Annals of Personal Responsibility

Oh, I don’t know: It’s never too early to start building a good credit history.

Of course, there is an up side to waiting till college. The folks hawking credit cards in front of the student union at the beginning of each school year also throw in a free T-shirt. Free!

Well, in Scandinavia these stories usually take place at the opposite end of the age-scale – 100-year-olds being reminded about post-natal care (“for you and your mum”), 102-year-olds getting a place at the local kindergarten and 106-year-olds contacted by the education authorities.

Anyway: If I were you, I’d take the card and buy a handful of iPhones for the money. And while you’re at it: Remember to buy a couple of Ferraris and have the cars registered in Junior’s name. (I haven’t dreamt these up: Some Swedish parents actually used their kids as fronts in different types of debt schemes – legislation regarding car-ownership etc. had to be amended)

It does work from both ends. My grandfather was a doctor — Army Medical Corps in World War I, fighting the flu pandemic, and I never asked the details.

Anyhow, he retired from practice about 1962, died in 1971, and at least as late as 1990 was still receiving free samples of some fairly powerful prescription medications at my parents’ address.

I think this is part of a program to help the children of immigrants assimilate better into American life and culture. And if you don’t get him started now, how will he ever become acquisitive enough to think he really _must_ have an iphone?

More evidence confirming the sad state of our out-of-control consumerist society.

I believe the cheap lesson to draw from this is “More evidence confirming the utter irresponsibility of the credit-card industry, which pushed through a draconian bankruptcy bill on the alleged grounds that consumers needed to take more responsibility.”

I got a card offer for my mother last year.

She died in 1989.w

What is the responsibility of an industry other than increasing its ROI?

Well said. What is it indeed, my friend? And as such, this insight goes a long way toward explaining why “industries”, and the corporations which comprise them, make such great cover stories for acting like a total bastard towards your fellow man.

And which is why I am sure you will join me in arguing that corporate entities should have very limited rights in contrast to people, and that there is a very strong case for comprehensive societal and governmental controls on their actions.

For me, all that I ask is that when with the words “It’s only business” I get slipped the shiv, that I get to see the face of the person doing it.

There’s a large body of literature on why Islamic societies failed to grow up into proper modern capitalist states (which is of course why they’re doing so badly in the world now: the books have names like “What went wrong?”) – one answer that’s often offered is that they failed to develop the corporation: an imaginary entity, with rights and personhood but no responsibilities, which can be used to shelter businesspeople from the fallout of their unscrupulous activities or ill-advised risk-taking. For some reason, traditional Islamic society frowns on gambling, extortion and ducking responsibility. Silly Muslims.

My eldest got one of these when she was 7 and wrote a blisteringly rude letter in response. Since then I have quickly removed them from the mail so that she won’t waste her time on them.

Six and a half weeks, hell–they’re sending ME credit card offers. Even I know how fucking insane THAT is.

I thought that they had changed the rules for prepaid reply envelopes, so that the company no longer gets charged extra if you fill it full of heavy stuff.

We once received an exhortation for funds from the GOP in the early ’80s, complete with a 8×10 of Nancy Reagan. At the time, my wife worked for a university medical library which was in the course of moving to a new facility, and in the process, she picked up a book and had a cascade of ’50s nudie pics fall out of it. We packed them into the return envelope, and Nancy graced our dartboard for some months thereafter.

she picked up a book and had a cascade of ‘50s nudie pics fall out of it

Sigh. Those are probably highly collectible now.

Yesterday I received an offer from one of my insurance companies which was a plan to insure me against the expenses of misuse of my identity and the sloppy work of corporations in protecting the privacy of my financial data. This would seem to be a form of extortion or a “protection racket.”

Corporations can’t be bothered to protect your financial data and now they want to be rewarded for their incompetence… Wonders never cease in the world of fascist corporate greed…

one answer that’s often offered is that they failed to develop the corporation: an imaginary entity, with rights and personhood but no responsibilities, which can be used to shelter businesspeople from the fallout of their unscrupulous activities or ill-advised risk-taking.

Well firstly the modern company has a responsibility – it can be sued. See the history of Microsoft or any other large company, they are forever being sued or suing each other.

Secondly, the other advantage of a company is that it can shelter businesspeople from the fallout of well-advised risk-taking that just happened to work out badly. The old rule was that if you put a single penny into a business venture your whole personal fortune was liable. This effectively restricted a normal, risk-averse person’s investments to those people they personally know and trusted thoroughly. The modern company allows the accumulation of large amounts of capital because it’s not quite so risky. How would you invest your grandmother’s retirement savings under each rule?

For some reason, traditional Islamic society frowns on gambling, extortion and ducking responsibility. Silly Muslims.

And yet, for some bizarre reason, they still have plenty of gambling, extortion and ducking of responsibility. I’ve travelled in Malaysia and in the US, I don’t think the inhabitants of either country can lay a claim to moral purity, wonderfully friendly though both groups of people are on the whole.

No gift will make a kid so thrifty as bad credit.

Get him 2!

My big concern about limited liability, is how it is being misused today in risky, leveraged investment (hedge funds). Rich people are allowed to take leverage bets without having to worry about paying for the downside. (Of course the Banks are allowing them to do this). It increases the level of risk in society. Yes this is potentially a positive thing, but at some point it is not. Leveraged financial bets are gambling not productive investment.

You must conform.

I’m afraid as far as I know Islamic law has no mechanism for recognising well-advised risk-taking that just happened to work out badly. There’s a contradiction inherent in the separation of investment from gambling: your grandmother is, hands down, a gambler when she puts money into someone else’s enterprise.

It does however allow you to control the amount of money you put at stake.

For example I’ve played blackjack at the Christchurch casino and there your potential losses are limited to the money you put on the table. If you bet $2 (the cheapest table’s minimum from memory), the most you are going to lose is $2.

Under the old rule of unlimited liability, however, if you put $2 into your mate’s shipping venture to Cairo, you were liable for your entire fortune. You could have lost your house due to a $2 stake.

Limited liability converted investing into business into more like normal gambling – losses could be limited to what you put in.

So imagine there’s an opportunity to invest some money in a company that’s investing in tidal electricity generation – risky as it’s not proven technology. They have a number of technical problems to solve, and you don’t know if they’re solvable. How comfortable would you feel about investing a few thousand of your ever-loving grey-haired grandma’s retirement savings if it meant she risked losing *all* her retirement savings, and coming to live with you for the rest of her days, bringing visits from all of her artistic friends who will hang around chain-smoking and drinking all your coffee while discussing producing all of Chekov’s plays back-to-back?

I am not sure what you mean about grandma having recourse against a living person – who exactly do you think pays when a company loses a legal battle? The shareholders in the company, or perhaps the managers. Or, if a government loses a legal battle, taxpayers. They’re living people. It’s just that their losses are limited by the legal device of a company (well, except for taxpayers). I may as well also add that I don’t see any particular benefit in having recourse against a living person – in NZ living people can declare bankruptcy and I know that everywhere in the world living people die.

Also, corporations do indeed have some kind of accountability, but both in kind and degree it’s a very far cry from the responsibilities of humans.

How?

I guess the US doesn’t have an equivalent of the UK Mail Preference Service – ie you sign up and no one is legally allowed to send you unsolicited mail?

Katherine: as far as I know, they do not, and probably won’t in the discernible future. They do have a no-call list for telemarketers, but something like that would be awesome to get in Canada.

Martin – it’s an analogy. I am not saying that gambling and investing is identical, just that they’re similar in some ways.

Plus the risks aren’t always known in gambling ahead of time. Are you sure that the dice are fair? Monte Carlo casino once discovered the hard way that they had miscalculated their risks. If a casino can get it wrong, why not other gamblers?

Corporations can create public hazards that are extremely undesirable. If the profit you as an investor can reap is not limited by law, but the liability is, you will always have a bias towards creation of such hazards.

Anyone can create public hazards that are extremely undesirable. That’s why we have regulations that range from requiring people to dispose of dead bodies in ways that reduce the risk of disease to requiring safety testing of drugs to seeking to limit the spread of nuclear weapons.

Experience however is that most people are risk-averse, so the possibility of unlimited profits is offset by the fear of losing all the money you put in in the first place. Large corporations are as much criticised for being too risk-averse as the opposite.

And governments don’t have limited liability, yet they have created many public hazards. For example, numerous haemopheliacs (not sure about spelling) in NZ were infected with HIV because the NZ government of the time delayed introducing HIV testing.

Since the invention of the limited liability company, life expectancy in the West has gone up considerably so the balance of the risks strikes me as on the upside. (Environmental damage is another problem, but in the planet-threatening cases that come to my mind, such as global warming, the problem is that society as a whole is reluctant to give up the activities that create CO2 and other greenhouse gasses, not that large corporations can’t be sued enough).

Richard – Under the old rule of unlimited liability, however, if you put $2 into your mate’s shipping venture you were liable for your entire fortune is no more relevant to it [Islamic law] that the marriage customs of the Nuer.

Luckily for me, my statement you quoted has nothing to do with Islamic law. It was explaining why limited liability was introduced in the first place in Europe. I probably thought of Cairo due to the earlier mention of Islamic law, and that I’ve just finished reading an Amelia Peabody mystery.

I’m also starting to prefer your grandmother and her beatnik friends to either of my own grans, who are dead.
Actually I was exaggerating. My Gran doesn’t let anyone smoke inside her house, which I suspect has a lot to do with why she’s my only surviving grandparent. She also makes friends with anyone so I wouldn’t be stuck listening solely to conversations on Chekov. It is very interesting going to see plays with her as she’s directed and produced so many over the years she always has some critical observations. However, I am on the whole biased towards her retaining her retirement savings.

“Are you sure that the dice are fair?”

Are you sure that your online stock brokerage is not going to simply empty your bank account? This is special pleading.

No it isn’t. You stated that the risks in gambling are known ahead of time. I pointed out they aren’t. Even a casino that made the rules and brought the machines found out it didn’t know the risks it was running.

A special pleading fallacy is where a person applies one set of standards, rules, etc, to one set of people, while applying a different to another without providing adequate justification for the difference. An example is:
“Barbara accepts that all murderers should be punished for their crimes.
Although she murdered Bill, Barbara claims she is an exception because she really would not like going to prison.
Therefore, the standard of punishing murderers should not be applied to her.” (http://www.nizkor.org/features/fallacies/special-pleading.html)

If I had argued that biased roulette tables counted as a risk of unknown size, but the risk of fraud by your online stock brokerage doesn’t count as a risk of unknown size (and had failed to provide sufficient justifcation for treating them differently), I would have been guilty of special pleading. Pointing out that gambling is like investing in that the risks are unknown is the opposite of the special pleading fallacy.

“Experience however is that most people are risk-averse”

Really? How on Earth is Vegas not still a mere desert? Any form of gambling with a “house” is a losing risk. People don’t seem particularly adverse.

Then how come the rest of America isn’t a desert? If people are risk-loving across the whole of their incomes, then they should be at Las Vegas, gambling away their money, not spending long hours say training to be a mechanic, or waiting tables, or fixing people’s teeth. Gambling only makes up a small percentage of the economy – there are compulsive gamblers, but most people restrict their gambling in some ways.

Correlation is not causation. That’s pretty basic.

Yep, I know that. But absence of correlation implies an absence of causation. For example, I think the final proof that mercury in vaccines isn’t causing autism is that mercury has been removed from vaccines in the US but there’s been no drop in autism diagnoses as the relevant age groups have reached the years in which autism is commonly diagnosed. There’s no sign of a correlation between the invention of limited liability and a decline in human lifespans so that counts as evidence that limited liability is not creating significant risks.

The rule is “correlation does not prove causation”, not “absence of correlation does not prove absence of causation”.

Thanks for the information about the US government. (And of course, the NZ government can always pass a law retrospectively clearing itself of liability).

Tracy, the law treats corporations are having minds. It grants them the right to intellectual property, to privacy (in the US through trade secret law), in fact, business plans are recognized as entities of worth, which can only be true if they have content. Business plans are the codified intentions of businesses, corporations if the business is incorporated. Although one could say that the “corporate mind” is but an emergent property of the structure, and that all that is really happening is human cognition, one could also say that human cognition is merely an emergent phenomenon of electrical and chemical interactions; under materialism, this is true in a sense, but does not provide a useful way to conceive of or deal with the mind.

For the third time, I am not arguing against limited liability, as your examples of attempting to distribute full liability among stockholders or taxpayers imply. I am arguing that given limited liability, a corporation’s claim to rights under the law can also legitimately be limited relative to a person whose liability is not limited.

As for lack of correlation disproving causation, you’re assuming 1) that human lifespan is a reasonable measure of all negative corporate effects one should worry about. That is a categorical claim that needs to be proved, not merely assumed. 2) that there are no other explanations for the increase of lifespan, or at any rate its lack of decrease, that are not attributable to limited liability. These are both absurdly broad claims. But if you want to make them, you have to go through and eliminate all other possibilities. Have fun.

It is special pleading to analyze investing only as it behaves under the law, and gambling as it may behave outside the law. In arguing the nature of the corporation, you are intrinsically arguing within the law, as, although corporations may break the law, the law is a necessary condition of their existence, and the penalties of which you speak are limited to legal remedies. If we’re going to go outside the law, we should also talk about the possibility of people personally targeting major stockholders. When you argue limited liability, you are assuming law is effective, and if you don’t assume the same for gambling, you are indeed applying “one set of standards, rules, etc, to one set of people, while applying a different to another without providing adequate justification for the difference”

The real difference between individual and corporate comes in how the liability is determined. For the individual, it is by the tort; for the corporate investor, the size of the investment. This is a real difference in that one is a function of the harm done, and the other is not. You don’t just get more money if the person who hit you is richer, not in any country I know; what you get is determined by the damage. Beyond that, there is the limit in both cases of ability to pay, although for the investor, that is actually the limit of the aggregate risked for all players, whereas for the individual, it is actually some legal determination of ability. This is a very real difference.

Tracy, being capable of being imprisoned is a function of having a body, not a mind. A person without a functioning intelligence can still be imprisoned.

“I am arguing that since human lifespans have risen since the introduction of limited liability then limited liability is not causing an increase in really serious hazards”

which is an argument you only make if a) really serious hazards are limited to those that would prevent increase of lifespan and b) that there are no countervailing factors at work during the historical period of interest. You have merely asserted, not argued, these points.

“Okay, what measure of human welfare do you think captures all the negative corporate effects one should worry about?”

I don’t need one, because I never said or implied that any single factor could suffice for such a measurement, or even that the problem was tractable. You did, so you have the burden of proof.

If you split a corporation into bits, you are left with individuals that function cognitively as individuals, not as a corporation. If you split the brain into neurons, you are left with neurons that, in an appropriate environment, could continue to function as neurons, not as a brain. Yes, you have moved around, and pig neurons can be placed in the brains of epileptics, but the component is not the emergent phenomenon.

An estate is not treated by the law as having plans, however, which is what business plans are.

If you don’t dispute that corporations should be on a different footing with regards to rights than individuals, then you have been arguing with me pointlessly, as that is what I have been arguing. Indeed, in my first post in this thread, I said:

“If it is economically useful to limit the liability, i.e., the responsibility, of people when they act as corporations, there may be good reasons to limit their rights when they so act as well.”

It is commonplace, however, at least in the US, and I would be surprised if this is not also true in NZ, to argue that rights such as free speech should apply to corporations under the same rationale as they do to individuals. What I am saying that is not necessarily the case; it may be so, but it is not necessarily. As for distinctions in rights between individuals, those are against the principles of liberal society. Abortion laws in most Western countries are, as you say, a violation of this, and there are others, such as the limited rights of children and other incompetents, and that is a whole other discussion, but such differences are not the general principle on which our society rests. If we accept liberal democracy, we attempt to minimize such differences.

“I’m not analysing gambling as it behaves outside the law. To the best of my knowledge the Christchurch casino I visited and the Monte Carlo casino are entirely legal by the rules of their own countries.”

OK, strictly speaking, I did say in gambling all risks are known, but if you actually do not know the law, then you do not know your risks. Thtat’ just your own lack of due dilligence. I suppose if I wanted to be really technical, I could have said all risks within the law could be known. However, you yourself defined special pleading as “A special pleading fallacy is where a person applies one set of standards, rules, etc, to one set of people, while applying a different to another without providing adequate justification for the difference”. Analysing gambling outside the law and limited liability within it certainly qualifies, save in the sense that neither are “people”, but that is merely an artifact of how you stated the fallacy, not something intrinsic to it. Although nothing important hinges on this point anyway, so it is probably not worth pursuing further.

“Then how come the rest of America isn’t a desert? If people are risk-loving across the whole of their incomes, then they should be at Las Vegas, gambling away their money, not spending long hours say training to be a mechanic, or waiting tables, or fixing people’s teeth.”

You stated without qualification that people tend to be risk-averse. Now, you want to insert qualifications. In any case, training for jobs, etc. also involves risk, there is little in life that does not, so people reasonably mix risk-averse and risk-seeking behaviors. But I am not the one who made a categorical statement on this point, you are. You said; “Experience however is that most people are risk-averse”. While you did not say “all people”, you did not qualify “risk-averse”, so you have to argue that they are not risk-seeking across any part of their income. I do not need to argue the reverse, because I did not make the categorical statement.

“Then how come the rest of America isn’t a desert? ”

Unless you’re positing a nuclear war scenario, I don’t see how people being less risk-averse automatically transforms the ecology of the country.