[For those who don’t have time to read the chapter, or who don’t like ideas to be presented in fiction, I have created short, concise cliff notes. You can skip the chapter and concentrate on the ideas.]
Chapter Nine: The Corporate Entity
Tommy sat up in bed. He had a cold. He was reclined, leaning on two large pillows. Toy soldiers were strewn aimlessly over the bedclothes.
Tommy’s hair was rumpled, his face pale. Sunshine streamed from the window, For two days he had been bedridden — had not been forced to go to school. He hoped it would continue. He hoped he would be sick for a long time. Maybe forever.
He frowned. Pursed his lips. Coughed. From the doorway he could hear his mother say: ” I’m so glad you came. I hope you can cheer him up. He’s been so glum lately.”
Placid entered and closed the door behind him. “Hello, Tommy.” He pulled a chair to the bed and sat down.
“I didn’t expect to see you here,” Tommy said. “Is it a business trip?”
Placid nodded, a glint in his eye. “Of sorts.”
“Dad didn’t mention you’d come.”
“He doesn’t know about it.”
“Not much fun to be sick?” Placid asked.
“It’s okay. There are worse things than colds.”
The corner of Placid’s mouth rose almost imperceptibly. “Like what?”
Tommy shook his head. “I don’t mind now.” he said. “I really don’t. It’s later I’m worried about.”
Tommy coughed, then recovered. “I can wait,” he said slowly. “It’s not so awful to wait. I’ve been waiting for years. I used to be sure everything would be all right. Up until I was five. Then I started wondering.”
Placid said nothing. He watched the light play in the slight creases on Tommy’s forehead.
“I waited for them to figure out what I knew and to teach me. Caldwell came. Years after she should have. But she came; and it was great. She couldn’t do anything, Placid. She taught me, but she couldn’t do anything officially. She couldn’t change things at all. And she’s gone now. Everything is the same as before. Maybe worse.”
“You haven’t heard from her?” Placid asked.
“She wrote me a letter,” said Tommy. “About fighting for things that matter and when I grow up.” He coughed suddenly, a long grating cough. “When I grow up,: he said with emotion, “it can’t continue when I grow up. I couldn’t take it.”
Placid shifted in his chair and gently took the soldier out of Tommy’s twisting hands. The pedestal was bent.
“When I grow up I don’t want to worry about staying clean and making money, the way grownups do.”
The Cliff Notes
So you don’t have a lot of time, and you can’t be bothered to read the whole chapter. Or maybe, this style of writing really doesn’t appeal to you, but you would like to know what the gist of it is. Okay, that’s understandable. Here’s the short version:
What is a corporation? An artificially created legal entity with limited liability. The corporation is owned by stockholders who vote on how it is to be run. Stock can be sold privately or publicly. A majority of stockholders elect the board of directors, and the board of directors chooses officers, such as the president and the treasurer of the corporation. Minority stockholders have about as little say in what a corporation does as do isolated voters in any democracy.
What is limited liability? It means that the people who own the corporation (the stockholders) are not responsible for wrongful acts committed by the corporation. You cannot sue the stockholders when a delivery van driven by a corporate employee runs you over, for instance. You can’t sue the stockholders when the nuclear power plant run by the corporation has a meltdown and kills half your family. You can’t sue the stockholders of the corporation when you eat poisoned peanut butter manufactured by the corporation. You can’t sue the stockholders when when the corporation promises to provide you with a service or product and then doesn’t keep its promise. You can sue the corporation, but you can only get the assets that are in the corporation’s name, and you can’t get what isn’t there — like the stockholders’ bank accounts, or the stockholders’ condos or the stockholders’ future earnings.
The reason this is bad is twofold:
(1) When the corporation makes money, stockholders profit. But when the corporation causes damage, stockholders are not at risk.
(2) Because they are not at risk, stockholders have no incentive to keep a close eye on how a corporation is run. This doesn’t merely hurt third parties damaged by the corporation — it also hurts employees, because when a business is mismanaged, it’s the employees who stand to lose the most.
How can we fix this? Do away with limited liability. Make stockholders jointly and severally liable for the acts of a coporation. When owners of a business are accountable for the losses as well as the profits, they are most likely to be vigilant. This will make them better employers as well as more responsible neighbors.
The Cliff Notes: Capitalism versus Free Enterprise
Have you ever felt that under “capitalism” bad people get rich? Have you ever had an argument with someone who was in favor of “free enterprise”? Have you ever felt that you and the other person were not living in the same universe? Well, it could be that you weren’t even talking about the same thing. Did you know that free enterprise and capitalism aren’t the same? Here are some definitions:
Free enterprise — The system of government under which each individual is responsible for himself. Each person owns property and is responsible to others for any damage he has personally caused them and for keeping those promises that take the form of enforceable contracts. Besides this, all are free to do whatever they wish with their time and their resources.
Capitalism — a system where large amounts of capital are accumulated in the hands of a few, while workers do not own the means of production individually.
Some examples of capitalism can be found under totalitarian regimes. Free enterprise need not necessarily lead to an accumulation of capital in the hands of a few. When all owners of a business are equally liable for its debts, this discourages investment by uninvolved parties and it tends to limit the size of businesses,
Granting a corporation limited liability violates the tenets of free enterprise because it nullifies the rights of individuals for compensation from other individuals. It elevates a corporation to a special status, and allows those owning the corporation to enjoy collectively rights that they never could have had individually. It is a form of government protectionism that favors the formation of large businesses, at the expense of individuals harmed by such businesses.
Placid smiled. “You’re opposed to making money? After all Caldwell said to us on the subject.”
Tommy shook his head. “Making money is okay. It ought to be great … But doesn’t it matter how?”
Their eyes met. Tommy picked up another soldier from the bedclothes and said sullenly: “What Dad and you do at SSI doesn’t sound right to me.”
Placid nodded. “That’s worse than a cold.”
Tommy smiled. Then he shook his head and looked out the window. Placid got up and went to the door. “You’re going?” asked Tommy.
“I’ll be back in a moment,” said Placid.
He returned shortly with a slim briefcase. “If you had a secret possession, where would you hide it, Tommy?”
The brown eyes widened. He wanted to ask. Instead he said: “In my trunk. It has a lock, you know.”
“Does your father have access to it?”
Tommy shook his head. “He doesn’t bother with my stuff.”
“Good,” said Placid. Tommy stared at him – and at the briefcase. Silence stretched between them.
Tommy felt like laughing, but restrained himself. Itcame out a cough. “So Caldwell wrote about fighting for things that matter?” Placid’s voice was tinged with sarcasm.
Tommy nodded. Placid asked: “Would you like to do that?”
Tommy sat up expectantly. “You know I would.”
Placid’s tone was harsh. “Open your trunk.”
Tommy scurried out of bed. He went to his desk and opened a drawer. He ran his hands through the contents. Pencils scattered to the floor. “I know that key is in here somewhere,” he muttered. Coins jingled and rolled. “I saw it there just yesterday!”
Placid picked something off the floor. “Is this it?” he asked, amused.
Tommy nodded and reached for the key. “Where’d you find it?” Placid pointed downwards. “I have trouble finding things,” Tommy explained. He opened the trunk at the foot of the bed. Placid looked inside. It contained an old nest, a cardboard military tent, two plastic tanks and a jeep, a bar of chocolate, a few trampled letters, and a photo album.
Placid opened the briefcase and took out a thick manila envelope. It was unmarked and sealed at the back. He placed it beneath the photo album and locked the trunk. He handed the key to Tommy.
“You musn’t lose it,” he said sternly.
“I’ll get some string,” Tommy volunteered. “I’ll keep it round my neck.”
Placid leaned forward. “Here are my instructions. Listen carefully. You are to do nothing with the envelope, except in one of the following situations. If I personally contact you, do as I ask of you. If you hear that I am sick, dead or missing, open the envelope. It contains several copies of certain writings, a list of addresses, and some money. You will see to it that the papers are delivered to those on the list.”
Tommy blinked. “You expect something to happen to you?”
Placid shrugged. “It might. In the meanwhile, you must keep this a secret. Don’t tell anyone. That includes your parents.”
Tommy’s solemn brown eyes took in every nuance in Placid’s expression. He turned the words over in his mind.
“You mean, I can’t write Caldwell about it?”
“No,” Placid answered absently. “Not yet.”
Tommy viewed him quizzically. Then he grew solemn. “And it is for something that matters?”
Placid nodded.
*****
Andy Barman lay on his side surveying Hayley. She lay naked on his bed and looked up at the ceiling. A half smile played at her lips, lending prominence to the dimple. He thought of Hannibal. He was able to think of nothing else. When he spoke to clients, he thought of Carthage Corporation. When he stared into the eyes of jurors, trying to find a spark of intelligence, and always failing, he thought of Carthage stockholders. When, in his spare time, he tracked Skinner, his last conversation with Hannibal played over and over again in his mind. “Would you like to take an active part in solving the mystery, Andy?”
When he reached out to Hayley, one idea remained in the fog of his mind – it was Hannibal.He had never wanted … whatever it was Hayley now stood for. The beautiful dumb blonde, the whore. But she was not stupid. Perhaps she was wiser than he. Sometimes he thought: she isn’t even beautiful. She’s a chubby two year old sitting on my lap.
He did not speak to her of it. He listened to her talk, instead. She spoke of Caldwell, and her voice held respect, anger and mockery. She talked a little about prostitution. He did not want to hear about that. She giggled when he frowned. His values were a weakness she occasionally explored. She prevented him from confessing emotion. Words almost came, haltingly in tenderness. She would stop him. Change the subject, make a joke. Like Hannibal’s response to a warning.
Then Barman felt compressed pain in his chest, and he wanted to protect Hayley, at whatever the cost. But it was irrational. Nothing was menacing her. She had no values; she could not be hurt. He was the one who stood naked and helpless before the world. It was she who might help him. Again he thought of Hannibal.
She turned on her side to look at him, a mocking smile on her lips.
“Brooding again, huh?” She expected no response,continuing after a short pause. “You know,” she said, twisting her mouth and squinting, “Caldwell would just love you right now. You’re so much like the heroes in the books she used to read when she was ten years old.” She studied his expression. He affected lack of interest, but listened.
“You know what I mean,” she said, drawing out the words and changing her position slightly. “There was always some dark secret or something. A skeleton or a heavy sorrow. Something awful they’d done, or something dreadful done to them or both. Anyway, they’d sit there brooding for hours about injustice or dishonor, and there’d be some pretty good descriptions of their profile.”
He laughed. Then his glance fell on the clock. He grudgingly got up and began dressing. She sat up. “Andy, why did you come to Estville?”
He looked at her, as if in measurement. Then hesaid: “The Society for the Small Investor is basedin Estville. I like to keep my eye on it.”
She raised her eyebrows. “So?” But she did not wait for him to answer. “You mean, you’re keeping an eye on Skinner?”
He nodded. She bit her lip. Her eyes sparkled.
“You are fanatical,” she said in a tone of wonder. “You’ll go after him until …”
He spoke instinctively. “I’m not after vengeance, Hal. All I want …”
“Vengeance? Who said anything about that?” She was confused. “And for what? Taking over the company when Mother gave him her proxy?”
He shook his head. “Poor choice of wording. That’s not what I meant.” He turned away from her. “I’ll make breakfast,” he said in the hallway, “you can laze a bit longer.” He walked off, tucking his shirt tails into his pants.
She rolled her eyes and repeated to herself:”Vengeance?!”
Barman’s kitchen was spacious and sunny. Shovinga morsel into her mouth, Hayley said: “I’ll be eighteen next Thursday. I’m taking that night off. Will you celebrate it with me?”
Barman looked up from his toast. His eyes were somber. “Eighteen?”
She ignored his expression. “I thought we might have dinner at Vanetti’s …”
“The food there leaves a great deal to be desired.”
She grinned. “Yes, but one doesn’t go there for the food. You ought to know that by now. Even that icepick, Placid Towers, understands it.”
Barman looked interested. “Oh? When did you see him last?”
“A couple of months ago. He came to report that Cad is okay. She’s not trying to kill herself.”
“If she had been, do you think she’d have waited for Placid?”
“Well,” Hayley dragged on the syllables. “She’s a terrible shot. Always has been.”
He laughed. “What did Placid say about Vanetti’s?”
“Well, when we were there that morning … I made a comment about the food and since he didn’t say anything, I told him the atmosphere made up for it. He agreed with me. He said eating at Vanetti’s makes him feel that he can get away with murder.”
Barman shrugged. He reached for the buttermilk. “I’ll have control of all my stock,” she said, looking at him attentively. “When I’m eighteen, I mean.”
He crooked his mouth. “I know that, Hayley.”
She glared at him. “Don’t you think we ought to do something about it?” He was obviously not going to speak. “Couldn’t we try a takeover or something?”
“Your stock is a mere minority.”
“I know. But with Caldwell’s, it’s a sizeable minority. Do you know SSI has been in power about four years now?
He winced. Did it mean nothing more to her than power play? She continued: “That makes them the establishment. It’s always popular to go up against the establishment. Especially when they’ve made a mess of so many things. I hear they’re going to be in a lot of trouble with the Army soon.”
He put down his glass abruptly. “Where did you hear that?”
She smiled, as though to say: How else? “One of my customers. Seems they’ve made a real botch of the missile project.”
“It hasn’t affected their dividends.”
“Not yet, and it may not for a while. The point is, we can scare up a few good stories. Make all of those itsy bitsy investors of Skinner’s hanker for new management. The stockholders’ meeting is in three months, isn’t it?”
He nodded. “If we were to succeed in a proxy fight, what would we do with the company, having won control? Despite everybody’s belief to the contrary, it does take technical know-how to properly run this business. I have none, and as far as I can tell, your talents run in a different direction.”
She laughed. “You’re almost as diplomatic as Skinner these days … Cody knows some of that stuff. She used to spend a lot of time in the lab.”
“That’s hardly enough, especially if she intends to stay isolated at the lake.”
Hayley’s grin was wicked. “But that’s the plan. If I have my way, she won’t see the lake any moreoften than once a year.”
“You haven’t answered my question.”
She made a fanning gesture with her hands. “Oh, we’ll find someone. Technical people are a dime a dozen. How about that guy Father had working for him? You know the one – he was so shy and retiring, he was almost invisible. Father thought agreat de al of him. Oh, what was his name? Hans Wavelength?”
Barman smiled. “Eric Band.” He stared somewhere above her head. “Yes,” he said, “we ought to contact Eric Band.”
*****
Have you heard it said that power corrupts? Power does not corrupt. Power when it is divorced from responsibility becomes corrupted.
Corporate corruption is not due to people having a lot of money at the top of the corporate hierarchy. It is because the people in control are not owners and do not stand to lose anything that they are corrupt.
Most CEOs do not own the companies they run. They run these companies on behalf of absentee owners who also believe they have nothing to lose, because their liability is limited.
Cliff Notes– Dramatis Personae
Eric Band — A former employee of Carthage Corporation.
Carthage Corporation — a company founded by Hannibal Grayne.
Caldwell Grayne — Hannibal’s eldest daughter who had his power of attorney at the time of his kidnapping and refused to pay the ransom.
Hayley Grayne — Hannibal’s younger daughter who comes of age in this chapter.
Hannibal Grayne — kidnapped and presumed dead.
Tommy Sharp — Placid Tower’s nephew. Formerly a first grade student of Caldwell Grayne’s.
Jimmy Skinner — The founder of SSI (Also a kidnapper).
SSI — Society for the Small Investor.
Placid Towers — An employee of SSI. (Also a part-time kidnapper.)
She came for Hayley’s birthday. It was difficult to resist her entreaties, the stomping of foot and pouting. “You’re not behaving like an adult,” Caldwell commented wryly. Hayley had answered: “Would you come if I did?”
Barman met them at Vanetti’s. It was the first time she had seen him since shortly after the funeral. There was an awkwardness in theirgreetings. As though some unfinished business lay between them, and one or the other was responsible for the neglect.
“You will help us, Cad, won’t you?” Hayley asked eagerly.
“I’m willing to sign my proxy over to you.”
“We’ll need more than that.” Hayley’s voice was calm now. There was a concentration in her eyes. “We’re planning a takeover. We don’t actually havethe necessary resources. It’s going to take brains, too.” She noticed Caldwell’s smile at thisobservation. “We will have such fun!” Hayley exclaimed.
“It would help if you ran for the board,” Barman said.
“People may not like you, but at least you have the reputation of being levelheaded,” Hayley put in. “How wrong they are.”
Caldwell smiled. She stared into her plate. “All right,” she said. “I suppose the time to act has come. But you must understand that if I’m elected and we don’t have a majority, I will resign. I will not serve as a decorative minority.”
Hayley’s dimple was showing. “I love to hear you talk,” she said. Then to Barman: “You going to stake SSI out tomorrow?”
“Yes, I thought I would. It might be useful if one of you came with me.”
“Don’t look at me,” Hayley said. “I’m a working girl. I’m going to sleep all day, so I’m nice and chipper in the evening.”
Caldwell eyed her, as though examining a specimen. But she saw pain in Barman’s glance.
Their eyes met. She said: “I’ll come with you to SSI, Andy. I’ve always wondered what it was like.”
The lobby was spacious and immaculate. The floor of brown marble that shone. Large tropical plants in giant pots scattered symmetrically throughout the hall. Marble columns every so often.
Two partition walls were covered with expensive, modern, rug-like hangings. The rest was filtered glass. Barman spoke to the elegantly dressed woman behind the marble counter. “I’m Andy Barman, attorney for Caldwell and Hayley Grayne. I’d like to inquire after Hayley Grayne’s investments.”
“Just a moment, please,” the woman said. Evenher voice seemed polished. She picked up a phone and turned away so that Caldwell and Barman could not hear her. She turned back to them: “Someone will be down for you soon.”
“So this is Jimmy Skinner’s domain,” Caldwell whispered to Barman as they strolled through the hall. “Or is there someone else behind him?”
Barman shrugged. “If there is, I haven’t been able to uncover it.”
There were soft footfalls behind them. “Hello Caldwell, Mr. Barman.” His voice held a hint of irony.
Barman frowned, but she smiled. “Placid. I thought I might see you here.”
“I’m your escort,” he said, looking at Barman, “to make sure you don’t wander into the wrong room.”
He led them into the elevator, then through a corridor. Caldwell caught glimpses of richly furnished offices and occasionally a fat, middle-aged man in a chair.
He led them into one such office. It was empty.
The armchairs were firm, but comfortable. Yet Barman sat stiffly in his. “May I offer you some coffee?”
Both declined. Placid perched himself on the corner of the broad mahagony desk. “Is this your office?” she asked.
He seemed amused. “No. I don’t have an office. I work on the files, mostly. I churn out letters to the stockholders.”
Barman stirred uncomfortably. Placid turned to him. “How can I help you?”
“I represent Hayley Grayne, who has recently come of age. Her guardian left the management of Miss Grayne’s stock to SSI. I would like an accounting.”
Placid nodded. “I’ll see what I can do about it.”
He turned to leave when Caldwell stopped him. “While we’re here, we’d also like to see a list of Carthage stockholders who are members in SSI,” she said.
He raised an eyebrow, then made his way out.
Caldwell turned to survey the room. She walked up to a print of a starving infant with an enormous belly. On the other side of the room was a multicolored matte with blotches and smears in the center. She returned to her seat and exclaimed: “What a mess!”
Barman looked about. “It seems pretty tidy to me,” he said wryly.
She shook her head. “That’s not what I mean. I mean all the funds channeled this way. All those,” she choked on the word, “small investors who paid for this – in return for Jimmy Skinner’s pillage of healthy businesses. Carthage is not the only one to fall this way. And it’s not just because Father was killed. There’s something in the system that inevitably leads to this – that wrests control from those who build and create and gives it to men like Skinner.”
Barman shrugged. “I don’t know,” he said wearily.
“Does free enterprise really promote that result?” she asked.
“That’s what happens when you fake it,” Placid said. He was standing in the doorway holding a thick, red folder.
“Fake it?” Barman repeated.
“The corporation is an attempt to unload moral responsibility.”
Barman shook his head. “You mean legal responsibility.” He frowned. “That’s the purpose of the corporate entity. To allow one to conduct a business without incurring personal liability. The legal responsibility ends when the corporate funds are exhausted.”
Placid made his way to the desk and again perched himself on its edge. She watched him intently, as though hypnotized.
“Have you ever heard it said that responsibility and power go hand in hand?” Placid asked. “Consider what happens to the power, when no one is responsible.”
She nodded, beginning to understand.
Barman cleared his throat. “Corporations – stock companies – were invented to facilitate expansion. To encourage investment …”
“By eliminating the risk inherent in such investment,” Placid said, “at the expense of anyoneelse, naturally. At the expense of all who areharmed through negligence of management, and all who contract with business when such contracts are breached. It is a just principle anyone embarking ona venture be personally responsible for the harm it causes. The corporation circumvents it. The result is the possibility of sinking funds into a giant thatcould not have been financially viable, but for the limited responsibility of the investors. Power isscattered among millions. Each shirks responsibility,not only for the debts, but for the proper conduct of the business. The result is in the nature of a democracy …”
Caldwell gasped. “And in democracy, as we know it, men like Skinner rule!” she exclaimed.
Placid nodded. “There would be few small investors if they had to bear the entire risk of loss as well as the chance to profit. They would have to take part in management, or truly know and trust the one to whom they delegate the task.”
Barman tilted his head. “What do you think should replace the corporation, then?”
“What is the nature of liability in a general partnership?” Placid asked him.
“Joint and several.”
“That’s how it should be,” said Placid. “One who stands to profit from a venture should be liable for the entire debt owed innocent outsiders as a result of the undertaking. The nicer division can be settled among partners. That’s what stockholders should be. Partners.”
Caldwell swallowed. “Now they feel safety in numbers,” she said. “They can turn their savings over to Skinner. They know others like them will do the same. Chances are, they’ll make a profit. And if not, their losses are limited.”
“And when all the small men have contributed their meagre resources, there is such a power in the hands of those who can rule them, that a true businessman cannot compete …”
There was a strong, dignified step in the hall. She could hear the quiet snap of expensive leather shoes. Placid turned. He slipped off the desk.
“That’s better,” Skinner commented, watching him. “I see I’ve arrived just in time. I’m sure Miss Grayne and Mr. Barman have had quite enough of your talk.” He flashed them a faultless smile.
Placid went to stand by the rubber plant, in the farther corner of the office. His face was in shadow.
“I’m so glad to see both of you,” Skinner continued suavely. “It’s been a long time.”
Barman stared at him with hostility. But Caldwell searched Placid’s face in the shadows.
“I understand you’ve come to look at Miss Hayley Grayne’s portfolio. Placid, where is that folder?”
Placid emerged from the shadows and handed it to the short, well-groomed man. “You’ll find she’s been well looked after,” Skinner said, leafing through the file. Barman reached for it. It was reluctantly relinquished. Barman examined the papers, choosing one manila folder and perusing thecontents.
“Placid has been neglectful,” Skinner said. “I see he hasn’t offered you coffee.”
“No,” Caldwell answered coldly. “He offered it to us. We didn’t want any.”
“Well, in any event,” Skinner said, sighing, “I’d like some myself. Get me a mug, will you, Placid?”
The young man quietly disappeared into the hall.
Caldwell looked coolly into Skinner’s eyes. “I’m glad to see you taking an interest,” he drawled.
She turned away.
“I see you’ve invested her income in other corporations,” Barman said.
“Why, yes, not to put all the eggs in one basket, so to speak.”
Barman crooked his mouth. “But you had her buy Carthage’s nonconvertible debentures.”
Skinner smiled. “Less risk …”
Barman gave him a wry look. He leafed some more in the files. “We also wanted a list of Carthage stockholders who are members of SSI.”
“Isn’t there one in the file?” Skinner asked innocently.
“No.”
“How careless of that boy …”
Barman shrugged. “It doesn’t matter. You can mail it to us. We’ll send you a written request. We’d better be going, now.”
They stood up. Skinner cleared his throat. “The file …”
Barman smiled. “I’ll take it with me. You see, Hayley doesn’t intend to stay with SSI. She’s notsatisfied with the present management of Carthage Corporation.”
Skinner’s voice was low. “How unfortunate.”
They met Placid in the hall, a mug of coffee in his hand. Caldwell stopped to look at him, but he would not meet her eyes.
*****
Placid fidgetted, as though expecting something to appear behind him and catch him unawares. He seemed afraid to leave Hannibal. He even brought his books into the room and attempted to complete his homework assignment. Hannibal was surprised by the title on the spine of the book: Advanced Accounting Methods.
“What is your major?” Hannibal asked.
Placid smiled coldly, looking up from the book. “Business Administration.”
Hannibal grinned. “You intend to follow in the footsteps of your mentor, Jimmy Skinner?”
Placid shook his head seriously. “No, I will never rise to his station. I’m just a flunky. Skinner is using me. My services are cheap. He pays Joe more. I don’t have what it takes to succeed at this business. Skinner is counting on my gratitude and loyalty. He rescued me from an unpleasant situation and made me privy to his darkest secrets. It should be enough. Oh, I’ll receive the standard promotions. But I’ll never really advance.”
Hannibal frowned. “You could do better without Skinner’s patronage. And without commiting a crime.”
“I want to commit crimes. I’m glad I killedVanetti. And as for the rest, I would not have as interesting a job as I do, without Skinner. My legitimate pay at SSI is above what others would hire me for.”
Hannibal said: “There’s a difference between what is legally a crime and what is wrong. You should make the distinction.”
Placid started flipping through the book again.
“What would you be, if not for the threat of injustice?” Hannibal asked. “An accountant?”
Placid looked up from the book. His voice was firm. “No.”
“What, then?”
The boy smiled. “Maybe an executioner.”
“You don’t mean that.”
Placid shrugged. “It’s a job, isn’t it ?”
“And you could not perform it. After all, I’m still here.”
There was irony in Placid’s glance. “I thought you said I should distinguish between what is illegal and what is wrong.”
A door opened. The sound echoed in the empty front storeroom. Hannibal wondered who it could be. Not Joe. Placid went out, returning with Skinner. “Sorry to say, I had other matters to attend to this past week. But when those two came yesterday, claiming their inheritance, so to speak, I decided it was time to clean up this mess once and for all,” Skinner said. “From now on, your life will be less complicated. You’ll be able to entertain.”
“Sorry, Hannibal, but we’re cleaning our books.” Skinner rocked lighlty on his heals. “You’re an expense I wouldn’t care to account for.” He turned to his subordinate. “You have the gun with you Placid?”
Placid drew it forth. He held it aiming at the floor. “Well, then,” Skinner prompted. “You do the honors, don’t keep me waiting. I’ve other mattersto deal with tonight. I just wanted to see it done with my own eyes.” Placid aimed. Skinner said: “Not at me, at Hannibal. Stop dawdling.”
They heard the entrance door creak open again.
“I’m not going to kill him, Mr. Skinner.”
The man frowned. “I knew you had a problem. All right, let me.”
There were lumbering steps in the hall. “You’re not going to kill him, either.”
“What’s the meaning of this?” Skinner askedangrily.
Joe entered the room. “You’re late,” Skinner said irritably.
“Sorry, Boss,” Joe said. “They gave me a trafficticket.”
“Placid won’t shoot our millionaire,” Skinner said. “Why don’t you do it for us?”
The Scout drew his weapon. Placid spoke quickly, still aiming Skinner. “You won’t kill him … or me,for that matter, because I have entrusted certaininformation related to Mr. Grayne’s kidnapping and whereabouts with a friend. If I disappear, you will be exposed.”
Skinner seemed angry. “You’re bluffing.”
“Look in the kitchen,” Placid said. “Second drawer from the left. It’s a photocopy of theinformation I gave my friend.”
Skinner left, and returned shortly, clutching a notebook. “All right, Joe. Leave them alone for now. I’ll find your friend, Placid.” He shook his head. “Such a terrible waste of resources.”
*****
Eric Band’s house was located in a rundown neighborhood, close to a junkyard. They had to stoponce for a bent old woman with walking canes supporting both arms. It took her two minutes to cross the street. The house was covered with faded aluminum siding. All the curtains were drawn. Itwas 10:00 a.m. Caldwell doubted that he would be home. However, the address in the phonebook was their only clue to his whereabouts.
“I’ll knock,” said Hayley, when they discovered there was no bell. “I’m very good at knocking,” she added. Caldwell and Barman exchanged smiles.
Hayley rolled her hand into a fist and banged mercilessly at the door.
They waited. “He’s probably not at home,” Barman said. “I don’t see a car.”
Caldwell heard shuffling. Someone was playing with the chain lock inside; the door opened. His face was unshaven, the yellow eyes bloodshot, the meagre light brown hair unkempt. He wore a pair of dirty workpants and an undershirt.
“Eric,” Barman said. There was concern in his tone.
Eric Band blinked, focusing his eyes. “Barman.” The anger flared. “What do you want?”
Hayley put herself in the forefront. “May we come in?” Her expression was earnest, the greeneyes friendly and open. Band looked confused. “Who…?” he began.
“This is Hayley Grayne, Hannibal’s younger daughter. You remember her.”
Eric Band nodded. “Oh, yes … I read about her.”
He looked at Hayley in disgust. “Why should I let you in?” His voice was flat, lifeless.
Barman was grave. “We want to talk to you about the corporation – about Carthage.”
“I quit. I want nothing to do with that company.” His voice shook. Hayley and Barman exchanged glances. Caldwell stepped forward. “Let us in, Eric.”
He noticed her for the first time. “Caldwell!” Then he sighed, relented and opened the door.
The floor was strewn with technical magazines. Hayley picked up a crumpled ball of colorful paper.She straightened it out. It was a two page adflouting the great technical ability of Carthage.There was a picture of smiling, silverhaired executives. Barman noted empty beer cans on adirty coffee table and a sagging green couch.
“Have a seat,” Eric Band said, pointing to the latter.Barman complied. Caldwell perched herself awkwardly at the edge, to avoid falling into a deep valley in the upholstery. Hayley said: “I think I’llsit on the floor.” She dropped onto one of the magazines and assumed a crosslegged position.
Barman looked up at Eric Band. “We’re planning a takeover. We want you on our side. We want you to be a part of it.”
Band stared at Barman, blunted resentment in his eyes. But he said nothing. Caldwell looked at the empty beer cans. She remembered Eric did not drink.
“You’ll be a lot more comfortable if you sit down,” Hayley said. “Come on, there’s plenty of room, down here by me.”
Eric glowered at her. The freshness of her skin, the glow on her cheek, her air of happiness were like a slap in the face. It was an argument he could not answer. But he had to. “I’ll get a chair,” he said tonelessly. He broughtit from the kitchen; it had metal legs and plastic padding with sunflower designs. He sat down, not offering it to Hayley. She grinned.
“We’re going to try for a majority at the upcoming stockholder meeting,” Barman continued. He spoke as though he were sure Band was an ally.
Eric wanted to strike him; but as always, he did not do what he wanted.
Caldwell watched him, but Eric avoided her eyes. Barman stirred on the couch. He seemed uncertain. Only Hayley looked comfortable on the floor, leafing through a magazine. Band watched her.
Hayley said: “I understand they’ve really botched up the missile project.”
His eyes widened. “Where did you hear that?”
She smiled, deepening the dimple. “I get around.”
Barman seemed annoyed with her. He spoke as though to keep her from elaborating. “You know more about that than we do.”
“If you tell us about it,” Caldwell said, “we will include a written report on this with the othermaterial we send the stockholders.”
“You’ll be in charge of all electronic related projects, if we are successful,” Barman said.
Eric Band laughed. It was a strange, strangling sound. “And you think I want that?”
Barman looked away. Hayley frowned, and bit hertempting lips. Did he detect actual concern?
Caldwell sat very still. She was pale, and her blue eyes were too big, too round. She met his stare.
He looked away. At Barman. “Do you really think you can leave … attend to your own business …manage your own affairs … And then when you feel like it, come back, and pick up the pieces and start over as if nothing has happened?” There was an unsteady tremor in his voice.”Maybe you can. Maybe that’s one of the powersthat’s been given to you. But if you think that Iam one of those pieces you can just pick up …” He stopped because his voice would not hold.
It was very quiet. They heard the water dripping from the tap in the kitchen. Eric Band took a deep breath. “You have nothing to offer me,” he said calmly. “Please leave.”
Barman stood up slowly. The corner of Hayley’s mouth moved toward her dimple, then returned. She came nimbly to her feet. At the door, Caldwell asked quietly: “May I stay?”
He breathed in, then let it out. “All right.”
She said to Barman: “You two can fly back to Estville. I think I’ll stay in the area for a couple of days. Leave the car at the airport. I’ll drive to Estville.”
He nodded. “Give us a call.”
They could hear Hayley chatting gayly through the closed door. Then the voices receded. Caldwell turned to face the electronics expert. “Eric, maybe I can’t answer you. There were many reasons why we never tried it before. Perhaps one of them was that I didn’t have the guts.” She paused. “No one can replace Father. You know that. You said yourself it wouldn’t be the same. It’s not going to be. I felt and I still feel, in a way, that … there’s no use in trying, if he’s gone. If he could … fail.”
He started at the word. She smiled sadly. “That’s what happened, Eric. Not just in that he was killed – he left the company so insecure. I felt then, that there is no use in attempting it … in doing anything.”
Eric’s mouth was dry. “And now you feel differently?”
“No, I don’t feel differently. But there has to be a way to change things – to make life as it ought to be. Because if there is no way, what we saw in him wasn’t real, either.” She swallowed. “When what I hold important and right is destroyed, it’s as though reality scorns me – no, us. All of us, Eric.You’re angry, too. Venting it against Andy is wrong. He’s not the enemy.”
She picked up one of the beer cans and rattled it. “We must enforce our justice, else it is worthless.” She looked less serious then. “Hayley says that there are certain people who count, and all the others do not. You count, Eric. We should join to fight the common foe. Don’t you want to beat Skinner?”
His voice was gruff. “I don’t care about Skinner.”
She nodded. “Neither do I. But we still have to beat him to win. And we must win, to salvage something of what Father was.”
Eric Band looked at her solemnly. “He had plans. I’ve got wiring diagrams, flow charts, sketches.”
“I’d like to see.”
“First, I’ll tell you about the Hellespont guidance system …” He hesitated.
She took out a notepad, and sat in readiness.
“All right,” he said. “I will help you, but I don’t think what happened after he died was right.”
“It wasn’t. And Eric, I don’t think we’ll win this proxy fight. It’s just the beginning. We have to start somewhere. Only, when we lose, we’ll stick together. We have need of one another.”
He blinked. “Need …”
She took notes for hours, while he told her about the missile project. Then he stopped in midsentence. “What is it?” she asked.
“I think I ought to tell you,” he said.
“What?”
“No one else believed and maybe it isn’t true, but you should know.”
She looked at him intently. He said: “About three years ago, he phoned me.”
“Who?”
“Hannibal.”
She stared at him. It was hard to breathe. “What do you mean?”
“The phone rang in the lab. I answered. I recognized his voice. He always sounded like that.Only he wa s hurried.”
She leaned forward. “What did he say?”
“He said … I wrote it down and gave it to the police, but I know it by heart. He said: ‘Eric,it’s Hannibal. Listen I need your …'”
“What?” she asked. “What did he need?”
“I don’t know. We were cut off. I didn’t know what to do. I waited, hoping he’d call back, but he didn’t. I reported it to the police. They weren’t particularly interested. They said it was probably a crank call.”
“Have you heard anything more?” she asked.
“No, that’s all there was.”
She clutched her pen tightly. Thank you for telling me, Eric.”
*****
Barman followed. It was not the first time he had trailed Skinner. It was his intermittent pastime for the last few years. He uncovered nothing from this. He knew where Skinner lived, and some of his favorite bars. He knew Skinner often flew away, presumably on business trips. There was nothing extraordinary about any of this information.
The neighborhood seemed familiar. He had been here a few times before. This was close to Hayley’s apartment complex. Only a block away. He did not like to come here, but twice in the past month he had been forced to bring her home after an outing. Skinner was parking before Hayley’s apartment building. A nauseating suspicion assailed Barman.
He left his car a few houses away and walked quickly toward the building Skinner had entered. He ran through the entrance and up the stairs. The elevator was taken.
On Hayley’s floor, he found Skinner before a door, her door apparently. It opened. Hayley stood in the doorway in a shimmering garment. Barman heard Skinner say: “I take it you are free?”
She smiled. “I have a space open. Come on in.”
There was something natural and open in the way she spoke. Barman took a few steps forward and cried angrily: “No, Hayley! This is Jimmy Skinner!”
Skinner turned. Hayley recognized Barman,surprised. “I would sleep with him even if he were Karl Marx,” she said firmly.
Skinner looked at her slantwise, not understanding. Barman’s pain he did understand. He smiled at the lawyer.
Barman stood motionless. Hayley’s voice was cool. “Get out of here, Andy.” She took Skinner by the hand into the apartment and gently shut the door. Barman stood there staring, then walked briskly to the elevator. His head felt light and numb.
*****
Mrs. Sharp said that her husband was out of town on business and would not return until the following afternoon. So that evening Caldwell took a cab from Eric Band’s house to the Sharp residence. Eric’s car was at the shop.
Tommy met her at the door. “Caldwell,” he said softly. He, too, counted, Caldwell thought. He must not be abandoned.
Mrs. Sharp beamed at her. “I would invite you to dinner, only Tommy and I have already eaten.”
“That’s quite all right. So have I.” She smiled, remembering the frozen dinner Eric Band had served her.
Tommy took her to his room to show her his new Grayne Computer. She noted the locked trunk, the wide bed, the CRT, disk drive and computer on the oaken desk. There was notebook paper scattered on the floor. She picked up a sheet and examined the crooked lines traced across it.
“Those are blueprints,” said Tommy, fiddling with the computer.
“For what?” she asked, puzzling over the untidy sketch.
“It’s a kind of laser,” he said gravely.” I’ll explain it to you later.” He motioned her toward the desk. “Sit down here. Dad got this computer when he was elected to the Carthage Board. Mom persuaded him to let me have it, since he doesn’t understand computers, anyway.”
He thought she seemed angry, but did not know why. “Just press go,” he directed her. “It’s a game program I wrote. You’ll see how it works.”
Three white dots appeared on the screen. There was a rectangular object toward the bottom. “You press this arrow to go left and that one to goright. The space bar is to shoot them.”
She started pushing the keys. One dot disappeared. Then the next. The third came easily.
“They don’t move or shoot back,” Tommy explained. “That makes it easy to win.”
She laughed. Tommy smiled. “I might make it harder later.”
“Have you been happy here, Tommy?”
He frowned. “It was awful at first. I felt very strange. Sometimes I thought so hard about everything, that it didn’t make any sense. I didn’t think I’d ever see you again. Now I feel a lot better. I wasn’t even surprised that you came.Because lately I’ve thought that you would come, sooner or later.” He fingered the string around his neck. “I think I will do something important, someday. Maybe soon.”
They spent several hours with the computer. Tommy was surprised that she was so familiar withit. They were reading poetry together when Mrs.Sharp invited them to have cookies. They took the book with them to the kitchen.
“Placid likes poems,” Mrs. Sharp said.
“Really.”
“Yes. He bought Tommy the book you’re reading from.”
“I want him to get me a puppy,” Tommy said. “I asked for one for Christmas.”
“Your father doesn’t like dogs,” Mrs. Sharp said.
“But Placid likes them.”
“Uncle Placid,” Mrs. Sharp corrected.
“Does he have a dog?” asked Caldwell.
“No,” said Mrs. Sharp slowly. “When he was little, he found an abandoned puppy in the alley in front of our restaurant. It was dirty, half-starved and bleeding. He insisted on taking it in. They were practically inseparable after that. Only Alexander was run over the day we closed the restaurant.”
“Alexander?”
“That was the name of the dog.” Mrs. Sharp frowned. “I’m worried about him. He’s always so serious about everything. More serious than anyone ought to be. Sometimes I’m afraid he’ll get into terrible trouble.”
“What kind of trouble?” Caldwell asked.
Mrs. Sharp dismissed the thought with a gesture. “Oh, I don’t know. He’s such a child. It’s easy for him to get hurt. And disorganized. Let me show you something.” She got up from the table and took a slip of paper from the kitchen drawer. “I offered to do his laundry last time he was here. I found this in his pant pocket.”
She handed the paper to Caldwell. It was folded over twice. SSI stationery of the finest quality. She read silently:
Sometimes I view him, close by his bedside
Sometimes I watch from afar
Often I study his features in sunlight
His form by the light of a star.
Slowly he struggles, fighting for freedom
He has not the means to succeed
Born to be master, there’s no one to lead him
His virtue is tempered by need.
He does not slumber, though late is the hour
Battles his bonds, though useless his strife
His muscles convulse and great is his power
But ’tis I who have granted him life.
Sometimes I long still further to help him
Soon I repent; I have naught to give
Woe to the conquered, shame to the victim
Far better to live and let live.
The scrawl consisted of long thin letters. Caldwell swallowed. She remembered the surprising, familiar words among the pines; Eric’s telephone message: “I need your…”; Virtue Tempered by Need. I know what this poem is about, she thought. I know the victim. And he’s alive. He must be!
“Are you all right, Miss Grayne?”
She nodded. “May I keep this?” she asked. “I’m going to Estville. I can return it to Placid.”
Mrs. Sharp seemed confused. “Well, I suppose so.”
“Could I have his addresss?” She saw Tommy looking at her intently.
“I don’t have his address,” Mrs. Sharp said slowly.
Caldwell frowned. “Has he moved recently?”
“No … But since he came to Estville three years ago, he refuses to give me his address or phone number. He says he likes his privacy.”
*****
Hayley stepped into his office, unannounced. He looked up from the statement he’d been trying to draft all morning. The words would not come together properly. There was no smile on her lips; she was almost grave. She looked … intelligent was the only word that came to mind. Her ample blond hair fell freely to her shoulders. She wore no makeup. She looked healthy, powerful alive. Her expression was understanding edged with steel.
“What are you doing here?” he asked. He did not want to see her. He wished she would cease to exist.
“I came to talk about last night. You must neverinterfere with my business again.” The childish, gritty element in her voice was still there, but another dominated, clear and hard.
“Certainly,” he said dryly. “Shall I count you out of the proxy fight?”
She stamped her foot. Again he saw the two year old. “What does the takeover have to do with this?”
“Mr. Skinner is one of your …” He paused to find the right word. He did not find it. “Surely you’re not in a position to fight him.”
She shook her head, marveling. “He came to me as a customer last night. I provided him with a service. Would you have done differently?”
“I would tell him that we have a conflict of interest and suggest he find another attorney.”
She pouted. “That’s because you’re a lawyer. But it’s different with other professions. Doctors don’t turn away patients because they don’t like them. Father gave his products and services to anyone who would pay for them.”
He got up from the desk. He wanted her out. He would make her leave. “You gave yourself to Skinner …”
She laughed. “I didn’t give him anything. He paid for it.”
His hands went for her neck. He shook her. That she could do that to him … to Hannibal. “How could you …”
“Let go of me,” she said very quietly and distinctly. But there were tears in her eyes. His hands went limp. She was leaning against the door and he stood before her, motionless and empty.
“You’ve always had this problem,” her voice sounded at length, and it was hoarser than before. “You go around personifying people.” He did not understand. She was not making sense.
Hayley shook her locks. “You think Skinner is some kind of thinking, feeling creature. That he’s some kind of arch-enemy from a comic strip. Well, he’s not. He doesn’t know half the things you think he stands for. Sure, he tried to screw Fatheraround. Sure, he took advantage of his death. But he didn’t do it for the sake of the powers of evil. He doesn’t worship Satan in his spare time. He does it for himself – only himself. He doesn’t know half the things that are going on. He doesn’t know who Eric Band is, for instance. I checked.” She shifted her position. “Jimmy Skinner is just another guy trying to make it big, whichever way he can. Sure, he doesn’t have scruples about pulling a dirty trick every once in a while. But the only thing that separates him from all the other jerks is that he’s a little more successful.”
She tucked a lock of hair behind her ear. “Of course, we’ve got to fight him over the company. But not because he’s … an abomination. Because we count, and we’ve got to have things our way.”
“Your father …”
“My father,” she said angrily. “You both worshiphim so – you and Caldwell. It blinds you. He was a great man. But he wasn’t …” she searched for theword, “Zeus. You always act as though he did everything with a sweep of his arm. He had to pay for what he achieved. You’re upset because I sleptwith Skinner. Father sold him hisstock. I gave him the use of my body for a little while. Father gave him the means to control the corporation. Now tell me which of us is a greater prostitute?” Barman recoiled. She smiled. “What was it Father used to say? Pecunia non olet?” She waited for his response. But he said nothing.
He did not want her gone now. He did not know what he wanted. She turned to leave. “Skinner is more than you think,” he said quietly. “You shouldn’t take him so lightly.”
“Why not?”
The words were torn from him. “He killed your father!”
—–
(c) 1983, 1985, 2009 Aya Katz
Comments
Aya
I am not into fiction and I got to the part in your cliff notes where you suggested the fix for stockholders to get more involved in a corporation by taking away their limited liability and that is where I got off the train.
The whole reason that stockholders have limited liability is because they are not running the day to day operation of the corporation.
Yes they can vote for the board and board resolutions but that in large corporations is a joke because of the proxy system.
Your suggestion would invoke more chaos into an already chaotic system. It would also create more litigation and it would be in an area without stare decisis or any case law at all. This would bring out the greed in the attorney like chumming the waters for sharks.
The stockholder is already connected to the success or failure of the corporation because of the value of the stock. Their investment into the corporation was giving money in return for the shares of stock in the corporation. If the company does well then the share values go up and vice versa.
The only area that I can imagine where your suggestion might have some merit is in the private close corporations which are prevalent in professional corporations. These professionals, lawyers, doctors, and dentists for example chose corporate rather than partnership for doing business because of the limited liability and the tax advantages. The law has provided to a limited extent with the mechanism of piercing the corporate veil.
Corporate law could be changed but not to the point of blaming shareholders personally.
If that could work then I would incorporate Congress and sue the people for the acts of Congress.
Issues Veritas, thanks for stopping by and commenting. I think it’s fine to just read the cliff notes. However, you need to understand the premises behind the suggestion. I am a proponent of the free market, not because I really like to shop or invest or be a consumer — but because I want personal freedom for all individuals. I believe that individual rights are what ensures the best for all of us.
You write: “The whole reason that stockholders have limited liability is because they are not running the day to day operation of the corporation.Yes they can vote for the board and board resolutions but that in large corporations is a joke because of the proxy system.”
Well, yes, it is a joke, because having that many people run a company is impossible. My suggestion would reform the system — not by creating law suits against stockholders, but by preventing people from becoming stockholders who are not involved in a company’s management.
If we implemented the suggestion, it would not be retroactive. Old lawsuits would not be brought against stockholders. They would know that henceforward they were responsible. The value of stock would decline drastically, and people would give up their stock in companies they did not wish to run. In effect, all companies would become general partnerships.
This would be fair to everyone:
1) third parties harmed by a business
2) people who really run a business and know how to do it well
3) employees, who would now have responsible management
4) consumers
and ultimately
5) serious investors who do know and trust the person to whom they give their money.
What’s more, no business too large to be properly run would exist.
It’s a win/win situation for everyone, and it eliminates corruption at the top.
Intreresting chapter, prescient.
Cheers! Jeff Tendick
Jeff, thanks!
Aya,
I guess I just don’t see this as a viable solution.
What you are suggesting is more like a limited liability partnership. Again, they work in select areas and with select groups like those of professional corporations.
What may help is to remove the corporate protection from the executive management of the company. I still maintain that lawyers would just have field day if they could litigate more causes of action and include more clients such as the stockholders, both in suing them and defending them.
Today, we are in the midst of a frivolous lawsuit virus, and this would only add to it. Many of the stockholders don’t even live in the same state or the same part of the country where their companies located. There would be no viable way to have shareholders involved in the day to day business of the company.
You would also do away with the shareholder derivative suits because the stockholder themselves would be their own defendant. You can keep following your thread an also make the Federal Government a defendant because of their pecuniary interest in the company. They tax the corporation and they tax any profits the shareholders get when they sell their stocks. If not for the federal government’s sovereign immunity they would be fair game for the lawyers.
I tried to see it from your viewpoint, but I can’t see it working that way.
Sorry,
Stockholders can’t make those kind of decisions. Nothing would ever get decided.
Vladimir Uhri, thanks for your comment. I agree that we have entirely too many regulations. This is not a hub promoting lawyers or regulations. I’m suggesting that we go back to the common law notion of partnership as the basic form that a business owned by more than one person should take.
Interesting. Thank you for writing this and for sharing part of your novel. However, I don’t think you make a successful argument here for capitalism and free markets being separate. They can’t help but be intertwined and not in a good way. When free market principles created great wealth in the U.S. during the industrial era of the late 19th century, the robber barons of that time (the Carnegies, the Rockefellers) finally had the power and the money to influence government to their own ends for greater profit. That’s how we GOT limited liability for corporations here. The first settlers remembered all too well how corporate law was abused in England, but once a select few Americans industrialists had sufficient wealth and power to profit to grant themselves special rights they did. As they always do. Over and over. Down through history.
Another issue I have is that I see no plan for dismantling what is in place. How do you take it apart? On what authority do you take it apart? What do you do with the mess that is created when you take it apart? For instance, everyone in the U.S. today does NOT own property. Most people live in cities and are dependent on jobs. They can’t ‘live off the land’. What land, where?
I think there is nothing wrong with choosing an independent lifestyle for yourself and it’s laudable that you were able to create it. But I don’t see 1) why everyone should live that way, 2) how everyone CAN live that way, or 3) how you mean to get the U.S. from here to there even assuming we all wanted that.
PGrundy, thanks for your very thoughtful comment. I’ve got to say that you’ve given the matter a much fairer hearing than most people. This cheers me up about the possibility of having reasonable debates on the subject here on Hubpages. The truth is that back in the 1980s when I came up with this, the responses were much more disappointing.
Of course, this isn’t going to be implemented just because I personally want this kind of lifestyle. Unless many others are persuaded that it will make their lives better, it’s just not going to happen.
If the “Robber Barons” introduced limited liability as a way to change the governmental framework in their own favor — (and I’m not sure that this is true) — then isn’t this just another argument in favor of the proposition that the government should stay out of the economy?
The method of transitioning back to general liability would be to have a grace period during which time each stockholder had the opportunity to decide whether he wants to remain a stockholder and start taking a real interest in the company (and accepting responsibility for what it does) — or not remain a stockholder and convert the stock into corporate bonds or cash.
The important thing is that after the transition, no new company would be established with limited liability. So all future companies would start out as general partnerships. This would mean they would end up being much smaller than today’s giant corporations.
I fully understand that not everyone wants to return to the land. I don’t think they would all have to. I don’t even think it would mean abandoning all that we’ve achieved technologically. People who enjoy being employees in an urban environment could still have such jobs — but I think their work environment would naturally be less toxic, because there would be many smaller employers to choose from and abusive employers would not prosper.
Well, I’m all for smaller companies and limits on abusive employers, but I think the point I’m making is less about government intrusion and more about the nature of free markets, which I do not see as positively as you do. I think inherent in your vision is an idealism that sees the free market as a metaphorically ‘noble animal’ that, when allowed to run free, always comes to a good end–and that government only stifles this inherent nobility, thus mucking everything up.
But I think history tells the reverse story–That people tend to want to accumulate money, power, and stuff, and when given free reign to do so it all gets out of hand rather quickly. At that point the rest of the people either introduce government regulation to create moderate financial stability, or we get a situation in which wealth concentrates in the hands of a few who then attempt to control the many by using government for their own ends. I think that free markets and capitalism are inextricably intertwined and trying to tease them apart is an intellectual exercise that has borne no fruit in the real world. But that main thing is, we start from different assumptions about the free market itself–you seem inclined to see the impulse to make money and garner power as basically good, I see it as having flaws and as needing to be moderated by others if it won’t moderate itself. On one level you could simplify it and say you are for the individual, I am for society, but that would be a distortion–I see that tension but I am for the messy middle ground, not for either end.
I also think government has a legitimate purpose and can be a good thing, and that people who consent to be governed are not necessarily lazy or foolish. I think the ugliness we currently face is more the result of capitalism eating itself than it is an example of government run amok with no help from capitalists.So that is another difference between us: I do not see government itself as the enemy, whereas I hear you saying government itself is a bad thing and should be minimized at all costs.
We begin with very different assumptions.
I do think it’s cool though that you wrote and published your own novel. :o)
Kudos on that!
“That people tend to want to accumulate money, power, and stuff, and when given free reign to do so it all gets out of hand rather quickly”
Absolutely Pam! Are you implying government employees are immune to that? Any big corporation is pretty worthless if you compare it to US government in terms of money and power accumulated…
Not that I have answers though…
I’ll come back here and read the hub in its entirety Aya, just don’t have time for this now 🙂
PGrundy, believe it or not, I don’t support free enterprise because I hope to one day make a lot of money. I don’t have much interest in making money, nor, sadly, much talent at it. To do well at generating income from others, you have to cater to their needs and tastes, and I’m really lousy at that.
The reason I support free enterprise is because I want to be able to do my own thing, using my own meagre resources. The free market allows everyone to choose what they will do with their time. Under socialism, because the state is responsible for your well being, it also gets to tell you when something you want to do is “too dangerous” or “not useful.”
Free enterprise has its own checks and balances built into it, just like nature. I can publish my own book, but I can’t make people read it! I think that’s fair.
Any other way to do it and we end up with some people — the ones who got elected — telling everyone else what to do.
Misha, any system that allows people to vote on how much of somebody else’s income they get to have is seriously flawed.
One way to deal with the “government employee” issue is to decide that they can’t vote in the elections of the government for which they work. That is, Federal employees get to vote in State but not Federal elections and vice versa.
The Corporate Entity
This is a good idea
Linjingjing, thanks!
Interesting topic and interesting read! My father used to tell us that you don’t bring up a problem unless you are willing to offer a possible solution. I found it intriguing that you were thinking about such things at such a young age. Plus, thought that the reactions in other’s comments was just as interesting. As for me, I don’t know, my opinion on the subject(s) spins in a hundred different directions depending upon what’s going on in my world.
Jerilee, thanks. At the time, I was very influenced by Ayn Rand’s writings, both in content and in style, and so some people just took this to be another pro-business novel with highly unrealistic characters. (That is, those who didn’t think it was an Agatha Christie style mystery or a science fiction book.) I was in fact adhering to the ideals of the free market, and I noticed that the corporation, as a legal entity, departs from those ideals. It’s no wonder that it’s usually a board of directors that ends up being the villain of many a piece. It isn’t the individual members of the board who are necessarily “bad”, it’s the way they are required to arrive at a consensus that is the real problem
I’ve found this to be true where decisions about chimpanzees are being made collectively by a group of primatologists. Individually, they may not be such bad people. But when compromise is the only way to get things done, they often arrive at the worst possible solution to a problem.
Aya,
I have found that politicians and lawyers use selective and partial responses to question posed to them . If some one, for example, poses 5 questions to them, they will ignore or glide over answering all but the question(s) that they want to answer.
While, I think that you are a brilliant person, I don’t think that you make a compelling argument for replacing all corporations and limited liability forms of business with a full liability partnership company.
As we have discussed in my hubs, partnerships are better suited from professional and trade businesses. Those businesses that are united by the profession, such as doctors, lawyers and dentists. As well as tradesman companies, like plumbing, electrical, air conditioning, interior decorating, etc. The partners in these businesses usually work together and share the work together according to their expertise in the company. Although the professionals like professional corporations more than partnerships.
If I understand your position, you don’t believe there should be any concept of limited liability for an investor of a business. If someone today wants to invest in a corporation that is on the other side of the country from them, they can easily do it. They will have limited liability in the company because they don’t run the day to day business of the company. They also don’t share pro-rata in the gains or losses of the company. They can make their money from the shares of stock in the company. The shares can be sold when the share price goes up and that is their profit. Some corporations also post a dividend but not all corporations do that, especially the high tech companies.
There are a number of forms of business today that offer limited liability, such as LLC and LLP for corporations and partnerships, respectively. Investors are not necessarily qualified to know about the business that they are investing in, but hopefully the management of the company do know all about the business. Putting investors in the position of day to day management would not be a wise move. The logistics of having people that want to invest in a business but live away from the business, prevents effective day to day management of the business.
Perhaps, the best way for you to advance your idea is to build a model of your partnership concept and compare it to the models of other forms of business that currently have limited liability. This should include all of the pros and cons as well as how the day to day management would be implemented. Constraints such as the maximum size that a business form can attain and still be effective such be in there as well.
As an example, how would your plan change GM and AIG from their current corporate form of business. How would your companies get the needed capital to build and expand their businesses?
These are not all of my questions but quite a few.
Treat these questions like you would legal causes of actions in a lawsuit. Any causes of actions that you don’t refute in the answer is deemed a fact in deciding the case.
Issues Veritas, thanks for stopping by again. Always happy to debate the point.
Yes, I am opposed to limited liability for the voting ownership of all business entities, whether they are called corporations or limited partnerships, or anything else, if they involve selling CONTROL over the company. (When limited partners have no voting rights, it’s okay by me.)
However, I don’t think that people who merely want to invest in a business — and do not want to run it — are without other options. They can buy bonds from the company; they can lend it money, in return for interest. They can put their capital at risk — and risk only their capital — without requiring voting rights.
I’m not sure if you caught that point. I’m not against investment — it’s control minus liability that doesn’t work. It’s those proxies from absentee investors who really don’t care what happens that ruin a business and turn it into a big political machine where opportunists can run the business into the ground, completely disregarding both customers and employees.
As for how to transition, I’ve already answered that at length in a comment above. Short grace period, during which stockholders have 3 choices:
1) remain stockholders and accept liability.
2) Trade voting stock for company’s bonds.
3) Sell stock for cash.
If the business is already bankrupt at the time of transition, then in all likelihood, the stockholders will not opt to keep the voting stock and accept responsibility. But as I see it, the importance of this proposition is in terms of the future. It is not a way to fix the current mess. In fact, the current mess shouldn’t be fixed. The failure of unsound businesses should be allowed to take its natural course.
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Aya,
I am not a defender of large corporations or even big business but I think I have a better chance with my National Sales Tax idea that you didn’t like, then your proposal of removing the limited liability.
You really have to have the models for the corporation (Sub Chapter C, LLC) and LLP partnerships.
Using your three points from your comment above.
1) remain stockholders and accept liability. !
Why would anyone want to accept liability from just losing their stock money investment, to whatever additional amount caused by the liability.?
2) Trade voting stock for company’s bonds.
This really isn’t a big deal because of the way large companies use the proxies for voting. This is sort of like political parties spending your vote before you actually vote just because you registered with their party.
3) Sell stock for cash.
Everyone holding shares in the company would have to do 2 or 3 because the whole concept of corporations will have changed.
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This change over would be more difficult than changing to the metric system.
Wouldn’t it just be easier to give stockholders more power over what management does like controlling these huge million dollar salaries and bonuses. Most CEOs that are COBs have the board in their pocket and the board is the real decision maker. Corporate Law state function and the SEC and IRS control it for Federal Issues. The different classes of stock also give different privileges and liabilities.
A lot of bad corporate decisions are made because of trying to get around income tax and the IRS. Many of the business entity forms ae based on trying to get more out of the business than the IRS wants them to have. More specifically, how can the owners of the business clear more money.? You would also have to change the stock market as we know it today as well as corporate law.
Do you see any difference between private, public and professional corporations in your plan?
I am trying Aya but I just can’t see the solution and now I am confused on the reason to give more liability.
Example
Person X has 1000 shares in Corporation Y, a public corporation listed on the NYSE. X has had these shares for 3 months and he invest $10 a share, so he put paid $10,000 plus broker fees to get this stock.
To make the scenario less complex, lets say that the stock is still selling a $10 a share.
The total number of shares outstanding is 1 million, so Y is has a capital stock worth of ten million dollars.
I will let you control the variables of the board, such as its number of members and how many are elected at any time etc.
If you now set these facts to a scenario that illustrates your goal and how it is solved, I would have a better understanding from it.
Again I am not rooting for the corporation, I believe today that the corporations are a pseudo form of a monopoly and they control too much and many of them are out of control
Thanks.
Misha
I don’t understand your comment at all.
Yoor comment and what I mentioned above in my comment have no relation to your comment???
Issues Veritas, I think what Misha is saying is that a democracy of stockholders is just as bad as a democracy to run a country. I agree with that. In order for people’s votes to effectively govern any entity, they have to have a true stake in the matter. When people get to vote about what will be done with other people’s money, they don’t make wise decisions.
I don’t object to a national sales tax replacing the income tax. My comment on your site about that wasn’t that it was a bad idea — it was your faith in the voting public that I was questioning. You made it sound as if everybody wants this, but some big bad politicians are keeping us from having it. The politicians are doing the people’s bidding. Read PGrundy’s pro-socialism site. She represents the majority of the people. You and I don’t.
You seem to want me to run a market projection of the value of stock after my proposal is implemented. Your point is that the value of the stock will go down. That’s right. But just exactly how much it will go down depends on the condition of the company in question. A business that has been run into the ground might have stock with a negative value — in that case, we’ll just let the stockholders off the hook; they get to turn their stock in for free. We won’t make them pay back the money they owe during the grace period. We’ll start with a clean slate. However, that won’t be the case for every company. A company with a sound base will have stock that will sell for a reasonable market price. Lower than it would be without liability, but still of true value.
As for your question:
“Why would anyone want to accept liability from just losing their stock money investment, to whatever additional amount caused by the liability.?”
Here’s my answer: Stockholders with no liability are like peace-time generals. They are a dime a dozen. But when there’s a real war on, the peace-time generals realize the true risk involved and step aside. Then only real generals are left standing. Those who can fight a war.
There will be stockholders who will hold onto their stock, because now that the politicians have been routed, they will have a chance to lead the company and make it profitable under real world conditions and under threat of losing everything! Those are the heroes of the business world.
Yeah Issues, Aya pretty much explained my point. Sorry I was not clear enough 🙂
Actually I would develop this point even further saying that ANY true majority rule system is doomed, even when people have a true stake in the matter as Aya puts it.
Majority is never right at the turning points, and it takes a visionary to recognize the turn and act accordingly. The trillion dollar question is though – how to find those visionaries and make sure they are promoted to the right spots, and how to weed out those that are not… Also, how to make the majority to stomach counter-intuitive visionary actions without revolt… I don’t know the answers…
Aya
Thanks for the very lengthy comment.
It is a shame that Socialism is the goal for the people.
Each year, more and more of the people want the village to take care of them.
They hang there like a big weight around the economy, the only thing most of them produce is children and liability for the rest of the village. The poorest people in this or any other country are the ones that produce the liability. They make unintelligent decisions and then they want everyone in the village to pay for these decisions. It is a vicious cycle, because as they increase the liability, the government taxes more to support them and this brings more people from the middle class into the poorer class because of that. The upper or rich class are unaffected by these events. Socialism wants the rich to subsidize their life style through welfare and give away. Of course, these people at the bottom can still vote and they are the majority so they vote in politicians that will continue to provide them with their freebies. All it cost them was their vote.
This country has deviated from being a Democracy many decades ago, when the government became the Robin Hood for the ghetto. The majority of people today are sheep and sheep don’t need a democracy, they need an Anarchy or a Monarchy. The democracy of this country has always been because of the middle class but each year the middle class shrinks, while the lower class increases. So every year the lower freebie class votes in more and more Robin Hood politicians.
I would like to see a country where the lower class is encouraged to make their way to the middle class, rather than showered with freebies and threatened by high taxes if they decide to move to the middle class. Having a distant and special upper class of super wealthy is like supporting a Royal Family, it doesn’t need to exist.
There are no pure forms of governance left in this country, socialism, Marxism, Capitalism, free enterprise, democracy or any other form because the country has mutated from the vision of the founding fathers. We are now a stew and that is why we are in a stew.
Anyway, you seem reluctant to shine the light on my question in my last comment. I have repeated it here.
BTW, which ism would support your system?
To make the scenario less complex, lets say that the stock is still selling a $10 a share.The total number of shares outstanding is 1 million, so Y is has a capital stock worth of ten million dollars.I will let you control the variables of the board, such as its number of members and how many are elected at any time etc.If you now set these facts to a scenario that illustrates your goal and how it is solved, I would have a better understanding from it.Again I am not rooting for the corporation, I believe today that the corporations are a pseudo form of a monopoly and they control too much and many of them are out of control
Aya
Apparently, I have not been clear.
Current System: Investor $10,000 (1000 shares at $10 a share)
Current System Liability: $10,000 investment
Your System: Investor $10,000 shares, bonds whatever is involved in your system.
Your System Liability: $10,000 investment, ? can the investor lose more than the initial investment and to what limits? So from your joint and several liability concept, it seems that if the company lost a 100 billion dollar lawsuit, this investor could be liable for millions, instead of just losing his $10,000 investment.
Issues Veritas, Correct! The liability is unlimited. It’s the same liability that each of us faces as we conduct our everyday business as individuals. If we harm no one, we don’t incur liability. But we are responsible for fulfilling our contractual obligations and for not committing torts against other people.
Aya
If that is the case, then start with Congress
Issues Veritas, Okay!
Misha, it’s always darkest before the dawn. Maybe it just isn’t dark enough yet…
LOL it definitely is not. Too many people still think they are watching a mild recession 🙂
I enjoyed the Cliff Notes version. I’ll read the chapter when I can, though. The ideas you present here are concise and beautiful. I too am exploring how to change the idea of corporations and how we may build in protecions from greed and bad action. I also want to find ways to make them more effeceint. I am now a new fan!
As far as how bad its gonna tank..I’m with you and Misha all the way. People just don’t want to understand the dangers that lay ahead and the turmoil that has yet to come.
GenriqueMedia, thanks! Let me know what you think after you’ve read the chapter.
In regard to the current state of things, my hope is that as things get worse, people may come to their senses … Sometimes it’s the worst situations that bring out the best in people.
Thanks, Suzanne! I will be reissuing the book on CreateSpace sometime in 2011. Maybe I will incorporate the Cliff Notes in this edition, so readers are less confused about what kind of book this is.
Sweetie Pie, thans! Making the Cliff Notes part of the preview sounds like a good idea, although since I am new to Kindle Publishing I’m not sure yet how to do that. I will look into it.
Thanks, SweetiePie. It is available for free at the moment if people have Amazon Prime and a Kindle. I am hoping to get more reviews.
I really do appreciate your review!
Hope more people have bought your book, Aya. I can say it was an interesting read.
Here is a new review of The Few Who Count.
The book is now available on Kindle:
I really like fiction, and I thought the story was interesting. Maybe you can make the Cliff Notes part of the preview, or the chapter from this hub.k
Very nice! I like the Cliff Notes! 😀
Well, Aya, we obviously had a turning point here in USA somewhere during the last several years, and majority never failed to make a wrong move. Instead of visionary they invariably elect someone who would continue the same suicidal policy, be it R or D.
So what you say may happen, but I don’t see it happen too often…
Issues Veritas, sorry. I thought you were still asking about the value of stock during the transition period.
Just to make sure, I’ll rephrase your question: A particular investor bought $10,000 worth of stock in a company, and sometime thereafter, the company went bankrupt. What will he lose? Well, that depends. How much money does the company owe other people? How many other investors are also responsible for this debt? How many of them are solvent?
The liability is joint and several. This means you take the debt the company owes, divide it by the number of voting shares, and each person is responsible for that share that is represented by the stock he owns. BUT — and this is a big but– if the money can’t be collected from the other shareholders (read partners) then the ones from whom it CAN be collected might end up paying all of it.
Why is this good? Because in order to go into business with someone, you have to understand that if that person fails, you might end up holding the whole bag.
Now I haven’t explained anything new here. That’s just the meaning of “joint and several liability”.
Misha, sometimes, in the darkest hour, the value of visionaries is recognized by the ordinary person. Churchill had his day. It lasted only as long as England faced annihilation, though. That’s one of the reasons I don’t think anyone should be shielded from risk. Only when people recognize the cost of achieving something in the real world can they make informed decisions.
Issues Veritas, I agree with you in general. I think I can put a more positive spin on it though: by being sheltered from any of life’s battles, people are deprived of the means of developing the life skills of becoming self-supporting adults. What we are seeing is an entire generation of adults who are developmentally delayed because they were never given the opportunity to grow.
I can’t answer your math question, because you have not included enough variables. The price that any stock certificate commands on any given day is determined by the entire market — and not just by the state of the corporation involved.
Issues, I am afraid you are still under delusion that “democracy” works, despite of hard facts telling otherwise 🙂 If citizens of flagship democracy could not run their country properly, what makes you thinking they will be able to run a corporation any better?
I am not commenting on the difficulties of implementing Aya’s idea, cause they are plenty no doubt, but your idea seems to be not worth implementing for me, even if implementation is easier…
As for the bad corporate decisions because of income tax – why not to get rid of the cause then, instead of trying to fix consequences? 🙂
Aya
This was not a math question, it just provided an example for you to explain how your system would be better than the current system and how it would affect the current system. The numbers in the example are a freeze frame of the scenario to showcase your idea.
For example, the investor liability in this example is $10,000. If the corporation makes a bad decision and it goes bankrupt, then the investor loses $10,000. What would he lose under your system?
When the stock value of the company goes up, the investor has a paper profit and if the stock value goes down then the investor has a paper loss. The profit or loss becomes real when the stock is sold.
Having idea is OK, but to implement an idea you have to provide details on it.
I am not trying to wear you down, I am trying to get those details.
Thanks for your interesting hub.
We lost values in USA then we need layers as a referee. Many arguing and opinion is nothing but like religion. I is too costly and control is out of line. Soon we will choke from regulations.
Hot Dorkage, thanks for dropping by. You imagine the current stockholders. They are powerless and without any decision making ability. But the reason they behave this way is because they have nothing at risk. Ownership creates responsible behavior. When ownership is split among so many, politicians of the business world run businesses. People complain about the rich getting richer. It’s not the rich! It’s people with no capital who got themselves elected to management but have no stake in the matter!
Issues Veritas, thanks for droppign by again. I hae no interest in promoting additional lawsuits. Look it at it this way: if the corporate entity with its limited liability did not exist, then management couldn’t get away with anything, because they’d be directly answerable to people who had their necks of the line.
The only way thst people will behave responsibly is if there are direct and immediate consequences for not behaving responsibly. Free enterprise is not driven by the profit motive alone — it also has a built in system of checks balances. Anytime you limit liability you promote irresponsible behavior.
Look at the current banking crisis. The average person with savings isn’t ding anything to oversee his own bank, because he thinks the FDIC will protect his assets. When the FDIC fails, all these people with small savings accounts are in for a rude awakening. But if they thought they had to make sure the bank was solvent themselves, do you think ordinary people would have let things get this far?
Look at the current banking crisis. The average person with savings isn’t ding anything to oversee his own bank.
If the banks had stockholders who had personal liability, you can bet that they would oversee the banks.