During Thursday’s Fox News Republican Presidential Candidate Debate, Chris Wallace asked Donald Trump about his most recent bankruptcy in which the banks to which Trump’s company was indebted lost over one billion dollars. Trump responded that the banks were evil in an attempt to convince us that the bankruptcy was no big deal. He may have been correct that the bankers were bad, but that’s missing the point.
We have to ask ourselves, “Where did the bankers get the billion dollars they lent to Trump’s company and then lost? Whose money was that?”
It was the depositors’ money.
It belonged to those who placed their money in the bank’s investment vehicles. These people expect to get their money back – with interest. And the banks have to make up for the money they lose in corporate bankruptcies by charging higher interest rates, more fees to their customers, and higher fees to businesses when they accept payments through corporate credit cards. So the money Trump failed to pay the banks was effectively stolen from the banks’ customers.
Corporate bankruptcy is legalized stealing!
In fact, a corporation is a system of legalized stealing!
Unlike sole proprietors and partnerships, who are held personally liable for their debts, corporate owners receive “liability protection” from the government. They get to make millions of dollars when business is good, but when their risk-taking goes awry, and they owe millions or billions of dollars that the company cannot afford to pay, they are personally free from having to pay any of it. The “company” goes bankrupt, but the owners of the company get to keep the profits they’ve been paid out during the years in which business was good. If it weren’t for corporate liability protection from the government, the owners might have to spend all they have in order to cover the debts, even if it makes them homeless and personally-bankrupt (which Trump made very clear in the debate that he has never been), and that would make corporate ownership financially dangerous and unattractive to the point that corporations and the stock market might not even exist.
It’s this “ownership without responsibility” that enables corporations to attract thousands of owners, which are commonly called “investors” or “shareholders,” and thus become so large that they can sell products nationwide or even worldwide, making their owners richer than was ever possible throughout all of human history. And these owners don’t have to put all of their eggs in one basket. They can own portions of many companies by owning stock.
So are you guilty of partaking in this system of stealing if you are financially well off but not a corporate owner?
Most likely, yes!
If you own stock to any degree, you are a corporate owner who benefits from liability protection. (You wouldn’t risk investing in stock if you might have to pay more than you invested because the company accumulated debts it couldn’t pay.) Yes, the shares you own might be very small in comparison to wealthier shareholders. And even if you don’t own stock but get a hefty paycheck from a corporation (ballplayers being the most extreme example of this), you still benefit from this system of stealing. No matter how you slice it, if you’re rich, you got rich because you took advantage of a legalized system of stealing.
So how can we justify having a liability protection system that steals from society to enrich the wealthy?
The only way I think it could possibly be justified in God’s eyes is if we require those who get wealthy from this system (which is just about all wealthy people) to pay a higher percentage of their income to taxes, and for those taxes to serve the common good and better the lives of those crushed and left out by the system. In fact, if we don’t insist on balancing out the system in this manner, we are evil, because we will effectively endorse a system in which the wealthy force the debts on society without allowing society to share in the gains. That’s the opposite of the Bible in which God required a national, mandatory redistribution of wealth from the haves to the have-nots, but had no system that enabled the wealthy to legally steal from society.
Some might say we should abolish corporate liability protection, but then world as we know it would collapse. You wouldn’t even be able to get gasoline without corporations. To live in the modern world, we need them. Therefore, I don’t have a problem with a system that makes society share in the debts caused by the risks that wealthy investors take, as long as society is entitled to share in the gains that wealthy investors make.