In his article in the March issue on property takings (“Does the Federal Government Protect Private Property?Views), Stephen B. Presser exhibits the fuzzy thinking that prevents our side from gaining traction.  He equates corporate property with personal property when, in fact, corporate property, like government property, is nearly the opposite of personal property and is certainly its enemy.  Large, limited-responsibility (so-called limited-liability) corporate stockholding reduces ownership to an abstract near-nullity.

Worse, it forbids the good use of such ownership.  “Fiduciary duty” means only the profit motive may be considered, even if holders of a stock majority would prefer to do better.  Offshoring, exploitative marketing, law-buying, and ruining of communities—all are required.  Witness Carl Karcher, who was forced out of the leadership of Carl’s Jr., the company he founded, because he tried to fight this.

Sarbanes-Oxley is nowhere near enough to level the playing field.  We need to make full-responsibility ownership (sole proprietorship and partnership) as attractive as corporate stockholding.  Then the families, clans, and communities so rightly extolled in the rest of the March issue will have a fair chance to influence the course of our country.

        —Lawrence J. Dickson
National City, CA

Professor Presser Replies:

Mr. Dickson’s romantic notion of individual proprietorship has a certain Jeffersonian appeal, but, given the realities of the global economy and governmental impositions of this day and age, it is not likely to be realized completely and certainly not through eliminating limited liability.  I simply cannot agree that the rule of limited liability reduces ownership in corporations to a “near-nullity”; instead, it facilitates investment for persons of modest means and increases productivity.

Mr. Dickson seems unaware of the role such limited liability plays in encouraging the development of closely held corporations and limited-liability companies, which offer the very opportunities for small-scale enterprise that Mr. Dickson seems to want.  In those small-scale ventures, of course, it hardly makes sense to suggest that “Offshoring, exploitative marketing, law-buying, and ruining of communities” are required; rather, the reverse is true.

Finally, given the reality that capital is being driven overseas by Sarbanes-Oxley, that its effect is undemocratic because it removes rather than encourages investment opportunities, and that compliance costs so clearly exceed its benefits, I find it difficult to understand how he endorses it.  Perhaps Mr. Dickson’s problem is with modernity itself, and, again I am sympathetic, but I think he fails to understand much of corporate law that seeks to buttress the kind of ownership and opportunity he appears to favor.