You Say "Corporate Personhood," I Pinch You in the Sulzberger

Just a remarkable editorial in today's New York Times about Citizens United v. FEC, the Supreme Court case on Hillary: The Movie that may chisel away some of the encroachments on political speech mandated by the Bipartisan Campaign Finance Reform Act. Here's the money quote:

The legal doctrine underlying this debate is known as "corporate personhood."

Huh. I thought the legal doctrine–the constitutional doctrine–was, whatchacallit, that talky-talk thing, Thomas Jefferson stuff, sometimes newspapers get all holier-than-thou about it…oh yeah, FREEDOM OF SPEECH.

The Times even gets in a junior high school debating point:

The drive to give corporations more rights is coming from the court's conservative bloc — a curious position given their often-proclaimed devotion to the text of the Constitution.

Face!

Unlike the New York Times, my devotion to the Constitution involves taking the "Congress shall make no law" clause seriously. That, and not letting my hatred of Corporations blind me to the fact that the term also refers to nonprofits, people who pool their money together to produce speechy products like political documentaries, and so on.

Reason on Hillary: The Movie here, and on campaign-finance laws here.

Comments

[Episiarch]

Remember when the GOP and its supporters lost all their supposedly small-government principles when they had the power? Well, you are seeing the Dems and their supporters lose all their supposed civil liberty principles now that they have the power. It's all so predictable, and pathetic at the same time. Oh, and really repugnant too.

[The Extispicator]

Congress shall make no law ....

.... unless the law only applies to those evil corporations.

[lunchstealer]

So does this include the Corporation for Public Broadcasting?

The way to frame this is things like "The Sierra-Club Gag Rule", and "Muzzling PETA".

[lunchstealer]

Ugh - awful grammar in that last sentence. Can we pretend I said "The way to frame this is with terms like..."

[T]

I'm really starting to think we should truncate the 1st amendment after the initial 5 words.

[Citizen Nothing]

My sulzberger is getting really sore.

[DJF]

Agreed there should be free speech for all people.

Corporations on the other hand should be stripped of all government granted privileges such as limited liability for stockowners. If these functions are needed people can see if the marketplace will grant them through contract law.

[Xeones]

Shut the fuck up, New York Times.

[Johnny Longtorso]

The major networks are for profit corporations. Let's ban them from talking politics and see if the left is consistent in their position.

[Michael Ejercito]

The ACLU could be muzzled.

[Attorney]

The founders of this nation knew just what they were doing when they drew a line between legally created economic entities and living, breathing human beings.

And where exactly did the founders do that?

[James Ard]

Just sick. One of the main areas where corporations' rights have long been limited is politics. Do you mean like the health care associations scrambling around DC trying to save themselves by throwing offerings at those that would destroy them? It is surreal to watch billions get tossed around in the closed offices of Washington, and then see the stupid ban on advocacy.

[Attorney]

Corporations on the other hand should be stripped of all government granted privileges such as limited liability for stockowners. If these functions are needed people can see if the marketplace will grant them through contract law.

1. You can't contract with tort victims until after they're victims.

2. Parties with which you can contract already require corporations to opt out of limited liability when the market permits. No bank is going to loan money to a start-up company, for example, unless the owner guarantees the loan.

[Troy]

Unlike the New York Times, my devotion to the Constitution involves taking the "Congress shall make no law" clause seriously.

You're just one those noisy "Firsters" shilling for the constitution.

[creech]

DJF, if you took away limited liability privileges, there would not be enough lawyers in this country to file all the lawsuits that would immediately result, nor would your pension plan or 401K (or America) survive the horrendous crash in the financial markets.
Going forward, new incorporations should have no trouble getting others to deal with them on a limited liability basis. {Banks, for instance, already require those with startup corporations to personally guarantee loans.}

[Forbes]

Apparently the only reason the read the NYTimes is to discover how well (or not) the schools are edjumicating junior high school students...

Given what's on display, not so well.

[Eros]

Your stupid minds! Stupid! Stupid!

[Matthew Tievsky]

I expected Matt Welch to point out the irony of advocating limits upon political speech by corporations within a political editorial published by a corporation (the New York Times Company).

[Johnny Longtorso]

I expected Matt Welch to point out the irony of advocating limits upon political speech by corporations within a political editorial published by a corporation (the New York Times Company).

The NYT is a media corporation, and is therefore special. They have rights others don't by virtue of their wonderfulness. Bow down to them and worship them as gods.

[Xeones]

And where exactly did the founders do that?

Living document, bro! The Constitution means whatever anyone in power wants it to mean.

[Tricky Prickears]

Huh. I thought the legal doctrine-the constitutional doctrine-was, whatchacallit, that talky-talk thing, Thomas Jefferson stuff, sometimes newspapers get all holier-than-thou about it...oh yeah, FREEDOM OF SPEECH.

http://blog.mises.org/archives/010646.asp

[Johnny Longtorso]

Living document, bro! The Constitution means whatever anyone in power wants it to mean.

What any morally and intellectually superior Democrat wants it to mean, that is. No others need apply.

[Hugh Akston]

Wow. 96 comments on that editorial and not one that disagrees with the premise let alone points out that the First Amendment applies to Congress, not individuals.

Anyone who calls H&R an echo chamber is a fucking racist. We can't get five posts into a thread without MNG coming along to retroactively endorse McCain, or his gimp Prickears to call us all out on being dupes of Big Pharma.

[Xeones]

Hugh, that's the most racist comment i've seen in a dog's age.

[@]

Here we go with all those pesky definitions again. Lefty censorship types view corporations as large buildings, stock prices, material goods...everything but a very large (or very small) collection of human beings with constitutional rights. Until recently, the punditocracy rarely mentioned the names of these humans. They didn't matter. It's much easier to revile the abstract "corporation" than its individual constituents.

[Bergholt Stuttley Johnson]

What any morally and intellectually superior Democrat wants it to mean, that is. No others need apply.

I detect sarcasm. Racist!

[J sub D]

Hugh, that's the most racist comment i've seen in a dog's age.

Speciesist!

[JW]

Perhaps Peter Bagge can pen another book for the NYT called "All Corporations are Stinky and Stupid and Should be Mercilessly Beat Down, Except for Mine"?

Yeah, OK, too long.

[DJF]

"""DJF, if you took away limited liability privileges, there would not be enough lawyers in this country to file all the lawsuits that would immediately result, nor would your pension plan or 401K (or America) survive the horrendous crash in the financial markets. """

So you are saying that the free market won't work unless you have the government use its force to make it work? That only with the granting of special privileges to special groups that the marketplace can keep a 401 K from crashing. Let me guess, you also support bailing out incompetent bankers

So much for free minds and free markets

[Tricky Prickears]

or his gimp Prickears to call us all out on being dupes of Big Pharma.

Sorry to rain on your little parade. I'm sorry, racist parade.

[J sub D]

And yeah, the First Amendment ain't that friggin' hard to understand. The Bi-partisan Campaign Finance Reform Free Speech Suppression Act is unconstitutional. All of it.

[?]

new incorporations should have no trouble getting others to deal with them on a limited liability basis

It would have to be a different kind of limited liability than the one we know, one that doesn't impose its conditions on everyone whether they "deal" or not.

I mean, as things are, if you never made any deal with SatanCorp, or never even recognized its actors' ability to make deals as SatanCorp, and they put uranium in your well, that doesn't mean you can sue the people who actually did it. SatanCorp's human actors are all shielded from you. They got their deal from the state. You don't get to say you didn't make any deal. It's made for you, against you.

"Personhood" is a red herring. That's why people like talking about it. The rights violation in incorporation is elsewhere.

[JW]

So much for free minds and free markets

Drink!!!

[JW]

So you are saying that the free market won't work unless you have the government use its force to make it work?

You must be new here.

Lurking is a wonderful cure for such ignorance.

[SugarFree]

Lefties are oh so concerned about bankruptcies due to medical debts, but don't care about the tens of thousands of bankruptcies that would result from ending limited liability protections.

The equation of the libertarian free market and the market created by the anarchist free market is one of the most self-serving arguments the economically ignorant make here on a regular basis.

[Michael Ejercito]

I mean, as things are, if you never made any deal with SatanCorp, or never even recognized its actors' ability to make deals as SatanCorp, and they put uranium in your well, that doesn't mean you can sue the people who actually did it

Actually, you can sue the people who actually did the action.

Nazi war criminals were not excused for their actions simply because they were following orders, you know.

Limited liability means that stockholders are not responsible for corporate debts. Employees of the corporation are liable for their tort actions, and the corporation can be held liable for those tort actions under the doctrine of respondeat superior .

[T]

that doesn't mean you can sue the people who actually did it. SatanCorp's human actors are all shielded from you.

I need my in-house counsel to verify, but the only reason you can't sue the individual actors and the corporation in your example is because the Feds preempted such a lawsuit with environmental laws.

[mark]

Sugar, you're ok with limited liability? And btw, I didn't detect anything lefty in what DJF said...

[hotsauce]

"Congress shall make no law ... abridging the freedom of speech, or of the press ..."

Unless you want to make the argument that the filmmakers are "press," the root question is whether corporations can speak. So the NYT has framed the issue properly.

[T]

Limited liability means that stockholders are not responsible for corporate debts.

I would broaden that to they are not responsible for the actions of the corporation in general. You don't sue the shareholders if SatanCorp dumps uranium in your well. You sue the employees, directors and the corporation itself.

[Michael Ejercito]

Sugar, you're ok with limited liability?

Without limited liability, you can become liable for corporate debts if you happen to own just a single share of stock in a corporation.

It does not protect the corporation's employees from lawsuits for torts.

[SugarFree]

mark,

Limited liability is a legal protection from the actions of the courts. In other words, no courts would make limited liability moot. Like copyright and patents, it seems to give us much more than it takes.

[dennis]

I've always felt that liability should fall only on hte individuals who committed an act and those who explicitly or tacitly authorized it. A company shouldn't be held liable for the actions of its employees. If a manager or executive knew about a tort and authorized it, or turned a blind eye then those managers and executives should also be held liable. Employees could seek to have some or all of their personal liability assumed by the company as part of their employment contracts. The free market would work just fine. There's no reason why a stock holder should be held liable for something over which he exercised no real control.

[Tricky Prickears]

As a business owner, my understanding is, that the reason one would incorporate, as opposed to a sole proprietorship, is specifically to protect personal assets in the case of a lawsuit. Besides, limited liability varies from state to state.

[Michael Ejercito]

You don't sue the shareholders if SatanCorp dumps uranium in your well. You sue the employees, directors and the corporation itself.

This is true, being a shareholder is insufficient to be in a position to exercise managerial control.

One either has to commit a tort, or have managerial control over the person who did the tort, to be liable.

[T]

Unless you want to make the argument that the filmmakers are "press," the root question is whether corporations can speak. So the NYT has framed the issue properly.

Not really. Corporations don't speak, individuals do. BCFRA prohibits real persons from speaking based on the association they have with a corporation. It shouldn't matter if the money that funds my speech comes from the government, somebody else, a corporation, or my own pocket. But it does.

[FrBunny]

BCFRA prohibits real persons from speaking based on the association they have with a corporation.

I know this comes up in prostitution debates, but what's to prevent a corporation from hiring the filmmaker to tie their fancy shoes for $5M, then letting the filmmaker use the money (now his) to make whatever movie he wants? (If the corporation's goal is speech, not movie profits, that is.)

[DJF]

""""". Like copyright and patents, it seems to give us much more than it takes.""""

Isn't that the same argument that was given for bailing out the bankers and for every other thing that the government does?

[Michael Ejercito]

Should people be held liable for corporate debts imply because they own stock?

[SugarFree]

DJF,

Not by me. I'm a libertarian, look it up sometime. I'm fine with certain things the government does, even fine with being [gasp] taxed for those things.

If you advocate anarchy, stop nibbling around the edges already.

[Old Bull Lee]

I'm so disappointed nobody has quoted this yet:

"and the corporations sit there in their... in their corporation buildings, and... and, and see, they're all corporation-y"

[T]

Should people be held liable for corporate debts imply because they own stock?

I don't think so, but I'm sure others would argue with me. Honestly, I think (but cannot prove) that limited liability evolved out of the arrangements necessary to make long haul ocean trading in the 16th and 17th centuries possible to private entrepreneurs. It's a case of the law recognizing an existing arrangement rather than the law creating the arrangement.

[JB]

Fuck the New York Times.

[Some non-corporate person]

Congress shall make no law ... abridging the freedom of speech...

Human people (sad that I have to qualify "people") possess the freedom of speech that the congress may make no law abridging. You are presupposing corporations also do.

[robc]

Corporations have no limited liability. They can be sued to the edge of bankruptcy.

The limited liability portion applies to the owners of the corporation. Their liability isnt nonexistent, it is limited to the amount of money they put in (ignoring veil-piercing behavior).

Just pointing this out because some people above dont seem to get this.

[R C Dean]

Corporations on the other hand should be stripped of all government granted privileges such as limited liability for stockowners.

Limited liability for stockholders is a pretty logical extension of basic personal responsibility. Stockholders are passive investors; as stockholders, they do not act as agents of the corporation or have any authority to act on behalf of the corporation. Why should they be held directly liable, then, for what the corporation does? (See Ejercito's posts above for the reasons why not.)

The only reason is because of other legal doctrines that (artificially) impute liability to people who are not directly responsible. Why get rid of one artificial limitation on liability, without getting rid of the matching artificial extensions of liability?

[Hugh Akston]

Unless you want to make the argument that the filmmakers are "press," the root question is whether corporations can speak. So the NYT has framed the issue properly.

Actually hotsauce, I'm happy to call the filmmakers "press." A press is a piece of equipment used to reproduce words and pictures for publication. So anyone who publishes and disseminates anything by technical means qualifies as press, and therefore enjoys the protections of the First Amendment.

So once again, the NYT fails.

[robc]

Some non-corporate person,

As already pointed out, corporations never speak. If have never seen AIG say anything. A spokesperson for AIG may speak on its behalf, but that spokesperson is, relatively speaking, human.

[DJF]

"""T writes, I don't think so, but I'm sure others would argue with me. Honestly, I think (but cannot prove) that limited liability evolved out of the arrangements necessary to make long haul ocean trading in the 16th and 17th centuries possible to private entrepreneurs. It's a case of the law recognizing an existing arrangement rather than the law creating the arrangement.""

Actually limited liability came from the Dutch and British East Indies Companies which were controlled by the respective government insiders so they issued themselves various special privileges to make their company successful. Americans will know the British East Indies Company by being the insider company which was granted the special privilege of importing tea into America without paying taxes. Luckily the Americans threw the tea into the harbor preventing these ill-gotten profits from rewarding such insider behavior. If they had not then America might have suffered the fait of India which for many years was ruled by the British East Indies Company

[T]

Human people (sad that I have to qualify "people") possess the freedom of speech that the congress may make no law abridging. You are presupposing corporations also do.

Once again, no. Corporation do not speak. People do. BCFRA strips rights from actual people based on their associations and their funding. How is that not an abridgment of their 1st Amendment rights?

[The Angry Optimist]

ah, as I suspected, "libertarians" who hate limited liability so frequently have no clue what the fuck they are talking about. Yes, that's you, DJF. Tell me - what liberties are taken away by limited liability, again?

That's right: there aren't any.

[T]

Actually limited liability came from the Dutch and British East Indies Companies which were controlled by the respective government insiders so they issued themselves various special privileges to make their company successful.

The concept predates both of the orgs you mention and was used by the Venetians and Arabs to organize long haul ocean trading and overland caravans, respectively. What made the Dutch and British companies different was the grant of monopoly over trade, not organization.

[junior]

"Human people (sad that I have to qualify "people") possess the freedom of speech that the congress may make no law abridging. You are presupposing corporations also do."

What about that whole "peaceable assembly" part?

[DJF]

"""Tell me - what liberties are taken away by limited liability, again?""""

The right to sue the owners of a corporation for the debts and actions of their creation. Why should someone be allowed to create an organization and then not have to pay its debts because these debts are supposedly only owned by a fake person called a corporation?

Why allow someone to create a fake person and use it as a Judas Goat, dumping all their debts and liabilities and walking away.

Also free speech is a human right, so if someone wants to speak, either me or the corporate boss of GE then we should speak. Not use a fake person called a corporation to speak for us. The same with the plaintiffs in this case, if they wanted to make a Hilery movie then all they had to do is do it in their own name, not create a fake person called a corporation to do it

[Some non-corporate person]

robc | September 22, 2009, 12:52pm | #
Some non-corporate person,

As already pointed out, corporations never speak. If have never seen AIG say anything. A spokesperson for AIG may speak on its behalf, but that spokesperson is, relatively speaking, human.

Agreed.

And whenever he he is asserting his first amendment right to speak on the corporation's behalf, we should know his name, for he is the person we are recognizing the rights of.

[Sean W. Malone]

Collectivism for teh fail yet again...

Corporations are associations of people, nothing more - nothing less. They are sometimes organized loosely, sometimes contracted, sometimes for profit, sometimes not for profit, but typically with a unified goal in mind. But no matter what, a "corporation", cannot speak. The people who have labeled themselves under such an organization can. That's it.

I work for a company right now - as do (I assume) most people. They pay me to create & work on music that will get used, undoubtedly, in political media. My roommate (a film editor) is currently working on a massive piece for Hillary Clinton - again, at the request of his boss, who is the owner of a corporation.

The "corporation" isn't sitting at my desk editing music right now, and my roommate's corporation isn't watching a bitchy asshat in a pantsuit spout idiocy.

Quit confusing the label people ascribe to organization with individuals.

[Sulla]

Limited liability is not that amazing a concept. Suppose you were a business owner and you came to me and told me you wanted to protect your personal assets but did not want to incorporate. I would find a insurance company willing to issue you a policy that would cover all of your actions. It would be expensive to have true limited liabilty because you would have no deductible and not limits on coverage, but it is doable.
The true benefit of corporate codes is that it makes it easy to raise capital and manage a business with multiple owners.

Limtied liability is also helpful, but the corporate form benefits small business owners, not the rich and powerful. The rich and powerful have alternate (i.e., more expensive) asset protection mechanims than the working and middle class. Take away corporate limited liability and you would see a massive divestment from the stock market because who wants to own a share of Coca-Cola in your 401K if you are jointly and severally liable for its losses?

If you are concerned that shareholders who cause their corporations to do "bad" things can then hide behind the corporate form, you should make it easier to pierce the corporate veil, not strip away limited liability from those who use it in a responsbile way.

[Sulla]

Why allow someone to create a fake person and use it as a Judas Goat, dumping all their debts and liabilities and walking away.

How often does this happen? Almost never - corporations must be adequately capitalized (at least under Delaware law and I assue most/all other states) so if you do this a court would easily decide to pierce the corporate veil and impose limited liability.

[Sean W. Malone]

DJF - there is no film production in existence that doesn't come complete with it's own LLC. Even the biggest films of all set up their own LLCs... This is why it's never just "MGM presents" or "20th Century Fox productions", it's "in association with ___" and "distributed by ___"

The reason people do this is because filmmaking is, in general a highly risky enterprise in a pretty volatile consumer market and an especially shady labor market. If the LLC contract didn't exist as a standard form, the film industry would invent it as a contracted clause in all of a nanosecond. It's flat out too risky to create a film, with too many people involved to risk being sued if it fails... Most do fail.

[Publius]

And whenever he he is asserting his first amendment right to speak on the corporation's behalf, we should know his name, for he is the person we are recognizing the rights of.

Bullshit.

Anonymity is part of the first amendment.

[robc]

Madison, Hamilton, Jay?

Which was more likely to call bullshit?

[DJF]

""""If you are concerned that shareholders who cause their corporations to do "bad" things can then hide behind the corporate form, you should make it easier to pierce the corporate veil, not strip away limited liability from those who use it in a responsbile way.""""

What responsible way?

Why should someone who incorporates get a special privilege from government to limit their liability? What makes them so special, as opposed to those who don't incorporate? Should not all people have equality before the law, if so then there should be no government granted limits on liability. Or we all should get it but that would just make the system worse

Even insurance does not grant you that limit on liability since all that insurance does at best is pay off any debts coming from your liability, it does not get rid of your liability. You just made a side bet with an insurance company. This side bet does not stop you from being liable.

Limited liability comes from the government which grants its own employees limited and no liability. And look how badly they act. Why would granting such privileges be any better for private people.

So lets on get rid of government granted limited liability for corporations, lets get rid of all government granted limits on liability including to its own employees. Should not Bush and Obama be responsible for their own actions while in government.

[DJF]

""""How often does this happen? Almost never - corporations must be adequately capitalized (at least under Delaware law and I assue most/all other states) so if you do this a court would easily decide to pierce the corporate veil and impose limited liability."""

You must not have been paying attention during the latest housing crash, all sorts of mortgage companies and RE developers created LLC so they could borrow huge amounts of money and then when the market turned they closed them down and walked away. How many of these corporations have had their owners put under full liability by the courts?

[Sean W. Malone]

"So lets on get rid of government granted limited liability for corporations, lets get rid of all government granted limits on liability including to its own employees. Should not Bush and Obama be responsible for their own actions while in government."

Look dude, I actually agree in principle, assuming that you are talking about abolishing all special privileges for all corporations and individuals, and instead provide a guarantee of rights to all individuals equally.

BUT... Don't be so naive as to think that in even an anarchic society limited liability contracts wouldn't naturally arise. They are a way mitigate a lot of the consequences of engaging in risky associations in order to accomplish uncertain goals. If government is there to enforce contracts (or if the contract itself specifies a mediator/enforcement system privately), then it's going to be enforcing LLCs.

[robc]

The problem with unlimited liability is that it isnt proportioned according to blame.

If Warren Buffett owns 1 share of SatanCo and I own 100 shares of SatanCo, then I should have 100 times the responsibility, in an unlimited scenario. But that isnt the way it would work. Limited liability actually forces this, in that the company is liable and we each lose value proportionate to our ownership.

[robc]

I assume those who oppose limited liability also oppose bankruptcy. After all, its a form of individual limitied liability, in that you can rid yourself of some of your liabilities.

[mark]

I have heard that corporate bankruptcy is practiced differently in some Asian countries like Hong Kong. You can't just protect the company's assets there and restructure. Personal bankruptcy hurts your credit so it's not like you can just drop your liabilities like corporations do.

[Big Racism]

"A spokesperson for AIG may speak on its behalf, but that spokesperson is, relatively speaking, human."

As is every other member of the AIG family.

[T]

DJF,

So, if you loan me 20 bucks and I use that money to buy a machete to hack up hookers, are you liable?

[John Thacker]

So, does the New York Times believe that the Pentagon Papers case was decided wrongly? That New York Times v. Sullivan was decided incorrectly?

Or are the laws different for corporations who own printing presses instead of for speech.

[Tricky Prickears]

Personal bankruptcy hurts your credit so it's not like you can just drop your liabilities like corporations do.

Years ago, it was possible fr a company to declare bankruptcy, then change the name and apply for a new EIN number and receive a "new" line of credit.

Donald Trump did it years ago, on a construction project and a lot of small contractors lost their businesses because Trump's company didn't have to pay. I believe Boston Chicken Market did the same thing.

But banks got wise to this, and now require SSNs of all principal holders or something. In other words, when a company is formed, someone's personal credit is on the line, if there is no established credit. Also, The Patriot Act requires this for bank accounts.

[robc]

My old condo had a lein on it for my company's line of credit. My new house doesnt as we dont have a LoC anymore.

[Sulla]

What responsible way?

Imagine a guy named DJF who wants to save for retirement. He has $100 and he wants to invest in a corporation. He buys a share of stock in Acme Corp. Acme has a string of bad luck and goes out of business. The equipment Acme owned is sold for pennies on the dollar, yet it still owes $100 million to creditors. There is no limited liability, so the creditors go after DJF and take everything he owns. Are you okay with this scenario?

[Pro Libertate]

The right of organizations to speak is not something new. Are we going to tell churches to stop talking about religion? And the comment about newspapers is right on target--they're no less corporations/LLCs/whatever than McDonald's.

Also, what about the Right of Association also embodied in the First Amendment? Can't get together and combine our resources to get a message out? WTF?

The left is positively stupid about the corporate bogeyman they've built in their collective head. It is neither a monolith nor anything other than a grouping of people. Want to go back to a mercantile or feudalistic economy? Then let's get rid of limited liability. Otherwise, be quiet. Does Wal-Mart control America? Is GE enslaving its employees? No, no, no.

[Sulla]

You must not have been paying attention during the latest housing crash, all sorts of mortgage companies and RE developers created LLC so they could borrow huge amounts of money and then when the market turned they closed them down and walked away. How many of these corporations have had their owners put under full liability by the courts?

Did the owners do anything wrong? Did they lie on loan applications? Did they not lose everything they invested in the LLC's?

Who exactly was hurt here? Obviously whoever lent the money to these LLC's, knowing that there was limited liability, was hurt. As mentioned previously, banks almost always require personal guarantees from shareholders/ llc members. I'm not sure how this is an argument against limited liability when in this case it could have easily been done contractually, even in the absence of the LLC form, and everyone involved was aware of the risks.

I'm honestly baffled as to what your argument against limited liability is - based on this anecdote you seem to have a problem with two parties contractually agreeing that if something goes wrong, the losses will be limited to a specific amount.

[Lamar]

"The Times even gets in a junior high school debating point:"

So, according to Welchian logic, the following Amendments do not apply or give protection to corporations:

II
IV
IX
X
XIV

And probably more. Because if freedom of speech is not limited to human beings, well then, that's a whole other thing.

[Sulla]

Even insurance does not grant you that limit on liability since all that insurance does at best is pay off any debts coming from your liability, it does not get rid of your liability. You just made a side bet with an insurance company. This side bet does not stop you from being liable.

Um, what? Liablity means you pay. If the insurance company pays, that means you shifted your liability to them. A corporate code is just about shifting liability, just like insurance shifts liability. If you mean liable in some moral sense, I'm not sure how anything the law does can affect moral liability.

[Tricky Prickears]

Does Wal-Mart control America? Is GE enslaving its employees? No, no, no.

Does W-M, GE lobby the government for unfair tax exemptions? Do they lobby the government to enact regulations designed to put their smaller competitors at a disadvantage? Yes, yes, yes.

[Pro Libertate]

What entity doesn't lobby some level of government? And why shouldn't they be allowed to do so? Should it be okay for a consumer advocacy group to lobby but not a corporation?

I'm not saying that businesses don't use the ever-increasing power of government to erect barriers to entry and to reduce competition, but that's not so much because of corporate power as because we've given so much unfettered power to various levels of government. Want to fix that problem? Then strongly limit government action.

[T]

Do they lobby the government to enact regulations designed to put their smaller competitors at a disadvantage?

Again, actual people do these things and have the right to do so in the 1st Amendment. How do you square a distaste for lobbying and corporations with the plain text of the 1st Amendment?

[Tricky Prickears]

I certainly agree with limiting the power the government has to sell. But if anyone tries to make the argument that giving money and free speech are the same, doesn't understand human nature. I'm saying no one should be able to lobby the government with cash donations. If it's a donation to a campaign fund or a house on Fire Island, it's corruption. In my opinion.

I understand the case at hand does not directly address cash donations.

[Tricky Prickears]

It's not the lobbying I disagree with, it's the money.

[T]

It's not the lobbying I disagree with, it's the money.

You're not getting it, Tricky. If the feds don't have the power to move vast sums of money around our economy at a whim, why spend vast sums of money to lobby them? Removing the power removes the money, as well. Nobody spends millions of dollars to win the city dogcatcher election, do they?

[Isaac Bartram]

But banks got wise to this, and now require SSNs of all principal holders or something. In other words, when a company is formed, someone's personal credit is on the line, if there is no established credit.

To the best of my knowledge banks asking for officers of smaller companies to personally guarantee their corporations' loans is not at all uncommon. I've always thought it was completely normal in anything but publicly traded companies and absolutely top-drawer privately held ones.

I must confess that how Donald Trump has managed to get away with his bullshit for so long is a total mystery to me.

[Tricky Prickears]

T

It's a chicken or the egg thing. How can we expect politicians to limit the power of government (their own power) while they are taking cash donations? No, while they need to take cash donations. Which comes first?

[Michael Ejercito]

The only reason is because of other legal doctrines that (artificially) impute liability to people who are not directly responsible. Why get rid of one artificial limitation on liability, without getting rid of the matching artificial extensions of liability?

Which artificial extensions of liability would they be?

And do not tell me respondeat superior .

[Tricky Prickears]

I must confess that how Donald Trump has managed to get away with his bullshit for so long is a total mystery to me.

Yeah, well, he's just bought back into his casinos. Apparently, daughter Ivanka needs something more to do than just this

[T]

Apparently, daughter Ivanka needs something more to do than just this

I agree. She needs to do considerably more than that, and preferably make the video available.

[Michael Ejercito]

The right to sue the owners of a corporation for the debts and actions of their creation. Why should someone be allowed to create an organization and then not have to pay its debts because these debts are supposedly only owned by a fake person called a corporation?

So then shareholders who have no authority to act on behalf of the corporation should be liable for the corporation's debts?

If legal liability is eliminated, the stock market will drop 99%.

[Attorney]

If legal liability is eliminated, the stock market will drop 99%.

Exactly. If someone wants to argue in favor of unlimited stockholder liability, be my guest. But recognize the price that would need to be paid in terms of standard of living.

[mark]

Didn't someone say on another thread that a company could sell bonds which pay a share of company profits? That way you can invest in a company without owning it.

[Attorney]

Didn't someone say on another thread that a company could sell bonds which pay a share of company profits? That way you can invest in a company without owning it.

Not sure what the person who said this meant. If he meant "profits" technically, then a bond paying its holder from profits wouldn't be a bond (bonds being debt instruments, and debt service being an expense). There are products that combine the characteristics of debt and stock, but they usually take the form of preferred stock, and the holders of it are thereby owners of the issuing corporation.

The market is always coming up with new kinds of investment products and financing arrangements. If something better than classic stock comes along, it will be adopted (regulations permitting).

[Hobo Chang Ba]

I'm very critical of corporate personhood and its negative effects on laissez-faire markets, personal responsibility and competition. Nonetheless, the Constitution DOES say "shall make no law" and does not limit that to individuals - thus organizations qualify as well, regardless of if they are incorporated or not.

[DJF]

"""So then shareholders who have no authority to act on behalf of the corporation should be liable for the corporation's debts?"""

Generally shareowners can do whatever they want with a corporation if they collectively own 51% of the corporation. They can fire all the management, they can change the name, they can move the corporation, they can give it away. So they are not powerless. They are generally lazy and uninformed people who just care about daily stock price and quarterly dividend but they do have the power.

Now you might argue that individual shareowners don't have that power but that is their fault, they are the ones who voluntarily joined the collective called the corporation and if they either don't constitute 51% or if they are too lazy to get off their asses and assert their ownership authority then that is their problem.

They own the stock and the stock controls the corporation. They want the benefits of ownership but not the responsibility

[DJF]

"""Um, what? Liablity means you pay. If the insurance company pays, that means you shifted your liability to them. A corporate code is just about shifting liability, just like insurance shifts liability. If you mean liable in some moral sense, I'm not sure how anything the law does can affect moral liability."""

Yes, liability means you pay, even with insurance you pay, it just that you made a side bet with the insurance company that they would provide the money. However if the insurance company fails to pay, guess what you, are still the one liable. Just having insurance does not transfer the liability, all it does it allows you to pay using the insurance money, you are still responsible for the debt.

While with government granted limited liability, you liability is removed.

See the difference. Insurance is a deal between you and the insurance company to pay certain debts. It does not take away your liability. Government granted limited liability is the government giving you part of its sovereign immunity which removes by law your liability

[Mj]

The editorial does not address the issue at stake in the case, which is not "corporate personhood" but the absurdly Solomonic task of segregating what speech is permissable from that which is not based on the law's arbitrary arcane rules. The law's tangled mess of rules is hardly understandable (McCain himself ran afoul of McCain-Feingold in the last election), and therefore a prior restraint on political speech from not being sure what is permitted and what is not.

One has to wonder if the Times editor's are deliberately ignoring or blissfully unaware that their arguments against corporate rights in general and speech rights in particular apply to their own employer. The 1st amendment does not contain an exception for corporations and it does not contain an exception to that exception for corporations that publish newspapers. One has to conclude that the Times editors believe that most major modern media outlets have no constitutional protections.

[MJ]

"Agreed there should be free speech for all people" - DJF

No, apparently you don't agree with that at all, as you think people should lose their free speech rights with respect to their corporate property.

Your idea to get rid of limited liability is a foolish solution to a nonexistant problem that creates a whole host of other problems including destroying the ability of people in lower income brackets from participating in the stock market without going "all in". My question is: Do you know how destructive and pernicious your idea is and you don't care, or is the economic destruction the point?

[DJF]

""""No, apparently you don't agree with that at all, as you think people should lose their free speech rights with respect to their corporate property.""""
No, they don't lose their free speech rights. All the people had to do is make a movie without using the governments special privilege of a limited liability corporation. They could do it individually or as a partnership. You want instead to allow a fake person called a corporation to speak. There is no right to being a limited liability corporation, it is a government issued privilege to give some people special rights.

""""Your idea to get rid of limited liability is a foolish solution to a nonexistant problem that creates a whole host of other problems including destroying the ability of people in lower income brackets from participating in the stock market without going "all in". My question is: Do you know how destructive and pernicious your idea is and you don't care, or is the economic destruction the point?""""

So in the same paragraph to claim that limited liability privilege is meaningless and then you claim that without it the economic world would collapse. So which is it, so unimportant as not even to be discussed or so important that even talking about it risks disaster? And then of course you throw in that its for the "lower income brackets", what next, are you going to start claiming that "corporations are for the children"

[MJ]

"You want instead to allow a fake person called a corporation to speak."

That "fake person" is owned by real people with real rights, yet you want to legally prevent those real people from using their corporate resources to exercise their free speech rights, while claiming "there should be free speech for all people". Apparently because you have some irrational view of a corporation as some sort of Frankenstein's monster that is beyond the control of flesh and blood people and rampaging around the country.

How many ordinary people would invest in a corporation if owning one share puts all of their personal assets at risk? What do you think all those 401Ks and such out there are invested in? You do not see how eliminating limited liability would be destructive to our economy?

Getting rid of limited liability solves what problem that justifies that destruction?

[DJF]

"""That "fake person" is owned by real people with real rights, yet you want to legally prevent those real people from using their corporate resources to exercise their free speech rights, while claiming "there should be free speech for all people"."""

Then have those real people speak for themselves. What I want is to prevent some people using their special government issued corporate privileges to speak. If they want to speak then they can do it individually or as a group, just leave their special government issued privileges out of it.

[quote]Apparently because you have some irrational view of a corporation as some sort of Frankenstein's monster that is beyond the control of flesh and blood people and rampaging around the country.[/quote]
Do you even bother to look at what is happening in this country and the world? Yeah it not like corporations like Goldman Sachs, Citi Bank, Halliburton, New York Times, GE and many many more are not rampaging around the country. And yes they are controlled by real flesh and blood people, and I say that those flesh and blood people should not be allowed to hide behind a government granted corporate fake person.
[quote]How many ordinary people would invest in a corporation if owning one share puts all of their personal assets at risk? What do you think all those 401Ks and such out there are invested in? You do not see how eliminating limited liability would be destructive to our economy?[/quote]
So because some people make a profit then they should be granted special government issued privileges? I bet you were also in favor of giving away billions to Goldman Sachs as well since they too are people and they need special government issued profits as well.

"""Getting rid of limited liability solves what problem that justifies that destruction?""

The problem is the separation of ownership from responsibility. This allows those "flesh and blood" people to do things without taking responsibility for what they own and what they do.

[Some non-corporate person]

Publius | September 22, 2009, 1:28pm | #

And whenever he he is asserting his first amendment right to speak on the corporation's behalf, we should know his name, for he is the person we are recognizing the rights of.

Bullshit.

Anonymity is part of the first amendment.

Fine. We should be told then that "an anonymous spokesperson for the Acme Corp. has stated..."

[Michael Ejercito]

The problem is the separation of ownership from responsibility. This allows those "flesh and blood" people to do things without taking responsibility for what they own and what they do

Ownership is separated from responsibility; owning a share of stock is insufficient to possess managerial authority.

Remember when Dateline NBC made that news report about exploding gas tanks, and it was discovered they rigged the tanks with rockets? Certainly, the reporters who did the story were liable for slander, and that liability goes up the chain of command to the General Electric Corporation. And that is where it stops. Unless a shareholder was in the chain of command, the shareholder is not liable for that libel.

Once again, if limited liability for corporate shareholders is eliminated, the stock market will tank 99% or more.

So in the same paragraph to claim that limited liability privilege is meaningless and then you claim that without it the economic world would collapse. So which is it, so unimportant as not even to be discussed or so important that even talking about it risks disaster? And then of course you throw in that its for the "lower income brackets", what next, are you going to start claiming that "corporations are for the children"

The purpose of limited liability is to enable people to invest in a corporation without going "all in".

Your foolish idea will tank the stock market much worse than it did in 1929.

As I noted in the Dateline NBC example above, liability for slander began with the reporters and went up the chain of command to General Electric. You want people who had just purchased a share of general electric as part of an investment portfolio, to be liable for that slander as well, even though they had no power to do anything about Dateline NBC .

[Michael Ejercito]

This allows those "flesh and blood" people to do things without taking responsibility for what they own and what they do.

When Dateline NBC slandered GM, the reporters and producers were fired, and Michael G. Gartner, who was president of the NBC News Division, resigned. The slander lawsuit was settled out of court.

Should GM have gone after individual shareholders who were not in the chain of command ?

[DJF]

"""Once again, if limited liability for corporate shareholders is eliminated, the stock market will tank 99% or more."""

So you are saying that limited liability is such a massive subsidy for corporation owners that 99% of the value of their stock is based on it? Wow, I knew that this government granted privilege was worth a lot but I never suspected that more then 99% of the value of the entire corporate assets was based on it.

Sounds like an bigger reason to get rid of such a market twisting government privilege, how are we suppose to have a true market if this government privilege so distorts the market place?

[DJF]

""""Should GM have gone after individual shareholders who were not in the chain of command ?""""

But the stockowners were in the chain of command, they collectively approved of the management.

[Michael Ejercito]

But the stockowners were in the chain of command, they collectively approved of the management.

Name each and every individual stockholder who could have fired Michael Gartner, let alone the reporters who did that slanderous news show.

What is elimination of limited liability supposed to solve? That would effectively make shareholders general partners no matter how little they invested. As the Dateline NBC example showed, General Motors got a fine settlement without having to go into the personal assets of General Electric shareholders who were not in the chain of command, the reporters who slandered General Motors were fired, their immediate supervisory producers were fired, and Gartner, who was president of NBC's news division, resigned.

Here is another example. The governor of California is commander-in-chief of the California National Guard. Being a registered voter in California, does that place me in the chain of command? If some National Guard soldier commits a tort in the scope of his duties, should my personal assets be confiscated to pay for the damages of that tort?

[DJF]

""""Name each and every individual stockholder who could have fired Michael Gartner"""

I said collectively they could have fired the management. Don't you know what the word collectively means? It means that as the collective owners of GE they have the power to change anything they want about the management including firing them. Or change polices, or products or anything else they want

Now you may object to them being a collective, but I am not the one who made them a collective. They voluntarily became a collective when they bought GE stock and became the collective owners of GE. If you don't want the responsibilities of being the collective owners of GE then don't buy its stock.

[quote]Here is another example. The governor of California is commander-in-chief of the California National Guard. Being a registered voter in California, does that place me in the chain of command? If some National Guard soldier commits a tort in the scope of his duties, should my personal assets be confiscated to pay for the damages of that tort?[/quote]
So who is ultimately responsible for what government does if not the public? You will end up paying more in taxes for these mistakes, maybe you should take more interest in what your state government does and remove many of its powers that you collectively gave it. First would be to get rid of these National Guard soldiers who do nothing to guard the State or the Nation but are mostly used to fight foreign wars or to impose marshal law whenever the governor or president wants to

Make the public responsible for what the government does and lets see if they start reigning in what the government does. Certainly the present system does not reign in government, maybe making the citizens responsible will do it.

Now you may have some defense in that citizenship was imposed on you and not voluntary so I would consider using this as a defense if needed

[Michael Ejercito]

So who is ultimately responsible for what government does if not the public? You will end up paying more in taxes for these mistakes, maybe you should take more interest in what your state government does and remove many of its powers that you collectively gave it. First would be to get rid of these National Guard soldiers who do nothing to guard the State or the Nation but are mostly used to fight foreign wars or to impose marshal law whenever the governor or president wants to

Your legal doctrine has been rejected by the courts.

How exactly would that work, holding individual voters personally liable for the acts of the state government? Or of the U.S. House or Senate?

[DJF]

"""Your legal doctrine has been rejected by the courts."""

So you have no real argument other than bowing to power?

The courts also say that some developer can take your home because his use of the land will generate more taxes for the government

The courts also say that speaking out against a war is the equivalent of falsely shouting fire in a theater.

The courts say that growing your own food, on your own land, for your own use is "interstate commerce" and can be regulated by the Federal Government.

The courts say a lot of things, much of which is determined by who has the money