When the end result is fines that are absorbed as a cost of business, why would we expect anything different? It’s high time to hold the leaders of misbehaving companies to account.
The thing you have to think about is what does it mean when someone says a company is a legal person? It means a couple of things:
- It allows companies to create contracts between themselves and real people. - It allows companies to own property (real estate, money, equipment, etc.) - It allows companies and individuals to sue other companies and individuals. - It protects companies from arbitrary or unjust government intervention.
Companies also have another very good feature. Investors can limit their liability. For example, if I own 10 shares of a company and the company goes bankrupt, I am not liable for the company's debts.
This good because it encourages people to invest, and it also protects people from being wiped out because of a bad investment.
Note, companies are not the only legal person. Governments are also legal people.
My question for you is how would you do things differently? What are the advantages of these changes?
RE: "I'm particularly concerned by their abillity to often "settle" criminal charges with a fine and no admission of wrong-doing."
This is a result of plea bargaining and individuals can do that if they can afford a good lawyer and have a good case. An example is in the United States, an individual could please no contest to a charge and pay a fine. It is more or less the same thing.
I am not sure if companies admitting guilt would really change anything. The main reason is no one cares if a company pleads guilty and the other reason is prosecutors can compel guilty pleas through plea bargains (i.e. either you plead guilty, or we will go to trial and ask for a very harsh sentence).
That seems... I'm not sure what, but we do limit what convicted monopolist corporations are allowed to do. It's not the same thing as physical jail, but just because we can't physically put it in jail doesn't mean we shouldn't find it liable for malfeasance and hold it accountable and extract reparations from it.
Let's say a human being--a flesh and blood one, not a corporation--is convicted of negligent homicide and is sentenced to 4 years in prison. 100% of that person's income is lost for 4 years. For the rest of their life, after they're out of prison, their income potential is drastically reduced.
If that's what our judicial system is, then let's do that to corporations, too. Try the person--the corporate kind, not (necessarily) the flesh and blood kind--in criminal court. If the person is convicted of a crime, sentence them as per the sentencing guidelines. If the sentence is 4 years, then take the revenue of the person over the previous 4 years. That's what the fine is.
Easy peasy lemon squeezy.
Yes, and if a company breaks a law, there was at least one person at the company who also broke the law. When the mob breaks laws, we use RICO. There appears to be no equivalent for corporations.
I wish every single person in the management chain over Don Sanders was in prison right now
Due process typically requires mens rea, so you can't prosecute people for crimes that they're unaware of. I suppose you could phrase the law to be in terms of negligence, but that's not a silver bullet either. What if the company had a certified ESG box-checker (the "G" in ESG stands for "goverenance" which covers this sort of thing) and did all the required anti-"look the other way when it comes to safety" training sessions and audits, but for whatever reason the incident still happened? Do you still prosecute them? Seems a bit unfair to do so given their hearts were in the right place and took steps to prevent it. Or maybe you let them off? If that's the case what prevents unscrupulous actors from going through all the motions and ticking all the boxes, but not actually caring the underlying principles? eg. SOC2 or PCI compliance
Actually you can. At least in the UK, and I assume it's similar in the US, directors can be held personally responsible for things that they allowed to happen through negligence even if they weren't directly aware of them.
I guess if you want to be a HN pedant you can say that they are aware of the negligence.
Consider a pit bull owner who, knowing that their dog has a tendency to attack people, takes it to a two-week dog training class and then lets it off the leash around toddlers. He did everything he could! Clearly he's not responsible.
So if you were running a bakery, hired some help to do some overnight prep/cleaning, did all the proper training, and it turned out that the guy was violating health codes, you personally should be held responsible? Note, this isn't saying the business itself shouldn't be liable if someone got sick or whatever, but that you personally should go to jail or whatever because it happened on your watch.
1. It's one isolated incident, and no connection can be made to show that the organization itself is responsible. If, instead, you trained 10 workers and they were all violating the health code, then I would find it hard to believe that it's coincidental, and you should probably be held responsible for whatever penalties that incurs.
2. In your example there's already a specific individual responsible (the employee who violated the health code, against orders). In the other, real example at hand, the legal system seems to be okay with saying that no person is responsible because all potentially-responsible parties are pointing fingers at the ghost of The Company itself. This system results in crime being committed that would hold criminal charges if an individual did it, but instead holds only fiscal penalties because it was done at scale by a group.
It doesn't matter if the individuals involved are contractors, or volunteers, or the general public. The officers have a duty of care and if they breach it they can be personally liable.
But on the other hand, I don't think I've heard of anyone going to jail for that sort of thing. Which either means we have no major health and safety problems (seems unlikely) or the courts are out of step with parliament, which does seem to happen a lot.
And we get there buy fining these companies into oblivion and ensuring their executives are removed from positions of power.
The saying is “privatize profits, socialize losses” for a reason.
Could you please go into more detail?
source?
It’s a saying because it’s a catchy socialist rallying cry, not because it has any relevance to the event in question.
(See: Superfund sites, this event in question, climate change, highways and car based infrastructure, etc...)
If you follow this line of logic, it quickly gets absurd. The whole point of government is to do things that benefit society as a whole, but aren't feasible to do on a for profit basis (eg. roads, police, schools, etc.). Private companies and individuals are inevitably going to reap benefits as a result. If that constitutes "privatize profits, socialize losses", then you're just describing a properly functioning government. Going back to the initial point, what are governments supposed to do? Not build highways? Not have the police because that would "privatize profits" because private business no longer have to fund their own security?
Err.. that’s a very unique definition, and certainly not one that’s universally accepted.
> If that constitutes "privatize profits, socialize losses", then you're just describing a properly functioning government.
One of the many roles of legitimate government is to protect the safety of citizens, aka voters. But corporations are incentivised to reduce costs.
When these principles come into conflict, unfortunately the corporates tend to win (at least in the short term), at the expense of everyone else.
A “properly functioning” government would balance these conflicts such that the cost of doing business was not socialised, for example by preventing companies from “cheating” by externalising costs that their competitors do not.
Feel free to present your own theory.
>One of the many roles of legitimate government is to protect the safety of citizens, aka voters.
Okay but how do schools, libraries, and roads fit into this?
I'm not sure my "theory" of government would fit into a HN post but it would include things like legitimacy, monopoly of force, right to taxation, distribution of income, democracy, representation... things like that. Ideally, modern government going back to the Magna Carta is there to protect those without power from those with it.
> Okay but how do schools, libraries, and roads fit into this?
Well a "properly functioning" and democratic government makes decisions about the allocation of resources based on the needs of society. For example, in my country, healthcare is mostly socialised, because we believe that this provides the best outcomes.
Anyway - the argument I'm making is that the phrase "socialise losses, privatise profits" accurately describes what actually happens in the world. Just because it's not universally true doesn't mean that it's not a useful prism through which to view the world.
In the end, it's basically just a large scale version of "follow the money".
Okay but that says nothing of why schools and roads are provided by the government but food is not. The theory I gave straightforwardly explains why.
>Anyway - the argument I'm making is that the phrase "socialise losses, privatise profits" accurately describes what actually happens in the world.
I'm not arguing it doesn't. In fact I'm arguing the opposite, which is that it's so good at "accurately describes what actually happens in the world" that it doesn't just cover "bad" things, it also covers "good" things. Outside of transfer programs, most things that the government does are "socialise losses, privatise profits".
>In the end, it's basically just a large scale version of "follow the money".
What's the principle here? I'm sure teachers unions and textbook companies benefit directly from public schools. Companies that hire knowledge workers also probably indirectly benefit. All of the groups probably engage in some sort of political lobbying and/or campaign contributions. Given all that, what should we conclude if we "follow the money"?
Anyway - if you think you can explain the purpose of government in a single sentence then nothing I can say is going to change your mind.
It’s a pointless saying because it describes far more than the idiots who parrot it really intend and when you actually analyze what it means to be against it, the outcome is the opposite of what socialists want.
Their personal risk is short term profit shortfalls, while shareholders and the corporation as a whole carry the longer term risks.
Even more misaligned, is the case of public companies.
The shorter term someone holds shares, the more impact they have (buying & selling) on current share price, while demanding shorter term results.
Without actual personal accountability from company leaders, criminal & civil, no amount of long term corporate risk, will change their rational response to incentives.
There is a good reason that dynamic companies “over compensate” their leaders with eye watering stock grants. It isn’t well earned compensation. It is a tool to align interests, benefitting everyone.
But for slower growing companies, that is too costly.
So for all companies, liability protection for shareholders should be matched by liability acceptance not just from the corporation as a whole, but when it comes to malfeasance, individuals responsible for the malfeasance.
How would that work? Individuals actors within corporations are already responsible for malfeasance. If you took it upon yourself to commit some crimes to boost your KPIs so you get a bigger bonus (eg. threatening employees with violence), being in a corporation isn't going to protect you. Even if you're the boss and you're telling your direct reports to commit crimes, that's still a crime.
If the corporation is found culpable, or pleads no contest to culpability to reduce their fines or other repercussions, then executive, management or individual culpability would be determined (if any) by an outside party chosen by the board, acting in the interest of shareholders.
Details, are not the point I am making, but that is one model.
Whatever the process, it would be set in the corporate bylaws, and a minimum process required by stock exchanges to maintain listing.
And possibly by law regarding corporate requirements - given law is what defines the balance of shareholder liability vs. corporate liability. This would add corporate employee liability to that balance.
What makes you think that "the big fish" will end up being punished, rather than the low level employees?
I can see this improving things simply because the possibility/process of accountability is likely to result in more responsible behavior from everyone.
But I can see your point too.
Software has the same problems. Usually the core of the problem is the perception that training costs too much and so problems from bad practice are encouraged until there is a class action lawsuit. I have seen this occur many times in my career whether it’s due to missing security, accessibility, or reporting.