[pmyteh]

For a handful of organisations, yes - though the adoption of limited liability structures en masse dates only to the late 19th Century, at least in England.

To put it another way, we managed to run the industrial revolution with pervasive unlimited liability, so it seems likely that 'completely critical' is substantively overstating it.

[roenxi]

We can split hairs about what adjective applies, but the point is that limited liability is a fantastic idea and a big positive in letting people get involved in a business. Limited liability makes it substantially easier for small-time investors to get involved in economic windfalls.

We should be striving to equalise access by both the poor and the wealthy to making money. Limited liability makes it safe for little investors (the people who can't afford a personal lawyer and accountant) to invest in a company.

Take away the limits, and it is no longer safe for small investors to invest in large companies. A big scandal and small shareholders could be wiped out. People who, realistically, had no actual control over the corporation and who were just trying to tap in to the wealth creation engines of the broader economy.

Removing limited liability provisions (1) doesn't target the executives, who are decision makers and (2) tips the field towards an "only the wealthy can afford the risk of investing in stock" equilibrium - even if just a little bit.

LLC isn't a serious mechanism to "privatise gains, socialise losses". That is achieved when the US government sweeps in and gives large cash infusions to incompetent bankers so they can pretend that bankruptcy is a mysterious phenomenon that threatens consumers rather than being a realisation of the incredible damage that they are doing with their own bad decisions. You can easily have both well remediated minesites and LLC laws in the same story. Just beef the regulation up a little.

[Scoundreller]

> Limited liability makes it substantially easier for small-time investors to get involved in economic windfalls.

I’d argue that limited liability mostly benefits the wealthy, as they’re the ones that:

1. Can afford to set up their affairs as a corporation instead of a sole proprietorship or partnership

2. Keep the rest of their assets safe (because they have a lot!) if something goes awry

You don’t need limited liability if you have few assets to go after anyway.

[indymike]

1. $200 is what it costs if you do it yourself, $1000 with the help of an attorney and accountant.

2. What's a lot? Losing even a $100K house is devastating. Having a failed business's creditors take away everything because a customer fails to pay a bill in a timely manner and causes a cascade of failed bill payments from the business is crazy... which is the main reason you incorporate - routine business risks are... riskier than most people's personal life.

Limited liability is a tool for everyone and I would argue matters more the less wealthy you are. I say that having started four businesses, with about a month worth of operating cash... Started three part time on the side, and without the corporation self-employment tax alone would have crushed the business, let alone a lawsuit against my family because of a routine business issue. It also helps in reverse - a financial problem a partner in a small business has generally is not able to reach through the business to take assets from the company. It might change who the owners are, but it doesn not allow people to reach through to the business.

These are not issues of the rich.

[wz1000]

> Having a failed business's creditors take away everything because a customer fails to pay a bill in a timely manner and causes a cascade of failed bill payments from the business is crazy... which is the main reason you incorporate - routine business risks are... riskier than most people's personal life.

Bills and other debts can be subject to limited liability when the other party explicitly agrees to it.

My point was that damages to 3rd parties who didn't agree to the conditions of limited liability, like people affected by hazardous chemicals(see https://en.wikipedia.org/wiki/Bhopal_disaster), unsound structures, unsafe workplaces, environmental damage and so on should not be denied restitution because of limited liability. Neither should the taxpayers pick up the tab in such cases.

[ben_w]

Being poor — or indeed normal —means not having $200 to spare on making yourself resistant to bankruptcy. Tech workers like us are much richer than most: I started on my country’s national lifetime average salary, and most recruiters now expect me to ask for double the local national lifetime average.

[indymike]

Plenty of normal people incorporate... It isn't about resistance to bankruptcy... It is about avoiding a whole swath of life altering problems that a corporation prevents.

[ben_w]

Define “normal”, considering your nation’s average salary.

[rfrey]

The inability to keep assets hidden ("safe") means an LLC would be more valuable for a non-wealthy person. While a wealthy person squirrels away their assets somewhere, a poorer person needs LLC protection exactly so their personal assets don't get taken away.

To the last point, losing everything, even if it's less, would be more devastating than a richer person losing half of what they have in a judgement. So a poor person needs a LLC to avoid the calamity of everything being taken.

Before LLCs it was only established families or folks with very wealthy patrons/backers who started companies. Now millions of people from every financial status do so. The proof of the pudding is in the eating.

[roenxi]

You're assuming that if the law changed the wealthy would sit there and accept the liability. They wouldn't. Without any expertise whatsoever I can imagine a massive pools of capital lending to companies at extortionate rates (~13%, or whatever predicted profits are + 5%), and the owners of the companies would be shell entities or some patsy to take the fall. That way the profits could be harvested across ownership boundaries and the people with the capital would be protected as lenders not owners.

The people with resources would set up ad-hoc schemes like that would limit their liability somehow, slipping loopholes in to the legal system. The small players wouldn't have the resources to play that sort of game. The more there is to lose the more effort would be diverted into protecting it.

[Scoundreller]

Sounds great: it’s too difficult currently for non-wealthy investors to buy anything other than equity.

The beneficial owners of the shells should be revealed anyway.

I’m okay with the wealthy having to hire an army of accountants instead of just pocketing it all. Taxes would be better though.

It’s all an academic exercise though as some country will allow limited liability.