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Can the United States function without corporations?

Discussion in 'Off-Topic' started by mrt144, Jun 19, 2009.

  1. Gustave5436

    Gustave5436 Emperor

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    Democratic ownership of property caused significant increases in efficiency during the Spanish Revolution. Depending on how radical a transformation you are suggesting, it could indeed function, and thrive, for that matter.
     
  2. Whomp

    Whomp Keep Calm and Carry On Retired Moderator

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    I'm trying to understand what the benefit would be.
    There's a variety of structures that benefit business owners of different types. Some entities pass through income, limit liability, offer easier transfer of ownership, better employee retention, varied estate tax benefits, fringe benefits, ease of filing etc.

    So what the business type is more often determines what the best structure is for the owners.

    Incorporating doesn't benefit everyone since there are inherent advantages and disadvantages with each structure.
     
  3. amadeus

    amadeus Bring back the Civ2 theme!

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    It sounds like what we're really talking about here, Whomp, is actually big companies, not necessarily those that are incorporated within a certain legal definition. :)
     
  4. Whomp

    Whomp Keep Calm and Carry On Retired Moderator

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    I see...
    Well I think it's obvious there are some fantastic businesses that are privately held. Mrt already mentioned Cargill and I'd add Enterprise, Mars and Koch Industries amongst many, many others to that list.

    I'd further ask the question "were the owners (traders) of the Chicago Mercantile Exchange rewarded by monetizing their equity in that trading seat they owned"?
    As well, didn't that allow the exchange to expand beyond just a regional exchange and become a global presence? This couldn't happen as a private entity.
     
  5. mrt144

    mrt144 Deity

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    I'm not saying there would be an overall benefit but I was interested in how it would be different.
     
  6. Whomp

    Whomp Keep Calm and Carry On Retired Moderator

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    Presuming these entities were not public or presuming you could construct a different entity that was public?

    Or only private? I could see a lot of problems with that right off the top.
     
  7. Ayatollah So

    Ayatollah So the spoof'll set you free

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    Teacher, may I be excused from class? My brain is full.

    So if I get this ... basically you're saying that there'd be less equity (only those brave enough to do partnerships would have equity) and more loans? Is that really such an economic drag? Obviously, transitioning from here to there would be difficult, but in the long run, what would the result look like?
     
  8. Whomp

    Whomp Keep Calm and Carry On Retired Moderator

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    Or those that are "in" enough would get equity.
     
  9. mrt144

    mrt144 Deity

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    I think the intent is to explore what the landscape would look like if these were enacted independently;

    A. Equity didn't have a firewall for corporate liability thus making equity more like a transferable partnership.

    B. Only private equity but active public bond exchange to invest in companies.

    To recap so far;

    The initial statement was that corporations give us everything an in the absence of corporations the government would provide everything. There was a rebuffing that both private enterprise and incorporation provided everything we needed with equal emphasis on both parts.

    I first tried to parse whether we are talking about corporations as legal entities. There are quite a few examples of integral goods services provided outside corporate entities.

    Then we discussed types of corporations, public vs. private because the question of "what would people invest in?" and "how would companies raise capital to start or improve the business" arose. I proposed that the funds necessary to get such capital could be gained through issuing bonds which also provides the answer to "what would people invest in?"

    For the most part though, the fact that corporations provide a great deal of what we consume does not mean that in the absence of both public corporations or corporations in general the government would have the take up the mantle.
     
  10. Formaldehyde

    Formaldehyde Both Fair And Balanced

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    Levi Strauss is still private. Forbes ranks them at #53. A number of the family owners are billionaires.
     
  11. CIVPhilzilla

    CIVPhilzilla Reagan Republican

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    Well we did exist before corporations so we could function, but we wouldn't function nearly as well as corporations are the most investment friendly business entity.
     
  12. History_Buff

    History_Buff Knight of Cydonia

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    I don't see why they'd be any more reliable investments than other types of businesses. And if a corporation goes under, paying off shareholders is the last thing on the list.

    The reason they're so common is that the owners can dodge nearly all of their financial liability in case of law suit or government fines, etc.
     
  13. Imperialmajesty

    Imperialmajesty Emperor

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    Define function.
     
  14. mrt144

    mrt144 Deity

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    Non subsistence farming. Division of labor.
     
  15. Imperialmajesty

    Imperialmajesty Emperor

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    Well, considering that entities with a division of labor exist without being corporations, I say the answer is self evident.

    Wait... you actually believe that the exit of corporations would lead to America being thrown into a mad max world of people huddling over subsistence crops? A period of economic depression, maybe, but even then I doubt we would be thrown into a full on societal and economic collapse, which would be the prerequisite of going back to subsistence farming.
     
  16. JollyRoger

    JollyRoger Slippin' Jimmy Supporter

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    Which they could sell in a secondary market. Pretty much like today, except with less liquidity.
     
  17. EnglishEdward

    EnglishEdward Deity

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    For the purpose of this particular discussion and certainly this post,
    I will regard "corporations" as being defined by limited liability.

    Limited liability was first introduced in England in the late 19th century
    to encourage high risk innovative ventures so that a prospective small
    investor on modest income or with modest savings could buy a small share
    in a new business that they could not control without being deterred by
    the worry that the business might become bankrupt and that they might
    in the first instance be held liable for the entirety of any debt that would
    be one or more magnitudes greater than their modest investment.

    It was never indended by the 19th century legislators in either Britain or
    the USA that the majority of existing business would become limited liability.

    Almost from the outset, the powerful and wealthy people abused this
    reform by converting existing businesses into many limited liability
    corporations so that if one of their ventures went wrong, they could
    simply declare insolvency and walk away from business debt leaving
    their employees, sub-contractors, suppliers out of pocket.

    Freed from the risk of personal bankrupty, the entrepreneur can
    take risks in competition with and against their naturally more cautious
    unincorporated competitors who won't take such risks. This provides corporations with their first unfair advantage.

    If a small businessmen wishes to borrow from a bank, then having his
    business incorporated as a limited liability corporation provides no value
    to him, because the bank typically insists that he, his wife, his parents,
    uncle Tom Cobbley and all each personally guarantee that loan.

    This gives large corporations their second unfair advantage.

    Some (then once) reputable professions such as Accountants, Auditors, Lawyers,
    Professional Consultants, Stockbrokers, Underwriters took their view that their reputation was important and prided themselves on not hiding behind limited liability.

    However some of these partnerships became overly large and some poor decisions were made by a few partners and they therefore became limited corporations.

    Now suppose I get in a legal dispute with a limited liability company.

    All my possessions are at risk, but the company owner's only risk their shares.
    This is inherently discriminatory against unincorporated individuals.

    Individuals are deterred at law by the threat of very large damages and legal
    costs (often far greater than the sum of money in dispute) being claimed against them.

    This provides a third unfair advantage to limited liability corporations.


    I believe that while some lines of business, e.g. aircraft manufacturing,
    steel plants require large corporations to operate, the primary reason
    outside such sectors why large corporations are so prevalent is, not
    due to any so claimed corporate efficiency, but simply due to the
    combination of these three unfair advantages.


    I see no reason why a limited liability corporation should not have
    its rights to sue an unincorporated individual correspondingly severely
    constrained.

    It is my opinion that unless and until this discrimination is abolished, that
    recognition of the limited liability status should be appropriately limited,
    suspended, or withdrawn in an organised manner by the courts/legislature.
     
  18. cardgame

    cardgame Sensual Kitten

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    As to the why, take the Civ 4 quote on Corporation tech.

    Still not really a good enough reason though imho, since we seem to be doing all right with corporations.
     

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