Vinay Gupta has a fascinating article on WorldChanging that characterizes limited liability corporations as a form of government subsidy (because otherwise, these companies would have to take out expensive liability insurance). Gupta posits that thhis creates a "perverse incentive" to do bad things, like pollute, and wonders aloud what would happen if LLCs were phased out:
What if we phased out limited liability? Suppose, for example, we made shareholders liable for up to 1% of their assets in corporate bankruptcy cases - you can lose up to 1% of your net worth to cover the unpaid debts of corporations in which you own stock. Would that change shareholder behavior to less risky investments? Would it cool the economy - or increase corporate responsibility at no cost to the tax payer?
Could regulating the degree of investor protection become one way of pulling corporations back into line when corruption becomes rife? Would ENRON have happened if shareholders had been even partially liable?
I'm not enough of an economist to really understand the implications of this idea, but I'd like to open the floor up to discussion: is viewing limited liability as a subsidy to the investor a valid way of thinking about it, and is reducing that subsidy to the investor a plausible way of making our economy a little more risk-averse and therefor environmentally responsible?
Graham Clark, the 17-year-old Florida boy accused of pulling off the big Twitter hack, pled not guilty to charges on Tuesday. During the security breach, top accounts including Democratic presidential candidate Joe Biden and Tesla/SpaceX CEO Elon Musk were taken over to push a bitcoin scam.
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The UK government today ordered domestic companies to stop buying equipment from Chinese vendor Huawei and to stop using its kit entirely by 2027. Huawei is suspected to be an arm of the Chinese government, breaking into western markets (and maybe its networks) by selling impossibly cheap equipment. The UK only recently approved more Huawei […]
“The way to have power is to take it.” — Boss Tweed. We think an 18th-century political power broker probably had a different definition of power in mind when he made that statement, yet the sentiment still applies. We’ve all got devices all but falling out of our pockets and the need for power to […]
If the last 50 years of education have taught us nothing else, it’s that it often requires different tactics to best reach different learners. To pick up a foreign language, some students take best to the old-school high school language lab method, using heavy repetition, verb conjugation and grammar emphasis to embed a new language. […]
For those who want a career in video games, there’s no reason to sit around and wait. EA and Rockstar Games probably aren’t going to seek you out and knock on your door with a job opportunity. But if you’re an indie developer with a good idea and some passion, you can create a really […]