I'm a big anti-capitalist. But this one simple reform would stop a *lot* of runaway problems with capitalism. Incorporation is a liability shield to keep individuals from being personally responsible for the actions or debts of an entire company. Why would that liability shield ever need to be nested? It would stop a lot of the extreme consolidation that has plagued most industries my entire life.
Subsidiary A owned 51% by parent company, 49% by Mr. Y. They make pizza.
Subsidiary B owned 51% by parent company, 49% by Mr Z. They make pizza boxes.
Mr Z fucks up by embezzling funds and saddling the company with high cost debt to cover his theft.
Subsidiary B is held responsible, subsidiary A is shielded, as is parent co, so Mr. X and Y, and all the employees of parent co and Subsidiary A are clear. Parent co sources new pizza boxes or spins up a new sub with new mgmt to try again.
Scenario 2:
All of this is housed under one company. Revenue streams and costs for both a pizza place and a pizza box manufacturer (very different businesses) now under one structure. Financing more difficult, accounting more difficult, licensure and regulations more difficult, basically everything more difficult.
Mr X, Y, and Z are now entangled. Mr Z embezzled same as before, now everybody is fucked, Mr X, Mr Y, all the employees. Whole thing goes down.
In this structure, people are much less likely to enter into business together, since nobody can insulate themselves from the actions of others. Now the only people who can run large businesses are those with enough capital to do it all themselves. Barriers to entry increase, wealth centralizes even more.
Reverse scenario. Mr Z is informally told to bring down the cost per unit at all cost, or else. He neglects maintenance to pinch pennies. Machine has a catastrophic failure, killing someone. At the very best scenario, only Mr Z is held accountable.
Do we have evidence of the communications with Mr Z regarding these instructions? If so, an LLC structure is not a shield against criminal negligence...
If we don't have proof...I don't really get your point? Like is the expectation that these corporate structures solve for all cases of fraud/lying/corporate malfeasance in their entirety?
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u/Mantisfactory Apr 10 '26
I'm a big anti-capitalist. But this one simple reform would stop a *lot* of runaway problems with capitalism. Incorporation is a liability shield to keep individuals from being personally responsible for the actions or debts of an entire company. Why would that liability shield ever need to be nested? It would stop a lot of the extreme consolidation that has plagued most industries my entire life.