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Fighting Crony Corporatism: Alternatives to More Regulations

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Besides inhibiting markets from making intelligent decisions, regulations are easily avoided when corporations have influence over government and its agencies. Regulations are laws, and corporations have been shown, time and again, that so long as profits outpace the cost of illegal activity, they will ignore regulations and legal repercussions.

The alternative to more regulations is a systemic change of the legal environment.

Presently, most corporations take the form of a “Limited Liability Company,” which encompass all the liability-insulating advantages of the corporate structure, with added tax benefits.

A real blow to Crony Corporatism is not to give more power to agencies like the FDA, but to change the legal environment to make mal-investment more devastating to the people in charge.

Strip corporations of protections from personal liability. As it stands a “corporation” is recognized as a legal person, with rights, and that holds most of the liability. A rock is not liable if it falls on your head: I am liable for throwing it. But if that rock is my corporation, you would have to sue the rock for liability: you would take the rock to court. The Jury would find the rock liable, and levy the cost of damages against the rock, and the rock would pay the damages. This is absurd.

Reform intellectual property law. Inventions are insights into a shared world, whether it is clean energy technology patents gobbled up by big energy, or the genetic makeup of humanity patented by private companies since the human genome project, such insights should not be owned privately, but made forfeit to the public.

Lower taxes for self-employed individuals and small businesses. Create a better incentive to start new business models to run their course in the laboratory of the marketplace.

Laws and regulations can be side-stepped. Make business more risky for those making the decisions. Make scientific insights public property. Give small businesses tax breaks to encourage market competition.

That is my prescription for the war against Crony Corporatism.

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Written by Jonathan Mark

January 2, 2012 at 11:22 pm