The issue is that you don't like negative numbers. You raise none of these same objections when the assets are still positive. Whats the difference if a tobacco companies assets are taken from +100M down to +10M vs. going from +50M to -40M due to a -90M liability? In the current system the difference is that we zero them at zero, i.e. don't allow negative numbers. All of your talk about unfairness comes down to the objection of handing someone a negative number, as opposed to a positive one. You object to negative numbers, plain and simple.
The mechanism for assigning the -90M hit is identical in either case, it has nothing to do with allowing negative numbers. If you accept that a 'fine' can wack -90M as long as the net assets are positive, why are you suddenly so full of difficulties about the same mechanism resulting in a negative asset value. It is no more complex at all.
The vast bulk of all transactions will have zero future value. Some will have positive value long term, and some negative value. Both can be bought and sold based on market prices. You claim the negative ones will just lie dormant. Nonsense. If I have a negative asset which will result in me shelling out real money such as the tobacco companies face, then I might well sell the risk (i.e. pay someone to buy it from me) if I think the market price is in my interest to do so. If I don't I'll keep the risk and pay any damages which the normal channels (i.e. courts or settlements) end up assigning. Tobacco is a great example, since the history of settlements has been up and down. The market value of risk would have fluctuated quite a bit over the last decade. A perception of arbitrage is what makes a market. Anyone's perception could be wrong which is how you can winners and losers.
You keep coming back to the complexity of determining the value. There is no complexity. Good or bad outcomes are set by the exact same mechanisms which currently decide liability. They do not depend on the market mechanism which enables buying or selling the financial legacy. Many hundreds of individuals entire financial life could be stored on a single $50 hard drive. There is literally no cost involved.
There is no issue of worrying about the chain of those involved, to use tobacco, from grower through user. Fault, if any will be determined in the normal legal manner. If for some reason, the future thinks it was the grower that should bare the responsibility, or say the retailer, so be it. The market has no control of that. The market is about accessing what future rewards/risks might be, placing a price (either + or -) and bringing willing buyers and sellers together. If global warming makes Canadian real estate boom, and the future thinks that some of that wealth should flow to those that consumed hydrocarbons, then the financial transactions of those gas gallons will be positive. If not, they'll be zero. If global warming raises sea levels, and Tonga gets flooded, they can sue to recover from anyone in sight, which they would under the existing system anyway. If they win, those gas gallons will have negative worth. The market will allow buying and selling of that risk as the story unfolds, at a price determined by free principles.
Like I say, the vast bulk of ones financial dealings will likely have zero long term value, and the market will price them as such.
Why is this system good? Precisely because it encourages people to consider the longterm impact of their actions.
Consider slavery in the 1800's under my system. A slave owner could say, slavery, and the way I treat this other race is good and justified, and will always be viewed that way, so there are no risks to my heirs from this behavior. A more astute individual might have said, well, it seems likely to me that in the future, my actions wrt to this race will be viewed very negatively, and my heirs might be required to pay compensation. This will negatively impact their inheritance from me, so I will change my behavior to protect against that. Indeed, a slave owner in the mid 1800's could look at the world and see quite a diversity of opinions which might make him think it risky behavior. Many people continue to pursue risky behavior long after it is obvious to others. The current legal mechanism, which says no or little liability if something is currently legal, encourages that type of behavior. My system encourages a best guess instead. Thats why it is better.
The existing system simply says that if it is legal now, there cannot be future negative consequences (in general, but there are exceptions of course). That encourages poor behavior IMO. |
