[slymon99]

They go bankrupt, because their liabilities exceed their assets. There are three main sets of creditors - the US government who are receiving this $142.7 billion, equity shareholders who own $MMM, and bondholders. In a bankruptcy, you arrange levels of creditors by "seniority", where more senior creditors are paid first. In this case, I would imagine the levels of seniority are:

1. The US government 2. Bondholders 3. Equity shareholders

3M has plenty of assets to be distributed to the creditors - the manufacturing capabilities that you mention, intellectual property, relationships with purchasers. These assets might be sold directly on the market (this is easier with physical assets like manufacturing labs). A new corporation with new management might be established to handle liquidating the assets, or even running the business (this is what happened with FTX). Either way, it seems like bondholders and shareholders alike would get zero'd out and the US government could do what it want with 3M's assets.

To answer your question succintly: > 3M is the only manufacturer of tons of important materials as I understand it, so it's not like they can just get erased from the market

3M is a corporation and one of their assets is their ability to manufacture tons of important materials. 3M the corporation would be obliterated but their ability to manufacture tons of important material would likely be sold off.

[CameronNemo]

The shareholders shouldn't just get zeroed. There should be a clawback of profits made by 3M since the 1970s. Raid my 401k -- someone has to pay.

[abeppu]

Everyone's hating on this, but I do think we have to rethink limited liability because of some of these contexts. 3M paid out dividends for years while producing these chemicals. Their liabilities exceed their _current market cap_, but their market cap could have been higher had they not decided to consistently make those payouts.

Consider J&J's (failed) attempt to spin out a new company to hold their liability over the talcum powder case. It was attacked and shot down because it was so clearly a post-hoc maneuver. If they had merely spun out that child company earlier, would it have been ok?

What if the new playbook is:

- spin out a new company for every potentially risky product line. A parent company may hold a large stake, but other investors can hold shares too.

- sell, grow revenue, but keep few assets in the company; pay out dividends aggressively

- drag out or quash or deny any research or evidence suggesting your product is dangerous, or being sold in an irresponsible way

- when you're finally sued and lose, the company has very little money left in it; plaintiffs get relatively little compensation for their harm, but you don't care because you're busy growing your next dangerous company

If that works, it sounds like a broken system. If you're doing something you should expect will cause large liabilities to crop up later, it seems abusive to pay out dividends to shareholders today and become insolvent tomorrow.

[sokoloff]

We'll put you down in the "not a fan of the rule of law" category.

[CameronNemo]

Thanks!

https://www.copblock.org/40719/myth-rule-law-john-hasnas/

[rapht]

Hello, "limited liability company".

[hgsgm]

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?

[KMag]

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.

[Ekaros]

Both?

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

[sigstoat]

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”