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Nice Post by David Henderson on "Avatar", property, corporatism & right of natives to live as they please

January 12th, 2010 No comments

David R. Henderson has a nice post up at Antiwar.com, titled “In Defense of Avatar”, in which he takes issue with reviews of Avatar by Reihan Salam and Edward Hudgins. (My earlier comments on Stephan Kinsella`s review of Avatar are here.)

I would just note that Henderson has presumed that the Avatar natives – non-humans – have “rights” that we are obliged to respect.. I think that history tells us that, even for humans in other civilizations, “property rights” are respected only when it suits the purposes of both sides (viz., can be protected by the side claiming them, as I`ve noted on several occasions, most recently here).

A few excerpts:

I don’t think Avatar is an attack on capitalism. One could leave
the movie and have no idea, based on just the movie, about James Cameron’s
view of capitalism. And while it did have some clichés (most movies
do), I didn’t find it loaded. So what is Avatar? In fact, Avatar
is a powerful antiwar movie – and a defense of property rights. For that reason,
I found it easy to identify with those whose way of life was being destroyed
by military might. …

“But here’s the crucial question, a question that neither Salam nor Hudgins
addresses: Do savages, noble or otherwise, have rights?

If given a choice between high-tech, with all its creature comforts, and the
jungle life of Tarzan, I, like Salam and Hudgins, will take high-tech every
time. But that’s not what the movie’s about. It’s about people from a high-tech
civilization using technology to make war on people from a more primitive society
so that they can steal their stuff. That’s a very different choice. I would
choose not to kill them and take their property. What would Salam or Hudgins
choose? They don’t make their answers clear, although they show zero sympathy
for the victims of the attack. …

To the extent that it makes any statement about capitalism, Avatar
is a defense of capitalism. Capitalism is based on property rights and
voluntary exchange. The Na’vi had property rights in the crucial tree and various
other properties surrounding it. Did they own it as individuals or as community
tribal property? We can’t be sure, but probably the latter. They had refused
to sell the property to the outsiders. There was nothing the outsiders could
give them that would make it worth their while. What should we, if we are good
capitalists, conclude? That, just as in the Kelo case, the people currently
sitting on the land value it more than the outsiders. The land is already in
its highest-valued use. Hudgins and Salam could argue that that’s implausible.
Surely there would be some finite price that the Na’vi would take in return
for the Unobtainium. Maybe, maybe not. But once the Na’vi have made it clear
that they’re unwilling to exchange it, that should be the end of things, shouldn’t
it?…

Hudgins argues that James Cameron is claiming, “That’s capitalism for
you.” As noted earlier, it’s not clear that Cameron is so arguing. But
if that’s what Cameron believes, shouldn’t Hudgins’s response be, “No,
that’s corporatism for you.” …

Read through everything Hudgins has written on Kelo
and you won’t find a wisp of discussion about how low-tech or high-tech, savage
or civilized, Mrs. Dery is. And that’s because it doesn’t matter. People
in high-tech societies have rights. So do savages. It would be nice if Hudgins
showed even one tenth of the concern for the “savages” over whom
the “non-savages” of the U.S. military and CIA roll as he shows for
an old woman who lives (or used to live) in a house. …

 

Avatar is an eloquent defense of the right of people in other civilizations
to live as they please.

Thoughts of an envirofacist avatar on "Avatar"; or Resources, Property Rights, Corporations & Government-Enabled Theft

December 22nd, 2009 1 comment

My pal Stephan Kinsella has a remarkably enviro-friendly post (“Avatar Is Great and Libertarian”) up regarding the new movie “Avatar”; his remarks and others on the thread prompted me to leave a few comments, which I copy below (in furtherance of my nefarious and/or insanely misguided agenda .

Many thanks to Stephan for aiding and abetting this. Ive added a bit of emphasis, fixed a typo or two, and a few additional comments, in brackets.

Published: December 22, 2009 2:38 PM

TokyoTom

Stephan, I welcome you to the dark, enviro-facist side!

– “you have to fight for and use might to protect your rights”

I see you are starting to buy into my real-world view of property rights, that “principles” and force are just two different ways we seek to protect what we consider ours, with the first being most efficacious within a community [and recourse to the later perhaps being necessary]. As I noted on a previous thread of yours,

“The deep roots of “property” are not in principle but in simple competition, physical defense of assets valuable enough to make the effort worthwhile, and in the grudging recognition by others – more willingly offered by those who share bonds of community – that yielding to others’ claims may be more productive than challenging them. This is as true for rest of creation as it is for man. While we have developed property to a very sophisticated degree, at its core property remains very much about the Darwinian struggle to survive and prosper, violence, theft and calculations as to when challenging control over an asset is not worth the effort.”

https://tokyotom.freecapitalists.org/2009/12/21/quot-property-quot-weird-thoughts-evolution-society-quot-property-rights-quot-quot-intellectual-property-quot-principles-structure-justify/

Sounds like this struggle over resources is at the core of Avatar, along with a boatload of Western guilt over our historical theft of land and assets from indigenous peoples, whom of course have also been involved for eons in bloody battles for resources with other tribes.

Far from being simply a dead relic of the past, however, the often violent struggle to take resources from indigenous peoples continues in many places, though out of sight from most of us (not simply those who are trying hard not to see) – oil & gas, minerals, timber, ranching, soybeans, oil palms, World Bank-funded dams and roads, fisheries – you name it, a violent conflict that the natives are losing to kleptocratic governments & elites can be found.

Western corporations are often in the thick of such conflicts, but even where not, modern technology (and growing consumer markets) provide the key tools and incentives for such conflicts, in which natives may be more or less hapless. Local governments typically either “nationalize” the resource or turn a blind eye, with the result that resource exploitation frequently takes on the appearance of a tragedy of the commons.

Western liberals sometimes exacerbate these problems – not simply by seeing “greed” and capitalism as the problem, and not kleptocratic regimes (often supported by the West and by aid money) or the lack of enforceable property rights – but also by demanding misguided policies such as “biofuels” incentives, which lie behind tropical forest destruction in much of SE Asia.

Libertarians should be familiar with these problems, which are a large part of the dynamics in petroleum-cursed nations and elsewhere. Such problems are also linked generally to “aid” efforts and to other centrally-directed development schemes. Elinor Ostrom was awarded the Nobel Prize in part for her work in showing that local communities, if their rights are respected, can generally do a good job of managing their own resources [and how government efforts frequently go astray].

I’ve commented on these issues a number of times, but here are a couple of links for those who might care to scratch the surface:

http://mises.org/Community/blogs/tokyotom/archive/2007/09/28/too-many-or-too-few-people-does-the-market-provide-an-answer.aspx

http://mises.org/Community/blogs/tokyotom/archive/2007/12/16/bison-markets-the-tragedy-of-the-commons-and-the-indian-war.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/11/26/theft-and-the-tragedy-of-the-commons-mother-jones-ponders-quot-conservation-indigenous-people-s-enemy-no-1-quot.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/05/24/capitalism-the-destructive-exploitation-of-the-amazon-and-the-tragedy-of-the-government-owned-commons.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/01/07/somali-piracy-flows-from-the-greater-and-continuing-western-theft-and-abuse-of-somali-marine-resources.aspx

http://mises.org/Community/blogs/tokyotom/archive/2008/06/02/environmental-damage-as-theft-report-by-prominent-enviros-quot-highlights-the-need-for-secure-ownership-of-wildlife-resources-by-poor-people-quot.aspx

http://mises.org/Community/blogs/tokyotom/archive/2007/10/12/libertarian-reticience-other-than-to-bash-enviros.aspx

Stephan, if youve made it this far, let me remind you of our conversations about corporations [most recently here], which have very unfortunately been inescapably tainted with statism from the get-go, in ways that play out negatively both abroad and at home. Ive devoted a fair amount of time to examining the entanglement of corporations and government: http://mises.org/Community/blogs/tokyotom/search.aspx?q=limited

  • Our state governments were wrong to get into competition with each other to grant corporate status to investor-owned enterprises, in exchange for fees and later taxes. Corporate status freed owners from down-side risk, by limiting liability to the amount of capital contributed. This incentivized investors to encourage corporations to embark on risky activities that shifted costs to innocent third parties; the concentration of wealth in corporations (that now have unlimited lives and purposes, subject to survival in the market); the corruption of the court system that once protected third parties from damages caused by others (by replacing strict liability with balancing tests); and the ensuing battle over legislatures and courts to check corporate abuses.What happens abroad at the “Avatar” is pretty basic, but the same nonsense, with taxpayers, investors and consumers playing the role of victim, can be seen at home. Has anybody seen the jaw-droppingly appalling report that the WSJ has run on “Fixing Global Finance”, based on their “Future of Finance Initiative”, in which they cheerlead a bunch of financial firms in their efforts to abandon free markets and to structure global regulation and regulators, to be staffed by a revolving door of themselves? [I think Im being fair to see this as posing a threat to markets and freedom at least as great as what others see in the more multi-faceted climate change muddle.] Even Paul Volker was appalled, not at their willingness to create more regulation, but at their unwillingness to confront the moral hazard problems (tied to regulation of public corporations and the financial sector) that lie at the core of the financial meltdown. [Volker seems to overlooked the crucial role of government in driving and feeding the moral hazard problems.]Heres the link, for those of you who missed it:
    http://online.wsj.com/public/page/future-of-finance-121409.html

 

Property rights, corporations and government-complicit theft? Hmm. [Sounds familiar. Maybe some of those who want to battle corporate excesses might not be so crazy after all, even if they neglect to understand the risks of negative consequences of seeking help from government. And maybe someday libertarians will get a little more serious about addressing the festering concatenation of corporate-linked problems that are generating so much rot at the core of our government and public company/financial company sector.]

 

Oh, I almost forgot to remind everyone for the need for group holiday cheer (as alternative to productive engagement on a libertarian, Austrian-based climate agenda):

http://mises.org/Community/blogs/tokyotom/archive/2007/12/16/holiday-joy-quot-watermelons-quot-roasting-on-an-open-pyre.aspx

 

The Road Not Taken V: Libertarian hatred of misanthropic "watermelons" and the productive love of aloof ad-homs

November 5th, 2009 2 comments

I copy below a comment I just left at Stephan Kinsella`s post on the main LvMI Blog, “Physicist Howard Hayden’s one-letter disproof of global warming claims“, which I have discussed here in several preceeding posts.

TokyoTom Published: November 4, 2009 10:54 PM (minor edits; links added)

Stephan:

– “They, like you, accept the state’s line and are happy to cede power to the state to “make things better.””

Except I DON`T “accept the state`s line”, nor am I “happy to cede power to the state”, which is precisely why I bother to interrupt your fantasies here.

This, in fact, represents the fallacy that is at work in climate change discussions here – and that almost completely vitiates the libertarian message –  namely, that if one concurs that we`ve got a potential problem, then they must then agree to the statist agenda.

So instead of any effort to engage ON the libertarian agenda, we get guys like you pandering – with demonstrable nonsense from guys like Harvey – to libertarians who hope the statists and the purported problem will just kindly go away.

What a great way for libertarians to muzzle themselves, and to stand by helplessly instead of weighing in.

Trying to reassure yourself and your buddies that the man with a gun is either deluded or trying to take over the world is hardly either reassuring, or a step on the way to getting him to put the gun down.

Nor is calling those [like me] who think conversation may be more efficiacious a “comrade to rotten watermelons” in any way helpful, unless the goal is simply to reinforce the echo chamber.

Watermelons, ahh, watermelons!  How helpful, and so much fun to bandy about this little bit of ad hom! Is it getting time for Austrians once more to gather `round the fire, and roast some watermelons?  Holiday joy: roasting “watermelons” on an open pyre!  A little eliminationist fantasy [a la Czech physicist Lubos Motl is not that far away ….

As I noted in my above post explaining the use of the “watermelon” ad hom:

“watermelon” is a venerable ad hominem here, useful for Miseseans to put fingers in their ears and dismiss what practically everyone who disagrees with them on climate change – from our national academies of science on down – has to say.

The trick is to first dismiss the evil “enviros” – you know, that class of rent-seekers that Rothbard and others tell us were created when statist corporations managed to subvert common law protections against polution damage to property – by focussing on their efforts to use the state to control corprations, while resolutely ignoring not only corporate statism but what Austrian economics tells us about how markets and private transaction are inefficient with respect to resources that are not clear owned or protected by enforceable property rights.

Then, having dismissed those wacky “watermelons”, we can simply ignore everyone else, by jeering at the enviros and thereby implicitly imputing to the whole scientific, economic, business and government community the same malevolent and stupid misanthropism.

Neat trick, isn`t it?

IOW, enviros should be burned at the stake for the heresy of trying to use the state to solve a possible problem, and everyone else, who have gullibly been corrupted by them, ignored. In this way, we can cleanse the body politic and avoid serious mistakes. See?

Serious people know that only irreproachable commentators like Dr. Reisman get to suggest that we use the state to address possible climate change:

“there is a case for considering the possible detonation, on uninhabited land north of 70° latitude, say, of a limited number of hydrogen bombs. … This is certainly something that should be seriously considered by everyone who is concerned with global warming and who also desires to preserve modern industrial civilization and retain and increase its amenities. If there really is any possibility of global warming so great as to cause major disturbances, this kind of solution should be studied and perfected. Atomic testing should be resumed for the purpose of empirically testing its feasibility.”

We can distinguish you from Dr. Reisman, Stephan, since you helpfully insist that the state should not engage in this testing, so that we must first privatize the holding of nuclear weapons, so that firms and individuals, unhindered by the state, can engage in such experimentation.  Such clear-mindedness is commendable, since freedom-loving commenters here or elsewhere seldom consider the difficult statist elements implicit in most discussions of active “geo-engineering” to dampen or reverse any climate change problem.

But while we`re on the subject of criticizing “watermelons” and their supposed “comrades”-in-arms, one wonders when aloof purists like you will ever deign to criticize fellow libertarians like Rob Bradley and Bob Murphy, who are also actively engaged in this statist discussion – shame! – but on behalf of the fossil fuel firms and utilities that until now have been the most successful rent-seekers.

So far, all we see with regard to the way libertarians actively defend successful rent-seeking is a studied indifference.

– “now that we have irrelevant credentials out of the way, let’s stick to substance.”

Absolutely; I was just concerned not to leave you hanging out there on the “irrelevant” limb all by yourself.

Best,

TT

As I noted on the main thread, surely it wouldn`t be helpful if I in like fashion called libertarians who refuse to engage in a principled discussion on the issue of climate policy (preferring instead to comfort themselves with one-page letters that tell us that our massive releases of greenhouse gases. etc. is peachy-keen) “coconuts” – hard on the outside, but empty on the inside?

For climate fever, take two open-air atom bombs & call me in the morning; "serious" libertarian suggestions from Kinsella & Reisman!?

November 4th, 2009 No comments

First, George Reisman, and now, Stephan Kinsella.  I have asked two of our leading lights whether they and libertarians are striving for a self-satisfied irrelevancy on climate issue, or wish to be taken seriously, and they both, with self-professed seriousness, announced that we should, in Stephan`s words, “investigate nuclear winter as a way to offset alleged global warming“.

I`m afraid these proposals leave me a bit stunned. On first blush – nay, lengthy consideration – such proposals can not in the least be considered libertarian, or something libertarians could countenance. This is the way to libertarian relevancy, and to take both the challenge of statist climate change proposals and libertarianism itself seriously? 

I don`t get it – is this obvious sarcasm or straightforward mockery of climate concerns, an inside joke, from which suspected “watermelons” are excluded, or am I just not on the right sober, libertarian wave-length?

And am I the only one who notices and is jarred by the cognitive dissonance in these messages from our leading lights? You know – puny man can`t possibly be affecting the climate, but if so, it`s something we can easily fix with a little “geo-engineering” (even if we have to use the state), so let`s just let our little ongoing and uncontrolled world-wide climate geo-engineering experiment continue?

Readers` help appreciated!

I copy below relevant passages, both from Dr. Reisman and from Stephan (emphasis added).

1.  George Reisman: Global Warming: Environmentalism’s Threat of Hell on Earth  March 16, 2007 (emphasis added):

In contrast to the policy of the environmentalists, there are rational
ways of cooling the earth if that is what should actually be necessary,
ways that would take advantage of the vast energy base of the modern
world and of the still greater energy base that can be present in the
future if it is not aborted by the kind of policies urged by the
environmentalists.

Ironically, the core principle of one such method has been put
forward by voices within the environmental movement itself, though not
at all for this purpose. Years ago, back in the days of the Cold War,
many environmentalists raised the specter of a “nuclear winter.”
According to them, a large-scale atomic war could be expected to
release so much particulate matter into the atmosphere as to block out
sunlight and cause weather so severely cold that crops would not be
able to grow. …

Certainly, there is no case to be made for an atomic war. But there is a case for considering the possible detonation, on
uninhabited land north of 70° latitude, say, of a limited number of
hydrogen bombs. The detonation of these bombs would operate in the same
manner as described above, but the effect would be a belt of particles
starting at a latitude of 70° instead of 30°. The presence of those
particles would serve to reduce the amount of sunlight reaching most of
the Arctic’s surface. The effect would be to maintain the frigid
climate of the region and to prevent the further melting of its ice or,
if necessary, to increase the amount of its ice. Moreover, the process
could be conducted starting on a relatively small scale, and then
proceed slowly. This would allow essential empirical observations to be
made and also allow the process to be stopped at any time before it
went too far.

This is certainly something that should be seriously considered by
everyone who is concerned with global warming and who also desires to
preserve modern industrial civilization and retain and increase its
amenities. If there really is any possibility of global warming so
great as to cause major disturbances, this kind of solution should be
studied and perfected. Atomic testing should be resumed for the purpose
of empirically testing its feasibility.

2.  Stephan Kinsella & TokyoTom, Physicist Howard Hayden’s one-letter disproof of global warming claims  October 29, 2009

Stephan Kinsella October 30, 2009 10:03 AM

If there were really global warming why not just use “nuclear winter”
to cool things down?
You don’t see the envirotards advocating that! 🙂 (see Greenpeace to advocate nuking the earth?)

 

TokyoTom November 3, 2009 4:01 AM

Austrians know very well that resource battles very often become
politicized as soon as government steps in; are “misanthropes” and
“rotten watermelons” responsible for the state grant of public utility
monopolies, the lack of court enforcement of common law rights to
protect property from state-licensed corporation that led to massive
pollution problems, the massive state role in the development of
nuclear weapons (that you & George Reisman mock-seriously suggest
the federal govt ought to start using again in the open atmosphere) ….

 

Stephan Kinsella November 3, 2009 8:00 AM

I don’t remember Reisman’s proposal, but I never said the feds should do it. I’m an anarchist, remember?

 

3.  Stephan Kinsella & TokyoTom, In which I applaud another balanced, productive post by Dr. Reisman, and draw attention to a post by Lew Rockwell on the need for more power competition (Apr 23 2009)

 

# Friday, April 24, 2009 2:27 PM
by
Stephan Kinsella

The
left yabbers about nuclear winter caused by nuclear bombs. This implies
nukes can be used to cool things down. The left yabbers about global
warming. Why is it unreasonable to investigate whether nuclear bombs
could not be used to cool things down and offset global warming? Which
one of these two contentions are you watermelons not serious about?

# Friday, April 24, 2009 9:45 PM
by
TokyoTom

Stephan,
I was just talking about the frumious bandersnatch and in walks the
yabberwocky!  Such coincidences are to be celebrated!

But surely you`re not serious about open air nuke tests to combat
climate change, but Reisman was, and on the LVMI main pages.  His
discussion was not the type of facetious one you throw out to dodge
addressing it.  You disappoint me.

What the left yabbers about is worth mocking, but anyone worth his
salt as a libertarian would do like Lew and spend a little time
acknowledging that preferences for green power, etc. are perfectly
fine, explaining that the reason for their frustration is public
utility regulation that stifles competition and protects utilities, and
suggesting approaches that would foster consumer goals while advancing
liberty.

But it`s so much funner to be like George, right?

What would Ludwig von Mises have said?  mises.org/…/draft.aspx (quoting Reisman`s translation)

 

# Sunday, April 26, 2009 2:25 PM
by
Stephan Kinsella

Tom,
it’s time to drop your sarcasm and just be direct and clear. I am
serious–why not investigate nuclear winter as a way to offset alleged
global warming?

As for all the fulminating against global warming… are you aware
that we are in an interglacial period, probably somewhere near the
middle? The earth is bound to start cooling and heading towards another
ice age before long. If global warming is real, it will only delay
this–which is good. In any event, suppose we impoverish ourselves to
slightly decrease the warming for a few decades, until natural cooling
starts anyway. Why do this.

 

# Friday, May 08, 2009 7:54 PM
by
TokyoTom

Stephan,
thanks for your comment, but I`ve been preoccupied.  However, it`s hard
to believe that you want Dr. Reisman`s suggested testing of atom bombs
in the Arctic to be taken seriously from ANY perspective, much less a
libertarian one.  There are obvious issues about the role of
government, consent and compensation of those facing fallout risks, the
problem of interfering with Arctic ecosystems and access to resources
that are coming available as a result of thawing, potential releases of
methane by the explosions themselves, plus small things like
international treaties as crf notes.

Are you suggesting that I`m “fulminating” about “global warming”?
 I`ve just been trying to steer the discussion from fulminations by
Reisman (and fawning worshippers) towards actual libertarian principles
and productive engagement.

“are you aware that we are in an interglacial period … Why do this”?

I don`t agree with your suppositions, but at least they provide a start for conversation.  

My reading indicates that climatologists agree that the Milankovich
cycles are in a unique period of overlap and, given the forcings that
we have already made (starting millenia ago with albedo changes/methane
releases resulting from agriculture), this interglacial is expected to
last for another 50,000 years, and that man`s activity is by far the
largest climate forcing variable – and we`re only heading north.  This
involves heavy pollution and will be accompanied by other large costs
to private and shared assets, including drastic changes in ocean
chemistry and ecosystems.

Mises, Yandle and others recognize that societies invested in
establishing informal and formal private and communal property rights
systems in order to tame tragedy of the commons problems and lead to
more efficient plan formation; IMHO it`s time for us to start managing
our atmosphere and oceans, instead of allowing those who profit from
exploiting these resources (a wealthy class of investors and
executives) to continue to do so while playing a rent-seekers` and
spoilers`s game that allows them to continue to shift costs to the rest
of us.

A focus on this will also help to shift down the environmental
Kuznets curve and improve the protection of private health and property
in China and elsewhere.

 

4. Greenpeace to advocate nuking the earth?

Scientist publishes ‘escape route’ from global warming
reports the emergency plan to save the world from global warming, by
altering the chemical makeup of Earth’s upper atmosphere. Professor
Paul Crutzen, who won a Nobel Prize in 1995 for his work on the hole in
the ozone layer, believes that political attempts to limit man-made
greenhouse gases are so pitiful that a radical contingency plan is
needed. … he says that an “escape route” is needed if global warming
begins to run out of control. … Professor Crutzen has proposed a method
of artificially cooling the global climate by releasing particles of
sulphur in the upper atmosphere, which would reflect sunlight and heat
back into space.”

Hey, if that doesn’t work, why not use the phenomenon of nuclear winter to cool things down? You know, explode a few nukes, kick up dust, cool things down. Any takers? Greenpeace? Earth First?

The Road Not Taken IV: My other hysterical comments on climate science & how Austrians hamstring themselves

November 2nd, 2009 2 comments

In my initial post, on how Austrians strive for a self-comforting irrelevancy on climate change, I copied my chief comment to Stephan Kinsella.

I copy below my other posts and some of the remarks I was responding to on Stephan`s thread, including the one that I was unable to post – for some reason I am trying to figure out (but that Stephan tells me was not a result of moderation by him; I note my full apology, as stated in my update to my preceding post):

  • TokyoTom

    fundamentalist: “I love the responses from the GW hysteria crowd.
    They have nothing to offer but ad hominem attacks and appeals to
    authority.”

    Am I excluded from the “hysteria” crowd, Roger? Because if I`m in,
    you seem to have entirely missed my post, and my point, as to the
    consistency of your arguments with Austrian principles and the
    effectiveness of approaches like yours in dealing with the rest of the
    world – including all of the deluded and others who are engaged in bad
    faith.

    Published: October 30, 2009 9:44 AM

  • Stephan Kinsella
    [Note: this is the comment to which I responded with the remarks copied on my preceding post]

    “Tokyo” asked me to respond to his post but it’s so rambling I am
    not sure what to respond to. To me this is very simple. I think we are
    in an interglacial period. It’s going to start getting cooler
    eventually, unless by then we have enough technology and freedom (no
    offense, Tokyo) to stop it. If there is global warming maybe it can
    delay the coming ice age by a few centuries.

    If there were really global warming why not just use “nuclear
    winter” to cool things down? You don’t see the envirotards advocating that! 🙂 (see Greenpeace to advocate nuking the earth?)

    In any event as I see it there are several issues. Is it warming?
    Can we know it? Do we know it? Are we causing it? Can we stop it?
    Should we stop it?

    It seem to me we do not know that it’s warming; if it is, it’s
    probably not caused by Man; and if it is, there’s probably nothing we
    can do to stop it except effectively destroy mankind; there’s no reason
    to stop it since it won’t even be all bad, and in fact would be overall
    good. I do not trust the envirotards, who hate industrialism and love
    the state, and seek anything to stop capitalism and to give the state
    an excuse to increase regulations and taxes; why anyone thinks these
    watermelons really know what the temperature will be in 10, 100, 1000
    years, when we can’t even get accurate weather forecasts a week out, is
    beyond me.

    That said, I’ll take the watermelons seriously when they start
    advocating nuclear power. Until then, they reveal themselves to be
    anti-industry, anti-man, techo-illiterates. (See Green nukes; Nuclear spring?.)

    Published: October 30, 2009 10:03 AM

  • TokyoTom

    [my prior version ran off without my permission; this is a re-draft]

    It seems like I can lead a horse to water, but I can`t make him think,

    We all have our own maps of reality and our own calculus as to what
    government policies are desirable and when, but as for me, the status
    quo needs changing, and the desire of a wide range of people – be they
    deluded, evil, conniving or whatnot – to do something on the climate
    front seems like a great opportunity to get freedom-enhancing measures
    on the table and to achieve some of MY preferences, chiefly because
    they help to advance the professed green agenda. [To clarify, I didn`t mean that I want to advance “the green agenda”, but that the pro-freedom policy suggestions I have raised should be attainable because greens and others might see that they also serve THEIR agendas.]

    I see no reason to sit at home or simply scoff or fling poo from the
    sidelines, and let what I see as a bad situation get worse. There`s
    very little in that for practically anyone here – except of course
    those who like coal pollution, public utilities, corporate income
    taxes, big ag corporate welfare, political fights over government-owned
    resources, energy subsidies and over-regulation, etc. (and those folks
    aren`t sitting at home, believe me).

    I can keep on questioning everyone`s sanity or bona fides, or I can
    argue strongly for BETTER policies, that advance shared aims.

    Does Austrian thinking simply lack a practical political arm, other
    than those few who have signed up to support special interests?

    Ramblin` Tom

    Published: October 30, 2009 11:51 AM

  • TokyoTom

    Stephan, if I may, I am appalled and offended by your shallow and
    fundamentally dishonest engagement here. That there are a string of
    others who have preceded you in this regard is no excuse.

    You: (i) post without significant comment a one-page letter from a
    scientist – as if the letter itself is vindication, victory or a
    roadmap for how we should seek to engage the views and preferences of
    others,

    (ii) refuse to answer my straightforward questions (both above and
    at my cross-linked post, which you visited) on how we engage others in
    the very active ongoing political debate, in a manner that actually
    defends and advances our policy agenda, and (putting aside the
    insulting and disingenuous “Tokyo asked me to respond” and “it’s so
    rambling I am not sure what to respond to”); and

    (iii) then proceed to present your own view of the science, the
    motives and sanity “watermelons” (as if they`re running the show), a
    few helpful, free-market libertarian “solutions”, like open-air
    explosion of nuclear weapons to bring about a “nuclear winter” effect!

    And my attempt to bring your focus back to the question of how we
    actually deal with others in the POLITICAL bargaining that is, after
    all, underway is met with silence – other than your faithful report
    back from your trusty climate physicist expert policy guru friend about
    …. science (all being essentially irrelevant to my question, not
    merely the cute little folksy demonstration about how the troubling
    melting and thinning of Antarctic ice sheets actually now underway
    simply CAN`T be occurring, but also a further failure to address the
    very rapid ocean acidification our CO2 emissions are producing)!

    Maybe it`s me, but I find this type of insincere and shallow
    engagement on such a serious issue to be a shameful discredit to the
    Mises Blog (even if it does cater to those who prefer to think that the
    big to do about climate – which may very well result in a mass of
    ill-considered, costly and counterproductive
    legislation – is really groundless and so can simply be ignored, aside from a bit of internal fulminations here).

    If you are not actually interested in discussing policy on a serious issue, then consider refraining from posting on it.

    Maybe it`s not my position to expect better, but I do.

    Sincerely,

    Tom

    Roy Cordato (linked at my name) said this:

    “The starting point for all Austrian welfare economics is the goal
    seeking individual and the ability of actors to formulate and execute
    plans within the context of their goals. … [S]ocial welfare or
    efficiency problems arise because of interpersonal conflict. [C] that
    similarly cannot be resolved by the market process, gives rise to
    catallactic inefficiency by preventing useful information from being
    captured by prices.”

    “Environmental problems are brought to light as striking at the
    heart of the efficiency problem as typically seen by Austrians, that
    is, they generate human conflict and disrupt inter- and intra-personal
    plan formulation and execution.”

    “The focus of the Austrian approach to environmental economics is
    conflict resolution. The purpose of focusing on issues related to
    property rights is to describe the source of the conflict and to
    identify possible ways of resolving it.”

    “If a pollution problem exists then its solution must be found in
    either a clearer definition of property rights to the relevant
    resources or in the stricter enforcement of rights that already exist.
    This has been the approach taken to environmental problems by nearly
    all Austrians who have addressed these kinds of issues (see Mises 1998;
    Rothbard 1982; Lewin 1982; Cordato 1997). This shifts the perspective
    on pollution from one of “market failure” where the free market is seen
    as failing to generate an efficient outcome, to legal failure where the
    market process is prevented from proceeding efficiently because the
    necessary institutional framework, clearly defined and enforced
    property rights, is not in place.”

    Published: October 31, 2009 1:00 PM

  • TokyoTom

    Bala:

    “Did rising temperatures cause an increase in atmospheric carbon-dioxide concentration”.

    This is a great, basic question; I`d love to answer it (actually, I
    already did, though a bit indirectly), but you see, I`m one of the
    nasty obfuscating members of the socialist hysterical crowd, so I
    really should defer to others here who have better ideological and
    scientific stature here (and who hate ad hominems and love reason),
    such as fundamentalist, or perhaps even our confident lead poster,
    Stephan Kinsella (who has nothing to offer on the question of how
    libertarians should engage with others on the political front), or even
    our humble physicist climate system authority, Dr. Hayden.

    Gentlemen, take it away.

    Published: October 31, 2009 11:31 AM

  • TokyoTom

    I`m sorry I don`t have time now to respond in more detail to those
    who have commented in response to mine, but let me note that not one of
    you has troubled to actually respond to my challenge, which was based
    on Austrian concepts of conflict resolution, understanding of
    rent-seeking embedded in the status quo, and the recognition that the
    present debate on climate, energy and environmental issues presents
    opportunities to actually advance an Austrian agenda.

    In my view, we can either try to improve our lot, by seeking items
    such as those I laid out previously or condemn ourselves to irrelevancy
    by standing by and letting the big boys and the Baptists in their
    coalition hammer out something worse from our Congresscritters.

    For this, the correctness of our own views of climate science
    matters little – nothing, in fact, unless we are willing to DO
    something about it, by engaging with OTHERS who have DIFFERENT views.

    For those who have too much trouble remembering the legal/regulatory changes that I suggested, here they are:

    [pro-freedom regulatory changes might include:

    * accelerating cleaner power investments by eliminating corporate
    income taxes or allowing immediate amortization of capital investment,
    * eliminating antitrust immunity for public utility monopolies (to
    allow consumer choice, peak pricing and “smart metering” that will
    rapidly push efficiency gains),
    * ending Clean Air Act handouts to the worst utilities (or otherwise
    unwinding burdensome regulations and moving to lighter and more
    common-law dependent approaches),
    * ending energy subsidies generally (including federal liability caps for nuclear power (and allowing states to license),
    * speeding economic growth and adaptation in the poorer countries most
    threatened by climate change by rolling back domestic agricultural
    corporate welfare programs (ethanol and sugar), and
    * if there is to be any type of carbon pricing at all, insisting that
    it is a per capita, fully-rebated carbon tax (puts the revenues in the
    hands of those with the best claim to it, eliminates regressive impact
    and price volatility, least new bureaucracy, most transparent, and
    least susceptible to pork).

    Other policy changes could also be put on the table, such as an
    insistence that government resource management be improved by requiring
    that half of all royalties be rebated to citizens (with a slice to the
    administering agency).]

    Many others come to mind.

    Well, what`s it going to be? Relevancy, or a tribal exercise in disengaged and smug self-satisfaction?

    Published: October 31, 2009 12:37 PM

  • TokyoTom

    1. Christopher and mpolzkill:

    Thanks for the favor of your comments.

    I was asking if Austrians never seek to practically engage others on
    questions of policy; the first of you brings up Ron Paul, but one man
    is not a policy, nor are his sole efforts a policy program; the other
    of you suggests succession from the U, which is hardly an effort at
    pragmatic engagement with anybody over a particular issue. (BTW, here
    is Ron Paul`s climate program.)

    I can see some engagement by libertarians on this issue, but such
    seeds either (i) die when they fall on the rocky ground of the Mises
    Blog or (ii) represent work by people paid to criticize one side of the
    debate, and consistently ignore problems with the definitely
    non-libertarian status quo.

    Why libertarians do not see any opportunity here for a positive
    agenda? Do they prefer to be taken as implicit supporters of the
    government interventions that underlie most enviros` complaints?

    2. fundamentalist:

    “I don’t see anyone doing that except the GW hysterical crowd.
    Honest scientists like Hayden try to present evidence and reason so
    that we can have a real debate, and the hysterical crowd flings poo
    from the sidelines.”

    Thanks for your direct comment (even as you lace it and others with
    ad homs), but can`t you see you also are missing my point? Are you NOT
    interested in trying to cut deals that would, say:

    * accelerate cleaner power investments by eliminating corporate
    income taxes or allowing immediate amortization of capital investment,
    * eliminate antitrust immunity for public utility monopolies (to allow
    consumer choice, peak pricing and “smart metering” that will rapidly
    push efficiency gains),
    * end Clean Air Act handouts to the worst utilities (or otherwise
    unwinding burdensome regulations and moving to lighter and more
    common-law dependent approaches),
    * end energy subsidies generally (including federal liability caps for nuclear power (and allowing states to license),
    * speed economic growth and adaptation in the poorer countries most
    threatened by climate change by rolling back domestic agricultural
    corporate welfare programs (ethanol and sugar),
    * insist that government resource management be improved by requiring that half of all royalties be rebated to citizens,
    * end federal subsidies to development on barrier islands, etc. or
    * improve adaptability by deregulating and privatizing roads and other “public” infrastructure?

    Or is it more productive to NOT deal with those whom you hate, and
    stand by while special interests cut deals that widen and deepen the
    federal trough?

    TT

    Published: November 1, 2009 2:21 AM

  • TokyoTom

    Allow me to outline here a few responses to the arguments raised by
    Dr. Hayden, even as I do not pretend to be an expert (and, to be
    pedantic, even though they are largely irrelevant to the question of
    whether Austrians wish to take advantage of the opportunity presented
    by the many scientists and others who have differing views, to roll
    back alot of costly, counterproductive and unfair regulation).

    1. Models: Dr. Hayden disingenuously casts aside what modern physics
    tells us about how God plays dice with the universe (via random,
    unpredictible behavior throughout the universe), and the limits of
    human knowledge (including the ability to measure all inputs affecting
    climate, including all of our own), and essentially asks us to wait
    until our knowledge is perfect, and our ability to capture and
    number-crunch all information relevant to the Earth`s climate
    (including changing solar and cosmic ray inputs and ocean behavior)
    before any of us, or our imperfect governments, can take any action on
    climate.

    Physical and practical impossibility aside, is this how any human or
    any human organization structures its decisions? Narrowly, Dr. Hayden
    is of course right that “the science is not settled”, but so what?

    2. Was there a tipping point 300 million years ago (or whenever it was when CO2 levels reached 8000 ppm) ?
    Dr. Hayden plays with language, suggesting that a “tipping point” means
    something irreversible over hundreds of millions of years, when it`s
    very clear that there have in the past been numerous abrupt changes in
    climate (some taking place in as little as a few years, with a general
    return to prior values sometimes taking very long periods of time) and
    that scientists today are talking about tipping points that may be reached in human lifetimes.
    Will we lose all mountain glaciers? Will the Arctic become ice-free in
    winter? Will thawing release sufficient methane from tundras and seabed
    clathrates to push the climate even more forcibly than CO2? Are we set
    to lose glaciers in Greenland and Antarctica, regardless of what we do?
    Will we dry out the Amazon basin, and interrupt the Asian monsoon?
    There is plenty of concern and evidence that these things are real
    possibilities.

    3. “Global-warming alarmists tell us that the rising CO2 concentration is (A) anthropogenic and (B) leading to global warming.”

    But you never tell us whether you, too, Dr. Hayden, are an
    “alarmist”. Further down you acknowledge that “Nobody doubts that CO2
    has some greenhouse effect” admitting (B) (though not that it may be
    the chief factor), but as far as (A) goes, you only acknowledge that
    “CO2 concentration is increasing”. Care to make yourself an alarmist by
    admitting what cannot be denied – that man is responsible for rising
    CO2 concentrations? Or you prefer play with laymen`s ignorance by
    irresponsibly suggesting that rising CO2 is now due to warming oceans
    and not man`s activities?

    – “CO2 concentration has risen and fallen in the past with no help from mankind.”

    Yes, but what relevance is this now, when man is undeniably not simply “helping” but clearly responsible?

    – “The present rise began in the 1700s, long before humans could have made a meaningful contribution.”

    So? Does the fact that CO2 fluctuates naturally do to things other
    than man`s activities mean humans` massive releases of CO2 have NOT
    made a “meaningful contribution”? It`s very clear that the Industrial Revolution caused a dramatic rise in CO2. Surely you don`t disagree?

    – “Alarmists have failed to ask, let alone answer, what the CO2
    level would be today if we had never burned any fuels. They simply
    assume that it would be the “pre-industrial” value.”

    “Alarmists” of course is simply an unhelpful ad hom; and as for the rest, concerned scientists and laymen clearly note how CO2 has fluctuated prior to the Industrial Revolution.

    There undoubtedly many clueless laymen, just as there are some
    clueless scientists, so your sweeping statement may be narrowly
    accurate.

    But in the big picture, it is clear that man has had a drastic
    impact on CO2 levels – so what, precisely, is your point, except to
    confuse the issue?

    – “The solubility of CO2 in water decreases as water warms, and
    increases as water cools. The warming of the earth since the Little Ice
    Age has thus caused the oceans to emit CO2 into the atmosphere.”

    Sure, but this doesn`t mean man hasn`t been the dominant contributor to atmospheric CO2.

    Further, of course, warming oceans CEASED to release CO2 at the
    point that atmospheric CO2 started to make the oceans more acidic.

    – “The historical record shows that climate changes precede CO2
    changes. How, then, can one conclude that CO2 is responsible for the
    current warming?”

    The lag in the historical record BEFORE man simply shows that CO2,
    which has an acknowledged warming effect, was a warming reinforcer and
    not an initiator. This does NOT, of course, suggest that massive CO2
    releases by man magically have NO effect.

    4. Assuming that we ARE changing climate, is that a bad thing?

    – “A warmer world is a better world.” Maybe, but are there NO costs,
    losses or damages in moving to one? And do those people and communities
    who bear these costs or kinda like things as they are have any choice,
    much less defendable property rights?

    – “The higher the CO2 levels, the more vibrant is the biosphere, as
    numerous experiments in greenhouses have shown. … Those huge
    dinosaurs could not exist anywhere on the earth today because the land
    is not productive enough. CO2 is plant food, pure and simple.”

    I see; this is not a question of fossil fuel interests homesteading
    the sky (or being given license by govt) and so being entitled to shift
    risks and costs on us, but them beneficiently bestowing gifts on
    mankind – or dinosaurs, as Dr. Hayden may prefer! Wonderful gifts that
    cannot be returned for centuries or millenia! Yippee!

    [This is only scratching the surface of the letter, but I`m afraid I need to run for now.]

    Published: November 1, 2009 4:51 AM

  • TokyoTom [Note: my original post contained some bolding that went haywire and bolded most of the post; I`ve fixed that.]

    Okay, here`s a few more unconsidered thoughts to show how hysterical
    I am, am hooked on religion, hate mankind, [want to] return us to the Middle Ages
    and otherwise take over the world:

    – “Look at weather-related death rates in winter and in summer, and the case is overwhelming that warmer is better.”

    Sure, for If only it were so simple. The increase in AVERAGE global
    temps that we`ve experienced so far has meant little warming of the
    oceans (a vast thermal sink), and has shown up at higher latitudes,
    where we have seen a very marked warming and ongoing thawing, a shift
    of tropic zones away from the equator, disruption of rainfall patterns
    and stress on tropical ecosystems; all of this is considered to be just
    the beginning of a wide range of climate effects that have not yet been
    fully manifested for GHG and albedo changes so far,. much less to
    further increases in GHGs.

    – “CO2 is plant food, pure and simple.”

    It IS a “pure and simple” plant food, but your rhetoric implies much
    more – essentially that CO2 is NOTHING BUT plant food, and large
    releases of it have no effect on climate. And this, as you well know,
    is NOT a “pure and simple” matter.

    – “CO2 is not pollution by any reasonable definition.”

    You mean not by your reasonable definition, or under
    historical standards. But what IS “pollution”, but a social construct
    to describe the outputs of human activity that some of us have found to
    be damaging to our persons, property or other things that we value?
    Were CFCs released by refrigeration equipment “pollution” before we
    discovered that they damage the ozone layer?

    Scientists may be qualified to measure particular outputs and their
    consequences, but otherwise have no special insights into what others
    value.

    – “A warmer world begets more precipitation.”

    Sure, as warmer air generally holds more water – which in turn has a
    warming effect, let`s not forget. But as for the water itself, climate
    change leads to more severe rain events in some places but to droughts
    in others. And let`s not forget that a warmer world means that mountain
    snows don`t last until spring and summer as they once did, leaving
    streams and forests drier, and adversely affecting agriculture that
    relies on such water.

    – “All computer models predict a smaller temperature gradient
    between the poles and the equator. Necessarily, this would mean fewer
    and less violent storms.”

    Not so fast; this doesn`t hold for rain events or tornadoes.
    Further, independent paths of research indicate that while the North
    Atlantic may end up with fewer hurricanes, warming is likely to make them more intense.

    – How, pray, will a putative few degrees of warming melt all the ice
    and inundate Florida, as is claimed by the warming alarmists?

    First, note again the Dr.`s use of a strawman; no one is expect an
    imminent melt of “ALL” the ice. But significant melting and thinning of
    coastal ice IS occurring, and not merely on the West Antactic
    peninsula, which the good Dr. would realize if he`d trouble himself to
    compare his simple mental model, of reality with FACTS. As previously
    noted, coast ice sheets are plugs that slow the flow of glaciers from
    the interior. As these plugs are removed, the glaciers flow more
    quickly, via that exotic phenomenon we call “gravity”. I`ve already
    addressed this above, with links.

    – “If the waters around it warm up, they create more precipitation.”

    Yes, but does the new precipitation balance the ice being melted?
    Actual, detailed observations tell us that, despite your absolute
    certainty, that we are seeing increasing net mass losses far inland,
    not merely in Greenland but also in Antarctica. Your religious-like
    faith in your own superior understanding doesn`t make the facts go away.

    – “The ocean’s pH is not rising. It is falling, ever so slightly.
    Obviously your respondent has not the faintest clue as to how pH is
    defined. (BTW, the oceans are basic, not acidic.)”

    Yes, the good Dr. catches my mistake – pH is falling rather
    remarkably (from basic towards acidic) – but he too hastily skates past
    the main point, which is that this is due to increased atmospheric
    levels of CO2, which prove that the oceans are NOT actually releasing
    CO2 (or they`d be becoming more basic).

    I provided links in this last year here:
    http://blog.mises.org/archives/007931.asp#c192563

    Here`s more:
    http://www.scienceprogress.org/2008/06/our-dying-oceans/
    http://docs.google.com/gview?a=v&q=cache:y_W6vseUrykJ:www.tos.org/oceanography/issues/issue_archive/issue_pdfs/20_2/20.2_caldeira.pdf+caldeira+ocean+ph&hl=en&gl=jp&pid=bl&srcid=ADGEESgEEoFLf7xd9QTyol2TYYmXKPxXFqMq5Nr1IPdGd_yEbV3zIxPi-4Rmhb6d-IQ-r4BPwBqzyhF6GZQw_ka1Eh3Ynn0lYlP7p974IYMHIdLMVE90nWJ81GHAfcdTrUJTNk7W8Man&sig=AFQjCNGg6Idq6GQ5gyrddlXRD8R98NQ_dQ

    From the Plymouth Marine Laboratory (UK) :

    “Until recently, it was believed that the oceans contained so much
    disolved carbonate and bicarbonate ions that any extra would have
    little effect. In fact this absorbtion was generally acknowledged a
    valuable process in protecting the planet from the worst effects of
    rising temperatures and climate change. However, in 2003 a paper was
    published in Nature (vol 425) which suggested that the increases in
    atmospheric CO2, occurring over the last 200 years, has actually
    increased the acidity of the oceans by 0.1 of a pH unit.The pH scale is logarithmic and this change represents a 30% increase in the concentration of H+ ions.

    “However, atmospheric concentrations of CO2 have been
    higher during previous times in Earths history and these high CO2
    periods didn’t cause ocean pH to change. The difference now is that the
    rate at which CO2 concentrations are increasing, is 100 times greater
    than the natural fluctuations seen over recent millennia. Consequently,
    the processes that ultimately balance the carbon cycle are unable to
    react quickly enough and ocean pH is affected. About half of all
    released CO2 is absorbed by the oceans but even if we stop all
    emmissions today, the CO2 already in the atmosphere has been predicted
    to decrease ocean pH by a further 0.5 unit.”

    From
    Wikipedia”>http://en.wikipedia.org/wiki/Ocean_acidification”>Wikipedia:

    “Dissolving CO2 in seawater also increases the hydrogen ion (H+)
    concentration in the ocean, and thus decreases ocean pH. Caldeira and
    Wickett (2003)[1] placed the rate and magnitude of modern ocean
    acidification changes in the context of probable historical changes
    during the last 300 million years.

    Since the industrial revolution began, it is estimated that
    surface ocean pH has dropped by slightly less than 0.1 units (on the
    logarithmic scale of pH; approximately a 25% increase in H+), and it is
    estimated that it will drop by a further 0.3 to 0.5 units by 2100 as
    the oceans absorb more anthropogenic CO2.[1][2][9] These changes are
    predicted to continue rapidly as the oceans take up more anthropogenic
    CO2 from the atmosphere, the degree of change to ocean chemistry, for
    example ocean pH, will depend on the mitigation and emissions pathways
    society takes.[10] Note that, although the ocean is acidifying, its pH
    is still greater than 7 (that of neutral water), so the ocean could
    also be described as becoming less basic.”

    “The term global warming has given way to the term climate
    change, because the former is not supported by the data. The latter
    term, climate change, admits of all kinds of illogical attributions. If
    it warms up, that’s climate change. If it cools down, ditto. Any change
    whatsoever can be said by alarmists to be proof of climate change.”

    Wonderful observation, except for the fact that IT`S WRONG; the
    change instead being deliberately led by Republicans; leading
    Republican pollster/ spinmeister Frank Luntz in 2002 pushed Republicans
    to move the public discussion away from “global warming” to “climate
    change”, because, as Luntz wrote,

    “’Climate change’ is less frightening than ‘global warming.’
    … While global warming has catastrophic connotations attached to it,
    climate change suggests a more controllable and less emotional
    challenge”.

    Of course there IS the inconvenient fact that “climate change” is
    actually more accurate than simple “global warming”, but who cares
    about accuracy anyway, right Dr.?

    – “the earth has handily survived many millions of years when CO2
    levels were MUCH higher than at present, without passing the dreaded
    tipping point.”

    I already addressed above the point that while the Dr. seems to
    what to recreate the Cretaceous, the better for dinosaurs, most of us
    seem rather to like the Earth that we actually inherited and that the
    rest of current Creation is adapted for. He is obviously a physicist
    and not a biologist, and doesn`t seem to give any thought to the
    rapidity of the scale at which we are conducting our little
    terraforming experiment, and te challenges the pace of those changes
    are posing to ecosystems.

    – “To put it fairly but bluntly, the global-warming alarmists
    have relied on a pathetic version of science in which computer models
    take precedence over data, and numerical averages of computer outputs
    are believed to be able to predict the future climate. It would be a
    travesty if the EPA were to countenance such nonsense.”

    To put it bluntly, this is largely rubbish; there is a tremendous
    and growing amount of climate change DATA. You just make it your habit
    not to let facts get in the way of your own opinions. I would be a
    travesty if we continue to countenance posts such as yours, questions
    of relevance to Austrian purposes aside.

    – “I don’t do politics”

    Fine; I can see why that would not be your forte. But what`s very
    puzzling is that you seem to think that climate science IS your forte,
    when all you`ve show is a shocking level of arrogant ignorance.

    – “I don’t pretend to be an economic theorist.”

    And on a blog dedicated to Austrian economists, just why, one
    wonders, do the “giants” in our Mises world keep filling the Blog pages
    with post such as this, which are, on their very face, IRRELEVANT, to
    the question of how Austrians wish to address the preferences of other,
    the misuses of government and the management of unowned common
    resources.

    – “he only difference between the Republicans and the Democrats
    is, in practical terms, their rhetoric. I don’t pretend to be an
    economic theorist.

    – “But the notion that we can run an industrialized giant on
    chicken manure and sunbeams doesn’t even pass the giggle test. Except
    in Washington.”

    At long last, you say something something intelligible. Except
    Washington spends trillions on nonsense at the drop of a hat, if you
    haven`t noticed recent events.

    Published: November 1, 2009 10:02 AM

  • TokyoTom

    Sorry if I`ve been a bit intemperate; that I`m rushed doesn`t excuse it.

    Dr. Hayden, you are entirely welcome to your own opinion and your
    own mental map of reality, but not to your own facts. As to your
    opinion and mental map, they are by your own admittance uninformed as
    to matters of economics and political science, but I must confess that
    I find your understanding of climate science to be seriously wanting.

    Given these, I fail to see what you offer here, other than a
    convenient, if very thin, cover for others here who don`t want to
    think, or to fight to make the world (or our own government) better.

    Sincerely,

    Tom

    Published: November 1, 2009 10:11 AM

  • TokyoTom

    Bala, I appreciate your polite persistence; I`m sorry I haven`t responded yet, but I`ll get to you.

    Please note that my time is both limited and my own (though indeed
    others have claims on it), and I have no obligation to spend any of it
    responding to your importunings regarding climate science, which are
    now shading into impertinence.

    Feel free to draw whatever conclusions you wish, but a fair reader might note that:

    – my priorities may (unsurprisingly) differ from yours,
    – my chief points (and Austrian principles as to how to engage with others) have nothing to do with climate science per se,
    – I explicitly make no pretense of being a scientist or climate expert, and
    – in any case, there is no simple course to understanding reality; we
    are all forced to make decisions as to how much energy to devote to
    puzzling things out on our own (and overcoming what we know of our own
    subconscious cognitive filters) versus outsourcing this effort to
    others (by accepting things without deliberation, “on faith” as it
    were).

    Others who have been around longer will know that I`ve also devoted
    what they might consider an unreasonable amount of my time over the
    past few years, “hysterical” trying to help others work through climate
    science (and policy) issues.

    TT

    Published: November 1, 2009 8:46 PM

  • TokyoTom

    mpolzkill:

    – “Tom, believing you live in a Republic with 300,000,000 people is a delusion which heads off all actual pragmatism.”

    This is not a delusion I have, but in any case it`s not at all clear
    that this or any other delusion “heads off all actual pragmatism”.

    – “Until there is actual representation, everything said by we
    proles is literally hot air (unless it’s happens to coincide with
    whatever benefits the regime).”

    I use “our government” simply as shorthand for what you call “the
    regime”, but perhaps may be more accurately described as a multicentric
    mess.

    In any case, the painstaking efforts of LVMI to grow the Mises
    website, and the welcome reception of and contribution to those efforts
    by everyone here – yourself included – belies both your near-nihilistic
    cynicism and your conclusion, as to virtually every topic discussed
    here. Words are deeds, though they be more or less frivolous, weighty,
    insightful or consequential.

    If the other Mises bloggers agreed with you as to the possible
    efficacy of their words, either generally or on this particular topic,
    they simply wouldn`t bother to post.

    However, I share your concern about efficiacy, which is why I
    criticize posts such these (whether by Stephan, George Reisman, Sean
    Corrigan, Walter Block, or Jeffrey Tucker), which are, by and large,
    more of a circle jerk than an effort to engage.

    – “thank you for being respectful”

    My pleasure, but you hardly need to thank me; this is a community, after all.

    – “even though you mistakenly think I’m a nut.

    In this case, it is you who are mistaken (not that you ARE a nut, but that you think I think you are).

    Tom

    Published: November 1, 2009 9:35 PM

 

This is last version of the comment that I tried to post several times:

method fan:

[my first attempt apparently failed to post, so apologies if this shows up twice]

– “You are insofar wrong, that not only this “data” is analysed but it is also used to “predict” the future of reality by using it in simulations!”

You miss my criticism of Dr. Hayden`s refusal to examine facts about ongoing melting in Antarctica, but of course I do NOT disagree with you that current and paleo data can be used to “predict” the future.

But of course a scientific understanding of the world, and information – in this case, both about the past and current trends of climate inputs – certainly can give us useful information about what the future may hold in store for us.

“There is no sound experimental proof that human activity-emitted carbon dioxide is the cause for some sort of global warming.”

Nicely phrased; there of course plenty of experimental proof that carbon dioxide is an atmospheric warming agent, but no experimental proof that it is “the” cause for any global warming.

While we are now running such a global experiment – one that started centuries ago and will not be played out for centuries hence and is, for all intents and purposes irreversible – and thus cannot, in the Popperian sense, even be considered an “experiment”.

Whether our ramping up of the experiment is prudent or principled are entirely different questions, and properly the subject of much discussion.

– “These guesses remind one of the idea that rain dances are the cause for rain.”

I`m tempted to make a comeback, but surely you realize your flip comparison is entirely inapropos.

Here`s hoping for more sincere discourse.

TT

Block/Huebert/Kinsella revisit corporations, beg Qs of grant of limited liability towards persons involuntarily injured and resulting fight to influence state action

September 10th, 2009 No comments

I left the following comment at a recent Mises Blog post by Stephan Kinsella, but the number of links included apparently triggered the spam filter and held up the comment.  According, I post it here, so I can re-comment with a cross-link here.

Stephan, we have extensively discussed this matter previously, focussing mainly on the point that Vincent Cook raises, namely, the consistency with libertarian principles of the state grant of limited liability as against parties who become unwilling “creditors” of the firm as a result of being injured by the actions of the firm.

You continue to dodge this point just as Block and Huebert have explicitly begged the question in their latest effort (emphasis added):

“As long as there is no fraud, as long as all those who deal with corporations know full well that in case of any dispute, they will only be able to sue for an amount up to the full capitalization of the corporation and not have access to the shareholders’ personal assets, there can be no problem with the libertarian legal code.”

It goes without saying that injured persons don`t choose ahead of time who will injure them, much less the whether the liability of their tortfeasors will be limited to corporate assets. [IOW, when it comes to limited liability corporations, there IS a fairly glaring problem with the libertarian legal code.]

Our previous discussions on the Mises Blog took place here and here

And an earlier related discussion on the Mises Blog was here:

I have commented extensively myself on the consequences of this grant – which I see as fuelling risky corporate behavior and a cycle of “rent-seeking” fights with private interests seeking to use the state as a check against corporations – in a number of blog posts, such as the following:

http://mises.org/Community/blogs/tokyotom/archive/2008/11/26/corporations-amp-the-state-some-criticisms-of-huebert-and-block-s-criticisms-of-long.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/03/03/when-will-tom-woods-and-other-quot-free-market-quot-intellectuals-have-second-thoughts-about-limited-liability.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/02/26/the-curse-of-limited-liability-wsj-com-executives-traders-of-big-financial-corporations-generate-risky-businesss-while-smaller-partnerships-are-much-more-risk-averse.aspx

http://mises.org/Community/blogs/tokyotom/archive/2007/10/16/fighting-over-the-wheel-of-government.aspx

http://mises.org/Community/blogs/tokyotom/search.aspx?q=limited

http://mises.org/Community/blogs/tokyotom/pages/legal-resources-on-the-state-creation-of-limited-liability-for-shareholders.aspx

 

Dialogue with Stephan Kinsella on the state grant to shareholders of limited liability for corporate torts – a gift that keeps on giving

December 22nd, 2008 No comments

Stephan Kinsella, in two recent blog posts, Left-Libertarians on Corporations “Expropriating the Efforts of Stakeholders” and Corporations and Limited Liability for Torts, kindly provided a forum to discuss the issue of the limited liability that states grant to shareholders of corporations (and more recently to partners in LLPs (limited liability partnerships) and LLCs (limited liability corporations)) for torts committed by business enterprises and their employees and agents. 

It was in the context of these two posts that I have done a little legwork in pulling together legal resources regarding limited liability, which I publish in an earlier post.

By law, under most statutes providing for the establishment of corporations, shareholders (whether individuals or business interests) simply risk the amount of their investment in the event that corporate liabilities exceed corporate assets, and otherwise have no personal liability for a corporation’s debts, whether such debts resulting from negotiated loans with creditors or similarly negotiated obligations to employees, or from the harms that a corporation’s business activities (which may or may not also be attributable to identifiable employees, agents and managers) cause to involuntary third parties.

The short version of our conversation is that Stephan acknowledges that the state grant of limited liability is non-libertarian and unjustified, but plays down its importance – essentially by ignoring the past and ongoing effects that the absence of any personal risk to shareholders has certainly had on the evolution of corporations, on shareholder control, and on managerial and employee behavior, and instead focussing on a static argument that today, under libertarian principles, shareholders have little actual control over corporate actions and merely passive shareholders probably would not have liability.  While Stephan’s point is correct, it is shallow and static, and ignores the bigger picture.

My own view is that the grant of limited liability for torts has played an important role in engendering shareholder powerlessness vis-a-vis management, fuelling the growth of the environmental movement, general mistrust of corporations, and the at time rather paranoid “risk society” that we face today, and locking us into a spiral of increasing government interventions into corporate management that tend to further free management from shareholder control while raising barriers to entry, and providing greater incentives and opportunities for non-investor “stakeholders” to try to increase their influence on corporate behavior.

I hope to explore these issues in further posts, but for now I thought it would be useful – to those interested in exploring the ramifications of limited liability – to pull together some of my comments and dialogue (with Stephan and others) from the two posts noted above. 

 1.  Published: December 9, 2008 3:25 AM (emphasis added)

Stephan, while I agree with most of your post, your attempt to shift the burden of argument on the issue of limited liability strikes me as a bit disingenuous:

most people … seem to simply assume that … absent state law, shareholders ought to be liable for torts committed by employees. This has has to be established before one can bluster in outrage at the failure of the state to hold shareholders personally liable for such torts.

As I’ve noted elsewhere,  one of the chief purposes and effects of the corporate form is that through it, the state allows owners to sidestep any personal liability for the wrongful acts that their corporation commits, with the result that liability for such wrongful acts is limited to the assets of the corporation. Very clearly, limited liability to investors is an act of state, and not something that investors could contract for in advance with the as yet unknown victims of their future torts. As such it seems to me clearly inconsistent with libertarianism.

Do you find it so difficult to establish that such limited liability IS consistent with libertarianism that your best response is to shift the burden of proof, while characterizing those who disagree with you as “blustering with outrage”?

2.   Published: December 10, 2008 7:43 AM (emphasis added)

Stephan, thanks for your comments.

1. Me: “one of the chief purposes and effects of the corporate form is that through it, the state allows owners to sidestep any personal liability for the wrongful acts that their corporation commits”

You: It’s only sidestepping if they should have this liability in the first place. Should they?

Again, you are shifting the burden of proof on the issue. Is there any libertarian argument that the state OUGHT to step in and allow investors to unilaterally shift a portion of the risks of their business venture to others who might be damaged by the activities of the business?

I don’t believe that there is any such libertarian justification for limited liability. Without the act of state in creating limited liability for shareholders, such limited liability would not exist – except perhaps vis-a-vis creditors and business counterparties who might otherwise agree to limited their claims to the assets of the company, in exchange for agreed methods of risk control or higher prices. However, such limited liability could not otherwise exist as to Involuntary (or “tort”) creditors who without their consent are injured by the corporation, who have not agreed to assume the risk of corporate insolvency and shareholders’ limited liability, and who have neither received ex ante compensation for doing so nor had the opportunity to bargain for contractual safeguards.

This result seems to be entirely outside of libertarian principles that require voluntary exchanges and eschews takings by force (including by the state), particularly if uncompensated.

2. Me: “with the result that liability for such wrongful acts is limited to the assets of the corporation.”

You: This is untrue. Liability on the part of the *person who committed the wrongful act* is unlimited. If an Exxon employee robs your house, you can sue him for all he’s worth.

Me: My point is that limited liability lets investors entirely off the hook for damages that the wrongful acts of the corporation and its employees. While a few employees might individually be held responsible for their actions, this still may leave many injured persons uncompensated for injuries cause by a corporation’s business activities (many of which it many be impossible to identify a single bad/responsible actor inside the firm: defective products, pollution, etc.).

Before limited liability corporations were established, the common law doctrine of respondeat superior required investors to bear responsibility for the acts of a business, just as individual proprietors and partnerships remain so liable today.

3. Me: “Very clearly, limited liability to investors is an act of state, and not something that investors could contract for in advance with the as yet unknown victims of their future torts.”

You: Now, if you want to object to the inability to sue shareholders for vicarious liability for the torts of another, you need to show that the victim *should* be able to sue the shareholders. Should he? If so, why? What exactly is your theory of causation and responsibility?

Me: Again, you simply fail to answer my question, and presume that the state action that leaves shareholders free to shift business risks to others is valid and justifiable. Even as you remain unwilling to make your case, I am happy to expand my argument that limited shareholder liability is an unlibertarian grant by the state to shareholders.

The chief point, of course, is that the creation by the state of corporations limits tort liability to individual tortfeasors (if any) and to the corporation itself – up to the value of its assets (after sharing with all other creditors), and frees the owners from liability. This reduces the likelihood that victims will receive full compensation for corporate acts. Unlike an unincorporated entity, the act of the state in authorizing investors to act through corporations thus places the owners (and managers, who are similarly free from liability except for torts they may individually commit) in a position to shift some of the social costs of their business activity on to members of the public who have not agreed to bear those costs.

Because the shareholders (and employees and managers) bear no responsibility for the full magnitude of costs that corporate activities may impose on others, as an activity holds some promise of increasing shareholder wealth, limited liability for tort claims creates a moral hazard problem by leaving shareholders (and managers) with the possible upside benefits to such activities without regard for the full magnitude of possible social costs (which might greatly exceed the benefits).

This results in not simply in an unjust and uncontracted for shifting of risks from tortfeasor corporations to victims, but also inefficient resource allocation decisions – by shifting risks to those least positioned to anticipate or manage them, and by encouraging excessive entry and aggregate overinvestment in hazardous industries while not fully incentivizing investment in precautions.

Further, the limited liability of the corporate form greatly reduces incentives of shareholders to monitor corporate risk-taking, and frees executives to act in ways that further their own interests without bearing full responsibility for risks that are posed to third parties and to investors (which is quite evident in the activities leading up to the ongoing financial crisis).

The subject of limited liability has been much discussed recently; may I recommend the following?  [see my related post with links to discussions among legal scholars]

3.  Published: December 10, 2008 11:14 AM  (emphasis added)

In corporations, by government fiat none of the owners has unlimited liability, and the lack of control that investors or their transferees typically have is a reflection of that limited liability. Of course it is possible for shareholders to have actual control, whether in the case of close corporations or even large public ones, and courts sometimes “pierce the corporate veil” (very sporadically) to hold shareholders responsible for bad acts despite legal niceties.

Corporations are creatures of the state that could not exist in their current form without a transfer of risk that is neither voluntary nor fully compensated.

There is nothing objectionable in excluding bondholders or other voluntary creditors from unlimited liability; they can bargain for limited risks and certain controls over corporate action. The question is whether it is consistent with libertarian principles to limit the liability of ALL investors to those who are subjected unwillingly to damage resulting from the torts of the corporation.

While I am sympathetic to common investors in public corporations, who have bargained for the situations they find themselves in, and not for unlimited liability, the question of where we go from here is logically distinct from the question as to whether the course to the present situation is one that comports with libertarian principles.

It seems to me that it does not, and that we face any number of undesirable consequences as a result – not merely a shifting of risks to citizens that finds its counterpart in citizen pressure groups, but in a bifurcation of ownership and control that provides ample opportunity for executives to loot their firms. These come on top of the problems with rent-seeking and politicization that tie in with the growth of big government.

4.  Published: December 11, 2008 3:42 AM (emphasis in original)

TT: “Is there any libertarian argument that the state OUGHT to step in and allow investors to unilaterally shift a portion of the risks of their business venture to others who might be damaged by the activities of the business?”

SK: No, and the state should not exist. But people criticize corporations as being *mere* creatures of the state on the grounds that the state gives them privileges that would not exist in the free market.

TT: My point is simply that there is no libertarian argument that the state OUGHT to step in and allow investors to unilaterally shift a portion of the risks of their business venture to others who might be damaged by the activities of the business. I’m glad that you agree, and am puzzled that you do not acknowledge that the state grant of limited liability to investors (and to transferees of such investors) in corporations constitutes an uncontracted-for shifting of risks to investors from victims of corporate torts.

TT: “Without the act of state in creating limited liability for shareholders, such limited liability would not exist – except perhaps vis-a-vis creditors and business counterparties who might otherwise agree to limited their claims to the assets of the company, in exchange for agreed methods of risk control or higher prices. However, such limited liability could not otherwise exist as to Involuntary (or “tort”) creditors who without their consent are injured by the corporation, who have not agreed to assume the risk of corporate insolvency and shareholders’ limited liability, and who have neither received ex ante compensation for doing so nor had the opportunity to bargain for contractual safeguards.”

SK: Again: the question is, absent the state, should shareholders be vicariously liable for torts committed by employees, or not? The presumption is they should not, since they did not commit the acts–unless you can come up with a sound argument for why they should (and pointing to the way it’s been done before doesn’t cut it).

TT: Stephan, again you refuse to actually advance a justification for the government grant of limited liability to shareholders (indeed, you concede that, there is no libertarian argument for such a state grant), but simply argue for the status quo, on the grounds that shareholders don’t typically themselves do not commit the torts.

If there is no libertarian grounds for the use of government fiat to limit the liability that shareholders bear for the risks that the activities of the business might injure others, then surely the “presumption” you offer should be reversed, and you should advance a case that whether those who are injured by business enterprises should justly be forced to assume the risk that their ability to make claims against the assets of the business owners depends upon whether the business happens to be a sole proprietorship, a partnership or limited liability corporation.

TT: “My point is that limited liability lets investors entirely off the hook for damages that the wrongful acts of the corporation and its employees. While a few employees might individually be held responsible for their actions, this still may leave many injured persons uncompensated for injuries cause by a corporation’s business activities”

SK: You are assuming the “business activities” are “the cause”. This is question begging.

TT: Well said, Artful Dodger, but it’s not me who’s begging the questions. Putting aside (i) the question of the scope of vicarious liability WITHIN the firm and (ii) cases where there is a only one a single injured party and a single employee committing an unauthorized tort, it is undeniable that small, medium and large corporations have in the past and continue from time to time to commit large-scale torts – in the form of pollution, dumping of waste, defective products, other personal injuries, slander and the like – that arise directly from their business activities. In most such cases, no single individual tortfeasor within the corporation can be identified. Clearly, in some such cases a few employees might individually be held responsible for their actions, this still may leave many injured persons incompletely uncompensated for injuries caused by a corporation’s business activities.

TT: “Before limited liability corporations were established, the common law doctrine of respondeat superior required investors to bear responsibility for the acts of a business, just as individual proprietors and partnerships remain so liable today.”

SK: Why should they be? Because the common law says so?

TT: No; sole proprietors and partnerships have been and remain liable for the acts of a business because it is unjust to allow them to externalize a significant portion of the risks of their activities, while capturing the benefits of those risks. The state, by providing the corporate form, allows the externalization of such risks on a vast scale, and continues to do so by further making limited liability available for those who prefer to be taxed as partners. But to reverse the question, perhaps you care to point to libertarian principles or a common law doctrines (which libertarians frequently point to as a valid basis for determining the scope of ownership rights and who should be responsible for injuries caused to others) that would justify a position that those who own and operate businesses ought NOT to be responsible for the damages those business activities cause, beyond the assets of the business?

TT: “Again, you simply …. presume that the state action that leaves shareholders free to shift business risks to others is valid and justifiable. Even as you remain unwilling to make your case, I am happy to expand my argument that limited shareholder liability is an unlibertarian grant by the state to shareholders.”

SK: You need to explain why shareholders should be liable. You keep calling them investors–shareholders are usually not investors.

TT: Again, you are nonresponsive. Perhaps you should pick fewer nits and acknowledge the bigger picture. For small corporations, start-ups, and corporations raising capital, the shareholders typically are investors. Moreover, for small firms, closely-held firms (including large LBOs) and even for many large firms, there are major shareholders that are also clearly “owners”. You have advanced no libertarian or other argument that justifies limiting the liability of investors and owners at all for the torts of corporations; much less for your implied position that investors and owners should be able to freely slough-off any vicarious responsibility for damages to victims of corporate acts by the simple expedient of selling their shares to others (who, while they do not directly fund the company, are certainly investing in ownership of the same set of assets and liabilities as the initial investors).

TT: “The chief point, of course, is that the creation by the state of corporations limits tort liability to individual tortfeasors”

SK: It limits state-imposed vicarious tort liability. If the state stops taxing you, this is good, because it should not be taxing you in the first place. If the state stops imposing vicarious tort liability on shareholders, this is also good, if it should not be doing this in the first place. You seem to assume they should. why?

TT: Where does “the state” impose vicarious tort liability? Respondeat superior is largely an old and evolving part of the common law. I don’t agree with all cases, but individual judgments are hardly the same as the state acting by law to free shareholders from liability above the amount they paid for the shares for the risks generated by corporate activities.

TT: “This reduces the likelihood that victims will receive full compensation for corporate acts.”

SK: If a FedEx driver negligently crashes into you, why arey ou calling it a “corporate act”? He was not directed to do this by FedEx, was he? Why is his negligence theirs?

In any event–this whole critique is ridiculous. Whenever a corporation’s employee commits a tort, the victim is compensated by the corporation or its insurer. IT’s almost always irrelevant that he can’t sue shareholders individually. Even if they could, shareholders could simply purchase shareholder-liability-insurance, no biggie.

TT:  The grant of limited liability to involuntary creditors cannot be justified on libertarian grounds, and arguments I have noted regarding efficiency, moral hazards, equity, the disincentives for shareholders to closely monitor firms, the relative freedom of managers and executives to loot, and the related rise of citizen pressure groups to seek to have governments provide checks are all substantial and important.

While there are many cases where injured persons are compensated, there are many cases where corporations have generated widespread risks and failed, leaving countless others holding the bag, while investors (and managers) may have profited and then exited without substantial loss. The limited liability grant actually encourages such behavior.

You say that, if victims could “sue shareholders individually”, in which case “shareholders could simply purchase shareholder-liability-insurance, no biggie”. I heartily agree – a system of pro rata shareholder unlimited liability would work (as one of the law journal articles argues), as well as being more just. I appreciate the concession – so have you stopped fighting this point?

5.  Published: December 12, 2008 3:42 AM  (emphasis added)

Say you have an unincorporated sole proprietor who is engaged in manufacturing and produces is a hazardous or toxic waste. If he disposes it in a way that causes injury to others, he is liable – up to all of his assets (and even further, though it may be a bankruptcy law cut off and it not be worth the injured person’s efforts). If he hires one or more employees, he is responsible for any injuries if he directs them to dump the hazardous waste, or if they cut corners as a result of his negligent oversight.

If he incorporates, he will not be held responsible personally unless he committed the tort himself or directed it; his liability will be limited to the net assets of the firm. Clearly, the state grant of limited liaiblity lessens the ability of persons injured by his business activities to recover damages for their losses (they MIGHT be able to recover from the employee, but they will not have access to his personal assets). This creates a moral hazard on the part of the corporation owner to maximize private benefits from business activites while not having to worry about whether the full scope of losses may exceed the value of the gains. Courts recognize the injustice in this and sometimes “piece the corporate veil” to protect injured persons and even voluntary creditors.

The state grant of limited liability has made it possible for founding shareholders to gather even more capital from persons who know that their downside risks are limited and wish to capture upside benefits. As these shareholders have limited liability, they also have limited interest in making sure that risks are managed well. The result has been a continuing erosion of shareholder rights, a whithering of control over managers, and the growth of ever larger corporations able to impose ever larger risks on society (the downside of which they can further limit by separately incorporating different business lines, especially the riskier ones).

The focus on investors earning profits while bearing no personal responsibility for losses has given us a gradual shift in the nature of corporations (which now are given rights by the state to have unlimited lives and unlimited purposes, and are even recognized as “persons” for purposes of the Bill of Rights), a growth in corporate scale and risks posed to others (as shareholders, creditors and executives, managers and employees have increasingly less identifiable personal risk and more opportunity to look out for number one while ignoring risks), and a growth in citizens forming pressure groups to push for the regulation of firms and the risks they pose (mandating the posting of bonds for certain activites, mandating pollution clean up, etc.).

All fed by the state grant of limited liablity – which could only exist on a libertarian basis (without veil piercing) if a substantial owner was covering the risks.

6.  Published: December 15, 2008 6:21 AM  (emphasis added)

Stephan, thanks for the further remarks.

1. me: the state grant of limited liability to investors (and to transferees of such investors) in corporations constitutes an uncontracted-for shifting of risks to investors from victims of corporate torts.

you: “It’s not a shift if they don’t or shouldn’t have liability in the first place”

TT: Your conditional rejection obviously fails. Clearly state action is necessary to limit shareholders’ liability to the amunt of their investment, and a key aspect of the popularity of the limited liability corporate form over other forms is precisely that it limits the downside liability that shareholders would otherwise bear for the risks of damage that the activities of the company (via employees) pose to unconsenting others who are victims.

As new limited liability forms have been created (LLC and LLPs), once tax authorities have confirmed pass-through tax treatment, their use has exploded, precisely to limit prior liability for torts (and to voluntary creditors). Large public firms separately all of the various hazardous ventures (that they own and control) precisely because they want to limit liaibility to third parties that they would otherwise be exposed to.

2. Nice to see that you see no justification for the government grant of limited liability to shareholders in the first place, and that youy are not arguing for the status quo.

3. you: “there is no libertarian grounds for the state to *impose* liability on shareholders for acts of employees.”

I agree with your statement, but it dodges the real issues. The government acted in a unlibertarian fashion by establishing granting limited liability – previously, unlimited liability of investors for acts of a venture had been imposed not by the state, but by common understanding; as most ventures had no separate legal entity status, vicarious liability for torts was more narrowly applied, and wouldn’t always reach investors.

But with the corporate form, the scale of risks imposed increased and the legal entity was imputed by courts to be the master to which corporate employees reported. But this new “master” was accountable to no one directly, with an ability to seek gains for the benefit of shareholders while creating risks for others, without any requirement to maintain assets to make others whole for the risks imposed: dividends could be paid to shareholders from profits, but when liabilities arose, the firm could simply be shut down.

There are of course many firms where there are identifiable shareholders in charge, and who would have liability but for the corporate form.

4. “I have little interest in reading the works of a bunch of mainstream unlibertarian utilitarian state apologist lawyer hacks.”

Your call, but others may think that reading about the history of the rise of limited liaiblity corporations, some of the results (transfer of risks to parties who are injured without any ability to bargain ahead of time, and resulting pressures for the state to interfere FURTHER), consideratons of the equities and economic efficiency of the status quo, and suggestions for reform might be useful in understanding the full subject.

5. you: “absent the state, should shareholders be vicariously liable for torts committed by employees, or not?” “I’ve given my reasons and sketched out my view of a theory of causation.”

Sounds like I need to refer to the other thread, but certainly here you’ve done nothing of the kind here.

But as for an argument that shareholders should be vicariously liable for torts committed by employees, I could advance the following:

– there are many cases where a small group of shareholders clearly owns and controls a company, in which there is no basis to artificially limit vicarious liability to the company level. Such shareholders may be individuals that own a small firm or via and LBO own a very large firm that was once public, or may be corporations that own and control subsidiaries.

– without limited liability, shareholders of large firms would have been much more interested in limiting the risks of losses and damages that exceed company assets, and would have made sure that they were in a position to manage downside risks directly (through management of executives, managers and employees) and indirectly via insurance (which insurers would also be incentiivized to manage and price risks).

– Sure, there are many investors/shareholders of in “public” companies that have no ability to control corporate risks, but except for the state grant of limited liaiblity, there are no other such classes of shareholders.

– The imposition of large-scale risk of injuries by limited liaibilities on involuntary victims is unjust and inefficient, shareholders (and executives) are better placed to bear the risks, shifting to pro rata unlimited liability by shareholders would not destroy markets (insurers could step in, for a price), and moving to such umlimited liability would greatly reduce the pressures on (and rationales used by) governments to force corporations to disclose more risks, maintain greater capital, bonds and insurance.

6.  Published: December 11, 2008 4:54 AM

By the way, Stephan, I don’t consider myself an “anti-corporate type”, or an “anti-industrialist”, “socialist” or “left-libertarian” either.

I’m just an anti-uncontracted-for-limited-liaibility-for-torts” type. There are plenty of my type in the world of corporate lawyers, as I noted on the other thread.

7.   Published: December 15, 2008 5:02 AM (emphasis added)

Roger:

Kinsella has already established that the master is responsible for the actions of his servant, so corporations are responsible for employees. Anti-corps want the responbibility to go even further to the stockholders. But why stop there? Why not make the customers responsible too? And let’s throw in the bond holders. Then let’s add the suppliers. How about the relatives of stock and bond holders?

The corporation is a legal fiction. Are there any persons within it where the buck stops? Created in order to free investors from downside risks, the limited liability has removed incentives for investors to keep executives and managers under control and to monitor business risks. Although small corporations remain under investor control, the result has been the growth of large public companies that are owned but not controlled by shareholders, leaving discretion but limited downside risk to employees, managers and executives.

Of course I’m being ridiculous. My point is where do you draw the line of responsibility for the actions of coroporate employees? Stopping with the stockholders is an arbitrary judgement. You need some principle that can delineate who is responsible for the actions of another. Traditionally, that line is drawn where control of the actions of the other party ends.

As for line drawing, voluntary creditors are all able to investigate whom they deal with, and to negotiate risks and prices. Victims of torts are seldomly so situated. But the problem of corporations leaving real victims behind is precisely why governments have started to seek further pockets, such as lenders and suppliers (via Superfund laws, for example), to require firms to post bonds and maintain certain capital levels, and why governments have fallen to the temptation to heavily regulate “public” firms.

As for what “tradition” was and where lines used to be drawn, surely you recognize that before limited liability corporations were established, investors had unlimited liability for losses – and risks for widespread torts were much lower? Unlimited shareholder liability was once more common than limited liability, and large markets like Lloyds until recently required that all Names bear unlimited liability for losses. It used to be that most small businesses and partnerships were structured with unlimited liability; now with LLCs and LLPs, there is a rush into structuring as limited members, precisely to limit liabilities.

8.  Published: December 15, 2008 8:50 AM (emphasis added)

  • Stephan, I’ve responded on the initial post as well, but here’s a bit more on what you’ve written above.

    1. You: “But you say “shift” here, which smuggles in your presumption that shareholders have a natural or default liability. If they don’t, there’s no “shift.””

    I thinks it’s a fair and natural presumption that investors (as opposed to lenders, who have a claim only for interest and no residual claim for profits) have a natural default liability. This is still the case for sole proprietors and partnerships. “Shareholders” exist only because states created corporations as legal entities. Without such action, there would be at least one natural person to whom employees would have to answer and who would be responsible for risks posed by his business activities (loans and involuntary torts), up to the full amount of his personal assets.

    Yes, there is still the question of the range of vicarious liablity, but clearly even today business owners and partners are deliberately incorporating (using corporation, LLC and LLP forms) for the chief purpose of limiting personal liability for the acts of employees. And courts continue to pierce the corporate veil from time to time to reach shareholders as well.

    2. Me: “the state grant of limited liability to investors (and to transferees of such investors) in corporations constitutes an uncontracted-for shifting of risks to investors from victims of corporate torts.”

    You: “To me, what is wrong with it is that the state steps in and monopolizes a field, as it has done with transportation, power, education, defense, justice, money.”

    Me: I agree with what you think is wrong with state action, but in the case of granting the corporate form and granting limited liability, there have been a a number of pernicious consequences, one of which involves an externalization of risk of the kind I mention.

    This and other consequences all tend to encourage the further growth of the state, such as the pressures on the state to regulate corporations (with a vicous cycle of battles over control over government), and the use corporations as money and jobs banks.

    3. You: “As a libertarian, I don’t think the positivist arguments of some mainstream law profs are going to be that mind-blowing.”

    To each his own; they’re certainly relevant and provide useful background information.

    4. You: “All these actions are done by individuals–and if done as decisions of the managers, then they and the corporate assets probably ought to be liable. But why the shareholders, if they didnt make this decision?”

    In many cases the shareholders ARE in a position of control; should they be able to escape liability merely because they use the corporate form, as is the rule today? I think not.

    I agree that it is difficult to argue that minority and non-controlling shareholders in public firms bear any responsibility for acts of the corporation, since that was not a part of the bargain they understood that they were making when they acquired their shares and they largely have no actual ability to affect decisions that end up causing injury to others.

    6: You: “I dont tink it’s a nit. I assume you call them investors since you think giving money to the company is some kind of aiding and abetting that helps make them responsible. I’m pointing out they are not necessaril investors in the corporation.”
    Me: Stephan, I’m only discussing the difference a shareholder and an investor because you seem to think it’s importance. Anyone who acquires a newly issued share is an investor; anyone who buys one on a market is stepping into his shoes.

    7. Me: “For small corporations, start-ups, and corporations raising capital, the shareholders typically are investors.”

    You: “True. AS Hessen notes, the entity theory helps to insulate liabiltiy most egregiously in the close corporation case. Another strike against the fervor agains bigness.”

    Sorry, but I have no “fervor”. The insulation from liability is most obvious in the close corporation case, but some close corporations are huge (LBOs). But it’s the larger public co.s that are really shifting the greatest amount of risk to others, in the form of toxic torts and dangerous products.

    8. Me: “Moreover, for small firms, closely-held firms (including large LBOs) and even for many large firms, there are major shareholders that are also clearly “owners”.”

    You: I don’t konw what proving ownership status does. So waht? I will grant you that in some cases some shareholder wields such influence and direction over the firm that he ought to be as culpable as management for actions he helps direct. So what? My point is that *merely being a shareholder* is not by itself sufficient to attribute liability.”

    Thanks for the acknowledgment. The point’s obvious – “*merely being a shareholder* is not by itself sufficient basis to exclude a shareholder from liability. In addition there’s a larger point – without limited liability, shareholders would have had potentially unlimited liablility, and consequently would have been much more cautious about whom they invested in, and making sure that downside risk was closely managed.

    9. You: “I am in favor of a nuanced and fact-specific approach, as I laid out in my Causation piece w/ Tinsley. If you can show in a given case that a shareholder is causally responsible for torts of the corporation, get ‘im. I’m just saying you have not shown that merely being a shareholder makes this case. It takes something more.”

    I’m not opposed to a nuanced and fact-specific approach, but the fact is that the grant of limited liability has essentially eviscerated it.

    10. Me: “your implied position that investors and owners should be able to freely slough-off any vicarious responsibility for damages to victims of corporate acts by the simple expedient of selling their shares to others (who, while they do not directly fund the company, are certainly investing in ownership of the same set of assets and liabilities as the initial investors).”

    You: “Saying they invest in liabilities is a bit of question-begging. The question is: does the status of a person as a shareholder–having certain dividend and liquidation and director-voting rights–make you liable for what the corporation does? I don’t rest my own conlcusions on whether the state “officially” classifies the shareholder “as an owner.” I’m looking at the functional reality of what they are and do.

    I’m not begging any question; a shareholder who buys shares that aren’t fully paid up purchases may be required to contribute the rest of the capital, and a whole host of obligations may accompany shares in a close corporation. And I’m looking at the effect of the state grant of entity status and limited liability on what a shareholder’s bundle of rights and obligations is.

    11: Me: “Where does “the state” impose vicarious tort liability? Respondeat superior is largely an old and evolving part of the common law.”

    You: “Yes, and we are a new and modern creature called “libertarian,” not tradition- or state-law-worshipping positivists.”

    How about actually answering my question? Where does “the state” impose vicarious tort liability? The common law is not state-imposed. And surely you haven’t failed to notice that libertarians routinely refer to the common law as the reason why regulation isn’t needed (other than those like Rothbard who recognize that regulation is needed because corporations persuade judges to subvert it).

    12. Me: “You say that, if victims could “sue shareholders individually”, in which case “shareholders could simply purchase shareholder-liability-insurance, no biggie”. I heartily agree – a system of pro rataliabilityactivitiesactivitiesliability sharliabilityeholliabilityconsiderationsderincentivizedliabilityliabilitiesunlimitedliabilityresponsibilitycorporate unlimited liability would work (as one of the law journal articles argues), as well as being more just. I appreciate the concession – so have you stopped fighting this point?”

    You: “It’s not a concession. It’s pointing out that this is just a red herring on your part. You guys throw up limited tort liability as if it’s some huge advantage given to corps that allows them to survive. It’s not a huge advantage b/c removing it really doesn’t affect victims;a nd imposing it can easily be handled with a slight change of the already-existing insurance coverage. If we did this, not much would change, but I’m sure the anti-industrialist types would find something else to yap about. You are not *really* concerned with this–it’s just one of an arsenal of arguments you whip out to attack industry and busienss and “bigness” and capitalism and whatnot.”

    Stephan, first, I’m disappointed by your dismissive and somewhat offensive talk of “you guys” and what you presume my motives to be. I’m not an “anti-industrialist type”, and I’m here on my own and making my own points (which must mean I’m “yapping,” in your book). Second, raising the issue of limited tort liability is not a red herring, at least for me, and it’s not something I think corporations need to survive. I do think it’s very important because I think that real shifting or risk, moral hazard, corporate governance and other issues are intertwined and that underlies the whole politicized struggle over corporate regulation.

    Courts rarely find individuals responsible, other than for very deliberate torts, in part because negligence is attributed to the firm (and managers and executives are generally excused from liability for the negligent acts of employees) but chiefly because those injured – particularly where the damges affect many people – don’t bother chasing those without substantial assets.

    That it will seldom be the shareholders is a result of the state grant of limited liability – given such a grant, shareholders have no interest in monitoring, and no ability control, corporate/employee acts. Without such a grant, it would be a different story – which is why business partners are still running to limited liability forms, and leaving unlimited liability partnerships and sole proprietorships behind.

  • 9.  Published: December 16, 2008 5:10 AM (emphasis in original)

    You: Again: shareholders are not investors necessarily. In any case, you are question-begging. It’s not a fair presumption for the libertarian–that’s the issue here.

    While I would agree with you that there should be no presumption that shareholders SHOULD have tort liability – after all, that should be a decision that depends on the facts of particular cases – I think it’s pretty clear that the blanket grant of limited liability has in fact acted to shield shareholders (and initial investors) from tort liability.

    You: Yeah, like you mean, the President or CEO, or manager or boss? Sure. These guys run the company. Not shareholders.

    Yes, the guys who run the company ought to be liable, but in some cases, controlling shareholders as well. Most individuals simply don’t have the assets to cover all of the risks, so a blanket rule that stops tortfeasor liability with the firm is clearly wrong.. Note that there are no rules that require managers, executives or even firms to acquire insurance sufficient to cover all risks created by corporate activity.

    You: I don’t think so. It’s primarily for contractual liability limitation, which would continue to exist in a free society. Tort liability could easily be handled by insurance.

    Stephan, come on. The partnerships could contract for liability limitations without a limited liability form; they have been moving rapidly into LLCs and LLPs solely to slough off risk to their personal assets for torts; for the same reasons, big firms that are already corporations separately incorporate subs for dangerous activities in order to limit potential liability for damages (both for torts and to creditors).

    You: Yep, when formalities are not followed or a shareholder is too dominant and really acts as a manager.

    My point about veil-piercing is that such cases show that no general state grant of limited liability is justified. The doctrine itself is extremely inconsistently used, in part because given the legal grant of limited liability courts are reluctant to use their equity power.

    You: Well, if the state is abolished as we want, any “externalities” would go away.

    Yeah, “IF”. Until then, there is certainly a lot of externalization that takes place, which seems to excite a few people.

    You: Right, I agree. Thoguh even in today’s law, if a shareholder is in a position of control, it’s either (a) because he’s also a manager or director; or (b) he goes beyond his passive shareholder role and pushes the company to do his bidding. In case (a), he’s not protected by limited liability. In case (b), well,l of ten in such cases the corporate veil would be pierced, again reaching his personal assets.

    I am happy that you agree that shareholders in a position of control should not be able to escape liability merely because they use the corporate form.

    You: I actually think it’s got nothing to do w/ the bargain they thought they were entering, since A and B cannot contractually limit C’s tort-recover rights. However, I do agree w/ you that their ability to control is key. Now you appear to have swung in my direction on this.

    In any particular case, I agree with you that actual ability to control is key. But generally, the state grant of limited liability is wrong and should be repealed.

    Me: Stephan, I’m only discussing the difference a shareholder and an investor because you seem to think it’s importance.
    You: I think they are *different*. The investor *gives money to* the company. The shareholder *votes for directors*. Both are different ways of having an affect on the company. The advocate of vicarious liability could make a separate argument based on each action for liability. Both are flawed, but in different ways.

    I’m not sure that there’s a relevant distinction. If an investor provides money to a firm, he does so in exchange for a bargain of certain rights and liabilities; any purchaser simply steps into his shoes. Granted, if an investor or shareholder has separately taken actions that make him liable for a tort, that liability is not conveyed by a sale. I do not otherwise presume that a shareholder, by virtue of owning shares and having rights (and maybe an obligation to fully pay up shares), should become liable for the torts of others.

    You: Small companies cut all kinds of corners–tons of illegal dumpting etc. It’s decnetralized and harder to track. And of course the biggest polluter is the state–e.g., w/ its wars. In any event, I don’t see that teh danger of toxic torts implies that shareholders have vicarious liabiltiy for torts of others.

    I agree with you about small firms and the state, but large firms pollute – often as part of doing business with government – and generate risks too. The point is that the state grant of limited liability has as its purpose cutting off liability at the corporate level, thereby freeing shareholders. Without such a grant, investors and shareholders in firms would be much more careful about the risks that they generate.

    You: it’s not obvious to the anticorpo crusaders, who think it’s a Holy Crime to NOT impute liability to them! They “are” “owers,” after all!

    Thanks for the acknowledgement that *merely being a shareholder* is not by itself a sufficient basis to exclude a shareholder from liability. But there you go again, “yapping” about other people who aren’t on this thread!

    Me: In addition there’s a larger point – without limited liability, shareholders would have had potentially unlimited liablility,
    You: Auugh! No, they wouldn’t. Not if they were merely passive shareholders.

    I agree with you that merely passive shareholders probably would not have liability, but the potential risk is there that they would have to face. They could wall off the risk by insurance (which would put an insurer in a position to evaluate the riskiness of a business and the degree of insulation that a shareholder is afforded by how the rights of shareholders are structured), or self-insure by making a similar analysis. But absent the limited liability rule, no doubt some shareholders would opt for measures that ensure better management by the company of risks of injury to third parties.

    Me: I’m not opposed to a nuanced and fact-specific approach, but the fact is that the grant of limited liability has essentially eviscerated it.
    You: Probably; but none of us are in favor of a state grant of limited liability.

    Progress!

    You: We just think that the left’s focusing on this as the Root of All Evil is confused and misplaced.

    It does sound like it may be confused, but is it really misplaced? My own view is that without a state grant of limited liability on torts that we would see greater shareholder efforts to control the risks of injury to third parties, more responsible corporate behavior, more responsible management, fewer efforts by citizens groups to get government to impose asset/bonding requirements, to impose broader liability in pollution cases (Superfund), andliability toviscousdidn’t rdon’tegulate. There would be less vilification of corporations generally.

    Me: “How about actually answering my question? Where does “the state” impose vicarious tort liability? The common law is not state-imposed.
    You: sure it is; and in any event, it is not necessarily libertarian.

    Howliability about actually answering my question? Where does “the state” impose vicarious tort liability?

    You: No. I still think it’s unjust for them to have liability where it’s not warranted–it’s just that it would make little difference, which shows that this is just a straw man for the left–it masques their real issue which is hostility to modern business and capitalism.

    Again, I’m not “the left” (and off of this site I am considered radically right); it may be a strawman for some of them, but I actually think that the grant of limited liability has had serious pernicious affects and removing it would be a great positive step. Under libertarian principles, individuals are responsible to the full extent of their assets for their harms to others; the creation of legal entities with limited liability for torts has allowed for the massive generation of risks, without regard to whether such risks are backed by the assets of real individuals. Rather, such risks are cut off by fiat at the corporate level, allowing shareholders to take profits for the upside of gains but not having to bear downside risk. 

    To be continued.

    [Note: some typos have been fixed.]