Let us write a constitution for Chile.

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Re: Let us write a constitution for Chile.

Post by admin » Tue Nov 05, 2019 11:55 am

the other thing that needs to be avoided is hard coding in to law, directly or indirectly, any specific spending requirements.

Both Argentina and brazil for example, got themselves in to big financial trouble because there was / is mandatory budget items either in the constitution or laws that could not be changed. think I read like 70% of Argentina's budget, like 80% of Brazil's budget, is hard coded in to the constitution.
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Re: Let us write a constitution for Chile.

Post by frozen-north » Tue Nov 05, 2019 12:38 pm

admin wrote:
The first right asserted in the u.s. constitution is 'We the PEOPLE".

essentially without those first three words, everything else that follows is b.s.; if you are actually trying to define a democracy.
.....
essentially it is a consent clause, and I am not sure there is a more compact version of that.
I guess the devil is in the details. A constitution that includes the line 'We the people', but does not consider part of its population as 'people', might not be seen as too much of a democracy. Even the Greeks had this problem.

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Re: Let us write a constitution for Chile.

Post by admin » Tue Nov 05, 2019 12:49 pm

well, a constitutional scholar recently pointed out that the u.s. was not even really a democracy until the 1970's, when things like voting rights acts, etc finally started making it possible for blacks and others to vote.
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Re: Let us write a constitution for Chile.

Post by admin » Tue Nov 05, 2019 12:51 pm

oh, i got one, and a lot of people are calling for it around the country, more autonomy for the regions.

some sort of federal system.

regional tax and budget independence from Santiago.

some ability to write laws at the regional level perhaps.

too many laws written for say rural southern chile, by people that live in los condes.
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Re: Let us write a constitution for Chile.

Post by Space Cat » Tue Nov 05, 2019 1:10 pm

The biggest complaint I see around is that the current constitution produces the "subsidiary state" model where the government only takes on services that private entities can't provide. I would prefer a mixed model where the government competes with private players in some sectors because public services have different initiatives compared to for-profit entities and they also can counter private monopolies/oligopolies which run rampant in Chile.

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Re: Let us write a constitution for Chile.

Post by bert.douglas » Tue Nov 05, 2019 2:19 pm

I think that a lot of the problems that we have can be traced to the legal framework surrounding corporations. I am not sure what should be changed. But I can list some of the obvious problems.

Washington Mutual. Defaulting subprime mortgages.
Tokyo Electric Power Company. Fukushima.
Boeing. 737 Max crashes.
Pacific Gas and Electric. Fires and blackouts.
Wells Fargo. Repeated fraud on customers.
Mallinckrodt Pharmaceuticals. Opioid deaths.

I don't think the problems can be solved by adding more regulations. A fundamental realignment of incentives is necessary.
BTW, Boeing is no longer actually making airplanes. They are only doing final assembly. All the components (wings, tails, fuselage, software) are purchased from suppliers all around the world.
Some corporations work really well, particularly small and medium sized family owned businesses. The epitome are the Mittelstand in germany. These businesses have a long term view measured in generations, not quarters. The owners and the managers are the same people. This is real capitalism.

However, many large corporations are characterized by an endless stream of highly paid, short term, charismatic, sociopathic managers. These managers are not capitalists. They are not risking their own money over a long period of time. They get the rewards. The risks are laid on others.

It is tempting to conclude that "big is bad". That is often the case. But, so far, attempts to restrict large corporations that are doing bad things (antitrust) have failed. ATT was famously split up in 1984. But now it is back together again and bigger than before.

But big is not always bad. If we eliminate all large corporations, then some things can not be done. I am thinking of leading edge high technology. Aircraft engines, computer chips, rockets. Rolls Royce, Intel, and SpaceX. These things require large investment over a long period of time.

Fortunately, large corporations don't live forever. There is a lot of churn. The oldest corporation in the Dow30 is GE which was founded in 1892. So the problem does cure itself eventually. We just need to help bad corporations to die sooner.

GENERAL THOUGHTS

Investing is good. Speculation is bad. The difference is one of time scale. Long term is good. Short term is bad. The short term actor is hoping to make a quick buck, and get out and leave the long term costs and risks to others.

The highly dispersed ownership of large public corporations among millions of shareholders is inherently bad. The small owners have no control, no knowledge, and no long term connection to the corporation. It separates risk from reward, and eliminates effective accountability.

Risk and reward should always go to the same economic actor.

When a corporation commits fraud, the penalties now applied are not sufficient. Fines are just a cost of doing business. Tax deductible. No effect on typical shareholder. No effect on managers.

SOME SPECIFIC PROPOSALS

The form of ownership of nuclear power plants should be restricted to a general partnership with unlimited joint and several liability. Construction should be financed only by personal funds of the owners. No debt allowed. Then they should be able to charge any rate for electricity that the market will support. If nobody wants to invest under these conditions, then we will be better off without nuclear power.

For public corporations that commit fraud (and other crimes), the court should seize a portion of shares from each individual shareholder, and sell these shares on the open market. This connects risk and reward, and will quickly lead to real reform within the corporation.

I can't see any good that comes from high speed (nanosecond scale) trading on the stock market. This should be abolished.

This needs a lot more consideration. Just scratching the surface here. But I think that a major restructuring of the legal framework for corporations would have a great benefit to society.

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Re: Let us write a constitution for Chile.

Post by Jamers41 » Tue Nov 05, 2019 3:02 pm

bert.douglas wrote:
Tue Nov 05, 2019 2:19 pm
I think that a lot of the problems that we have can be traced to the legal framework surrounding corporations. I am not sure what should be changed. But I can list some of the obvious problems.

Washington Mutual. Defaulting subprime mortgages.
Tokyo Electric Power Company. Fukushima.
Boeing. 737 Max crashes.
Pacific Gas and Electric. Fires and blackouts.
Wells Fargo. Repeated fraud on customers.
Mallinckrodt Pharmaceuticals. Opioid deaths.

I don't think the problems can be solved by adding more regulations. A fundamental realignment of incentives is necessary.
BTW, Boeing is no longer actually making airplanes. They are only doing final assembly. All the components (wings, tails, fuselage, software) are purchased from suppliers all around the world.
Some corporations work really well, particularly small and medium sized family owned businesses. The epitome are the Mittelstand in germany. These businesses have a long term view measured in generations, not quarters. The owners and the managers are the same people. This is real capitalism.

However, many large corporations are characterized by an endless stream of highly paid, short term, charismatic, sociopathic managers. These managers are not capitalists. They are not risking their own money over a long period of time. They get the rewards. The risks are laid on others.

It is tempting to conclude that "big is bad". That is often the case. But, so far, attempts to restrict large corporations that are doing bad things (antitrust) have failed. ATT was famously split up in 1984. But now it is back together again and bigger than before.

But big is not always bad. If we eliminate all large corporations, then some things can not be done. I am thinking of leading edge high technology. Aircraft engines, computer chips, rockets. Rolls Royce, Intel, and SpaceX. These things require large investment over a long period of time.

Fortunately, large corporations don't live forever. There is a lot of churn. The oldest corporation in the Dow30 is GE which was founded in 1892. So the problem does cure itself eventually. We just need to help bad corporations to die sooner.

GENERAL THOUGHTS

Investing is good. Speculation is bad. The difference is one of time scale. Long term is good. Short term is bad. The short term actor is hoping to make a quick buck, and get out and leave the long term costs and risks to others.

The highly dispersed ownership of large public corporations among millions of shareholders is inherently bad. The small owners have no control, no knowledge, and no long term connection to the corporation. It separates risk from reward, and eliminates effective accountability.

Risk and reward should always go to the same economic actor.

When a corporation commits fraud, the penalties now applied are not sufficient. Fines are just a cost of doing business. Tax deductible. No effect on typical shareholder. No effect on managers.

SOME SPECIFIC PROPOSALS

The form of ownership of nuclear power plants should be restricted to a general partnership with unlimited joint and several liability. Construction should be financed only by personal funds of the owners. No debt allowed. Then they should be able to charge any rate for electricity that the market will support. If nobody wants to invest under these conditions, then we will be better off without nuclear power.

For public corporations that commit fraud (and other crimes), the court should seize a portion of shares from each individual shareholder, and sell these shares on the open market. This connects risk and reward, and will quickly lead to real reform within the corporation.

I can't see any good that comes from high speed (nanosecond scale) trading on the stock market. This should be abolished.

This needs a lot more consideration. Just scratching the surface here. But I think that a major restructuring of the legal framework for corporations would have a great benefit to society.
Is this related to the Chilean constitution or are these comments for any generic country?

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Re: Let us write a constitution for Chile.

Post by bert.douglas » Tue Nov 05, 2019 7:54 pm

Jamers41 wrote:
Tue Nov 05, 2019 3:02 pm
Is this related to the Chilean constitution or are these comments for any generic country?
These comments are drawn from my observations of events outside of Chile.
I think that they are generally applicable to most if not all countries.

More by accident than design, corporations are treated as people by the law. So they inherit all sorts of rights (eg political speech) that are appropriate for people, but may not be appropriate for corporations. It should be obvious, but a corporation is not a person.

This is the kind of thing that should be considered in a constitution.

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Re: Let us write a constitution for Chile.

Post by Space Cat » Tue Nov 05, 2019 10:10 pm

As usual, a nice write-up by Daniel Matamala who says that the Assembly has great psychological significance: a constitution created by the citizens, not a dictator or a group of aristocrats.
https://www.latercera.com/la-tercera-do ... lo/886666/

But he also says that left-wing politicians put the cart before the horse:
Una asamblea constituyente, por supuesto, no resuelve por sí misma los problemas de Chile. Se equivoca la izquierda cuando la empuja diciendo que permitirá nacionalizar el agua o acabar con el Estado subsidiario. Anticipar los resultados del proceso es faltarles el respeto a los ciudadanos. En este caso, lo importante no es el qué, sino el cómo. Es el proceso el que da legitimidad, no el resultado.

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Re: Let us write a constitution for Chile.

Post by frozen-north » Wed Nov 06, 2019 12:20 am

Space Cat wrote:
....Daniel Matamala who says that...

But he also says that left-wing politicians put the cart before the horse:
Se equivoca la izquierda cuando la empuja diciendo que permitirá nacionalizar el agua o acabar con el Estado subsidiario. Anticipar los resultados del proceso es faltarles el respeto a los ciudadanos.
Actually Matamala is wrong. Saying that it will allow to do these changes if the constitution is changed, is different than saying that they will happen. It will just become possible to do it, something that, even if everybody agreed on right now, is blocked by the legal framework.

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Re: Let us write a constitution for Chile.

Post by frozen-north » Wed Nov 06, 2019 1:05 am

bert.douglas wrote:
More by accident than design, corporations are treated as people by the law. So they inherit all sorts of rights (eg political speech) that are appropriate for people, but may not be appropriate for corporations. It should be obvious, but a corporation is not a person.
'More by accident than design' By accident? Where did you get that?

Now regarding your previous post:
Fortunately, large corporations don't live forever.
In theory they can. As it is, they might outlive most people.
After incorporation by English royal charter in 1670, the company functioned as the de facto government in parts of North America for nearly 200 years
https://en.wikipedia.org/wiki/Hudson%27s_Bay_Company
I think that a lot of the problems that we have can be traced to the legal framework surrounding corporations.

However, many large corporations are characterized by an endless stream of highly paid, short term, charismatic, sociopathic managers....They get the rewards. The risks are laid on others.

But, so far, attempts to restrict large corporations that are doing bad things (antitrust) have failed.

I don't think the problems can be solved by adding more regulations. A fundamental realignment of incentives is necessary.
In short, there are problems with the legal framework around corporations, and often they managed by 'sociopathic managers'. What incentives would you give to this managers to change their behaviour?

We agree on your last point:
But I think that a major restructuring of the legal framework for corporations would have a great benefit to society.

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Re: Let us write a constitution for Chile.

Post by admin » Wed Nov 06, 2019 7:52 am

corporations are public charters. The public licenses them to "act as if they were a citizen".

when a company acts so outside the public interest, execute it.

courts should be able to sentence a company to death (i.e. cancel its public charter). force it to dissolve, pay what ever reparations might need to the state or victims, return any remaining capital to the shareholders.

do that a few times with high profile cases, investors will learn to keep a tight leash on the stupidity of management and only invest in companies that are behaving themselves. If you are a scumbag executive, good luck getting a job.
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