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Comment by jdietrich | Hacker News Reader

"Going out of business" is a product of regulation that artificially separates the assets and liabilities of a corporation from its owners. I expect that the hardcore libertarian argument would be to make bankruptcy conditional on the corporation having insurance sufficient to cover any possible liability - failing that, the shareholders are held fully responsible for their share of the corporation's liability.

I'm no Libertarian, but I think it's unfair to characterise their position as being a kind of corporate anarchism.

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  "Going out of business" is a product of regulation that
  artificially separates the assets and liabilities of a
  corporation from its owners.

That regulation is the essential ingredient required to allow capitalism to function. It reduces the amount of risk that the natural persons involved in a company run. The company is the legal person carrying the full burden of risk, but it is also in the position to take on that risk, because it has the assets to do so. No individual person would ever have enough assets to take on the risk that a company like BP does. However, companies can also leverage more risk that they can chew and go out of business. However, the natural persons involved would have gone bankrupt long before that.

In short: the problem with straight up libertarianism is that it would destroy capitalism.

Risks should not be ignored. Doing so promotes risky behaviour and misallocation of resources.

If a supplier of a company agrees on limiting liability on the corporation, as they do now by obligation, that's ok. But if you commit an agression, as this oil spill is, there should not be any limit on the liability.

Actually, I've heard many libertarians argue for precisely a kind of corporate anarchism. That is, at the end of the day, exactly what deregulation really is: removing government from having power over the actions of corporations. Taken to the logical extreme that people such as Rand Paul seem to honestly want, then that implies that a government cannot enforce the conditions of bankruptcy, nor the liability of owners.

Straw man, red herring, spotlight...

Libertarian != Anarcho-capitalist

Stop trolling.

I don't know of a single libertarian that opposes government action to prevent harmful externalities. They may differ on the mechanism (property rights + tort law vs preemptive regulation), but they all believe preventing harmful externalities is a responsibility of the government.

You seem to be confusing anarchists with libertarians.

We must be operating under different definitions, then, because every libertarian I've ever met expresses their policy goals specifically as being against government action to prevent harmful externalities. "The market will work it out, and it's not government's job to make my decisions for me". From motorcycle helmet laws on upwards (we all pay for head injuries via insurance). It goes on up to a default position of being against regulation on almost everything -- against sarbox on principle, not just the implementation, against regulations regarding offshore drilling most likely until 4 weeks ago and now they're re-evaluating. If your default philosophy is to approach every issue with "less government" as priority #1, you're going to be against government taking action most of the time.

No, most libertarians are against government action to prevent non-externalities.

For example, motorcycle helmet laws do not prevent any external cost. Motorcycle drivers pay extra for insurance (except when the government prevents insurance companies from doing this), and the only other "externality" is caused by government action (forcing ERs to service people who don't have insurance). I don't know enough about sarbox - what externalities does it prevent?

Libertarians may differ on things like regulation of drilling. Some believe the externality only exists when the harm actually occurs (and should be handled by tort law), while others believe the risk of harm is an externality(I lean towards the latter).

But I'm pretty sure the boundary between libertarian and anarchist is when you call for the government to stop protecting people from the bad acts of others.

You're centering your argument around "the government is forcing ERs to service people who don't have insurance"

This is why libertarian arguments always become absolutely ridiculous when you try to apply them in the real world. In what world would an ER turn away someone with a massive head wound because they don't have insurance?

Sarbox is intended as a fraud prevention scheme. Libertarians tend to be opposed to it on principle because hey it's just creating a bunch of extra unnecessary paperwork, drag on the economy and all that. If corporations aren't committing fraud, why do they have to do all this unnecessary work and let the capital-G Government snoop all over the business? All fair points until Enron and Worldcom collapse and blow up a million people's retirement funds. I'll take the drag, thank you. (actual implementation of sarbox could undoubtedly be improved).

You might be right about that boundary, but it's all in how you define bad acts. I'm glad that you see the risk as being an actual thing (5% chance of it means you caused 5% of the damage, statistically speaking, even if someone else drew the unlucky number).

I suppose it's all in how you define externality too. I'm all about hiking up the gasoline tax by 2-3 bucks a gallon over the next decade. We have a trillion dollar defense budget, a boatload of strategic issues and dubious alliances all based around oil - those aren't priced in, and that's why we have such a hard time getting off of it. But most libertarians would probably tell me that that's a perfectly functioning market, oil even gets traded on commodity exchanges, how can that not be a market? It's all in your frame of reference, I guess.

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