Overnight News: “The limited liability corporation is the rope by which Capitalism hung itself.”

Predatory traders are not new. Crassus, to pick an ugly example, would bring his fire brigade to your burning Roman insulae – apartment building – but he wouldn’t have them start to put out the fire until you sold the property to him. The longer it burned, the cheaper it got. Desperate businesses get sold this way to this day.

But it is liability limitation that made predation normal – or at least common, to be expected – in trade. We want to do business with the butcher, the baker and the candlestick maker, but instead we wake up with fleas from Bezos, Dorsey and Zuckerberg – the law firm of all the people who didn’t read the Terms of Service.

This is me, nearly sixteen years ago:

“The essential defining characteristic of a corporation, as against other ways of organizing a business enterprise, is liability limitation, a conspiracy between the proprietors and the state to defraud tort claimants of all they might otherwise obtain in redress for their injuries. It’s pure Hamiltonian Social Engineering, Mercantilism at its worst. The idea is to encourage investment by limiting the risk. But by limiting responsibility, investment is distorted away from the individual integrity that is the sine qua non of enlightened self-interest. The limited liability corporation is the rope by which Capitalism hung itself.”

Some people are much better at particular jobs, which is how task specialization brought us the butcher, the baker and the candlestick maker. Some people are better at organizing and managing things, too, and this, also, is a talent to be exploited in the marketplace – within limits.

Liability limitation rewards investors for hiring ruthless managers. The butcher marks up cost-plus not because everyone else does it that way, too, but because friends don’t gouge friends. The baker gives you a baker’s dozen doughnuts because you take care of the people who take care of you. The candlestick maker employs your kid part-time – not because he’s worth it, but because someday soon he will be. But the third-party corporate manager can run roughshod over a company’s neighbors, customers and employees – to the limits of the law and beyond – and the investor is shielded by deliberate arms-length negligence and is absolved of all legal responsibility over the amount of his investment.

Corporations are not built to fail, but, when they do, they’re built to fail on everyone but their ownership.

That’s “legally-sanctified” crime, and it undermines what should be an unassailable argument against ever other form of “legally-sanctified” crime: What we call “Capitalism” is actually Rotarian Socialism, alas – an elaborate pretext for systemic predation.

This may actually be the worse news I know, because I don’t know how we get this Djinn back in its bottle. If you have ideas, I’m all ears.

In other news:

MarketWatch: Housing is a luxury? Here’s what the K-shaped recovery means for real estate.

PJ Media: Our Collapsing Culture: How ‘The Church of Woke’ Upends Language and Ends Debate.