Otherwise we’re just back at “you can’t argue with a deontologist”.

@164: It’s hard for me to imagine a libertarian avoiding the conclusion that people who can’t produce value equivalent to the health care they need to survive have no right to survive at others’ expense. Most non-libertarians would put the right to survive above the right to own property, even when the former has to become a “positive” right rather than a “negative” liberty. It doesn’t seem like the kind of disagreement that can be resolved by argument.

OTOH, it’s also possible that some libertarians would agree that the current US health insurance industry’s practice of “we’ll sell you something that we convince you is insurance, even though in the fine print, it actually isn’t” is fraud and should be prosecuted as such, and repudiate the “fine print uber alles” doctrine of contracts.

We needn’t act like full liability corporation-like entities are mythical creatures. You want something that can function like a corporation save that it does not limit liability? It’s called a general partnership. Won’t find many of those in the Fortune 1000, unless they are general partnerships whose members are themselves corporations (you might find limited partnerships, but the “limited” there stands for “limited liability”, so those too are vehicles for constraining responsibility). Why aren’t General Electric and General Mills general partnerships? After all, the government provides a breathtaking tax advantage: general partnerships are not taxed, the owners only pay taxes on those profits they take as income, whereas, in regular corporations, both the corporate profit and the individual income are taxed (the infamous “double taxation”). Limited liability is so strong an advantage that big businesses and even many small ones routinely leave this money on the table. It also enables them to have millions of owners, with the access to capital that implies. Millions cannot be directly involved in management. Even through elected representatives, the amount of information fully liable investors would need to rationally invest would be much greater. Therefore, the transaction cost of investing would be much higher and people would do less of it. Transferring money from one investment to another would require a great deal of research and compensation for the increased risk.

Which, of course, gets us to why you couldn’t have a functioning stock market of general partnerships, each with potentially millions of members. The liquidity of having capital moving second to second from place to place is possible because each investor has perfect information about the maximum extent of his losses: it is expressed in the price. This makes the market a much more efficient information sieve than it would be otherwise. And, of course, the market itself confirms this. If a stock market of general partnerships were viable in comparison to what we have, why don’t we have one:? There is no legal obstacle I know of.

Chris,

What you’re proposing is basically to make the socialization of risk explicit and codified, with the government as the ultimate underwriter (as it would have to be). I think that would be better than the status quo, but would add that if society is going to undertake risk on behalf of private entities (which it does under limited liability anyway), it has the right to make demands in return, which are not necessarily limited to those necessary to minimize said risk. A corporation under society’s protection can be legitimately required to pay for that protection by serving the public interest in specified ways, even at the expense of its own.

But I don’t see any of that as consistent with Libertarian principles. It’s much more a social democratic kind of solution.

I think that’s a difficult question to answer because the owners of Lehman Brothers weren’t actually making the decisions that caused Lehman Brothers to behave the way it did. So basically it hinges on whether or not professional business managers would be able to take over governance of non-limited-liability companies in the way that they actually have taken over limited-liability ones, which I don’t think I can predict with any reliability. If the officer qua officer isn’t on the hook for the excess liability, then his incentives haven’t changed; the owner has a stronger motive to scrutinize his actions more closely, but no enhanced capability to do so effectively, compared to the status quo.

And that’s even under the assumption that Lehman’s management’s risk-taking was intentional rather than delusional. I don’t have specific knowledge either way on that, but obviously both kinds of problems occur regularly with corporations.

I think your point about the externalities of corporate bankruptcy is a good one, but couldn’t it also be solved in practice by imposing a Pigovian tax on limited liability corporations and using it to establish a fund that fills the gap in bankruptcy so that all creditors are made whole? (Or possibly all non-bond creditors, declaring bonds junior to all other non-equity obligations in bankruptcy, and then bond buyers can decide how much their risk is worth.) This would allow the individual investor to still be protected from losing more than all of his investment, and thereby prevent Martin’s doomsday scenario in comment 157, while also protecting the counterparty/creditor/tort victim from losses imposed by a shortfall of assets in bankruptcy. Such an “insured corporation” (with the government acting as insurer) would provide the investor with the security of limited liability and the creditor with the security of guaranteed full satisfaction. Since TANSTAAFL, the tax is necessary to achieve this goal. But it seems obviously worth it compared to the status quo, if the capture of our political system by corporate managers didn’t make it politically impossible.

Interesting, but (as you might expect) I disagree. I guess I simply am not convinced that the consequences of scrapping limited liability would be what you say they are. I don’t understand how it follows that there will be no functioning stock market or ability to raise capital. (Just to make sure we’re on the same page, I take limited liability to be the principle that shareholders are not liable, beyond the value of the shares they own, for the debts – be they contractual obligations or damages – of the corporation of which they are part-owners.) Now, if this were replaced overnight by some sort of principle of full liability, I have no doubt that some ventures would find it more difficult to raise capital and some would find it easier; those who have more trouble raising capital would naturally be the ones which involve more risk and a greater potential liability for their shareholders. In short, a nuclear power plant would have more trouble raising capital, and would have to pay a higher rate of return for it, than a supermarket would. But this seems to me to be a feature rather than a bug: it’s important to emphasise that in the current system that risk is still there, but merely externalized by the legal system. Holding shareholders responsible for the costs imposed by the company they own seems to me like it would be a great improvement.(question: if the owners of Lehman Brothers were ultimately responsible for all the debts incurred by the company, do you think it would have behaved the way it did?)

I think this also explains what you see as libertarian duplicity, or insincerity. In an ideal world, I suspect there would be organizations taking advantage of the same economies of scale that corporations currently do, just without the legal privileges that corporations are currently granted. I don’t know exactly what it would look like, and I take Kevin Carson’s arguments that many of these economies of scale are illusions created by state subsidies seriously without subscribing to them entirely. It could be worker-owned co-operatives filling the gaps, for all I know (I would have expected lefties like you to be more sensitive to the potential distorting influence of granting special privileges to one form of organization over another – it surprises me a little to be the one defending co-ops against a CT commenter, but there we are!) But the point is that some ‘corporate interests’ are plainly legitimate, and some are not; I don’t see any reason why libertarians should pretend that corporations do not have any legitimate interests whatsoever, and for me at least, the legitimate ones are roughly the interests which they (or their limited-liability-free counterparts) would plausibly have in a counterfactual ideal world.

…there just isn’t a case to be made against reform unless it’s this simple one: if you don’t have any money, you shouldn’t be entitled to any medicine.

Universal healthcare is a public good. This is fully demonstrated in the real world. The glaringly obvious example is an epidemic. Would you care to read some history of epidemic diseases? Check out J.N. Hays, a professor emeritus of history at Loyola. (Note: I make no claims as to whether his science is accurate, as I haven’t checked.)

If you really want an epidemic across North America, let those without the money go without any care. The official figure for illegal immigrants in the US is 12 million (correct me if I’m wrong). I blink a little when I read that people are seriously proposing to cut off all healthcare to illegal immigrants, and limit what is available to legal immigrants. Take that 12 million and add the homeless, and the vulnerable population that has no healthcare. Add to that the population of twits who think all vaccinations should be optional. (I’d like to crack the numbers, but not now. Feel free if you have the stats at hand.) That should add up to a fairly substantial slice of the population of the US —enough to be vulnerable to an epidemic. For those who want to argue about population density of this group, limit the numbers to New York or Chicago.

The middle class and above, defined as “those who can pay for their health-care”, do not live in a bubble. Your health is dependent upon the population you interact with. The CDC is funded by the government for a reason, no? And it is widely acknowledged that preventive medicine is much cheaper than emergency care.

So, pay for universal healthcare of people you don’t like, or suffer the consequences—in higher health care costs, in overwhelmed emergency medical care, in epidemics and the costs of treating a national health-care emergency. And, well, you’ll probably contract the epidemic disease, spend a small fortune getting the best of care—and you might die anyway. To me, this seems a high cost for hanging onto libertarian principles. (I’ve never met anyone who did practice those principles, other than principle number one of whinging about their taxes.)

And Canadians interact with the Americans enough to qualify as part of the geographic population. Take care of your problems, please.

Dan,

Yes, some Libertarians do attack limited liability ( although the Russell Long article you linked to just had a footnote stating LL was controversial among Libertarians, and then stipulating it as legitimate. It mostly is arguing that government is intrinsically responsible for the existence of big business, a completely different argument). They do not, however, from what I have seen, follow through with the consequences of that position. Limited liability is why the corporation exists. Without it, there is no corporation as we know it. There is no stock market. No ability to raise huge quantities of anonymous capital well beyond what a small group of owners could manage on their own. Vastly reduced liquidity. In short, no modern Capitalism. Without this huge mobilization of capital and the research and technology, as well as economies of scale, that can come from it (especially if you exclude the government from mobilizing capital or doing research as Libertarians are wont), most of the benefits of modern Capitalism would not be possible.

Yet Libertarians claim the successes of actually existing Capitalism as successes of their philosophy. Calls for cuts in regulation or taxes imposed on corporations seem never to mention that the corporation should be abolished. The limited liability position seems dragged out only to explain what Libertarians would advocate in place of regulation in cases where regulation seems necessary – in the wake of Exxon Valdez, or the recent financial debacle. But at no other time do Libertarians seem to suggest that Exxon and Citigroup have no right to exist; instead their interests seem to loom rather large as aspects of “liberty”.

Many of us on the Left accept limited liability for its practical advantages, but recognize that corporations, being not fully responsible entities (liability is just a legally-enforceable form of responsibility) are not entitled to full rights either. Therefore, we are untroubled by restrictions on corporations that are not legitimate to impose on individuals. Others reject limited liability, while embracing the logical consequences: opposition to the corporation as such, which is manifest in opposition to public recognition of the legitimacy of “corporate interests”. Both of these are more consistent than the Libertarian position.

Then the hospital tries to get compensation from Medicaid (not Medicare) for the services rendered—at a loss and not in all cases, but better than nothing. This I know from doctors who have treated me and deal with this daily. So the services performed under the current screwed up USA health insurance scenario are being performed generally for all. It is just that the costs are hidden in the foregone income to hospitals and the like. And preventative care is consequently a joke for the uninsured.

The problem of course is the waste and extra expense to treat people at later stages. So Megan McCardle, if she were between insurance coverages, could still have an sever medical problem. go to emergency, and be treated and she may never see even the bill. It’s the people with some insurance who have the problem here if their coverage is found retroactively to be deficient by their insurance companies.

Spoken like a person who has not been exposed to medical insurance bills, which have been going up by 10-20% per year. Yes, public healthcare will probably cost more than expected; private for-profit healthcare will cost HUGELY more than expected.

We’re not comparing “government-based healthcare costs that are bad” with “no healthcare costs” but with “already-exploding health care costs”; we’re not comparing “government bureaucracy” with “no bureaucracy” but with “multiple overlapping corporate bureaucracies”.

I will leave to the student to see how many of the libertarian arguments made here support my theory that libertarians don’t believe humans are social animals.

Of course, they hotly deny that this behavior is in any way doctrinaire or unreasonable.

Severe asthma is a condition which, if not adequately controlled, is very likely to result in emergency admission to hospital in extremis, probably involving an ambulance call-out. This is the absolutely most expensive way of providing healthcare anyone has ever invented, and in the US, the costs fall in the first instance on the taxpayer…the difference here is between a couple of hours of GP consulting room time and a few bucks’ worth of ventolin or a corticosteroid, and wheezing until you turn blue and have to be blued-and-twoed into the nearest casualty department for a night’s oxygen and powerful intravenous drugs and the valuable time of a consultant A&E physician.

She has said this – and that she has in the past gone without health insurance and still opposed government healthcare – but for me that doesn’t really strengthen her case. As I commented earlier,

Anyone prepared to sacrifice their own health to their politics is out of the discussion, as far as I’m concerned.

“No, not the government lifebelt! Somebody else throw me a lifebelt! I’ll pay you later!”

Europe can use collective bargaining to get lower drug prices, but it is acting as a free rider on the innovation that the American market funds. … without the American market to drive innovation, there wouldn’t be nearly as many new drugs or innovations …

I’m not sure that “collective bargaining” quite captures what you’re thinking of. Pharmaceutical companies are not especially worried about differential pricing per se. What they worry about is the fact that once a company has made a drug and shown that it works, other companies can copy what the original company did, and they become free riders on the originator’s R&D. IP counters this by granting a company a (temporary) monopoly. However, patent law varies from country to country. This can open the door to pharmaceuticals arbitrage: drugs (either repackaged or generic copies) are imported via a third party to a country where a drug company would like to sell its original branded drug at a high price. Allow too much of this and you might discourage R&D. On the other hand, it might be very much a country’s interest to allow the distribution (at a low price) of a generic version of a drug. South Africa has done this with AIDS drugs. So there is a tension between encouraging R&D (for longer term benefit) and promoting access to something which might be of great benefit right now.

It seems to be already the case that the potential for pharmaceuticals arbitrage between EU nations has resulted in drug companies giving up on differential pricing in those markets. To the extent that this has happened, it’s a consequence of how the EU has implemented patent law. It’s not clear to me how healthcare reform in the US would affect things either way. Even if the US government were to become a larger purchaser of drugs than it is today, that doesn’t entail a commitment to altering US IP law, thus precipitating a flood of generic drugs imported from elsewhere. As a bulk buyer, it could decide to bargain hard; then again, it could decide that bargaining too hard will constrain the US pharma industry. Isn’t this what already happens with defence procurement?

The problem with some of the socialistic price controls is that they’re only functional when some other market exists where a profit can be made.

I think you’re on the edge of a category error. The US isn’t the world, and even if the US were to commit to broader state provision of healthcare it would remain a customer in a global marketplace. Just because I decide who gets the cookies in my house (I don’t, actually) doesn’t mean I get to set the price at the grocery store.

Similarly, in the short term you can limit what doctors get paid.

This already happens everywhere.