1/ <Omar voice> all in the game, yo https://t.co/s0BgOyM4iJ
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2/ As an ancap, I note that there is no natural right in the physical universe to be paid back for loans. You get what you can enforce. The state holds itself out as an enforcement mechanism. In ancapistan, various legal providers would do the same. Pay X get service Y.
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3/ What is X? What is Y? In USG X is "taxes" and Y is "best efforts by state to enforce a contract, SUBJECT TO RESTRICTIONS such as: * contracts must have consideration * no enforcement of overly onerous terms * no enforcement against minors * proportional payout in bruptcy
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4/ I've made loans to small firms and individuals. I've taken loans as a small firm / individual. I have both defaulted on and have been defaulted on. THIS IS OK.
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5/ What is the interest rate if http://Amazon.com wants to borrow $1 and pay it back tomorrow? A: Roughly 0%. What is the interest rate if my alcoholic uncle Kevin with no job wants to borrow $20k and pay it back maybe in 10 years? A: LOLOLO
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6/ When the state says "we will enforce this contract C with mechanism M subject to exceptions E" it is YOUR JOB to look at that package and price it fairly. No portfolio of loans returns positive on every single loan.
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7/ so I object to the original tweet > Corporate limited liability is short-form for corporate moral hazard and a carte-blanche for managerial malfeasance this is framing it as if in a state of nature all loans get paid back and all contracts are enforced perfectly and fairly
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8/ The state (in our current system) or legal firms (in ancapistan) provider a certain service. THAT IS THE DEFAULT Perfect enforcement and perfect incentives were NEVER AN OPTION. Make a loan to an LLC or don't. If you do, set an interest rate that covers your risks.
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9/ I strongly dislike "limited liability is a con job" for the same reason I dislike "in Vietnam 12 year olds work in factories and THAT IS NOT OK": it assumes that there are trivially available better options, instead of realizing that these ARE the best options available.
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