Lab c3: Business Rights & Responsibilities
Business Rights & Responsibilities
Marco, our correspondent from Earth to the OboxPlanet, conducts an interview with Hank, a successful business owner on the OboxPlanet. The interview was recorded on the OboxPlanet.
Marco: You are a successful self-made business owner. When did you get started?
Hank: Just like most kids, I wanted to imitate adults. I would set up all kinds of sales shops in front of our house and sell drinks and cookies to the passing crowd. I was lucky we lived on a busy street.
Marco: Didn’t you need permission? Who ensured that you sold clean food?
Hank: Permission from whom? There are some neighborhoods with restrictions for kids doing business, but luckily, not where I lived. My parents kept an eye on me, of course, because they would have to take responsibility for any damages I might cause.
Marco: What about later? Did you need to register your business somewhere?
Hank: Well, nobody can force you to contract or sign anything. On a local level, where you know and trust your suppliers and customers, you need nothing, like some farm shops or temporary food stands. Everyone else has an insurance contract for damages they might cause and this provides security for all parties involved.
Marco: And I suppose there are no bookkeeping or tax laws you need to respect?
Hank: What do you mean by tax laws? Bookkeeping is, of course, in every firm’s interest, and there are easy programs and helpful companies to assist with it. For the financial part, there are standard contracts for how you can run a business, and auditing firms check your financial standing and give you a credit rating.
Marco: Ok, I understand that the free market will keep an eye on your financial behavior and insurance contracts replace our bureaucratic safety rules for customers and employees. I suppose these insurance contracts must be very detailed and complicated?
Hank: Of course, these are more or less detailed, depending on the type of business you are in. A hairdresser has a simple contract, while a big production company has a more detailed one. But simplicity is a main selling point for insurance contracts. People want to understand what they are signing and paying for.
Marco: Still, some of them must be very complicated.
Hank: Well, I don’t think so. All contracts stipulate, in essence, that you must act professionally and in good faith, meaning carefully and honestly. You must respect all the knowledge available to a professional in the field to reduce your risk, and this varies greatly. Insurance companies have an interest in you optimizing your behavior and help with risk assessment and reduction. Another important help comes from accreditation companies.
Marco: Can you give an example?
Hank: As an airline pilot, you need certification from an insurance-approved accreditation company. As a hot-dog seller, you just need to use common sense. Plus, all contracts stipulate what happens in case of conflict.
Marco: And what happens then?
Hank: Each contract defines arbitration and litigation procedures. Most firms have a group of mediator and arbitrator firms they work with. In case of conflict, the quarrelling parties can choose among these firms, and then the procedure is the same as in private law disputes. Usually, you accept the first verdict. If not, you can get a second opinion, and if it reaches the same conclusion, it’s settled. The last step is an appeals court, which will make the final ruling.
Marco: Isn’t this susceptible to corruption?
Hank: What do you mean?
Marco: That big firms bribe the judges?
Hank: What is a bribe?
Marco: A payment for a certain ruling.
Hank: That doesn’t make sense. That would immediately kill a law-firm if the competition or the media finds out. And believe me, they will.
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!
