Scale

    Large corporations suffer from the same bureaucratic inefficiencies that the all large organizations do (like the government, for example). The difference is that the massive amount corporate welfare they receive enables them to “outcompete” smaller businesses. Take away special privilege (which, I believe, should include the concept of “limited liability”) and I thnk the size of your average business would decrease dramatically. (This is not to say there would be no pooling of resources or advantages from to be gained from economies of scale like you point out, I just think it would occur on a much smaller scale than it currently does.)

  102. Posted by Jennifer:

    I’m just saying, as I’ve said before, that governments aren’t the only organizations whose power over those beneath them needs to be kept in check in order to maintain a free society.

    Um, am I the only one reading who’s lost the escapist fantasy of Jennifer being a hot libertarian chick?

    Wish I could turn back the clock.

  103. How can personal responsibility be a BAD thing for society?

    Jennifer, you are trying to make investors responsible for the decisions others have made. That isn’t personal responsibility at all. Most investors are, and have to be, passive.

    That means the decisions that create corporate liability are made by others, corporate managers and directors. Making me liable for someone else’s decisions is the opposite of personal responsibility. It is collective responsibility. You can go down that road if you want, but don’t try to dress it up as anything other than what it is.

    Instead, the idea is that, since you now own .00000000001 percent of Boeing stock, you are liable for .00000000001 percent of Boeing’s debts.

    It is my vague recollection that Victorian joint stock companies were limited liability organizations, just as modern corporations are. If you know of a link to good history of them, please post, but I don’t recall any form of business organization that distributes debts pro rata as personal liabilities.

    As far as I know, you either have limited liability (you can lose your investment, but no personal liability), or joint and several liability (every partner is fully liable for all of the firm’s debts, and not just his or her pro rata share).

  104. RC-

    I don’t have a link, but it was in the book “What Jane Austen Ate and Charles Dickens Knew.” Or maybe what Dickens knew and Austen ate–one of the two. There wasn’t much of a stock market as we know it today BECAUSE of the stockholder liability.

    David-
    I have never, ever positioned myself as a hard-core libertarian; I call myself a libertarian because I disagree with y’all less often that with the two idiot parties who are currently ruining our country.

  105. I have never, ever positioned myself as a hard-core libertarian

    Hmmmm I wonder what you would consider a hard core position? Talk about escapist fantasies! 😉

    But anyway, didn’t madpad say you were a liberal? 🙂

  106. Brian–
    Madpad probably thinks I’m a liberal, whereas Joe once called me a Randroid. And Northerners think I speak with a bit of a Southern drawl, while Southerners think I talk like a Yankee. I don’t fit in anywhere.

  107. By the way, RC, that book I mentioned talked about the minutiae of everyday Victorian life, so as to help people understand references in British novels of the era. If you ever read a Victorian novel where somebody has to declare bankruptcy and ends up losing not merely their bank accounts but even their personal possessions, the business law of the era was why. None of this crap with a CEO and number-one stockholder running a company into the ground while keeping the hundreds of millions of dollars in salary he made while doing it.

  108. “I don’t fit in anywhere.”

    Haha….Welcome to my world. 🙂

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