mellyrn on May 13, 2011, 08:14:45 am
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One of the reasons why contract is so important in the ordering of human affairs is that predictability is valuable.

It's funny.  It's so cute.  The agents write up their contract to be all nice & tight & predictable, so both (or all) parties know what they're getting into, and then in practically the next breath someone is violating the contract while arguing that he's in compliance.  Is he in compliance?  Go to court and find out.  If the court rules that he is, then the other party didn't really know what he was getting into.  If the court rules that he is not, the other party still didn't know, since "going to court" was probably not in his plans.  And whichever way the court rules, there is -- in modern America, at least -- the possibility of an appeal.  We won't know what the contract meant until all interested parties have, um, lost interest.

It doesn't matter what the contract says -- you won't know what you're getting into it until you're in it.  The predictability of complex systems (and human relations are awesomely -- and irreducibly -- complex) is notoriously phantasmal.

In my world, the wish for (open, admitted) anarchy is the wish that people will man up and accept that:

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    So far as the laws of mathematics refer to reality, they are not certain. And so far as they are certain, they do not refer to reality.

    Albert Einstein: Geometry and Experience

And by (open, admitted) I mean:  what we actually, demonstrably do, in a state, is not so very different from what's proposed in the absence of the state . . . with the difference that there is no state power for state agents to use and abuse.

quadibloc on May 13, 2011, 08:35:46 am
It's funny.  It's so cute.  The agents write up their contract to be all nice & tight & predictable, so both (or all) parties know what they're getting into, and then in practically the next breath someone is violating the contract while arguing that he's in compliance.  Is he in compliance?  Go to court and find out.
People hope, when they enter into a contract with someone, that the other party is honest and doing so in good faith. The contract is written carefully so as to function as a safety net in case that is not true. The more reasonable and honest judges and courts are, the better that safety net will work.

The fact that safety nets are imperfect does not make it irrational to use them instead of doing without. So, since I don't see irrational behavior, I don't know what there is to laugh at.

J Thomas on May 13, 2011, 08:38:36 am

The more I give it thought, the more convinced I've become that limited liability would not be possible in an AnCap society. The conditions required to make such a "legal fiction" work - the evasion of responsibility for injuries inadvertently inflicted upon other people - simply cannot exist in the absence of a government. 

People in the Belt would have to act at all times and in all ways with a great sense of consequence.  With the unimpaired authority to act must come the unabated responsibility to deal with adverse eventualities resulting from those actions.

I think you're right in principle. But when people use language they almost never use it in exactly the same way, and trying to pin down definitions only compounds the problem. Mutual understanding is often more poetic than otherwise.

So, the purpose that encourages people to support limited liability laws is that they want not to be held responsible for things they actually are not responsible for. Say you are a minor partner in a business. You live in San Francisco. A low-paid employee of the corporation in Washington DC makes a mistake that injures thousands of people. And the lawyers sue *you* for everything you've got. We don't want that.

There could be methods that tend to prevent that sort of travesty, without government force. Those methods could be called "limited liability".

You could be completely correct, and still Sandy could have a point claiming that liability is not always completely unlimited.

I expect that whatever you do *yourself*, you will be completely liable for. You can't divide yourself up into ten corporations and hire yourself by one corporation at a time so that whatever you do cannot lose more than 10% of your net worth.

But you are not always completely liable for what your employees do without your permission. And you are not always completely liable for the details of what people do as side effects while fulfilling contracts for you. Etc.

J Thomas on May 13, 2011, 08:47:29 am
People hope, when they enter into a contract with someone, that the other party is honest and doing so in good faith. The contract is written carefully so as to function as a safety net in case that is not true. The more reasonable and honest judges and courts are, the better that safety net will work.

The fact that safety nets are imperfect does not make it irrational to use them instead of doing without. So, since I don't see irrational behavior, I don't know what there is to laugh at.

Consider the Ebay alternative. You buy something for $10 and the seller does not deliver. Do you sue him for your $10? No, it isn't worth it. You do add your name to the list of people who had bad experiences with him. Presumably he lies and adds your name to the list of people he has had bad experiences with.

When you do business in the future, you try to avoid people who have had a lot of problems. You avoid people who have had more than their share of bad reports made on them, and you avoid people who have made more than their share of bad reports. Either one is more likely than usual to be trouble.

This safety net is decidedly imperfect. But consider how much it costs versus how much it delivers, versus the lawyer approach....

mellyrn on May 13, 2011, 09:09:53 am
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The fact that safety nets are imperfect does not make it irrational to use them instead of doing without. So, since I don't see irrational behavior, I don't know what there is to laugh at.

The irrational behavior I see is in believing that the safety net -- the apparent safety net -- changes anything.  Even the most honest and impeccable of judges can sincerely disagree about the meaning of the terms in a law or contract.  So, whether we have a body of laws and a system of dedicated enforcers, or whether we don't, we're going to need arbitration sooner or later.  Seems to me like the same process, except that one has a lot of baggage and the other doesn't.

The amusement I find is that contracts were cited for predictability.  Heh.

I'd want to write a contract if you and I were going to do anything together.  It will certainly serve as a memory aid.  And I wouldn't be at all surprised if, down the way, either one of us had to go to the other and say, Does [this] count?  I'd be surprised if we didn't.

Does that help?

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This safety net is decidedly imperfect. But consider how much it costs versus how much it delivers, versus the lawyer approach....

I wish I'd written that.

Tucci78 on May 13, 2011, 11:18:16 am
The more I give it thought, the more convinced I've become that limited liability would not be possible in an AnCap society. The conditions required to make such a "legal fiction" work - the evasion of responsibility for injuries inadvertently inflicted upon other people - simply cannot exist in the absence of a government. 

People in the Belt would have to act at all times and in all ways with a great sense of consequence.  With the unimpaired authority to act must come the unabated responsibility to deal with adverse eventualities resulting from those actions.

I think you're right in principle. But when people use language they almost never use it in exactly the same way, and trying to pin down definitions only compounds the problem. Mutual understanding is often more poetic than otherwise.

In any field of human endeavor, technical language - contemptuously dismissed as "jargon" - is developed in order to reduce such confusion (and to foreclose shyster duplicity) by increasing specificity and precision.  This helps to mitigate the errors of interpretation. 

Effort invested in "trying to pin down definitions" is, in fact, precisely what's required to solve the problem. 

So, the purpose that encourages people to support limited liability laws is that they want not to be held responsible for things they actually are not responsible for. Say you are a minor partner in a business. You live in San Francisco. A low-paid employee of the corporation in Washington DC makes a mistake that injures thousands of people. And the lawyers sue *you* for everything you've got. We don't want that.

There could be methods that tend to prevent that sort of travesty, without government force. Those methods could be called "limited liability".

Nope. There must be a government - a "standing army" ready to intervene with aggressive violence in human affairs - operating to provide any "limited liability" in the sense where we're using the expression here.

Were a collective enterprise - that Mordor-on-the-Potomac "business" in which the San Francisco resident is invested - to cause harm to someone in its proximal area of operations, what we're speaking about is an arguable violation of individual rights perpetrated (whether deliberately or inadvertently) by the agents of the business. 

The concept of "limited liability" is nothing more than the intervention of government thugs to prevent the enforcement of the injured parties' rights.

In an AnCap society, "no government" means "no limited liability."  No way, no how, no matter what the guy in San Francisco (or anybody else) might want. 

You could be completely correct, and still Sandy could have a point claiming that liability is not always completely unlimited.

I expect that whatever you do *yourself*, you will be completely liable for. You can't divide yourself up into ten corporations and hire yourself by one corporation at a time so that whatever you do cannot lose more than 10% of your net worth.

But you are not always completely liable for what your employees do without your permission. And you are not always completely liable for the details of what people do as side effects while fulfilling contracts for you. Etc.

No, I'm pretty well convinced that Sandy is wrong, both because he hadn't really thought this issue through and  because he's now obstinately refusing to admit that he's trying to build his argument on a foundation with the tensile strength of an aerogel.

Anybody who has ever employed people understands the concept of "chain of command" liability, even if he's never been sued for some error or malefaction committed by one of his employees. There are always questions that need to be settled about responsibility both direct (was the damage done while the subordinate was following procedures and implementing policies that you had ordained?) and indirect (was your employee being supervised to within a "reasonable" degree in order to prevent misadventure?), but if you own the business - even just a piece of it - it's your responsibility. 

That's why even limited liability companies issuing common and preferred stock have stockholders' meetings which not only have to vet major policy decisions but also provide for the election of directors who are supposed to embody the everyday exercise of the owning stockholders' responsibility to supervise the employees managing the business. 

Unlike Sandy, who's been weaseling about how "limited liability" might be secured in an AnCap society (it ain't gonna happen, folks), I know of one way in which it should be possible for a business enterprise to gain capitalization from the fat cats and the small fry alike without vesting ownership responsibilities in those who provide the valuta. It's got plenty of precedent.

Remember, buying stock in a corporation makes you a part owner of that corporation, and to the extent that your share of that company is a fraction of the corporation's liabilities (as well as its assets), you are - or you sure as hell ought to be - responsible for what your employees do or fail to do, acting as your agents.

Such businesses, however, routinely take out loans, some formally secured by stipulated assets, some unsecured.  The issue of corporate bonds is nothing more than floating a loan, with the promise to pay at a certain rate of interest during a specified period. The secondary market value of such bonds tends to depend upon the perception of the issuing company's relative reliability as a payor.  "Good" companies' bonds sell at a premium.  Corporations perceived as unreliable or declining in their market performance have their outstanding instruments of debt discounted in this secondary market, and when they come again before the public to take out subsequent loans, they either have to offer higher rates of interest or they're diddled.

Instead of you "buying a piece of the action" in becoming a stockholder, you either lend directly to the owners of the enterprise by purchasing a bond (in whole or in part) from them, or you take part in the loan indirectly, by way of the secondary market. 

You do not get to make decisions as a part-owner of the business, but you also don't have to worry about being dispossessed of your personal property to compensate somebody injured by one of the enterprise's employees. 

Your liability in case of an adverse outcome is limited to what you've lent the business, when and if the owners of the business default on those loans.

Because "limited liability" is impossible in an AnCap society, I tend to go along with writer L. Neil Smith, who has observed that a libertarian sociopolitical system would be the first genuinely adult society in the history of the human race.

"I is a great believer in peaceful settlements," Jik-jik assured him. "Ain't nobody as peaceful as a dead trouble-maker."
-- Keith Laumer, Retief's War (1966)

J Thomas on May 13, 2011, 01:20:35 pm
The more I give it thought, the more convinced I've become that limited liability would not be possible in an AnCap society. The conditions required to make such a "legal fiction" work - the evasion of responsibility for injuries inadvertently inflicted upon other people - simply cannot exist in the absence of a government. 

People in the Belt would have to act at all times and in all ways with a great sense of consequence.  With the unimpaired authority to act must come the unabated responsibility to deal with adverse eventualities resulting from those actions.

I think you're right in principle. But when people use language they almost never use it in exactly the same way, and trying to pin down definitions only compounds the problem. Mutual understanding is often more poetic than otherwise.

In any field of human endeavor, technical language - contemptuously dismissed as "jargon" - is developed in order to reduce such confusion (and to foreclose shyster duplicity) by increasing specificity and precision.  This helps to mitigate the errors of interpretation. 

When you devise definitions of increasing precision, you leave it increasingly unclear what happens at the edges. There is a natural tendency to apply the precise definitions to situations where they are increasingly inappropriate. And also a natural tendency to believe you understand things that in fact you do not.

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Effort invested in "trying to pin down definitions" is, in fact, precisely what's required to solve the problem.

I can't say that it's useless. But it's a perilous task to create useful definitions, and then a perilous task to apply them. The more certain you can be that you have shared meanings, the more likely it is that all the participants who share the meanings are deluded, that they agree about phantoms that are not particularly real.

Still, what's the alternative but to admit that we often have barely enough common ground to reach agreements that mesh? Perhaps we interact and I have a completely different concept of what it means than you do, but we both come out satisfied.... I've heard that most happy marriages are this way....

So, define away. The alternative is almost unthinkable.

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There could be methods that tend to prevent that sort of travesty, without government force. Those methods could be called "limited liability".


Nope. There must be a government - a "standing army" ready to intervene with aggressive violence in human affairs - operating to provide any "limited liability" in the sense where we're using the expression here. ....

The concept of "limited liability" is nothing more than the intervention of government thugs to prevent the enforcement of the injured parties' rights.

Well, may be.

Here's my view of American laws:  Imagine a giant software project that has been developed over a period of 200+ years by many thousands of programmers. It contains tens of thousands of kludges. When somebody thinks they see a bug they design a quick patch. Every now and then whole sections have had major overhauls, resulting in big clusters of new bugs which got quick patches.

Experienced users know about many of the ways to make it crash, and they carefully avoid them. Inexperienced users have no hope, and typically do not pass bar exams.

When you find code that looks real bad, you have to be careful about fixing it. Because almost certainly it was put there to patch over a bug that users hated, and if you remove it you will likely get the old bug back. Or maybe other random patches have mutated the old bug into something new and different.

If you are assigned the task of maintaining this monstrosity, do you leap with enthusiasm and click your heels and say "I know just which injustices to fix first!"? Or do you take sick leave while you look for a way out?

The whole thing needs to be scrapped and rebuilt from scratch. But the users say they have trillions of dollars "invested" into creating it, and they can't stand to lose their investment....

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You could be completely correct, and still Sandy could have a point claiming that liability is not always completely unlimited.

I expect that whatever you do *yourself*, you will be completely liable for. You can't divide yourself up into ten corporations and hire yourself by one corporation at a time so that whatever you do cannot lose more than 10% of your net worth.

But you are not always completely liable for what your employees do without your permission. And you are not always completely liable for the details of what people do as side effects while fulfilling contracts for you. Etc.


Anybody who has ever employed people understands the concept of "chain of command" liability, even if he's never been sued for some error or malefaction committed by one of his employees. There are always questions that need to be settled about responsibility both direct (was the damage done while the subordinate was following procedures and implementing policies that you had ordained?) and indirect (was your employee being supervised to within a "reasonable" degree in order to prevent misadventure?), but if you own the business - even just a piece of it - it's your responsibility.

I can imagine that. Still, if you are in San Francisco competently supervising your part of it, and somebody in DC has a one-in-a-million accident, why is it your fault? If that *is* your fault, then you have a strong incentive not to own anything you can't supervise your own self. After all, WalMart has about 2 million employees, so one-in-a-million accidents will happen every day for them.

So that's one approach -- get rid of great big companies.

One way to get similar results to big companies is to create a web of contracts among small companies and proprietors. If you are in San Francisco and you contract with a company near DC to provide you with X number of widgets at Y cost, and they become liable for some horror, should you be sued? Because you didn't supervise them well enough? It isn't your job to watch them do their work, it's your responsibility to pay them for their performance.

This has overhead that large corporations don't pay. You have to repeatedly renegotiate with lots and lots of people about interactions that would otherwise be internal to the company and could be simply done top-down. On the other hand it's far easier to decrease the size of your contract with one company and increase that with another than it is to fire a bunch of employees. Maybe the negotiation is worth what it costs.

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Instead of you "buying a piece of the action" in becoming a stockholder, you either lend directly to the owners of the enterprise by purchasing a bond (in whole or in part) from them, or you take part in the loan indirectly, by way of the secondary market. 

You do not get to make decisions as a part-owner of the business, but you also don't have to worry about being dispossessed of your personal property to compensate somebody injured by one of the enterprise's employees. 

I completely agree! But, your example is the paticular tradition of the loan. What if instead it is a more general contract? You provide X amount of money for a fixed period or an indefinite time. They provide you with Y, where Y could be a fixed payment or could be a fraction of their profit, or something else. If they give you a fixed fraction of profit then you have something kind of like nonvoting common stock, where the loan is more like nonvoting preferred stock. What they give you for your money could be anything except ownership, provided both parties agree. Does that seem OK to you?

SandySandfort on May 13, 2011, 01:47:24 pm
Still, if you are in San Francisco competently supervising your part of it, and somebody in DC has a one-in-a-million accident, why is it your fault? If that *is* your fault, then you have a strong incentive not to own anything you can't supervise your own self. After all, WalMart has about 2 million employees, so one-in-a-million accidents will happen every day for them.

The short, cynical answer is "deep pockets." If a WalMart employ is negligent and someone gets hurt, the employee is the morally responsible person, but he is slim pickings. He works at WalMart for Pete's sake. So even though WalMart provided adequate training, equipment and careful employee selection--in short did nothing wrong--they get sued. Not because they were at fault, but because they are a juicy victim whom juries can rob to pay off the little old lady whom they feel sorry for. It is not fair, but that is the way it works under the current systems.

J Thomas on May 13, 2011, 02:30:01 pm
Still, if you are in San Francisco competently supervising your part of it, and somebody in DC has a one-in-a-million accident, why is it your fault? If that *is* your fault, then you have a strong incentive not to own anything you can't supervise your own self. After all, WalMart has about 2 million employees, so one-in-a-million accidents will happen every day for them.

The short, cynical answer is "deep pockets." If a WalMart employ is negligent and someone gets hurt, the employee is the morally responsible person, but he is slim pickings. He works at WalMart for Pete's sake. So even though WalMart provided adequate training, equipment and careful employee selection--in short did nothing wrong--they get sued. Not because they were at fault, but because they are a juicy victim whom juries can rob to pay off the little old lady whom they feel sorry for. It is not fair, but that is the way it works under the current systems.

At first sight that looks morally wrong.

How about this -- The little old lady trusted WalMart. WalMart trusted the slim-pickings employee. So let the little old lady get paid by WalMart who abused her trust, and let WalMart recover what it can from the employ who abused WalMart's trust. Is that kind of fair?

quadibloc on May 13, 2011, 03:22:43 pm
The short, cynical answer is "deep pockets." If a WalMart employ is negligent and someone gets hurt, the employee is the morally responsible person, but he is slim pickings. He works at WalMart for Pete's sake. So even though WalMart provided adequate training, equipment and careful employee selection--in short did nothing wrong--they get sued. Not because they were at fault, but because they are a juicy victim whom juries can rob to pay off the little old lady whom they feel sorry for. It is not fair, but that is the way it works under the current systems.
Juries may well abuse the system because of emotional sympathies.

But the law is the way it is because it's pretty hard for the police to monitor the quality of training and employee selection of every honest business - they should be chasing criminals, not hovering over honest businessmen - making companies strictly liable for what is done in their name gives them an incentive to be careful about those matters.

SandySandfort on May 13, 2011, 03:26:22 pm
How about this -- The little old lady trusted WalMart. WalMart trusted the slim-pickings employee. So let the little old lady get paid by WalMart who abused her trust, and let WalMart recover what it can from the employ who abused WalMart's trust. Is that kind of fair?

"Abuse of trust" is your cause of action? That is what you would claim in arbitration? I already stipulated that WalMart made a concerted effort to avoid injury to customers with training, worker rules and hiring practices. If the LOL trusted WalMart to provide perfection, then I submit she was clearly asking for the impossible. As we say in law, "due care is the care that is due." Meaning that one is only required to provide reasonable protection in most circumstances. (FYI, there are some situations where the there is a higher duty of care, e.g. common carriers, buses, ships, etc.) WalMart does not and cannot provide an environment without risk. Their only duty is to take reasonable precautions to invitees.

Would your answer be the same if the same employee accidentally caused the same LOL to fall on the street as both of them were going home? Would it be the same if some other customer spilled some of her Icee moments before the LOL came around the corner and slipped in it?

J Thomas on May 13, 2011, 05:47:45 pm
How about this -- The little old lady trusted WalMart. WalMart trusted the slim-pickings employee. So let the little old lady get paid by WalMart who abused her trust, and let WalMart recover what it can from the employ who abused WalMart's trust. Is that kind of fair?

"Abuse of trust" is your cause of action? That is what you would claim in arbitration? I already stipulated that WalMart made a concerted effort to avoid injury to customers with training, worker rules and hiring practices. If the LOL trusted WalMart to provide perfection, then I submit she was clearly asking for the impossible.

It depends. It depends on the degree of apparent negligence in the particular case.

There's a side issue that the bigger the company, the more likely that wildly improbable events will happen.

Walmart is the biggest. They sell about $1 billion a day. I don't know how many customers they have but I'll assume the average sale is $100, that's about 10 million customers a day. They can expect about ten one-in-a-million accidents per day! So maybe we should give giant corporations a break. When they accidentally flatten a customer under a steam-roller, or pour boiling oil over a customer, or knock a customer down and kick her and publicly strip-search her under the mistaken belief that she's a shoplifter, we should give them a pass.

"Ho! Vell, see? En exident! Vell, vun ting ve Jagerkin understend is dat krezy exidents happen. Right boyz?"

So just remind the victims that they gave up their legal rights when they drove into the parking lot, and maybe send them a nice teddy bear to keep them company in the hospital, and let it go at that.

Or maybe we could find a way to decide the issue on less emotional grounds and more in terms of rights and obligations etc....

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As we say in law, "due care is the care that is due."

Ah, that elite legal training coming out again....

spudit on May 14, 2011, 09:54:00 am
Good gods, another Girl Genuis freak. Course the fact that I understood it says something about me as well. Is the Coffee ready?
Vote Early and Vote Often
for EFT
have you voted today?

quadibloc on May 14, 2011, 06:14:05 pm
"Ho! Vell, see? En exident! Vell, vun ting ve Jagerkin understend is dat krezy exidents happen. Right boyz?"
On the occasion of Gilgamesh Wulfenbach's successful invention of heavier-than-air flight... the Girl Genius reference noted above.

sam on May 14, 2011, 07:20:45 pm
The short, cynical answer is "deep pockets." If a WalMart employ is negligent and someone gets hurt, the employee is the morally responsible person, but he is slim pickings. He works at WalMart for Pete's sake. So even though WalMart provided adequate training, equipment and careful employee selection--in short did nothing wrong--they get sued. Not because they were at fault, but because they are a juicy victim whom juries can rob to pay off the little old lady whom they feel sorry for. It is not fair, but that is the way it works under the current systems.

At first sight that looks morally wrong.

How about this -- The little old lady trusted WalMart. WalMart trusted the slim-pickings employee. So let the little old lady get paid by WalMart who abused her trust, and let WalMart recover what it can from the employ who abused WalMart's trust. Is that kind of fair?

Not when the little old lady gets awarded a zillion dollars, as is apt to happen.  Consider for example, the hot coffee lawsuit, the asbestos lawsuits, the sudden acceleration lawsuits, and so on and so forth.