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Thursday, September 25, 2008

Limited Corporate Liability
Corporate personhood wasn't in the 2004 platform, but there was indeed one sentence opposing limited corporate liability.  Congratulations, you've exposed the Reform Caucus conspiracy to "water down" the LP Platform. :-)
However, I never heard any Platform reformer complain about this LP position, and I for one oppose special limits on liability for corporations.  As far as I can tell, a corporation is fundamentally just a scaled-up limited partnership that has no general partners. The crucial question is: would capital formation be threatened by a requirement for each corporation to have at least one liable general partner? I suspect that it wouldn't. If corporations are equivalent to scaled-up limited partnerships, then the traditional leftist argument against limited shareholder liability evaporates -- unless they are against limited liability for limited partners. I don't see how they could be, since that in turn seems equivalent to a transferable contract that pays a share of firm income and is a particular sort of claim against the firm's assets upon liquidation. There's nothing wrong with that.