Do Corporations have Personal Privacy Rights?

I don't think they should be granted 'personhood', no.

I think the issue with corporations is overlooked to the extreme, though. The reason why corporations are as bad as they are, is because they're given a legal status that basically gives them a license to create moral hazard. People who criticize corporations tend to often overlook this fact, and instead get all dramatic about campaign contributions and corporate personhood. These issues are of some concern, but the root cause of the corruption of corporations is the mere fact that they're corporations in the first place, which is a special legal title that eventually leads to moral harzard.

I also think the idea of 'special interests' in overblown as well. What's the difference between a major drug company contributing to the re-election campaigns of politician, or another interest group like Media Matters, or a Union, or a Committe, or a Council on some social issue? None. They all pour money into the pockets of politicians, and expect a political end as a favor.

Don't mistake my sentiments as support for corporations, because I honestly think corporations are evil, but I also strongly believe that a lot of the anti-corporate hysteria is vastly over-hyped, and it's damaging because this hysteria muddles the field and allows people to overlook the real problems.

 

a corporation in essence is a company that wants to provide a product or service without any personal liability to the owners of said company. and this is a legal right granted by the government.

it is a common trick in the contracting business that if someone sues you you just declare bankruptcy and get a new contractors license under a new name. you just have to make sure that your company is always broke. it is easy to do with wages, bonuses, and equipment investment. these similar tricks are used by bigger corps to a certain degree. a corporation could sell you strychnine as soup and the owners will never see a bit of liability. by granting the corporation a legal fiction known as personhood the company is its own entity, the investors, directors and employees are not liable for any of the actions of the company....even though they are the company. neat huh?

 

Moral hazard - Wikipedia, the free encyclopedia

 

If the banks (or any corporation) knew that if they fucked up they would end up in bankruptcy, they'd have a little more incentive to act responsibly, no?

So, to answer your question: yes, if these corporations weren't protected and were subject to the competition inherent in the (free) market, then these moral hazards would not exist. If a company displeased their customers/clients, took fool-hardy risks and/or lost a lot of money, they would be risking the survival of their firm (as opposed to someone else's money).

 

Yea, without a safety net from the Government, Corporations wouldn't make risky choices and act like little tyrants. If you want a good example, compare US Banks to foreign banks. You know how rich people like to hide money in offshore banks? Most of these offshore banks exist in places without a Central Bank that guarantee their deposits (Lender of last resort), and because they don't have that safety net like US banks do, they run their banks very conservatively to remain risk-averse. These small countries with the popular banks that rich people put their money into have never experienced a major shock in their economy like the US has.

Here in the US, because of the safety net provided by the Federal Reserve, they all made bad loans and took on risky behaviors because of the moral hazard. The point is, when you give people such a broad safety net, they make bad decisions. If you've ever known a drug addict on a personal level, you'd see this behavior repeated. The only way to get across to people is to hold them accountable for their actions and not give them infinite 'chances'.

 

Much of the moral hazard that led to the subprime crisis and ensuing financial meltdown was not caused by the fed or "two big to fail" or even the Government.

It was caused by the sheer size of the big banks themselves.

Big Banks, even if they were working under the assumption that there is no safety net, couldn't possibly check every individual loan in the packages the smaller lenders will selling them.

And on top of that, they could just take out default insurance on the packages from AIG. So in the event that they get a few lemons, their ass was covered.

So in that scenario, there's two levels of moral hazard and we haven't even talked about anybody having an expectation of the Government providing a safety net.

And at that time was AIG backed by the Fed? At that time, AIG was an insurnace company. I don't think insurance companies fall under the watch of the Federal Reserve. Yeah, they got bailed out by the Fed, but they didn't necessarily have that expectation at the time they writing insurance policies on mortgage based securities.

Maybe they were, IDK. I tried to google it, but AIG backed Federal Reserve doesn't turn up much relevant to what was going on 5 years ago.

Anyway, with so many players in the game, it becomes a game of risk-hot-potato. Small banks act riskily, throw that risk to a big bank, they throw it to an insurance company, given time, the insurance company will find someone else to throw it to.

In this case, the music stopped and they threw it to the taxpayer, but given six more months, maybe they would have found a way to protect themselves from the risk by passing it on to someone else.


The only way I can see alleviating that problem is by no longer allowing banks to package and sell loans. The originator of the loan must own it until it's closed, or they must sell it individually.

Then, the small banks won't be able to package a bunch of crap and call it AAA knowing that the "too big to fail" bank is also "too big to check".

Not that anything should be too big to fail. Not that the Fed is a good thing.

Just saying that no-Fed and no big Gov does not equal no moral hazard. Big business creates moral hazard just by it's nature.

 

The point you're missing here, is; how did the banks get so big in the first place? Moral hazard. I wasn't talking about the financial meltdown, I'm talking about the corporation in general, as an entity. In a true free market, corporations would be forced to *actually* compete with each other, and their ultimate goal would be to please the consumer. But because of how intrusive the Government is into the market, the goal of ultimately pleasing consumers if offset by ultimately trying to rent-seek and to cartellize. I guess what I'm saying is--big business wouldn't be 'big' unless it had a way of being big. These companies are nearly monopolies, yet, they increase the price of products through cartellization. A true monopoly has the effect of *lowering* prices. People can complain about Standard Oil all they want, but by the time Standard Oil began losing market share, the price of oil had dropped 80%. There are such things as natural monopolies and unnatural monopolies, and the only way to achieve a natural monopoly is to truly deliver a better product or service and do it efficiently. Today, companies achieve monopolies through abuse of the law system, the political system, cartellization, etc. That's why big business sucks today.

You also seem to be missing that in a true free market, banks would simply be issuers of IOU's, and would hold gold in stock, as opposed to calling up the Fed and getting a boatload of loanable funds.