Limited liability is not a free lunch. Being able to be sued is an important right - it gives others the confidence to deal with you, as you can be held accountable. Being able to discharge those obligations in bankruptcy means a LLC has to prove its reliability in other ways - for example, by holding more capital, or posting collateral, or simply offering better prices to make up for it. As it happened, this proved to be more efficient that unlimited personal liability, so LLC's won out. Third parties could freely choose to deal with non-LLCs if they wanted to, and if they did, they would not be taxed to fund LLCs, so there is no subsidy.
The one case where you have a stronger case is with negative externalities, where an LLC might cause damage to third parties. In this case third parties are paying the 'tax' of the externality. However, I do not think this was the most important cause for the rise of the LLC, and there are many other checks and balances - for example, not just any LLC is allowed to own a nuclear power plant, you have to be very well capitalized.
Also LLC's are generally more heavily taxed than partnerships, etc. - they pay income tax at the corporate level as well as at the individual level. They have risen to prominence despite this (literal) tax.
-- Mark Friedenbach
Of course, with the prompting to state my own thoughts, I simply had to go and start typing them out. The following contains obvious traces of my own political leanings and philosophy (in short summary: if "Cthulhu only swims left", then I AM CTHULHU... at least until someone explains to me what a Great Old One is doing out of R'lyeh and in West Coast-flavored American politics), but those traces should be taken as evidence of what I believe rather than statements about it.
Because what I was actually trying to talk about, is rationality in politics. Because in fact, while it is hard, while it is spiders, all the normal techniques work on it. There is only one real Cardinal Sin of Attempting to be Rational in Politics, and it is the following argument, stated in generic form that I might capture it from the ether and bury it: "You only believe what you believe for political reasons!" It does not matter if those "reasons" are signaling, privilege, hegemony, or having an invisible devil on your shoulder whispering into your bloody ear: to impugn someone else's epistemology entirely at the meta-level without saying a thing against their object-level claims is anti-epistemology.
Now, on to the ranting! The following are more-or-less a semi-random collection of tips I vomited out for trying to deal with politics rationally. I hope they help. This is a Discussion post because Mark said that might be a good idea.