User:Drshok

From zefrank

So, please follow my chain of thought and see where it leads:

1> The difference between a partnership and a corporation is that shareholders in a corporation are protected from liability for the debts of the corporation in bankruptcy (”limited liability.”)

2> The same protection from liability could be obtained in partnership by the purchase of “liability insurance” which would, if the company you co-owned went down, cover your debts. Because of the open-ended nature of the liability being insured against, this insurance would probably be fairly expensive.

3> The fiat (government-created) limited liability provided by the state is actually a subsidy at the expense of those whom bankrupted corporations owe money to, in favor of the investors, and its financial value can be calculated as the total value of the insurance services provided to investors or perhaps as the total cost to the creditors.