Economics Questions

Re: Chapter 11 in a free market

Autolykos — Wed, 26 Jan 2011 19:46:53 GMT

liberty student:
A "natural fiction" doesn't make any sense to me. I think Black's law dictionary was updated so that a person is now a "natural person" btw.

Are you implicitly defining "person" as "fiction" above? If so, why? Note that my own definition of "person" is "human being".

Re: Chapter 11 in a free market

liberty student — Wed, 26 Jan 2011 19:12:20 GMT

Autolykos:
liberty student:
Technically, this is incorrect. A "person" is a legal fiction. It's a name given to a human being (a living soul) so that they can transact with property in a commercial society.

Would it be more accurate to use the term "natural person"? That is, under common law, only natural persons can own property?

A "natural fiction" doesn't make any sense to me. I think Black's law dictionary was updated so that a person is now a "natural person" btw.

Re: Chapter 11 in a free market

Autolykos — Tue, 25 Jan 2011 13:39:07 GMT

liberty student:
I used to think they would. Now I am almost certain they would not. Being able to transact through avatars without liability is the foundation of the state.

I completely agree. It wasn't until I read some of Frank van Dun's works that I realized the state is the original limited-liability corporation.

Re: Chapter 11 in a free market

Autolykos — Tue, 25 Jan 2011 13:38:21 GMT

liberty student:
Technically, this is incorrect. A "person" is a legal fiction. It's a name given to a human being (a living soul) so that they can transact with property in a commercial society.

Would it be more accurate to use the term "natural person"? That is, under common law, only natural persons can own property?

Re: Chapter 11 in a free market

liberty student — Sun, 23 Jan 2011 18:22:33 GMT

Autolykos:

Stranger:
I'm not. Chapter 11 bankruptcy prevents the destruction of an enterprise, while Chapter 7 liquidates it.

Do you think businesses would have "legal personhood" in a free-market society?

I used to think they would. Now I am almost certain they would not. Being able to transact through avatars without liability is the foundation of the state.

Re: Chapter 11 in a free market

liberty student — Sun, 23 Jan 2011 18:10:40 GMT

scineram:
Why would they not have legal personhood? Big business is impossible without it.

I don't think the creation of new entities (easily) is going to be possible where there is polycentric legal order.

Re: Chapter 11 in a free market

liberty student — Sun, 23 Jan 2011 18:06:58 GMT

Stranger:

Do you think businesses would have "legal personhood" in a free-market society?

Legal personhood is loophole around common law because under common law only persons can own property. There is no reason for it to exist under a more rational legal system.

Technically, this is incorrect. A "person" is a legal fiction. It's a name given to a human being (a living soul) so that they can transact with property in a commercial society.

Re: Chapter 11 in a free market

Stranger — Sun, 23 Jan 2011 16:54:50 GMT

Do you think businesses would have "legal personhood" in a free-market society?

Legal personhood is loophole around common law because under common law only persons can own property. There is no reason for it to exist under a more rational legal system.

Re: Chapter 11 in a free market

scineram — Sun, 23 Jan 2011 07:39:49 GMT

Why would they not have legal personhood? Big business is impossible without it.

Re: Chapter 11 in a free market

Autolykos — Fri, 21 Jan 2011 16:39:45 GMT

M1ThinkTank:
No one mentioned that in Chapter 11, creditors sometimes are awarded ownership of the firm. This is beneficial to them when the business is worth more as a going concern.

A recent example I can think of is Visteon Corp.

Since I don't think businesses would have "legal personhood" in a free-market society, I don't see how they can be owned per se. What it would mean to "own a business" in a free-market society would be to own certain assets (property) placed under a certain label.

On another note, who decides whether ther business is worth more as a going concern? The creditors? The bankruptcy judge? I'm not asking this as a criticism, just to get more information.

M1ThinkTank:
Since the creditors can benefit in this way from Chapter 11, I can imagine something similar being created in a free market, perhaps as part of the bond/note contracts. Just as shareholders are granted a vote, bondholders would be granted a vote based on the value of debt outstanding, with options for voters to either liquidate or convert their debt to equity.

Very good point. Of course, shareholders don't have to be granted voting rights.

Re: Chapter 11 in a free market

Autolykos — Fri, 21 Jan 2011 16:34:23 GMT

Stranger:
I'm not. Chapter 11 bankruptcy prevents the destruction of an enterprise, while Chapter 7 liquidates it.

Do you think businesses would have "legal personhood" in a free-market society?

Re: Chapter 11 in a free market

Stranger — Fri, 21 Jan 2011 14:54:55 GMT

A Chapter 11 bankruptcy makes sense in the following scenario: suppose that mad CEO has decided to make a huge bet on a new venture by borrowing huge amounts of money. Now, it turns out that the ventury is profitable, except the income generated is exceeded by the debt payments. It makes absolutely no sense in this case to liquidate the business, since it generates profits. The only thing that makes sense is to remove the CEO and convert debts into ownership to compensate the creditors.

If a business loses money quarter after quarter and can no longer pay its employees, then it must be liquidated.

Re: Chapter 11 in a free market

M1ThinkTank — Fri, 21 Jan 2011 05:34:54 GMT

No one mentioned that in Chapter 11, creditors sometimes are awarded ownership of the firm. This is beneficial to them when the business is worth more as a going concern.

A recent example I can think of is Visteon Corp.

Since the creditors can benefit in this way from Chapter 11, I can imagine something similar being created in a free market, perhaps as part of the bond/note contracts. Just as shareholders are granted a vote, bondholders would be granted a vote based on the value of debt outstanding, with options for voters to either liquidate or convert their debt to equity.

Re: Chapter 11 in a free market

Stranger — Fri, 21 Jan 2011 01:46:29 GMT

I'm not. Chapter 11 bankruptcy prevents the destruction of an enterprise, while Chapter 7 liquidates it.

Re: Chapter 11 in a free market

Autolykos — Fri, 21 Jan 2011 00:33:35 GMT

Good point, Stranger. I was under the impression that Chapter 11 bankruptcy allowed at least some of the bankruptee's debts to be completely forgiven. I have no problem with specialized bankruptcy arbitrators that are paid to "balance out" the bankruptee's assets between competing creditors.

EDIT: Based on this, it seems we're talking about Chapter 7 bankruptcy.