Loss Socialization from Entrepreneurs – Criminal v Capitalist

Imagine, for a moment, that the concept of the limited liability company was applied not only to corporation law, but to criminal law, and conversely, that the notion of being responsible for the result of one’s actions applied to capitalist activities.

The unspoken purpose of limited liability in corporate law is to socialize risk, turning the worst liabilities of improper, sharp, or negligent practice into burdens on the community, in particular, the most vulnerable in society.  Modern capitalism could not exist without this institutionalized moral hazard.

The whole point of limited liability is that only the investment is at risk, there is no real impact on investors if liabilities, including damages to others, far exceed the assets of the particular construct called a company.  The James Hardie asbestos "settlement" demonstrates just how hard it is to extract compensation for damages – and it only succeeded because the company did not fold completely.

A gang of armed robbers is a group of investors that expects a return from activity.  The investment in their enterprise is little more than the cost of weapons, a getaway car, and a few balaclavas.  If only these investments were at risk, and that "plant and equipment" subject to asset-stripping, then there is no incentive for the enterprise to avoid damage to others – indeed, there is incentive to kill as many witnesses as possible to both avoid detection, and to increase the intimidation that promotes victim compliance.

Dynasty

Little Johnny Rat… Kevin Rat… who’s next?

Crown him? – that; –
And then, I grant, we put a sting in him,
That at his will he may do danger with.
The abuse of greatness is, when it disjoins
Remorse from power: and, to speak truth of Rattus,
I have not known when his affections sway’d
More than his reason. But ’tis a common proof,
That lowliness is young ambition’s ladder,
Whereto the climber-upward turns his face;
But when he once attains the upmost round.
He then unto the ladder turns his back
Looks in the clouds, scorning the base degrees
By which he did ascend. So Ratti do.
Then, lest he may, prevent. And, since the quarrel
Will bear no colour for the thing he is,
Fashion it thus; that what he is, augmented,
Would run to these and these extremities:
And therefore think him as a serpent’s egg
Which, hatch’d, would, as his kind, grow mischievous,
And kill him in the shell.

The fault, dear voters, is not in our leaders, but in ourselves, that we are underlings.

Polis for our time

There must be a photograph or video clip of Kevin Rudd taken in the last few days that will become as much a symbol of failure and stupidity in Australian history as the English have with Neville Chamberlain coming out of a plane, waving a piece of paper that was the result of meetings with Hitler, and proclaiming "Peace for our time" later at Downing Street.

Perhaps the only thing stopping such a striking photo or clip is that KRudd’s can’t make such clear remarks when announcing policy, only when speechwriters put words like "greatest moral challenge of our generation".

I wonder how long it will take for some Oz comic to put together a clip of KRudd similar to the John Cleese and Peter Cook spoof of Chamberlain with his spin doctor.

The analysis of Cleese is brilliant – "I hold in my hand a piece of … sh*t", as Cleese loses it.  Rudd has lost his grip too… and the policy is sh*t.

However, we must remember not just Chamberlain and Rudd proclaiming failure as victory, we must remember the cheering crowds in 1938 Downing Street, we must remember all those in 2010 who cheered or even ho-hummed Rudd’s appeasement of planet-destroyers.  Doubtless there are few, if any, of the 1938 crowd who would confess their cheers a few months later.  Doubtless there are few, if any, of the 2010 population who will confess their cheers and ho-hums a few years hence.

This all points to what could be called the greatest moral and intellectual challenge of human history – how a population of a country or planet can choose wise, honest, and steadfast leaders, then how that population can let such leaders do what needs to be done in the long-term interest of all.