brief summary
The video transcript from Sergey Lu’s YouTube channel explains the origins, necessity, and future of corporations through a practical example of starting and growing a business in America.
Starting a Business as a Sole Proprietorship
Sergey begins by describing his own tutoring business in America, teaching children math via Zoom. He explains that such a business is a sole proprietorship, which requires no formal registration regardless of income or number of employees. Taxes are paid as personal income tax on whatever is earned. This form is simple and can continue indefinitely, even with many employees, as was the case with the Levi’s company historically
Transition to Partnership
As the business grows and Sergey hires assistants who might become competitors, he suggests converting the business into a partnership. This change does not require formal registration but involves an agreement on how profits are split and how partners join or leave. A partnership allows members to buy each other’s shares, providing a way to retire and receive income from the business. However, liability issues arise, such as when an employee is injured on the way to work, exposing the business to lawsuits
Limited Liability Partnership or Company
To protect personal assets from business liabilities, the business can become a limited liability entity. This limits the partners’ personal responsibility for business debts or lawsuits. Unlike corporations, limited liability entities do not pay taxes themselves; instead, income is taxed at the individual partners’ level. This structure is very common in America because it offers liability protection without double taxation
Corporations and Corporate Personhood
Sergey then explains corporations, derived from the Latin «Corpus» meaning a group of people. Historically, corporations had limited terms and specific purposes. However, a landmark 1886 U.S. Supreme Court case (Santa Clara County v. Southern Pacific Railroad) granted corporations «personhood,» meaning they have constitutional rights similar to individuals, including free speech and political activity rights. Corporations pay taxes on their income, unlike limited liability entities
Why Form a Corporation?
Corporations are formed to raise capital by issuing shares that can be sold on the stock market. Shareholders, who may be unknown investors, own the corporation, while the original founders become officers or employees receiving salaries. Corporations pay corporate taxes (currently around 19% after tax reforms) before distributing dividends to shareholders, leading to double taxation. Despite this, corporations are preferred for raising large amounts of capital and for the ease of transferring ownership through shares
Summary
Sole proprietorship: Simple, no registration, personal income tax, unlimited liability. Partnership: Informal agreement, shared ownership, personal liability unless limited. Limited liability entities: Protect personal assets, pass-through taxation (no corporate tax). Corporation: Separate legal entity, corporate personhood, pays corporate tax, can raise capital via shares, ownership easily transferable
This explanation provides a clear evolution of business forms from individual ownership to complex corporations, highlighting why corporations exist and their legal and financial implications in
the retelling is done in a neural network https://www.perplexity.ai
Расшифровка видео
0:00
welcome to Sergey Lu’s YouTube channel
0:02
the topic of our conversation today is
0:05
corporations where they came from
0:07
whether they are needed and what will
0:09
happen to them going forward and in
0:11
order to understand this material let us
0:13
start with the fact that I Sergey lubas
0:16
decided to start a new business in
0:17
America I train children I teach
0:19
children some Sciences for children
0:21
basically I do tutoring do I need to
0:24
open some kind of business in America
0:26
for this no I do not so I turn on Zoom
0:29
ch join me I teach them mathematics and
0:32
the father or mother transfers money to
0:34
my bank card that is my entire business
0:37
this kind of business in America is
0:39
called a sole proprietorship which means
0:42
an individual entrepreneur no
0:45
registration is required for this
0:46
regardless of the size of the business
0:49
from the word absolutely any taxes I pay
0:52
I already pay it is called an income tax
0:55
whatever income I earned that is the tax
0:58
I pay and how I earned it by contract
1:01
work by hourly work is nobody’s business
1:04
that is how it works in America I turned
1:06
out to be a good teacher I have a lot of
1:08
students and I can no longer keep up
1:10
with teaching them all what do I do I
1:13
hire anatol whom I’m looking at right
1:15
now and he starts helping me the model
1:18
is the same now the children come on
1:20
Zoom to Anatoli and to me the parents
1:22
pay me and I pay Anatoli his salery the
1:26
business expands and Adam Vladimir and
1:29
Alex join me as well altogether I have
1:33
five employees and I have completely
1:35
stopped teaching myself they work
1:37
wonderfully the parents pay me and now I
1:40
just run the business the question do I
1:43
need to change the form of my business
1:46
no I do not I can remain that same sole
1:50
proprietorship as long as I want
1:51
regardless I emphasize of income level
1:54
or the number of employees the
1:57
well-known company Levis as it is called
1:59
was for a very long time a sole
2:01
proprietorship absolutely having
2:03
thousands of employees that is workers
2:05
but at the same time it belonged to one
2:07
family in other words one person until
2:11
he died he had no desire to do anything
2:13
else with it he just wanted it that way
2:16
my business continues to grow and I
2:18
sense that Anatoli Vladimir and Alex
2:20
want to leave my company and start their
2:22
own becoming my competitors I have
2:25
taught them everything I could about
2:26
teaching math to children and instead of
2:28
creating a competitor for myself I
2:31
suggest they become my partners and here
2:33
we do need to change our form of
2:35
business meaning that from a sole
2:37
proprietorship we become a partnership
2:40
do we have to register something do we
2:42
have to do anything no we do not it is
2:44
enough for us to write our Charter on
2:46
paper even informally how we split the
2:49
money how we work how people join the
2:52
partnership how they leave the
2:54
partnership and that partnership is
2:56
already operational that is it we can
2:59
register it or not not register it the
3:01
law in America does not require it a
3:04
question arises Beyond not wanting them
3:06
to leave me and start a competing
3:08
business what else is a partnership for
3:11
and the main point for a partnership is
3:13
that if I want to retire and somehow
3:15
receive some income from the business I
3:17
created I can sell my partnership share
3:19
to my partners that is they will buy out
3:22
my portion and that will be my pension
3:24
money fantastic that is how a
3:26
partnership works but there is a Nuance
3:29
we have employees and on the way to work
3:32
one day an employee got hit by a car
3:34
while he was driving an unfortunate
3:36
accident and his widow sued us you might
3:39
say what do we have to do with it he was
3:42
just driving to work and he got hit by a
3:44
car but since he was driving to work
3:47
under America’s strict computerised laws
3:49
that is time he spent on me so his widow
3:52
has claims against me therefore first I
3:55
need insurance and second I need to
3:57
limit my liability so
4:00
in our Arrangement it would be
4:02
absolutely normal to establish what is
4:04
called a limited liability either a
4:06
partnership if we are all Partners or a
4:09
company so we move on to the next form
4:11
of ownership limited liability in this
4:14
case it is a partnership we are partners
4:17
and we have limited liability liability
4:20
is responsibility limited means
4:22
restricted so it is a partnership with
4:24
limited liability limited to whom to
4:27
society it is hard to sue me personally
4:30
and seize my house and so on if I do
4:32
something wrong in business they can sue
4:34
my insurance Sue something else but not
4:36
me personally though there are some
4:38
complications here so it is not as
4:39
bullet armor piercing a protection as
4:41
say a corporation but still that is why
4:44
most American companies are precisely
4:46
these limited liability entities not
4:48
corporations it is very important to
4:50
note that limited liability entities do
4:52
not pay taxes because they basically
4:55
consist of people and it is those people
4:57
receiving income from The Entity who pay
4:59
the taxes for instance if we had a
5:02
successful year and Anatoli Vladimir
5:05
Alex and I each received $100,000 in one
5:08
year our limited liability company pays
5:11
nothing whereas I pay the tax on my
5:13
$100,000 according to the formula that
5:16
includes my family situation my other
5:18
businesses and so on that is how it
5:21
looks so the main and Central advantage
5:24
of this structure be it a company or a
5:26
partnership is that as a legal entity it
5:28
does not pay taxes at all
5:30
and now we come to the corporation what
5:32
is a corporation well it is from the
5:35
Latin word Corpus as in the 22
5:37
mechanized core it is the same word
5:40
Corpus is Latin for group of people that
5:43
is all it means accordingly a
5:46
corporation is a group of people and it
5:48
was virtually no different from other
5:50
companies until the year
5:52
1886 that is until 1886 corporations
5:56
existed they go far far back into
5:59
history at least to the Mayflower that
6:01
ship that arrived in America it came on
6:04
corporate money but corporations were
6:06
fundamentally different back then first
6:09
corporations existed for a limited term
6:12
they were not Perpetual the term was
6:14
usually 10 15 25 or 30 years you had to
6:20
declare it they issued a charter for
6:22
that time frame once the charter expired
6:24
you had to either renew it or close the
6:26
corporation second a corporate charter
6:29
was issued only for a specific type of
6:31
activity and if for some reason that
6:33
activity did not work out for the
6:35
corporation it had to close third money
6:38
was invested in a corporation by certain
6:40
people a group of people but selling
6:43
your stake in the corporation was not as
6:45
easy as it is now we will discuss that
6:47
shortly then in 1886 came the famous
6:50
very important though you may not have
6:52
heard of it but nevertheless it is all
6:54
affirming case of the Supreme Court
6:57
called Santa Clara County versus
6:59
Southern Pacific Railroad Santa Clara
7:02
county is my neighboring County in
7:04
Silicon Valley and the entire Silicon
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Valley is precisely in that same Santa
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Clara County but back in 1886 nobody
7:12
knew about that and in Silicon Valley
7:15
they grew apples and cherries there were
7:17
a lot of fruit orchards and that was it
7:19
and in that Santa Clara County up to the
7:21
present day there is a train called Kel
7:23
train back then there was a train owned
7:25
by a corporation called Southern Pacific
7:28
Railroad that is what it was was called
7:30
that County wanted to start collecting
7:32
taxes from this corporation which had
7:34
not been paying them until then the
7:36
matter reached the Supreme Court and
7:39
there based on the 14th Amendment to the
7:41
Constitution we have not discussed it
7:43
but that is the amendment that emerged
7:45
after the Civil War to equalize everyone
7:47
in rights this is that same Amendment
7:50
the one that equalized the rights of
7:51
black and white citizens suddenly out of
7:54
nowhere it was used to Grant
7:55
corporations what in America is called
7:58
personhood that is to treat them as
8:00
individuals and so starting in 1886 by a
8:04
margin of one vote indeed in my
8:07
preparation for this seminar I
8:09
discovered an interesting statement that
8:11
the Court’s decision was actually the
8:12
opposite but was falsified by the
8:14
clerk’s summary it is hard for me to
8:17
believe but I found that opinion anyway
8:20
by a margin of one vote corporations
8:23
received what is called
8:24
personhood what does that mean it means
8:27
that all constitutional rights apply to
8:29
corporations including the right to free
8:31
speech I am not kidding the right to
8:34
political activity I am not kidding and
8:36
other political rights along with that
8:39
corporations are subject to taxation in
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other words now we have the same
8:43
Collective group myself Vladimir Anatoli
8:47
and Alex and we transform our
8:49
partnership our limited liability
8:51
partnership called kind teacher into a
8:53
corporation how does that happen I will
8:56
explain first we have to change our form
8:59
of of registration that is possible it
9:02
will cost a bit more in California you
9:04
pay $600 per year for a limited
9:06
liability company and that is all you
9:09
pay for that Charter if you form a
9:11
corporation depending on the state you
9:13
pay more but you can register a
9:15
corporation not necessarily where you
9:17
live that is if you have a limited
9:19
liability company you must register it
9:21
where you live but you can register a
9:24
corporation in some other state it has
9:26
its own personhood which is why everyone
9:28
registers corporations 95% of American
9:32
corporations in the state of Delaware a
9:34
small state that hardly anyone has heard
9:36
of but that is where all American
9:38
corporations register for various
9:40
reasons which I will not go into now it
9:42
offers the most favorable conditions for
9:44
corporate registration so we register a
9:47
corporation in order to do that
9:49
naturally we need a charter now we need
9:51
a board of directors that is we need
9:52
managers and not just us we need at
9:55
least three or as many as we like
9:57
usually around eight or 10 indiv idual
9:59
who will serve as the corporation’s
10:01
governing body without that it cannot
10:04
exist we become officers that is
10:06
employees of this Corporation now I do
10:09
not receive income I receive a salary
10:12
just like everyone else and I am merely
10:14
hired by this Corporation when we were a
10:17
limited liability entity I was receiving
10:19
income but now I receive a salary a
10:23
different form of payment while
10:25
shareholders people or other entities
10:27
that own shares of the corporation
10:29
receive the income that might be me it
10:32
might be someone else moreover once that
10:35
occurs the corporation starts paying
10:37
taxes president Trump lowered the
10:39
corporate tax rate before him it was
10:42
around 28% now it is around 19% it used
10:46
to be the highest but it became one of
10:48
the lowest before I get even a penny
10:50
from the corporation the corporation
10:52
itself pays tax so the government
10:55
benefits because corporations pay taxes
10:58
unlike other forms of of ownership in
11:00
which the individuals pay this is what
11:02
in American legal terms is called double
11:04
taxation It Is by law so we ask why
11:07
would we want that why do I need a
11:09
corporation if that is the case a
11:11
corporation is needed because I can sell
11:13
its assets meaning its shares on the
11:15
open market and easily make money on it
11:19
which is what a share of a corporation
11:20
is all about suppose our team of
11:22
Partners created 100 shares and sold
11:25
them on the market and now they live a
11:27
life of their own they can go up in
11:29
price they can go down in price we are
11:32
now officers of that Corporation we want
11:34
the corporation to make money for whom
11:37
not for us anymore but for its
11:38
shareholders that is the investors in
11:40
the
11:41
corporation those shares will be traded
11:44
on the stock exchange and bought by
11:45
completely random people I do not even
11:47
know their interest in my company this
11:51
corporation that we created is
11:53
represented by that same board of
11:54
directors the committee that now
11:56
represents the investors interests that
11:58
is why you create a corporation in order
12:00
to raise Capital this way I will tell
12:03
you a story about a company once called
12:04
Anderson Consulting where I worked so I
12:06
know this story well firsthand Once Upon
12:09
a Time in the early 20th century in
12:11
Chicago there was a man named Arthur
12:13
Anderson Arthur was his first name
12:15
Anderson his last name and he was a CPA
12:18
that is a certified public accountant a
12:21
public accountant he would go to
12:23
companies and do audits for them let us
12:25
note why audits are needed by law you do
12:28
not have to do an about it you can just
12:30
submit your tax documents as they are
12:32
but then the likelihood is much higher
12:35
that the tax authorities will come to
12:36
inspect you in order to avoid that
12:39
hassle they are shady people they will
12:41
harass you for a long time you hire a
12:43
third party an independent organization
12:46
and an independent person who has a
12:47
license from the state in which they
12:49
practice these are the CPAs certified
12:53
meaning they are certified public
12:55
accountants and they verify your
12:57
documents they have no interest in
12:59
covering for you or lying for you
13:01
because they would lose their license
13:03
and might even go to jail by giving them
13:05
control or letting them audit your
13:07
company they accept full responsibility
13:10
they have zero motivation to lie sure
13:13
the tax authorities may still come and
13:15
check even if you had a certified public
13:17
accountant but they are less inclined to
13:19
do so so most people involved in serious
13:22
business do not do their taxes
13:23
themselves well that is not entirely
13:26
accurate they do prepare them but once
13:28
paid they they send them to a CPA who
13:31
checks them and says yes everything is
13:33
fine thus the government for many years
13:36
over 150 years found a third party to
13:39
avoid auditing every single business in
13:42
America the tax service has
13:44
traditionally been very small auditing
13:46
about 1 in 1,000 sometimes randomly
13:49
sometimes not never explaining to anyone
13:53
but it is precisely the institution of
13:55
these CPAs certified public accountants
13:58
that allows the government not to check
14:00
every single company that is clear so
14:03
our young man Arthur Anderson became a
14:06
CPA business went well he hired
14:09
assistance and by the scheme I described
14:12
so they would not leave and start a
14:14
competing company he made his best
14:16
assistance Partners the company grew
14:19
quickly and over 80 years he was no
14:22
longer Alive by then his children took
14:24
over but eventually there were more than
14:26
3,000 Partners all across America that
14:30
does not mean there were not also
14:31
employees indeed in the mid 1980s there
14:35
were around 25,000 employees and about
14:38
3,000 Partners a partner’s job was
14:41
simply to find clients sign contracts
14:43
and make sure everything was done as the
14:45
clients wished they developed their own
14:48
methodology their own work methods their
14:50
own client base and grew steadily until
14:53
about the early 1980s when computers
14:56
came to American accounting and
14:57
accounting systems began to appear under
15:00
American law the company that installs
15:03
accounting systems cannot be the company
15:05
that audits them makes sense right if it
15:08
is installing them someone else must
15:10
confirm that they are set up and
15:12
functioning properly and our Arthur
15:15
Anderson company realized they were
15:16
losing a huge amount of business their
15:18
business was knowing their client
15:20
because they could not install the
15:21
computer systems and audit them too then
15:24
they made a clever move a classic trick
15:27
they formed a subsidiary called Anderson
15:29
Consulting the original firm was Arthur
15:31
Anderson while the new offshoot was
15:34
Anderson Consulting the partners dealing
15:36
with it technologies that is
15:38
computerization moved there it was a
15:41
formal divorce essentially a fictitious
15:44
divorce as was once said in the Soviet
15:46
context they still slept together but on
15:49
paper everything was separated there
15:52
could be no half measures on the books
15:54
so the finances were split on paper
15:56
nonetheless the partners still shared
15:59
the money according to a certain scheme
16:01
I emphasized they were Partners so
16:03
everything they earned was split based
16:05
on some coefficient this firm by the way
16:07
mandated retirement at 55 years old at
16:10
55 you had to sell your share in the
16:13
partnership and retire that is how it
16:15
was set up in the charter so when the
16:17
first generation of Partners turned over
16:19
in Anderson Consulting meaning some
16:21
reached 45 some 55 and had to leave they
16:24
had roughly a decade to do so the Next
16:26
Generation asked a logical question why
16:29
are we the partners in Anderson
16:31
Consulting paying the folks at Arthur
16:33
Anderson yes once upon a time we were
16:35
one firm but we are no longer that
16:38
supposed divorce was in fact real now
16:40
the spouses stopped sleeping together it
16:43
went to court they battled it out for
16:45
about 10 years in the 1990s I worked
16:48
there at that time and finally the court
16:50
severed them completely and Bard
16:52
Anderson Consulting from using the name
16:54
Arthur Anderson they had to rename
16:56
themselves I was working there when that
16:59
happened they announced a contest for
17:01
the best new name a young woman from
17:03
Scandinavia came up with the name
17:05
Anderson Consulting had always been
17:07
abbreviated AC on its business cards AC
17:11
Anderson Consulting so she proposed the
17:13
name AC centure meaning AC Anderson
17:17
Consulting for the next Century thus the
17:19
company Accenture emerged today
17:22
Accenture is the largest consulting firm
17:24
in the world it exists in Ukraine exists
17:27
in Russia at least did for a while
17:30
really in all countries by the time I
17:32
was there it already had 250,000
17:34
employees those who were billable
17:37
meaning whose time was sold to clients
17:39
plus about 50,000 or so support staff
17:42
secretaries accountants and so on and
17:44
around 15,000 Partners when I worked
17:47
there meanwhile the original Arthur
17:49
Anderson company did what must not be
17:51
done it lied in its audit specifically
17:54
it lied in the audit of a company called
17:56
Enron in 2003 there was the this company
17:59
Enron that was misreporting I do not
18:01
want to dive into that Scandal a
18:03
separate story known as the Enron
18:05
Scandal Arthur Anderson was enron’s
18:08
auditor so millions of people who had
18:10
invested in the corporation Enron lost
18:13
their money and guess whom they started
18:15
suing they started suing the partners of
18:17
Arthur Anderson in spite of the fact
18:19
that it was a limited liability
18:21
partnership they found a way to pierce
18:23
that limited liability shield and began
18:25
suing all of the partners in that firm
18:28
because as part Partners they all bear
18:30
joint responsibility for the company’s
18:32
actions I could have been a partner
18:34
living on the Pacific coast while Enron
18:36
was on the East Coast never meeting
18:37
anyone there but since we were Partners
18:40
they could take my house my savings and
18:43
my car that is how it is after that
18:47
Anderson Consulting by then called
18:49
Accenture quickly decided it no longer
18:51
wanted to be a partnership and turned
18:53
itself into a corporation they became a
18:55
corporation and so they issued those
18:58
securities well not Bonds I slipped I’m
19:01
not sure how to say it in Russian but
19:03
common stock and everyone who was a
19:05
partner at that time became fabulously
19:07
wealthy it is a successful company now
19:10
all the money went to those who were
19:11
Partners at that moment the very people
19:14
who created that Corporation they got
19:16
quite Rich thus cutting off the
19:18
opportunity for all future wouldbe
19:20
Partners to get rich after that there
19:23
were no more Partners everyone became
19:26
just an employee so the question arises
19:29
what is bad about these corporations
19:31
everything seems good moreover many
19:35
economists assure us that we would not
19:36
have the progressive technologically
19:38
active world we have now if not for them
19:41
they have become so normal over these
19:43
130 years since 1886 that we cannot
19:47
imagine the economic world without them
19:49
but that is not necessarily the case we
19:52
could have built a perfectly functioning
19:54
economic model without corporations at
19:56
all whether it would be better or worse
19:58
is Up For Debate in my opinion and I’m
20:00
not claiming it is the correct opinion
20:02
it would be better without corporations
20:05
why well first and foremost corporations
20:07
have political rights they can
20:09
participate in the political process
20:12
that is the corruption Factor destroying
20:13
our American Republic for example there
20:16
is a well-known journalist filmmaker
20:19
writer of Republican conservative
20:21
leanings named denesh dza he is of
20:24
Indian immigrant background but an
20:26
American citizen born in India hence
20:28
named inesh he had a childhood friend
20:31
I’m not sure what their relationship was
20:33
but they were friends who ran for
20:35
Congress and she asked him denes duza to
20:38
appear at her political Gatherings as a
20:40
local celebrity at that time he was
20:43
filming one of his movies he has a
20:45
fairly successful production company and
20:47
he said he could not appear but would
20:50
help her financially by law one person
20:53
cannot donate more than $10,000 to a
20:55
politician’s campaign he gave her
20:57
$10,000
20:59
and he asked his friend to donate
21:00
$10,000 so that it would not look like
21:03
one person was donating
21:05
$20,000 then he asked a third friend to
21:07
donate another $10,000 to make it
21:09
$30,000 total and denesh reimbursed each
21:12
of those friends he basically used them
21:15
as
21:16
stand-ins what denz duza did not know is
21:19
that the Federal Bureau of Investigation
21:21
was listening to him because he had
21:22
produced a critical documentary about
21:24
Barack Obama they tried him for
21:26
violating campaign Finance laws
21:29
proved that he had used standin and that
21:31
in fact he wanted to donate
21:33
$30,000 thus breaking the law he
21:36
received a prison sentence and wrote a
21:38
book about it why am I telling you about
21:40
Des duza because this does not apply to
21:43
corporations a corporation can find ways
21:46
as a corporation to donate practically
21:48
unlimited sums of money and indeed
21:50
corporations love to do so lobbying for
21:53
their interests denes duza was an
21:55
individual had he created a corporation
21:58
none of that would have happened he was
22:00
just naive and he admits it so that is
22:02
reason one that corporations personally
22:04
do not suit me they can participate in
22:07
the political process and that is where
22:09
the magic starts for example Microsoft
22:12
is a company that actively takes part in
22:14
the political process yet it is not
22:16
owned solely by American citizens you in
22:19
Ukraine or someone in Bangladesh or
22:21
Burkina Faso can buy Microsoft stock so
22:24
who exactly is participating in the
22:26
American political process in other
22:28
words a corporation is international
22:30
which leads to another Point
22:32
corporations are international they
22:34
easily cross borders they easily set up
22:37
businesses in other countries they are
22:38
loyal to no particular country and they
22:41
can quickly change their affiliation
22:43
corporations have become these sorts of
22:45
persons without bodies and we get
22:47
situations such as that with a
22:49
corporation called British Petroleum by
22:51
its name British but not necessarily so
22:54
because in reality it is registered in
22:55
America at one point they move from
22:57
Britain to America and British Petroleum
23:00
violated its own norms and standards in
23:02
deep offshore drilling in the Caribbean
23:04
many years ago maybe 15 or 20 years ago
23:07
and the drilling rig blew out flooding
23:09
the entire Caribbean with oil an
23:11
enormous environmental disaster who paid
23:14
for that American taxpayers because whom
23:17
else do you take the money from so the
23:19
second or third point about corporations
23:22
apart from them being International and
23:24
from having political rights is that
23:26
they create a sort of class the noren
23:29
cura those who remember the Soviet
23:32
nomenclatura like Factory directors
23:34
easily move from one Corporation to
23:36
another it is not their business they
23:39
are Corporation officials they bear no
23:42
responsibility the owners of the
23:43
corporation those same nameless millions
23:46
of people holding shares of British
23:47
Petroleum definitely bear no
23:49
responsibility either thus you get this
23:52
curious entity where no one is
23:54
personally liable the next issue with
23:56
corporations is that most Corporation
23:58
officials this nomenclatura behave very
24:01
much like the Soviet nomenclatura they
24:03
receive salaries large but not
24:05
astronomical for example a top manager
24:08
at a big company might earn around $1
24:10
million a month that is a lot of money
24:12
but not utterly mind-blowing then they
24:15
get what is called stock options without
24:17
going into details it means that if the
24:19
corporation’s shares go up for every
24:21
percent they go up the managers receive
24:24
some sum of money with these stock
24:26
options in good years it is not uncommon
24:28
for them to make $200 to $250 million a
24:31
year and so on this is public
24:34
information since these are public
24:36
corporations one can easily find out how
24:38
much each official earned in each given
24:40
year these corporate officials are the
24:42
Elite of the capitalist world that is
24:44
the corporations created corporate
24:46
officials and they are the Elite of the
24:48
corporate world the simplest way to
24:51
become very rich in America is to become
24:53
an official of some Corporation as to
24:56
how much they earn that is a secondary
24:58
question though it has been studied
25:00
thoroughly and is public knowledge the
25:02
point is this Whenever there is a market
25:04
crash there is a game of musical chairs
25:08
I have observed this three times a crash
25:11
occurs corporate stock prices tumble and
25:13
at that point we switch chairs I am at
25:16
the corporation horns and Hooves anatol
25:19
is at Hooves and horns both do roughly
25:21
the same thing each company’s shares
25:23
were $50 but when the market crashed
25:26
they fell to $20 I go go to his
25:28
Corporation he goes to mine as soon as
25:31
they hire me they record that the share
25:33
price under me was $20 the same for him
25:36
then when the market rebounds we rake in
25:38
money like Bandits because we raise the
25:41
stock from $20 to 50 so whenever the
25:44
market crashes when prices fall you see
25:47
a frantic game of musical chairs all
25:49
these people Shuffle around in teams
25:52
bringing their entire staff of
25:53
Executives along traveling like a
25:55
cluster of grapes I have even seen two
25:57
competing companies literally swap
25:59
leadership teams obviously there is no
26:02
loyalty to employees or to shareholders
26:04
no loyalty at all so corporations have
26:07
created a class of corporate
26:08
nomenclatura the wealthiest most
26:10
successful American class which is
26:12
certainly not engaged in startups
26:14
running an existing company is far
26:16
easier believe me than creating one from
26:17
scratch another problem with
26:19
corporations is that through political
26:21
influence and lobbying they crush and
26:23
Destroy small businesses they Scorch the
26:25
competition intentionally not by
26:27
accident
26:28
as soon as a particular Market sector
26:30
takes shape with large corporations in
26:32
place it is nearly impossible for a
26:34
small startup to break into that sector
26:36
from McDonald’s to Coca-Cola once upon a
26:39
time there were millions of diners and
26:41
Running a Restaurant was American’s
26:43
favorite business if you did not know
26:45
what else to do you opened a restaurant
26:48
nowadays these fast food chains though
26:50
most are franchises still stamp
26:53
everything out with an iron boot as I
26:55
mentioned in my lecture on food in every
26:57
small town or Village there used to be a
26:59
local butcher but now you cannot just
27:01
slaughter a cow or a bull you have to be
27:04
a corporation they took that right away
27:07
and all meat products have changed
27:08
accordingly to conclude let me say a
27:11
free market is not the same as
27:13
corporations and corporations do not
27:15
equate to a free market you can have a
27:17
free market without corporations and if
27:20
you need investors you can borrow money
27:22
do not sell part of your company to
27:24
someone else the company remains with
27:26
the owner and if they want to expand
27:29
they can use Banks or directly issue
27:30
debt obligations and pay them off but
27:33
that model disappeared in 1886 by a
27:35
margin of one vote in the Supreme Court
27:38
and never came back thank you all for
27:40
your time and
27:42
attention thank you for watching this
27:44
video Until the End you can find links
27:46
to my telegram Channel email and other
27:48
social media below here are the most
27:50
important videos on my channel these are
27:53
channels where I discuss societal
27:54
freedom and the philosophy upon which
27:56
this freedom is built for example
27:59
there’s the luosi school a Channel about
28:01
American history and the lessons and
28:03
mistakes the US has gone through in its
28:05
pursuit of a free Society also my latest
28:08
playlist on Liberty provides an overview
28:10
of political philosophy that forms the
28:12
foundational core of the western world
28:14
if you’re not interested in politics
28:16
politics will be interested in you