Not everyone can be Bill Gates or Steve Jobs. We would all love to be the person who invented the microchip or founded WalMart. We can’t be. It may be that we weren’t born into the right family, clever enough, or simply in the right place at the right time.
But we can buy shares in this luck. In 2004, you may have no design skills but you may recognise that the iPhone is the future and buy Apple shares. You would have done well for yourself.
Maybe you’re not that sharp? Well, you can always invest in an index fund and let the market make you an investor.
The last thing you need is a heavy knock on the door and be arrested for crimes committed by Enron even though you only had $12 in the firm.
Just as all Americans gained from the financial boom they have also all lost from the crisis. Your pension funds went up, and now they’ve come down in value.
The downside of democracy
It takes a lot of cash to reach everyone and persuade them to your cause. The average US presidential candidate has to raise millions, and probably soon billions, of dollars in order to launch their campaign.
If limited liability and incorporation were not possible then only the very rich could afford to be president.
The creation of special purpose vehicles can allow small pundits to invest their meagre savings in order to massively increase the spending power of their chosen candidate, or to campaign for their special interests directly.
These trusts open bank accounts and buy advertising on behalf of their investors. If the trust fails to honour its contractual expenses then it closes but the individuals who donated don’t get summonsed to pay off the trust’s debts.
A poor person in a rural town wanting to campaign for their rights doesn’t want their $1 donation to compel them to bail out the organisation for a further $1 billion if things go wrong. If you donate to a charity supporting rebuilding after Hurricane Katrina you don’t want to be held liable if the charity builds a home that subsequently falls down.
These are the benefits.
But it also means that others can organise who happen to disagree with you or have their own special interests. Such as unions, companies or religious organisations.
In 2010 the US Supreme Court ruled that corporate funding of political broadcasts is protected by the first amendment right to free speech. That caused some uproar.
Yet a company is set up to make profits for its investors, not to elect specific politicians. A company may have vast profits, and it may favour one political candidate over another, but it can’t abandon its mandate to pursue a single political end. Companies are there to outlast mere individuals.
Will company campaigning make a difference? Difficult to know just yet but, if you’re worried, you can always check the reported financial statements from a company. Such a thing would have to be reported to shareholders so they can judge whether it is a good investment.
Unfortunately, unions and special interest organisations are under no such compulsion in law, so you takes your chances.
The upside of limited liability
Either you think that all people are criminals and that limited liability gives everyone the chance to blame an intangible legal construct for anything they do; or you believe that people are mostly good, sometimes misguided or ignorant, that poverty is a terrible thing, and that pooled effort is a wonderful thing.
If you’re part of the former then every single type of contract-based organisation will always be a problem for you. If you’re part of the latter you’ll recognise that adverse outcomes do sometimes result from good things and that we should simply tweak the rules a bit to reduce these events as and when they occur.
Limited liability is a natural extension of division of labour. It frees us to pursue our own ends and take advantage of the upside of other peoples’ wealth, ambition and creativity. Most importantly, the most you can lose is to the limits of your own investment.
So where does that leave BP?
Risk is a natural component of life. We can do our best to minimise that risk but it is unlikely that we will ever obliterate it.
The way in which society has trended is to distribute the responsibility for risk but concentrate the responsibility for fraud. In other words, where things just go wrong because we’re on the downside of probability then insurance must distribute the pain to as many people as possible but, when the downside is a direct consequence of illegal individual action, then that person should be held accountable.
If BP and its various partners did nothing wrong but wrong happened anyway then everyone will end up paying just as everyone in the US now pays for health insurance. If the US doesn’t like this arrangement then you should really start looking for alternatives to oil otherwise … this is where the oil is and these are the risks you take in getting it.
If individuals are found to have been negligent then they will be held to account, but the cost of the cleanup will still be distributed to everyone since no individual could afford to make good.
Rehabilitation is the important thing; making good what was broken.
If you personally want to go further than that, to humiliate, punish and destroy, then you need to re-evaluate your principles.