Lab c3: Business Rights & Responsibilities
Business Rights & Responsibilities
Most of today’s business models on earth and on OboxPlanet have evolved over time and on the market. On earth, at some point, states standardized some business models and then started regulating them. On OboxPlanet, you can choose whatever is offered on a competitive market or draw up a contract yourself. On earth, establishing and maintaining a business firm, following all the rules and tax laws can be very expensive and time-consuming.
Families and friends may do business with a handshake. For other deals, contracts are used and useful, e.g., loans from parents to kids or vice versa.
The more people trust and know one another, the shorter the contract may be. Contracts within a community of likeminded people are shorter than between people of different cultures. There, it is efficient – to avoid misunderstandings and future conflict – to enumerate certain things that are taken as given within a tight community. And the bigger the group and the more complex it’s goals and undertakings, the more detailed contracts usually are.
This is where standardization comes into play. To offer contracts which are optimally suited for certain goals is a valuable business model. And like in many other spheres, there is the conflict between drafting a different contract to meet the unique needs of each company and the need for simplicity, because simplicity and standardization facilitates dealing with such business unities.
OboxPlanet has countless business models and contracts, some of the most popular resembling the standards on earth, like LLC’s. The difference is that the only standard and purpose is its efficiency in helping the business achieve its goal. There are no tax law considerations, no state accounting standards, no state SEC, no insider trading laws, no liability suits to “punish” companies etc. There are only the contractually agreed upon rights and responsibilities and a market mechanism which punishes cheating and lying companies rapidly and mercilessly.
What is the main difference to earth? Here the states have taken over and regulate ever more contracts ever more tightly. In some countries it takes years to buy lands and in developed countries it takes lots of money and time to establish and maintain a simple business firm. This leads to less entrepreneurship, less competition and wealth creation and the temptation for corruption.
Now it’s your turn:
Have you tried to establish a business? Can you imagine that there could be a easier way?
What we can do on earth:
Legalize all private contracts, eliminate all accounting regulations and business taxes.
Most of today’s business organizations on Earth and on the OboxPlanet have evolved naturally through market forces. However, on Earth, states have intervened by standardizing and regulating certain business organizational models. This has made the process of establishing and maintaining a business firm complex, expensive, and time-consuming, due to various rules and tax laws. On the OboxPlanet, everybody is free to organise his affairs however he wants to. This is much more efficient, flexible and innovative.
While informal agreements, such as handshake deals among family and friends, exist, formal contracts are commonly used, particularly for transactions like loans between parents and children. The length and complexity of contracts depend on factors such as trust, familiarity, and cultural differences between parties involved. Standardization plays a role in offering contracts that are suitable for specific goals, balancing the need for customization with simplicity.
On the OboxPlanet, there are countless business models and contracts, some resembling the standards on Earth, like Limited Liability Companies (LLCs). However, the key difference is that the only standard and purpose on the OboxPlanet is efficiency in achieving business goals. There are no considerations for tax laws, state accounting standards, regulatory bodies, or liability suits. Instead, contractual rights and responsibilities are agreed upon, and a market mechanism swiftly and mercilessly punishes cheating and dishonest companies.
In contrast, on Earth, states have increasingly regulated contracts, leading to tighter control and delays in various transactions. The process of buying lands can take years in some countries, and establishing and maintaining a simple business firm requires significant time and financial resources. This regulatory burden limits entrepreneurship, competition, and wealth creation, while also increasing the risk of corruption.
More generally, as far as rights and responsibilities are concerned, firms and organizations on the OboxPlanet prioritize transparency and commitment to their purpose and mission.
Profit-oriented firms focus on their responsibility to generate profit in a non-coercive manner. They achieve this by maximizing value for their customers, which, in turn, involves optimizing working conditions for their employees. It is well-known that a motivated workforce is more productive, and businesses understand the importance of treating their employees well.
Non-profit and charitable organizations have the freedom to define their mission without being burdened by state accounting or bureaucratic harassment to get a tax exempt status.
All organizations, regardless of their nature, strive to optimize current income and future enterprise value. In line with the conservation aspect, private companies, driven by self-interest, treat natural resources with optimal care.
The commitment of organizations to fulfill their promises is reinforced by competition and independent rating and testing organizations. Additionally, without political conflicts, scandals, corruption, or wars which take up most of the news headlines on Earth, people on the OboxPlanet have more time available to focus on productive endeavors and maintaining business integrity.
What experiences on Earth, past and present, help us understand life on the OboxPlanet?
This is one area where we clearly see the conflict between private and public law.
Private law prohibits businesses to use coercion or physical violence toward people and their property. They must act self-responsibly and bear punishment even for negligent behaviour. It will cost them business or even fines or imprisonment. This part is very similar to the OboxPlanet.
Public law sometimes permits such behaviour if it is in the “common interest”. And of course, politicians and bureaucrats are creative in finding such interests.
It was the state that explicitely permitted factories to pollute water and air in the 19th century, disregarding the property rights of the victims in their land, houses and even persons. This lead to most of the polution problems that plagued us in the 20th century.
Licensing is another big stick. It not only prohibits unlicensed competition but often shields the licensed person or business firm from full accountability for their actions. “But I was permitted to sell this medication, it was approved by the drug administration” or “the plane that crashed was checked by state officials”. The approval process is prone to several dangers: corruption, lazyness and irresponsibility can more easily florish than under competitive arrangements.
More generally, we can compare private firms with public or publicly licensed and controlled businesses. Private owners have ”skin in the game”, they pay the full price for their decisions. Politicians, bureaucrats and state control agencies feel the consequences of their failings much less, if at all.
In the words of Murray N.Rothbard,
“while a private owner, secure in his property and owning its capital value, plans the use of his resource over a long period of time, the government official must milk the property as quickly as he can, since he has no security of ownership. … Government officials own the use of resources but not their capital value… When only the current use can be owned, but not the resource itself, there will quickly ensue uneconomic exhaustion of the resources, since it will be to no one’s benefit to conserve it over a period of time and to every owner’s advantage to use it up as quickly as possible. … The private individual, secure in his property and in his capital resource, can take the long view, for he wants to maintain the capital value of his resource. It is the government official who must take and run, who must plunder the property while he is still in command.”
Here are some examples:.
Lumber firms with private woods tend their land and plan sustainably. Lumber firms who get forest clearing permits will cut everything, disregarding the longterm consequences. Private fisheries are pampered, public fishing quotas are highly problematic. Private wildlife parks make animals valuable for the owner, in public parks, we have much more poaching etc. etc.
Now it’s your turn:
Have you tried to establish a business? Can you imagine that there could be a easier way?
Things we could learn and implement from the OboxPlanet:
Legalize all private contracts, eliminate all accounting regulations and business taxes.
Illustrations:
John Stossel Don’t Ask Permission!
