This is what makes a European a European, and an American, American. We have different standards and expectations about the social contract between enterprises and society.

Also, no wonder American companies tend to grow a lot faster without many impediments. The whole American system is built to support and protect the enterprise, not the people. In Europe, as an enterprise, you have a lot more requirements and obligations to fulfill.

And even though I have a disadvantage running a company in Europe as compared to the US, as a European I believe it's the right thing to do.

> This is what makes a European a European, and an American, American. We have different standards and expectations about the social contract between enterprises and society.

As an American this is what I truly hate about corporations. They are afforded person-hood and "citizenship" where it benefits them but are treated as a company / corporation / non-living entity when that benefits them most.

I've been tired of telling international friends that I don't set nor agree with the vast majority of American policies. I, sadly, have no faith that the day will ever come where I won't feel so defensive when the topic of my country and it's influence on the globe becomes the topic for discussion.

> As an American this is what I truly hate about corporations. They are afforded person-hood and "citizenship" where it benefits them but are treated as a company / corporation / non-living entity when that benefits them most.

As an American, I detest this meme, because it perpetuates major misconceptions about corporate law in the US.

Corporations are not granted "personhood and citizenship". People are citizens. People can exercise their rights. Both of those statements are true whether they do so as individuals or whether they do so as a group. In other words, a group of people has the same legal rights collectively that they do as individuals.

This concept is often abbreviated as "corporate personhood", which is unfortunate because it's a seriously misleading term. It's not that corporations become people - it's a way of referring to way individuals can exercise their rights through a group. Corporate personhood isn't even a single provision; it's a way of summarizing a collection of unrelated case law in a short phrase.

>People are citizens. People can exercise their rights. Both of those statements are true whether they do so as individuals or whether they do so as a group. In other words, a group of people has the same legal rights collectively that they do as individuals.

I in turn detest this meme. It is symptomatic of everything I think is wrong with corporatism.

Size and power distort incentives and moral accountability. Each individual in a group should continue to have the rights they have as individuals, but these rights should not aggregate with a "simple sum", so to speak. There must be some cost to aggregating your "rights" in this way, because there is a clear dampening factor for aggregate blame and accountability, which counterbalance "rights". People behave differently in groups (worse), and with more power (worse), and it is impossible to pin moral blame on a corporation.

People perpetrate violence on other people. People can perpetrate said violence as a group. People and groups with more means (money, power, influence) can perpetrate and get away with more violence, as the scale and degrees of removal from the effects of the violence become incomprehensible. Hence I can't blow smoke in the face of my neighbor because I will feel bad, and I will have to deal with the repercussions. But BP can spill 4.9 million gallons of oil in the gulf because not a single person will go to jail, the fees are a negligible cost of doing business, and nobody feels bad because everyone was "just doing their job". No, I don't believe corporations deserve any rights whatsoever.

> because there is a clear dampening factor for aggregate blame and accountability

There isn't, legally. If anything, corporate status provides a clearer framework for holding people properly accountable when they coordinate their actions as a group. Without corporate case law, it would be much easier to shirk accountability.

> But BP can spill 4.9 million gallons of oil in the gulf because not a single person will go to jail, the fees are a negligible cost of doing business, and nobody feels bad because everyone was "just doing their job"

You're conflating a lot of distinct issues - principally, the effects of being a corporation and the effects of being incredibly wealthy and politically influential.

> No, I don't believe corporations deserve any rights whatsoever.

This statement is logically equivalent to "I don't believe that people should have any rights to coordinate their actions".

The irony is that it sounds like a populist statement that's sticking up for the little guy against the machine, but in actuality it's an incredibly radical statement in favor of stripping power away from the poor in order to preserve the power and status of the extremely wealthy.

> Without corporate case law, it would be much easier to shirk accountability.

To my eyes, a large part of the purpose of corporations is to shirk individual responsibility. What else would LLC stand for?

>You're conflating a lot of distinct issues - principally, the effects of being a corporation and the effects of being incredibly wealthy and politically influential.

I attempted to make it clear that the act of incorporating, ceasing to become merely an individual and existing as part of a group in and of itself has dehumanizing influences. The corrupting influence of group-think, moral smokescreening, and increased degrees of separation from the repercussions of one's actions is orthogonal to the corrupting influence of power. Nazi guards could sleep at night after a long day of executions because they were part of a corrupt group that absolved them of responsibility, not because they were mega rich.

To take BP's example, the blame for the spill results from countless decisions which add up to supreme negligence. But it's hard to pin on a single person, it is the organization itself (and its goals) which caused the problem. This negative influence needs to be curtailed, so I think it's inappropriate to consider a group of individuals as having the exact same rights as its constituents summed. When it comes to rights, I just don't buy that 2+2=4.

>>No, I don't believe corporations deserve any rights whatsoever.

>This statement is logically equivalent to "I don't believe that people should have any rights to coordinate their actions"

It was a bit inflammatory of me to word it that way, but I still disagree that those two things are "logically equivalent". I just don't think it makes sense to think of rights in aggregate. Aggregating rights in the form of corporations leads to weighting of rights by the amount of money you have. The son of the chairman of Samsung can exert far more influence across his network of conglomerates and paper companies than I ever can. Does his million-fold monetary advantage over me give him a million times more rights across his corporate appendages than me? Should I buy a third of a share in his textiles company which has the president's ear if I want to express my rights? Fuck that. Those aren't rights, it's the pure expression of power and violence, the very thing I want society to curtail.

>There isn't, legally.

Look at the number of people put into prison after a corporation commits a crime.

In almost all cases being part of a corporation provides protection above and beyond what an individual has on their own. Arguably, this is the entire point of corporations over just having groups of individuals. Consider a world where there was zero corporate law and a group of people was dumping illegally. Each of them would have massive individual liability.

I'm not very knowledgeable in this area, but have a question, as you seem to have thought about this.

I feel the GP's point relates to things like corporations receiving favorable tax treatment when individuals would not; corporations receiving very lenient punishments for crimes when individuals would not; corporations, as above, being able to avoid payments when an individual's property might otherwise be at risk, and so on. Perhaps I'm just not aware that these possibilities are available to me. Am I mistaken here?

Overall, I feel your response deals with the legal framework around what GP said as opposed to the ideas that inspired GP's comment.

The issue with this perspective is that corporations generally are not chartered such that they provide their employees with a voice in its executive actions. There’s also a level of (soft) coercion in that employees’ jobs are on the line.

As a result, granting a corporation blanket rights (eg to donate money) is not implicitly granting those rights to the group, it is granting them only to a small number of individuals within that group.

You say “individuals can exercise their rights through a group”. Most individuals are in fact prohibited from exercising their rights during working hours beyond what is of interest to the corporation, and do not have a direct voice in what the corporation’s goals are.

Thus mediating privileges of a 10,000-person organization as if it speaks with the voice of 10,000 people is effectively reassigning the voice of a large chunk of people to a much smaller chunk of people. If the group only has the legal rights collectively as the sum of its individuals, it is creating an inherently non-democratic power block within a democratic society.

The problem is that companies can spend their money on free speech without undergoing double-taxation. If the same money was allocated to an individual first it would be taxed.

Strawman. You clearly aren't awake to the corporate cancer that has metastasized through corrupt political-media-corporate complex that controls America with manufactured libertarian propaganda and consent.

> This is what makes a European a European, and an American, American

> Also, no wonder American companies tend to grow a lot faster without many impediments. The whole American system is built to support and protect the enterprise, not the people. In Europe, as an enterprise, you have a lot more requirements and obligations to fulfill.

Huh? Developed EU countries eagerly open branches in newer EU states so they can benefit from American-style treatment of the employees... and these branches don't grow at all - it's just about cheap workforce and all profits are funneled out (franchises, copyrights, and various "sandwiches"). You should really understand that there are people paying hefty price for your cozy warm employment conditions and it's not in some remote Asian country - it's just across the border, within the same economic and political union.

To be fair the US system has advantages. Hiring and firing people is a lot easier and faster.

I do think that in the long run making your employees happy and loyal is worthwhile. But treating your workers as disposable trash is also a viable strategy in some sectors.

Watch Where to Invade Next? , learn something and try again.

Except in France, unemployment is 10% while in the US it's 4%. My point on this is that it's a lot bigger of a risk to start a company in France, it's harder to hire and fire and thus it makes it a more risk-adverse environment.

So the thought experiment -- is it better for someone to work for a year and then get fired unexpectedly or not work at all and collect unemployment money for 3 years?

I thought about opening an office in France for a dev team, but after looking at the real costs -- there's no way I could afford it. The actual salaries are fine, but adding in social charges, then all of the ridiculous "protections" -- it's easier for me to hire guys in Serbia, pay them well while not having the financial risk of having to take care of employees when my business may not be able to support them.

So there are 5 French engineers that aren't working now and 5 Serbians that are because I can't afford the risk of hiring French workers because as the business owner, I'm the "bad guy" -- despite funding my little company out of my own pocket and not even being able to pay myself a salary. To be on the hook for French social benefits and the job protections when I can't even provide that for myself? No thanks.

So I've had Serbian devs for the past 2 years and exactly zero French devs -- despite paying the Serbians the same net salary I would have paid the French.

I'm an anecdote, but that's the other side of this "protection" that EU workers "benefit" from -- it's great when they DO have a job, but there are countless jobs that don't exist precisely because of these policies -- and the jobs that do exist pay far less than American jobs (despite similar living costs) because companies have to price the risks into the salaries they offer. So rather than paying a dev $100k per year plus benefits -- a French company would pay $40k per year plus benefits. Then they have roughly 1.5 years of "cushion" in case they're stuck with an employee they can't simply fire.

Before folks start to talk about how France has better social benefits and thus a lower salary is ok.. Net disposable income is vastly less than in the US. And, US companies provide health/disability/etc. benefits in addition to a higher salary. So the idea that French companies pay a lower salary because health insurance is free is just ridiculous -- since French companies aren't paying for health insurance, they should be able to pay even higher salaries than the US right? But the reason they don't is because they have to hedge the risk that they can't fire this employee.

I'd rather work an uncertain year at $150k than three years of $40k guaranteed, but that's just me. I'm an optimist while most French I know are decidedly pessimistic.

I'm sympathetic to your general point but it doesn't seem very relevant to this discussion.

It's one thing to have employment law where you can't hire/fire people at will. I agree that's relatively inflexible and I'd prefer the American model (as a European). There's no free lunch here, you either need to pay for this out of your taxes (as in France), or pay lower taxes and save for the unexpected loss of job yourself (as in the US).

It's an entirely different thing that a company can't meet its basic contractual obligations, i.e. the ability to pay salaries. That's a case where a contract was made, there seems to be something very wrong with basic US corporate law that would allow this to happen, i.e. a company should have enough assets on hand to pay salaries in the event that it goes bankrupt.

In most of Europe companies are obligated to insure against this eventuality. I can't drive a car on public roads without insurance, why should a company be allowed to operate if it isn't insured against failure to meet its basic contract obligations?

> I'm sympathetic to your general point but it doesn't seem very relevant to this discussion.

That you should judge the economy as a whole instead of picking one aspect and extrapolating what "our values are".

Europeans tend to view issues through a classist lens. That society is split up into the workers, and the capitalists, and that your ranking in the social hierarchy is solidified.

For better or worse, we don't see it that way. Today you're a worker, tomorrow you're a business owner. I would say America has more workers-turned-entrepreneur than anywhere else in the world. We have more millionaires who came from "worker" background than anywhere.

I've seen it first hand on multiple occasions. I've seen immigrants come to this country with nothing, work incredibly hard, build a business from scratch, and turn into employers in their community. It's the story of my family and many others here.

If the barrier for these immigrants starting a business was anything like complying with EU regulation - I promise you these businesses and their communities would not exist.

> Europeans tend to view issues through a classist lens. That society is split up into the workers, and the capitalists, and that your ranking in the social hierarchy is solidified.

And yet social mobility between the classes (they exist in the US too even though you don't necessarily think in terms of them) in many European countries is better then in the US. Especially the nordic countries. Pretty much the only EU countries doing worse then US are UK and Italy and the difference between US and UK is much smaller then US and Finland for example.

Maybe we Europeans are a bit pessimistic when it comes to our economic futures but in terms of the chance of making from poor to rich (or vice versa) in many places we are doing better then the US.

https://inequality.stanford.edu/sites/default/files/Pathways...

There's some truth here but it seems we're comparing apples to oranges considering Finland is the size of a US city. I wonder how a top US city compares to Finland for example, or the EU as a whole compares to the US in class mobility.

I don't understand what you think any of this has to do with the topic of unpaid wages owed to workers.

Do you think a critical part of the American success story is the ability of these workers-turned-entrepreneurs to skimp out on paying them the wages they owe?

To answer your original question

> why should a company be allowed to operate if it isn't insured against failure to meet its basic contract obligations?

Because it is meeting its contractual obligation. The liquidation preferences were already part of the corporate bylaws when the employees joined. If the agreement was violated then we have a court system to work it out.

The founders screwed up here and in this iterative game of prisoners dilemma their next venture won't be so easy. But I don't think we can point at this scenario and draw any systematic conclusions. The companies that would need this insurance are the one's that can afford it the least. Which is why "startups" have this profile of high risk and most likely a total bust.

Having the option to work in a high risk environment is important because as individuals we all have a different risk profiles. And if you look at our public listed companies some of these risks have payed off immensely.

Since the context of this thread is the oddity of the American system compared to most other western countries, yes, of course you can draw systematic conclusions. Workers aren't systematically unable to get their final paycheck in most other western countries.

There's a small flat corporate tax for this sort of thing, which addresses your point that startups would need to pay higher insurance rates for this. The insurance is run by state. The reason should be obvious, because you still want innovation and new companies, so it amounts to a net subsidy from big corporations to small ones.

Unless you think unpaid wages are some big part of US GDP it's pretty hard to argue that the lack of this is some huge part of the US's success story.

There's also no limit on working in a high risk environment. There's just a higher bar to being able to form a limited liability corporation.

Sure, you can work with a bunch of people and if it all collapses none of you get paid, but you don't get to do through some arrangement that looks like a normal job. They need to explicitly sign up for that, e.g. as co-founders or through some other painfully obvious mechanism, not just some clause in the bylaws that nobody working at Starbucks is ever going to read.

> Workers aren't systematically unable to get their final paycheck in most other western countries.

How is a one-off event systematic? This is a chapter 7 bankruptcy. The employees become creditors and participate in the liquidation. If the founders were using bankruptcy intentionally to not pay wages then it becomes a matter for the department of labor. All these employees are eligible to collect unemployment in the state they're employed.

These guys spectacularly crashed and burned for this to happen. Starbucks wouldn't file a chapter 7, they'd restructure and wages wouldn't be effected. If you want judge the entire US economy from this article and draw parallels about how this makes Americans and Europeans fundamentally different then you're painting with too broad of a brush.

Quite a bit of nonsense in what you tell.

Of course it is cheaper for you to hire in Serbia than in France, it is a poorer country with lower cost of life. That's about it.

What does "harder to hire" in France even mean? You make a contract and someone starts working for you on the following day. Actually, you do not even need to make a written contract, just have him come to work and pay him, that's enough to define employment.

What is so risky about firing in France? If you fire someone with a good reason, you have to pay him the astounding, horrific, monstrous amount of... 1 week of pay per year of service. If you fire him for no good reason, that is not much worse, you risk (as in, that's if you really screw up (or get screwed)) a few months of pay and that's it.

You can make provision as much as you want, there is no way it is going to cost you more than the difference between 40k and 100k (I take your numbers, which are also off, but that's another problem). Let alone every year for every employee.

I am always amazed at the so much praised risk-taking entrepreneurship (which is prone to brag about its boldness and how it deserves to be rewarded for the huge risks it takes)... who hates nothing as much as the smallest existing risk. I've come to think that it is probably afraid of its own shadow when it walks down the street.

> since French companies aren't paying for health insurance

What? Of course they do. How do you think the health insurance and other services are funded? It is just fixed by law and not depending on the mood on the employer.

You can ramble on as much as you like, but your decision can be summed up as just "it is cheaper to hire someone in a poorer country", which is nothing new. You did not choose to avoid France to go to Germany or Switzerland, you chose an Eastern country, you chose Serbia where the average salary is 6 to 8 times lower!

The correct answer in your case is to give your employees ownership or give them shares or find investors or increase your social safety net to be suitable for underfunded startups.

In the U.S., employees are also protected to a degree. Unpaid wage claims up to $10k, including vacation, severance, or sick leave pay, are prioritized over general unsecured creditors. [1]

[1] https://www.law.cornell.edu/uscode/text/11/507#a_4

Are there creditors that have preference above unpaid wage claims in the US (like banks)? In my little country in Europe (NL), wage has near absolute preference so there is little chance of unpaid wages not being paid. Almost any company has some assets. In Finland (see GP) there's even government insurance.

This is flat out wrong. In bankruptcy in .nl, the uwv (a semi government agency) takes over responsibility for paying up to 13 weeks before and 6 weeks after termination of employment, which is usually a few days after the bankruptcy. Apart from that, wages are 'preferenced' but at the same rank as the uwv and the tax office. However, all of those come after the 'separatisten', which are creditors with a 'security right' (don't know the english term). Which means in practice (since most companies will have pawned their assets to banks for credit lines) that banks will get the most money, 'preferred creditors' some money and others nothing. So while in nl, in case of bankruptcy, most employees will get all wages and overtime they were owed, it has nothing to do with some 'near absolute preference' they supposedly have. And if you don't start bankruptcy proceedings at most say four to six weeks after you didn't get paid, there is a real chance you won't get your full wage. And this is by design, it says so in the 'parlementaire geschiedenis' of the law (record of the discussions around new laws that provide context for future interpretation)

Source: have degree in Dutch law, this is elementary 'employment law', but 30 secs of googling will show that I'm not just making things up.

Apologies. The 'near absolute' was wrong. And the part about who pays the wages by implication as well.

At least we got a good explanation, but not thanks to me.

You can see the list in the link above, but the short answer is very few, such as domestic support (alimony, child support) and administrative expenses of the bankruptcy. The most important creditors with higher priority who are not on the list are secured creditors, such as lenders with mortgages on real and personal property -- but I'd be surprised if this varied much internationally.

Prioritized wages get paid even before unpaid taxes do.

I'm surprised secured credit would get priority over wages. Creditors make money by taking on risk. Wage workers make no such agreement.

Probably because the security is specific real property, so that someone can't give everyone a $100k/week raise and then declare bankruptcy and use the court against the secured creditor. If this were not the case then it would be hard to convince someone to lend for the various bits of real property that make commerce work. Secured creditors are taking on a risk, but not a very big risk because they have first claim on the secured property.

Interesting! Well thought.

In Denmark we have a government body litteraly called the "salary guarantee foundation" (well obviously it is named in danish), which pays salaries (including those you are entitled to after you are fired) up to 160K DKK (so around 21500 EUR).

That foundation then goes first in queue in the bankrupcy claims (but often doesn't get anything)....

But the salary up to that point is safe for the employee... no matter if the company has any assets or not..

(EDIT): oh yeah, and we have state funded health care too...

So, I don't see anyone even trying to start something like this in Finland.

It might be interesting to speculate on potential reasons for that.

In some states employees can go after company officers for their paychecks. There's also still regular unemployment benefits.