Tim Worstall explains why the EU’s latest brain fart is not just a bad idea in its own right, but a truly horrific precedent for the future:
Elon Musk at the 2015 Tesla Motors annual meeting.
Photo by Steve Jurvetson via Wikimedia Commons.
… But now, this, now this is even more important than that. We can deal with free speech by the judicious use of lampposts. This is worse:
The European Union has warned X that it may calculate fines against the social-media platform by including revenue from Elon Musk’s other businesses, including Space Exploration Technologies Corp. and Neuralink Corp., an approach that would significantly increase the potential penalties for violating content moderation rules.
Under the EU’s Digital Services Act, the bloc can slap online platforms with fines of as much as 6% of their yearly global revenue for failing to tackle illegal content and disinformation or follow transparency rules.
In English law that’s known as “piercing the corporate veil”. It’s also something we don’t do. Because that corporate veil is the very thing, the only thing, that makes large scale economic activity possible.
It has actually been said — and not just by me — that the invention of the limited company is the third grand invention of all time. Agriculture, the scientific method, the limited company.
Before the limited co everything was done through partnerships. Every individual involved in the ownership of something was liable for all of the debts of that thing. Which, when you’ve got 5 or 10 blokes trading isn’t that bad an incentive upon them to be honest.
Now think of large scale activity. We want a blast furnace — plenty of folk say Britain should have one after all. £3 to £5 billion these days. OK. No one’s got that much. So, we need to mobilise the savings of many thousands of people to go build it. But without limited liability that means all of those thousands are liable for all the debts — off into the future — of that blast furnace.
“Invest £500 in the new, new British Steel. And if we fuck up then in 10 years’ time they’ll come and take your house.”
Err, yes.
Large scale economic activity depends upon being able to separate the debts of one specific activity from the general economic life of all its backers. If this is not true then no one will invest in large scale economic activity. Therefore we won’t have large scale economic activity. Which would, you know, be bad.
