Reddit reviews The Company: A Short History of a Revolutionary Idea (Modern Library Chronicles)

Before the hysteria gets really out of hand I encourage people to read:
http://www.amazon.com/Company-History-Revolutionary-Library-Chronicles/dp/0679642498

The enormous CEO salaries in the US are not the result of corporate rights, but rather a lack of shareholder rights. Shareholders have very little power versus boards and CEOs in America. As a result, boards and CEOs abuse the system, pay themselves a lot, and get involved in politics when they shouldn't.

Prior to the eighties, shareholders could easily replace boards and CEOs by deposing them in shareholder actions. In the eighties these laws changed in response to the so called hostile takeover pirates from Wall Street. Basically boards and CEOs didn't like losing their cushy salaries and benefits in corporate break ups, so they made it so its virtually impossible to come in from the outside and force changes in boards.

People liked the changes because they didn't like the destruction part of creative destruction. The result though is that we have stagnation with corrupt boards and CEOs of companies that should have died a long time ago.

Corporations aren't all evil. The worst offenders are the ones protected from shareholder activism.

Unless the pharmaceutical distributor has lived in a hole the past 500 years, it knows that it's dealing with a limited liability entity. If it doesn't like that arrangement, it can refuse to deal, or request a personal guarantee on the debt (these do happen). The only thing limited liability does is give more options. It's not mandated, and it's not forbidden.

See The Company for a better understanding of limited liability and its role in the economy.

Regarding your alternative, you're simply shifting creditors to insurers. There is almost no actual difference. Creditors today evaluate the chances that the business will fail, and adjust the premium accordingly, as will your hypothetical insurers. The only difference is that your system will be less efficient because the insurer(creditor) coordinates with the investor, rather than the company itself. It also means investment goes through a single investor class, rather than allowing different types of capital arrangements.

You clearly have a brain, so I have to ask: where do you come up with this stuff? Is someone really touting this as a good idea?

(Note that I'm not saying limited liability is not without it's drawbacks, but unfairness to cognizant, voluntary creditors is not one of them)