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Taking the L out of Limited Liability Corporation.

If you paid $100 for a share after the damage was done, who should pay? You, or the shareholder who sold to you?




Exactly. Dollars are fungible, and spread around the economy pretty quickly. It's just not clear the "right" way to do any clawbbacks after a few years. If not done carefully, someone who inherits $1,000 worth of stock from their rich uncle on just the wrong day could the very next day discover they've inherited a $100,000 debt through the crime of being born in the wrong family. People die, people inherit stock, there are lots of second- and third-order effects to take into account in order to have a proper accounting of everyone who profited from the misbehavior.

In a relatively short period, the answer becomes "pretty much the whole economy benefited financially". On the one hand, that's a good argument in favor of partially funding the healthcare system via a financial transaction tax, but is also less emotionally satisfying than what you're looking for.

If you want to make long-term clawbacks practical, you need to do something like force all dividends to be paid as long-duration low-seniority zero-coupon corporate bonds backed by a special-purpose legal entity that holds cash/treasuries to fully back the bonds and can only be raided via bankruptcy hearings. That way, the value is kept non-fungible and risk explicitly tracked.

Though, in practice, equity holders would probably sell those bonds immediately on the market, offloading the risk to third parties. You could make the bonds non-transferable except in case of inheritance, and ban short-selling/creating derivatives to prevent transferring the risk, but that's a lot of complication and overhead with little chance of improving corporate behavior.

Ultimately, long-term corporate responsibility is much harder to enforce than long-term personal responsibility. You need a licensed Professional Engineer (or something similar) overseeing safety testing of the chemicals putting their personal career on the line with their stamp of approval. "If everyone's responsible, nobody is responsible." You need a mechanism to make individuals both responsible and legally empowered.


Both?

Just track everyone who has ever owned a share and confiscate their whole property.


what’s the point of even typing such silliness? you just said “confiscate the property of everyone on the _planet_ who has ever had a retirement account”

you might as well propose “we should just snap our fingers and wish really hard for utopia”




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