RoR: Forum

Post 0

Wednesday, August 6 - 7:21pm

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Tibor: "As it is, she is aiding and abetting those who want to support regimes wherein human rights are violated, left and right. If they are a mere invention, what could be wrong with that?"

Note that the current Bush administration has explicitly adopted the position that rights are granted by the state. This is the rationale they have used for the "Patriot" Act, for Guantanemo, and for the idea that the Executive may simply declare someone an enemy combatant and suddenly they no longer have any rights.

As for property rights, we know that in principle such rights are a logical extension of the right to life, which of necessity entails the right to take the actions over time to support and preserve that life, but I could argue that none of the currently popular schemes for implementing the principle have managed to encompass all the dimensions necessary for consistency with morality and justice in general.

Our concept of property in land, for example, is largely inherited from the Divine Right of Kings concept, which was morally comforting to the settlers, I suspect, when they seized land that had been owned for generations by the natives, citing a piece of paper from the state or from the East India Corporation. I'm not trying to tar all the settlers with this brush. In some cases the land was legitimately purchased, but in many cases not.

It is too bad that we had not gone in general with the Common Law version of property, which rests strictly upon equity.

(Edited by Phil Osborn on 8/06, 7:27pm)

Post 1

Wednesday, August 6 - 8:04pm

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Phil, I challenge this:

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Our concept of property in land, for example, is largely inherited from the Divine Right of Kings concept, which was morally comforting to the settlers, I suspect, when they seized land that had been owned for generations by the natives, citing a piece of paper from the state or from the East India Corporation.
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Because generations of Native Americans never owned any land -- though do not mistakenly interpret that to mean that "land ownership" was merely invented.

Ed
(Edited by Ed Thompson on 8/06, 8:05pm)

Post 2

Wednesday, August 6 - 8:46pm

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Ed: "Because generations of Native Americans never owned any land..."

This unfortunately encompasses both a prevalent mythology and a likely mistake in understanding ownership.

As to the less serious (philosophically) error: The ownership of land among native Americans differed greatly from tribe to tribe, with the large Ojibwa (Chippewa) tribe recognizing very strict individual land ownership rights, while some other tribes considered land to be commons - owned by the entire tribe. There were many variations in all kinds of property rights among the various Indian tribes.

The usage in general reflected the technology and lifestyle. It did not make much sense to have individual land titles when you were living on the move, hunting and gathering. However, many tribes had extensive agricultural sophistication, and clear land property rights.

A recent National Geographic feature article discusses how the Indians got displaced by the settlers in much of New England. The Indians had a very successful agriculture that was adapted to the local environment, building upon many generations of experience, while the settlers brought in a European agriculture that imposed itself on that environment and was fundamentally incompatible.

The Chippawa Indians survived largely by hunting and trapping in a region - around the Great Lakes - that had long and bitter winters, with food of all kinds scarce. It required about 7 square miles to feed a single nuclear family. That meant that generally only units of a few Chippawa could live together during the winter, as they simply could not afford to travel any further in that kind of weather.

ALL property, including land, was individual among the Chippawa. They did not even have a way of saying that more than one person could own something. There was no "our" in the language. However, the property right was tied to use. Typically a family - or, more precisely, the head of the family - would claim title to several areas of several square miles each, switching between them as they used up the game. If the owner stopped using a piece of property for more than a set number of years, then it was considered abandoned and free for someone else to lay claim.

The Chippawa were great traders, and even included intellectual property in their commerce. Dances, stories, dreams, spells, songs, were all considered owned property, subject to trade.

The more serious philosophical problem which I suspect you're having here is the idea that property can only be owned by a single individual. What about businesses? Can a trust own property? I don't want to discuss corporations, because I think that that form of organization is inherently morally repugnant and could not survive without state fiat.

If you grant that a business or a group of people can jointly own property, then what is it about a tribe that makes it incapable of doing so? Granted, some tribes found the whole idea of owning land ridiculous, but many tribes did treat land as property and there were great treaties drawn up between various tribes to recognize what were essentially land rights. Typically they spelled out where the boundaries were as well as providing permission for peaceful temporary use by travelers in passing through.

Post 3

Thursday, August 7 - 5:02am

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Phil Osborn says, "I could argue that none of the currently popular schemes for implementing the principle have managed to encompass all the dimensions necessary for consistency with morality and justice in general." He could argue that, he says, but he doesn't (not that I want him to).

He goes on to talk about American Indian tribes that owned land and were mistreated by the settlers and by the American government. And he points out that there are serious violations of individual rights being committed by the current administration.

Now, tell me what any of that has to do with Dr. Machan's article.

If someone wants to argue that some aspect of property rights should be different, it would be better to put that in a thread of it's own or do a search and find one of the existing articles on property rights. I think a thread should have a chance to get started before it is totally hijacked. Hell, If you are the first poster, its hardly even a thread yet!

One of the most valuable things we can learn at a forum like this, is the variety of fallacies employed to attack the values we hold in common. Dr. Machan points out the fallacy of declaring an moral position as just an invention and thereby implying an arbitrariness to the position. And that continues the misconception that natural laws only exist in the physical sciences.

That is the kind of contribution that merits our attention.

Post 4

Thursday, August 7 - 6:19pm

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Now, tell me what any of that has to do with Dr. Machan's article.

But Phil is famous for this tactic, Steve. Bait 'n switch!

Post 5

Thursday, August 7 - 7:10pm

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Actually, TSI, what I was leading up to was that while the fundamental nature of human rights is undeniable, the practical implementation of the principle varies widely, based upon variables of culture, lifestyle, technology, etc. A hunting and gathering culture may have no real need to recognize individual property rights in land. As they develop technologies such as agriculture, which require an investment of large amounts of time and effort in a particular plot of land, then that need becomes very apparent.

Furthermore, just as the technology of standardized units of value - money - revolutionized commerce, it might be that we could come up with improved technologies regarding the protection and implementation of rights, as well.

Far from being in disagreement with Tibor, I applaud his article.

Post 6

Friday, August 8 - 9:10am

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Phil said: "I don't want to discuss corporations, because I think that that form of organization is inherently morally repugnant and could not survive without state fiat."

OK, I'll bite: what do you consider "inherently morally repugnant" about, say, stockholders in Boeing or AMD or Microsoft pooling their capital to produce incredibly expensive and complex airplanes or computer chips or computer software? How does it violate anyone's rights if individuals voluntarily trade and cooperate with others in such an industrial enterprise? I'll agree that such enterprises could not survive without a legal system that protects their right to trade with others, but how is any of that necessarily a "state fiat"? These companies were founded by private individuals who made voluntary trades with other private individuals, producing goods that other people wanted. Without their efforts, we wouldn't even have computers to carry on this conversation.

I own portions of virtually every major corporation in America via broadly diversified index mutual funds -- please elucidate how my investing money in corporations that produce goods and services that other people want and voluntarily purchase is "morally repugnant"?

Post 7

Friday, August 8 - 1:51pm

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Robert Hessen wrote a book on this - In Defense of the Corporation.....
worth reading....

http://www.amazon.com/Defense-Corporation-Publication-No-207/dp/081797072X/ref=sr_1_1?ie=UTF8&s=books&qid=1218228592&sr=1-1

Post 8

Friday, August 8 - 2:57pm

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Jim,

Phil Osborn has criticized incorporation on this site before. See these:
http://rebirthofreason.com/Forum/ArticleDiscussions/1999.shtml#5
http://rebirthofreason.com/Forum/ArticleDiscussions/1893.shtml#0
http://rebirthofreason.com/Forum/GeneralForum/0992.shtml#0

He holds corporations to be simply privileged by state fiat. Apparently he believes it would be just for a person to buy the common stock of a corporation, have no part in running it (other than voting his or her shares), and be subject to a loss of many times the amount invested. He may hold the same for lenders, too.

(Edited by Merlin Jetton on 8/08, 3:11pm)

Post 9

Saturday, August 9 - 2:50pm

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Just to clarify:

The market alternative to the corporation, which is literally a child of the state, an artificial person created to stand in for real people when they screw up, is the trust, which can also issue shares, but is a purely contractual market entity. Trusts limit liability by giving complete control of the assets to the Trustees. The reason why corporations became the dominent business form, over partnerships and trusts, was the corruption of the court system, basically its move from a common law equity basis to that of an enforcer of positive (state) law.

Under the common law, it was highly unlikely that a business could be ruined by punitive judgments, as such judgments were simply outside the scope of the common law's authority, which was limited to identifying equity and restoring it. Once the floodgates of punitive judgments were opened, however, such judgments became a serious liability for businesses and their owners or Trustees. This became the incentive for the move to the corporate structure, in which the risk is assumed by the general public, willy-nilly, by state fiat, while the state is supposed to oversee the artificial person, its child, to ensure not only that it doesn't do bad things, but also that it function in the "public interest."

If that doesn't define the corporation as inherently a fascist construct, I don't know what could.

In fact, the state has not in general interceded either in the interests of safety or for the public good (whatever that means). Instead, the various bureaucracies that are supposed to be protecting us are typically staffed by representatives from the very industries and corporations they are supposedly monitoring, so that we get the worst of all possible worlds via the corporate model. Rules and regulations are passed to hurt one company at the behest of another or to prevent competition from emerging, and when real disasters happen - as they inevitably do when you've offloaded risk, the courts have typically ruled that since the issues were already covered by bureaucratic law, typically fines of a few thousand dollars, the people actually harmed are barred from suit.

Post 10

Saturday, August 9 - 8:56pm

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Phil,

I see the points you are making and they are good ones. But, it seems to me that the problems all originate with the government - the courts pushing ideologies, the special-interest influenced politicians, the bureaucrats with their endless regulations, biased views and corporate bed-partners, the political parties with their drive for power regardless of principle, the accumulation of bad laws, and an under-educated electorate lacking in personal responsibility and overly tolerant of crooks, con-men and thugs.

People clearly have the right to associate and to invest their funds in any manner that doesn't violate the rights of others - which takes us back to the problem being government - only through the government in some form or another can these violations occur.

Remove the problems in government and that bad child is now disciplined by the competition in a free market and the enforcement of individual rights.

Post 11

Sunday, August 10 - 12:30am

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Bob Hessen does a fine job on Ralph Nader's thesis that dismisses corporations "creatures of the state." For one, back in those times nearly everything was deemed a creature of the state--the arts, sciences, manufacture, commerce, religion, you name it. The American Revolution turned this around by locating sovereignty in citizens, not governments. Remnants of the old system (taxation, limited liability) still linger but are no longer well founded since it is citizens and not states that are sovereign and own their lives, property, etc. The entire notion of corporate commerce and organization need therefore to be reconceived and mostly have been. (See Hessen's book, In Defense of the Corporation, on this!)
Treating corporations as if they were still creatures of the state is like treating marriages as if they were still only made in heaven or children as if they were brought by the stork

(Edited by Machan on 8/10, 12:39am)

Post 12

Sunday, August 10 - 4:42pm

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http://www.gangsofamerica.com/gangsofamerica.pdf

Corporations are distinguished from market entities on the basis that they require a state license to exist and that this license imposes both costs and benefits, such as limitation of liability to the value of the assets "of the corporation."

Note that the part in the parentheses is critical. In every form of private market entity, the real people who operate the company are fully liable for their actions. The corporation gets around this by the neat trick of having the state create a fictitious legal person - the corporate entity - which stands in as if it were a real person in any legal proceeding. This has not changed, and, as "Gangs of America" details, it has in fact broadened over the past couple centuries.

This state-created legal status is why corporations like Enron were able to do the things they did to offload their liabilities. My understanding is that the technique of creating a shell corporation and then selling it ones liabilities is quite common. Then the shell goes bankrupt, with only the fictitious person to blame, and real people lose their shirts.

That's just one of the many methods by which corporations employ their special legal status as children of the state to escape liability, leaving legions of real victims without recourse.

Post 13

Sunday, August 10 - 8:54pm

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Phil,

I had a C-corp registered for a number of years to take advantage of differences in taxation. I wouldn't say it is a state "license" - like a driver's license - it is more of a registration. Clearly there is a common-sense need to have a central registration for a name. And there are a number of different entities that fall under the category of "doing business as" - S-corps, limited liability companies, partnerships, trusts, non-profits, and even single proprietorships have a recognized status as a registered business entity.

Enron was a case of fraud - not a normal act of a c-corp. It isn't the nature of the incorporation that is the source of wrong-doing here - it is a cultural climate that is becoming more and more friendly to dishonesty and to political structures that are less and less honest, or competent, in protecting individual rights.

All of these different business, or legal, structures are as much tax creatures as they are liability limiting in intention. Our tax codes are awful and spawn a great deal of ugly regulations and equally ugly reactions where people have to twist their economic actions all around just to keep some of the money they earned.

As to the limited liability, when you exclude fraud, the only limitation is that the lawyers can't go after the investors assets beyond what they invested. That seems reasonable to me. It is like recognizing that a lawyer can't come after my house and bank accounts, because I had loaned money to my next door neighbor, who invented something, and then was sued. I might never get my money back, but that should be the limit of my losses. The limiting of liability only makes it possible to raise funds.

I'm sure that there are lots of changes in the laws and regulations that should be made, but I don't buy into the corporations as evil arguments. I looked at the 307 page pdf at that site you listed. The author was mostly upset that corporations wouldn't use their 'power' to support his ideas of social reforms (gay rights, environmentalism, consumer protection, wealth redistribution, etc.) And he saw all of the lobbying interactions between government and corporations as instances of corporations being the primary problem of the resulting corruption and NOT the politicians. In several places you can see that he approves of the anti-trust laws and believes that some of the 'problems' he sees would be improved if they were more vigorously enforced. He has something of a class-view of society and that comes out when he talks about the need for greater protection for unions, workers and customers. And he just plain sees business as a suspicious activitiy. Look at this quote: "As Atlanta mayor and former United Nations ambassador Andrew Young once said, �Nothing is illegal if 100 businessmen decide to do it.� Young may have overstated things a bit, but the observation does encapsulate a basic truth about American society. Business does tend to get its way, acting by means of a nebulous force known as �corporate power� that drives much of what happens in both the public and private spheres.

It would make more sense to point to specific aspects of of specific laws that violate an individual right and suggest the kind of change that would be best.

Post 14

Monday, August 11 - 7:00am

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I read part of the article "Gangs of America". It had some interesting history, but it seemed to me the author's "solution" is to give more power to governments and we know the usual result of that.

I agree with Steve Wolfer that incorporation is more a matter of registration than license.

Phil Osborn wrote:

In every form of private market entity, the real people who operate the company are fully liable for their actions. The corporation gets around this by the neat trick of having the state create a fictitious legal person - the corporate entity - which stands in as if it were a real person in any legal proceeding.

This is a half-truth. If it were such a "neat trick", then directors and officers insurance would not exist. In a small entity, regardless of the form of organization, it is far easier to determine who is responsible for a given act. In a large corporation with many people making key decisions, and with the people changing over time, it is extremely difficult to determine who is responsible for a given act. Also, a corporate failure can have many causes, not just one.

This state-created legal status is why corporations like Enron were able to do the things they did to offload their liabilities. My understanding is that the technique of creating a shell corporation and then selling it ones liabilities is quite common. Then the shell goes bankrupt, with only the fictitious person to blame, and real people lose their shirts.

I disagree. The primary way Enron offloaded its underperforming assets and associated liabilities were with partnerships, usually called "special purpose entities." But the primary problem in Enron's case was massive accounting fraud. Loose accounting rules were partly to blame in my view. Of course, Enron massively abused what rules there were. Indeed, by using partnerships rather than corporations, Enron was able to commit even greater fraud.

I remain confused by what Phil considers legitimate and illegitimate limited liability.

Under the common law, it was highly unlikely that a business could be ruined by punitive judgments, as such judgments were simply outside the scope of the common law's authority, which was limited to identifying equity and restoring it.

Punitive damages have rarely caused the downfall of a corporation. It is usually "business failure." It is usually borrowing money and buying assets which eventually generate far less revenue than anticipated. This is what leads to "write-downs", diminishment of equity (net worth), and creditors trying to recoup their money by lawsuit or in bankruptcy proceedings.

Post 15

Monday, August 11 - 6:57pm

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I cited the "Gangs of America" site because it is easily available and the author, who is a liberal/progressive businessman, does cite many of the relevant court decisions.

That doesn't mean that I like his politics. It was, in fact, the progressives and the mercantilist proto-progressives - think Lincoln and the bunch of bloody maniacs who forced the U.S. into the Civil War - who were primarily responsible for the shift from Trusts and other market business forms to the corporate model. Teddy Roosevelt and his "Trust Busters" were not out to "get" big business. They were out to create an unholy alliance between the state and its newly created children. And they were financed by the very people who were supposedly the victims - Standard Oil, etc.

Required reading in my U.S. Hisory course in college was a book which laid out the entire plot, citing names, dates, places of the conspiracy to turn the U.S. into a fascist country. As I recall, the title was "A History of American Reform," and one of its central theses was that so-called reform is usually best examined carefully, or, as Rand put it, "Que bono?"