I’ve seen a fair amount of commentary about common ground between the Occupy Wall Street movement and the Tea Party. I don’t think it exists, because I find the Tea Party’s grievances largely pretextual. Debt and government spending was only a problem when a Democrat took office. Much like infidelity and lying about infidelity was an impeachable offense only when a Democrat was in the White House. For a certain group of hard core partisans, a Democratic Presidency is more or less by definition, illegitimate. That has seemed to be the beating heart of the Tea Party. The rest is mostly just dressing.
But, with that theme of common ground on my mind, I read Tipsy’s remarks on Mark Cuban’s advice to OWS. Says Tipsy:
A lot of reckless crap went on at least because the risk of loss was so minimal compared to the chance of gain. This is the whole point of Corporations and LLC’s: to limit risk of loss to one’s investment – and not one cent more than one’s investment.
It’s always seemed to me that the corporate form should be anathema to Libertarians. It’s a government construct that exists for the purpose of evading personal responsibility. And, as Tipsy points out, a lot of our recent economic problems were helped along by the actions of people who stood to lose no more than their investment, even if the damage caused by their actions or those of their agents was far greater.
For this reason, it seems like the Occupy Wall Street crowd and the Libertarians should be able to find some common ground in tinkering with the corporate form. (Particularly in the wake of the Supreme Court’s Citizen’s United decision which expanded the rights of corporate personhood in the world of political campaign finance.)
I don’t know what that corporate tinkering would look like, necessarily. Cuban suggests turning “too big to fail” banks into partnerships:
We should make all investment banks become reporting partnerships (meaning they still have the same reporting requirements they have today ). I would have no problem with our government loaning money to the partners of Goldman Sachs and Morgan Stanley and other Too Big To Fail Institutions so that they can buy back all public shares of their stock. Of course all those partners would become personally liable for repaying that money back to the government. It would probably be about 120B dollars in total to take these 2 companies private. That is far, far less than a possible bailout would cost.
Those personal guarantees would change EVERYTHING in the banking industry. It would change the decision making process across the board. There would be a moral hazard to every decision. Today , a wrong decision and they vacation on their yacht. As a partner, the wrong decision and they are protesting right next to the OWS crowd as a 99pct er. It would be the definition of having “skin in the game”
How about this? Don’t bailout anyone. Let the banks and the automakers fail.
We would have a robust recovery if, for example, GM and Chrysler no longer existed. Sales at Ford would be booming even more than they are. Honda and Toyota would probably have become 100% US automakers by now (they’re like 90% American at this point, all they need is to move their corporate headquarters).
I also see a regulation problem. For example, if the FDIC is going to insure your bank account up to $100,000, what incentive as a consumer do you have to make sure that you are banking with a sound institution?
If Freddie and Fannie are going to buy up every mortgage issued, what incentives do mortgage lenders have to ensure that borrowers can make their payments?
You make it out to be like losing your capital is no big deal. Maybe you don’t have any savings, so its no big deal to you, but I personally think that it’s a pretty strong deterrent.
One area I would like to see MORE regulation is to just outlaw certain financial practices that have a lot more downside than upside. Credit default swaps come to mind. Banks should be a lot smaller as well. Nobody should be too big to fail.
“Debt and government spending was only a problem when a Democrat took office. ”
Let’s acknowledge that the national debt has become worse in the last 3 years, ok? While the Bush deficits were also atrocious, they don’t compare to the deficits over the past 3 years, which have been over $1 trillion each year. That’s double what the deficits were under Bush. We’ve even had a downgrade of the U.S. credit due to the unsustainable pace of added debt.
You should remember that that the last time the debt was a focus was 1992. The target of the national debt conversation was George H.W. Bush, a Republican. And if the Tea Party were simply “hard-core partisans”, they’d still be calling themselves “Republicans”, yes?
No. The Republican brand was badly tarnished when the Tea Party brand popped up. It’s like ValuJet to AirTran; Blacwater to Xe; Andersen to Accenture. Sometimes you need to change your name in order to more effectively continue to sell the same product.
And, Buzz, I agree that the risk of losing one’s investment isn’t nothing; but it’s not as great a deterrent to bad behavior as being on the hook for cleaning up the damage caused by you or those acting on your behalf. Given libertarian ideology, I especially cannot understand how libertarians can approve of a government construct that serves primarily to limit individual responsibility.
I recall reading many years ago that Michelin, the well known and well regarded tire company, was owned by the Michelin family in such a way that a corporate failure would cause each family member – participant to lose his personal property – house, etc. I am sure that most French firms do not work that way, and don’t remember the details. Still, it sounds like what you are talking about.
@Paul C Can we acknowledge that without the Bush-era tax cuts, the deficit would be staggeringly less, and the economy as a whole would be much more sound (as almost every economist who carries any weight of opinion has stated is the case)?
Its so cute when armchair economists decide that letting billion dollar corporations fail and decimate American confidence in industry would be a good plan of attack for a struggling economy. Then again, those who don’t know their history are doomed to repeat it.
Can we acknowledge that without the Bush-era tax cuts, the deficit would be staggeringly less, and the economy as a whole would be much more sound (as almost every economist who carries any weight of opinion has stated is the case)?
Of course we can’t, because that is not the case. Had the economy not imploded in ’08, the deficit was on track to be balanced by the end of ’09. The budget deficit was smaller every year from ’03 to ’09.
Hey, Doug, we used to put people in debtor’s prisons, too. Are you saying that bankruptcy laws limit individual responsibility vs. debtors prisons, too?
I don’t think so.
Corporations limit liability, not responsibility. Heck, if there is fraud involved, people can go to jail. Ask that Skilling guy from Enron.
From a libertarian, I am not one, but I would think that libertarians have bigger fish to fry. The biggest threats to liberty are not corporations.
Sorry, I meant to write that the deficit was smaller every year from ’03 to ’07. It went up in ’08 and exploded in ’09.
You know what’s funny, Doug? You keep throwing around that canard about the Tea Party (they were for government spending before they were against it) against all evidence we’ve given you.
You don’t take my word for it. How about Herman Cain’s?
Cain may have been a big fan of Bush’s Social Security reform plans, but he was not keen on Bush’s spending. “When we elected a Republican president and a Republican majority in Congress, we thought the runaway spending spree of our money would stop. The excess spending did not stop,” Cain drily noted. In 2006, he lambasted Bush’s “compassionate conservatism,” blaming it for leading to No Child Left Behind and Medicare Part D, and saying the philosophy had “completely betrayed conservative voters and their decades of grassroots activism.” In the column, written days after the GOP had lost the House, Cain spared no words: “Compassionate conservatism failed America and cost Republicans control.” In a shot at Karl Rove and then–RNC chair Ken Mehlman, Cain wrote two months prior to the election, “What Rove and Mehlman fail to realize, and have failed to realize this entire year, is that conservatives are upset with House and Senate leadership because they have squandered their majority status and failed to enact substantive policy solutions on the domestic issues.”
Well, here’s a libertarian (for the past 30+ years, I might add, although I dropped all party affiliation after the Clark campaign sellout in 1980) that most definitely does see the corporation as a threat to liberty, even if not on par with government itself. Corporations are creatures of the State, and are in and of themselves regulatory entities, and need to be eliminated. Completely.
@Nick: Yes. The national debt (but it is hard to blame him for the current deficit) would probably be less without the Bush era tax-cuts.. However, that is not relevant to the point I stated. NOBODY predicted trillion dollar deficits when those tax cuts were passed. Now that we have them, they have to be fixed.
@Doug: “Sometimes you need to change your name in order to more effectively continue to sell the same product.”
Completely disagree. Facts are against you here. The 2010 Senate elections had big names such as Sharron Angle, Christine O’Donnell, and Rand Paul. Only 1 of those 3 is now called Senator (helps to have a dad in politics). If we talk locally, Tea-Party candidates such as Stutzman and Hostetler were beat by Coats. Kristi Risk was beat by Larry Bucshon, and so on. In the House races, 32% of all TP candidates (that made it out of the Primary) won. http://firstread.msnbc.msn.com/_news/2010/11/03/5403120-just-32-of-tea-party-candidates-win
At least so far, Republicans that are not associated with the Tea Party name have done better than ones who haven’t.
I guess the Tea Party already has wholehearted defenders here, so it doesn’t need much said by a halfhearted defender. But I think it started relatively well and was quickly co-opted. I’m concerned that OWS might become a wholly-owned subsidiary and alias for, say, the AFL-CIO.
It’s not just libertarians, but traditionalists and “CrunchyCons” that are developing concerns about the way we do business (including the corporate form). The topic is way too big to discuss here.
Matt Taibbi has a post up about being afraid that Occupy Wall Street will be co-opted or at least be written about as if it’s co-opted by traditional Democratic operatives. He suggests that another battle of R v. D is a comfortable, familiar narrative that’s easier to discuss and less threatening than, “a movement in which virtually the entire spectrum of middle class and poor Americans is on the same page, railing against incestuous political and financial corruption on Wall Street and in Washington.”
Doug- I will echo a few things here.
Agree with you wholeheartedly, Doug, that there is common ground. I don’t think anybody can look at the rewarding of failure with bonuses and rewards and call it ‘justice’. I think this is the point of real common cause that can stretch very widely across the political spectrum. I’ve blogged exactly this. Unfortunately, the differences on other issues, which are many and run deep, are getting in the way. The Tea Party could be right in there, but they see OWS as a leftward event, even a counter to the Tea Party as a whole, and just couldn’t wait to return the vitriol they felt they have received for the past 2+ years. Anybody using the word ‘Teabagger’ should not now be surprised at human nature when the return volley of ‘dirty hippie’ comes back.
Completely agree with Dave H, for the reasons he stated. The Rand devotee portion of the libertarians that worships business has a hard time seeing distinctions around it, and defends corporations more because they are attached to businesses than for their actual constructs regarding responsibility. Every group and movement has its blind spots, no doubt.
Also, what Buzzcut said: Libertarians do have bigger fish to fry as threats to liberty. The wars are the top of the list, in my opinion. Too bad the protesting class shifted attention from the wars when Obama was inaugurated. Their points are still valid. Hell, more valid than ever. The debt and spending are still bigger than the threat of corporate corruption and crony capitalism, of which these latter are a subset. After all- a corporation can stick its hand out looking for largesse, but it requires a culture of compliance as a matter of government policy to dole it out. That’s on the elected officials, just as sure as if the kids ask mom & dad for cake and ice cream for breakfast, and the parents say, “Good idea!” That’s a bi-partisan effort. I don’t split hairs on scale. Both Rs & Ds are guilty.
Why not just eliminate the corporate charter as a universal, ageless entity, and revert back to what it was for so long after America’s founding – a very limited thing that had an expiration date, and served a specific public good? The corporation, as it is today, is indeed anathema to libertarianism. Corporations are a framework to remove barriers that prevent the free market from providing a particular service, such as financial liability, for example, in the construction of a bridge that a majority of citizens in a particular township would like built. If someone dies in the construction of the bridge, the shareholders aren’t legally liable for the death, which is understood by the township. However, if the bridge costs more to build than initially estimated, the shareholders are still liable for allocating more funds towards that goal, or abandoning the project. Today, we think the government should match financial contribution so the shareholders can still sink a profit. That thinking should be dumped in favor of rational,. truly limited corporations – that are not legal persons. Someone has to pay the government so the government can pay the shareholders, after all. There’s no such thing as a free lunch.