[Grovenet] Dependent or Independent?

[David Morelli]

The creation of corporations in their current form can be traced to a  
variety of legal decisions and legislative actions.  In the end, the  
corporations had a real edge over sole proprietorships.  Corporations  
can own property and people working within the corporation can make  
decisions in the name of the corporation as if it was a living  
thinking person.  Not bad for a piece of paper.  This is a bit like a  
comatose patient having a trustee handling their estate, and  
pretending that the patient is responsible for the decisions.

And since it was not a real person, it doesn't have to worry about  
inheritance or death interfering with the acquisition of wealth for  
it's board of directors and corporate officers.  Yes, it also passes  
some dividends to the stock holders, but in the modern corporate  
America, the largest beneficiaries, in my opinion, are the board and  
their officers.

The other benefit is the limited liability aspect.  sole  
proprietorships have strong liability for their actions, the owner  
can be responsible for civil or criminal actions and actually go to  
jail.  Corporations cannot go to jail, and the board of directors  
isn't likely to be sent to jail even if they hire individuals who are  
illegally aggressive or negligent in their pursuit of profits for the  
board.  The stockholders may benefit financially from the actions of  
their "hired help" without holding any civil or criminal liability.   
Corporate punishment is pretty much financial, with a cap on the  
possible consequences to the stockholders.  Stockholders cannot lose  
more than they invest.  While they can share in any profit that the  
board, officers and management can create.  There is no incentive to  
police the actions of their "workers", while there is an incentive to  
invest in those corporations where the "workers" push the envelope or  
step outside the bounds.

Is there a corrective response?  I would suggest that this county  
determine that, by law, corporations are a construct of the state and  
that they are not "legal individuals".  Their existence may be  
terminated by the issuing body for wrongful or illegal behavior -  
which was the original standard.  Also, a determination that the  
corporation is a special form of partnership, where it holds property  
and conducts business in the name of its stockholders, rather than in  
its own name.  Therefore the legal liability for wrong actions, may  
be passed unto the stockholders, board of directors, officers and  
administrators, in proportion to their ownership or control.

David

On Dec 16, 2007, at 10:41 AM, Ron D'Eau Claire wrote:

> We didn't outlaw sole proprietorships.
>
> So why don't we structure the laws to encourage sole  
> proprietorships over corporations?
>
> People do what works best for them, whether it's a desirable carrot  
> or a stinging thrash from a stick. Only they're less likely to  
> revolt going for the carrot.
>
> Ron D'Eau Claire
>