If the company is a sole proprietorship, you can sue the person who controls it up to bankruptcy, which will affect their personal life significantly. If the company is a corporation/LLC, you can sue the corporate entity up to the bankruptcy of the corporate entity, while the people controlling the company remain unaffected.
This gets even more perverse. If you're an individual you actually can't just set up an LLC to limit your own liability. There's no manner for an individual to say "I'm putting on a hat and acting solely as the LLC" - rather as the owner you need to find and employ enough judgement-proof patsies that the whole thing becomes a "group project" and you can say you personally weren't aware of whatever problem gave rise to liability. In other words, the very design of corporations/LLCs encourages avoiding responsibility.
You're correct with the nitpick about the Supreme Council's justification, but that justification is still poor reasoning. Corporations are government-created liability shields. How they can direct their employees should be limited, to avoid trampling on those individuals' own natural rights. A person or group of people who want to exercise their personal natural rights through hired employees can always forgo the government-created liability shield and go sole proprietorship / gen partnership.
> If the company is a sole proprietorship, you can sue the person who controls it up to bankruptcy, which will affect their personal life significantly.
I'm sure it will. But how do you collect $30M in damages from a single individual whose entire net worth is e.g. $1M? What if the sole proprietor actually owns no assets whatsoever, because he's set up a bunch of arrangements where he leases everything from third parties, and contracts out his business operations to a different set of third parties, etc.?
I don't get why so many people are so intent on trying to attribute the motivations to maximize one's own take, deflect blame for harm away from themselves, and cover up their questionable activities to some specific organizational model. All of those motivations come from the human beings involved -- they were always present and always will be -- and those same human beings will manipulate whatever rules or institutions are involved to the greatest extent that they can.
Blaming a particular organizational model for the malicious intentions of the people who are just using that model as a tool is a deep, deep error.
> If you're an individual you actually can't just set up an LLC to limit your own liability.
What are you talking about? Of course you can. People do it all the time.
> rather as the owner you need to find and employ enough judgement-proof patsies that the whole thing becomes a "group project" and you can say you personally weren't aware of whatever problem gave rise to liability.
You're conflating entirely unrelated concepts of liability here. Limited liability as it relates to LLCs and corporations is for financial liability. It means that the organizations debts are not the shareholders' debts. It has nothing to do with legal liability for one's own purposeful conduct, whether tortious or criminal.
The kind of liability protection that you think corporations enjoy but single-member LLCs don't -- protection from the liability for individual criminal behavior -- does not exist for anyone at all.
> A person or group of people who want to exercise their personal natural rights through hired employees can always forgo the government-created liability shield and go sole proprietorship / gen partnership.
The ownership structure of a business has nothing at all to do with how it hires employees and directs their activities. The same law of agency and doctrine of vicarious liability applies to all agent-principal relationships regardless of whether the principal is a corporation or a sole proprietorship.
> how do you collect $30M in damages from a single individual
It's not about getting made whole from damages, it's about the incentives for the business owner. A sole proprietor has their own skin fully in the game, whereas an LLC owner does not (only modulo things customarily shielded from bankruptcy like retirement savings and primary dwelling, and asset protection strategies for the extremely rich, like charitable foundations)
> I don't get why so many people are so intent on trying to attribute the motivations to maximize one's own take, deflect blame for harm away from themselves, and cover up their questionable activities to some specific organizational model
Because this specific legal structure (not organizational model, that is orthogonal) is a powerful tool for deflecting blame.
> You're conflating entirely unrelated concepts of liability here... It has nothing to do with legal liability for one's own purposeful conduct, whether tortious or criminal
The point is that these concepts are quite intertwined for small businesses, and only become distinct when there are enough people involved to make a nobody's-fault "group project". Let's say I want to own a piece of rental property and think putting it in an LLC will protect my personal life from all the random things that might happen playing host to other people's lives. Managing one property doesn't take terribly much time so I do it myself. Now it snows, the tenant does a crappy job of shoveling, and someone slips on the sidewalk up front, gets hurt, and sues. Since I'm personally involved in supervising the condition of the property, there is now a theory of personal liability for me that I should have been aware of the poor conditions of the sidewalk. (This same liability applies to the tenant, or anyone that was hired to shovel, but they're usually judgement proof, sympathetic, etc).
Same thing with making repairs to the property, etc - any direct involvement (supplying anything but investment capital) opens up avenues for personal liability, negating the LLC protections.
> The same law of agency and doctrine of vicarious liability applies
The point is that LLC/corporate structures allow for much higher levels of scaling, allowing them to apply higher levels of coercion to their employees. Since these limited liability structures are purely creations of government (rather than something existing outside of government), it's straightforwardly justifiable to regulate what activities they may engage in to mitigate this coercion.