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Comment by droffel | Hacker News Reader

In the absense of capital punishment for corporations, fines can and will be seen as merely the cost of doing business. It feels like the only way to address this is by holding the decision makers (executives) responsible, but that would require piercing the corporate veil[1], which has disappointingly low precedent in the US

[1]Edit: piercing the veil refers to holding shareholders responsible, which is a different (but related) way of keeping companies accountable. Thanks for the clarification wnoise.

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> fines can and will be seen as merely the cost of doing business

There's nothing inherently wrong with that.

The answer, of course, is that fines can be increased to the point where businesses change.

Just recently, Amazon was forced to completely shut down in France because the level of fines made it impossible to run their business at all.

Businesses respond to incentives. Fines are an incentive. They can be set at any level. It's the responsibility of government to figure out the right level.

Also, finding the executives responsible for any decision is not nearly as clear-cut as you might suppose. Ultimately shareholders are responsible. Then they elect a board which elects the C-suite which hires the VP's who staff their divisions and so on. And approvals happen at every level but with varying degrees of granularity and attention.

The C-suite will collectively sign off on a strategic plan for the following year. Different members are aware of implementation details at different levels. There's very often no clear "the buck stops here" for any policy except ultimately with the shareholders themselves. (A manager approved the plan, but final sign-off was with their VP, but that was part of the package presented to the CEO, who brought it to the board...) Which is why fines work well -- they punish the shareholders.

This sounds pathological. Why have different C suites if none takes responsibility for anything that happens on their watch?

If this is really an inevitable state then perhaps the only solution is to limit the size of companies: by head count and market power.

So cripple American companies, making it impossible to compete with countries that don't have the same restriction?

The only issue with the fines in this country is that they are too low to actually affect behavior. There is definitely a number that would be effective.

> It's the responsibility of government to figure out the right level.

Which is simply impossible when companies openly pay legislators millions of dollars not to.

I think even if we had a corporate “death penalty”, companies would find a way around it with help from the government.

A great example is Pfizer’s punishment for off-label marketing. In addition to fines, the gov’t can ban a company from doing business with Medicare and Medicaid. That’s a death knell for a company as those public insurers typically pay for half of all drugs.

So what did the gov’t do? They did ban the manufacturer! But which one? Oh yeah, the empty shell company called Pharmacia and Upjohn (which Pfizer has acquired years earlier and stripped of products).[1]

So everyone is happy! Government mets out a ban and the company can pay the fine and go back to business as usual.

[1]http://narpa.org/reference/pharma_too_big_to_nail

Piercing the corporate veil is a different thing, connecting the corporation to its owners (e.g. stockholders for public corporations, or the conglomerate for subsidiaries.)

Who are the owners of big public corporations?

If you have an IRA, maybe you're an owner of Facebook as part of an index fund.

But do you really own the fund? Or does the broker/bank own it for you?

Does the index fund manager own the stock, such as Vanguard or Blackrock? Or is it really owned by The Depository Trust & Clearing Corporation for the fund?

It means holding employees, directors, CEO... Responsible for their actions instead of the company.

The shareholders only come into play in they work for the company.

>In the absense of capital punishment for corporations

That's an interesting analogy that I've never considered, given we treat corporations as personlike entities. Why don't we have a capital punishment equivalent?

Perhaps our rules regarding social harm are too loose. But I'm not sure that I would trust a government, especially our government, to make and enforce the right rules.

In any case our legislation desperately needs to catch up to the tech. Communication has changed exponentially for the last few hundred years - printing, radio, telephone, television, cell phone, dialup, cable, smartphone, gigabit...many of our laws are simply not written for an era where decentralized communication of this bandwidth and latency is possible. Article is case in point.

It does exist. The state can cause an involuntary dissolution of your corporation [0] if circumstances dictate. That would include such things as not paying your corporate taxes.

[0] https://www.upcounsel.com/involuntary-dissolution

"Why don't we"

Way too many people ask "why don't we" before figuring out what they are talking about.

Arthur Andersen got the death penalty. If you point that out, people will argue with you, no the death penalty would be something different.

It doesn't matter what you think a word or phrase means, you should have a good idea of what you mean by it before advocating it.

What? I'm identifying a need and a possible solution. Now we have a civil discussion with the goal of exchanging information.

Sorry if I sounded hostile, but I'm saying that when you use a phrase and assume everyone knows what it means just because everybody uses it, that's not identifying a solution and it's not a starting point for a discussion.

I'd love to have a discussion about the corporate death penalty, as long as it's based on some concrete idea of what it is and why it should help.

It's a topic that comes up over and over and I wouldn't even comment if I wasn't interested in something substantive and different from the norm.

Corporate charters can be revoked. It doesn't happen because of the jobs factor but in theory it can be.

We punish corporations in ways which adversely impact jobs all the time, even though we don't do charter revocation.

True, but once you start applying that at the level of Facebook the jobs factor starts to really add weight.

Personally I'd much prefer executives to become automatically liable for wrongdoing by their companies.

> That's an interesting analogy that I've never considered, given we treat corporations as personlike entities. Why don't we have a capital punishment equivalent?

We do, it's called charter revocation. It's basically never done any more because even though the corporate form is a privilege granted by the public, it's become essentially an unconditional gift.

Rather than a outright death sentence for a corp, something like a 30 day "timeout" would be interesting. No network traffic for 30 days, in or out. Would a 30 day loss of service be equivalent to a death sentence? We know certain companies can survive hours to up to a day without service just due to tech glitches. After 30 days, people would be suffering withdrawal like symptoms, but would start using the service as soon as it came back. It's not like a FB replacement could start up in 30 days and acquire their users.

This of course would incur collateral damage from companies that "require" offending service to operate.

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