1. Imprison executives who made the decisions that led to the result. Preferably in a way that makes them spend their fortunes on legal costs so that when they get out in 20-30 years, they're dependent on social safety nets for the rest of their natural lives. People are dead because they thought that possibility of profit was worth the risk of hundreds of deaths. That's negligent homicide.
2. There is no 2.
Like, nobody really think about risking people's lives for slightly more profit. It's more like they think about "cutting cost to get promotion and make more money. What risk? There's no risk.".
It's not like Boeing are particularly competent. Their projects experienced cost overrun for example. This whole idea of outsourcing to individual contractors turned out to make development of aircraft even more expensive. Their space division is currently blowing another hole in their budget. Their Starliner program is a joke and has no future beyond the ISS.
Some people may need to go to jail because it's more than just gross incompetence, fair enough. I am just skeptical of long lengthy sentences.
You mean a golden parachute? I don't think that will deter anything.
I think the GP is on the right track. Business leaders need fear consequences, so they moderate their behavior, and that means messages must be sent. It would be perfect to have some fortune 100 CEO go to Davos one year, then return the next in a prison jumpsuit to tell all the collected elites about what it feels like to be utterly ruined. Then do it again and again until the message gets through.
I think the GP is on the right track. Business leaders need fear consequences, so they moderate their behavior, and that means messages must be sent. It would be perfect to have some fortune 100 CEO go to Davos one year, then return the next in a prison jumpsuit to tell all the collected elites about what it feels like to be utterly ruined. Then do it again and again until the message gets through.
There's no need to resort to extreme measure, unless things are truly beyond the pale. It matters far more that regulations are enforced and consequences are enacted. Consequence don't need to be dire, unless actions are so beyond the pale that it required criminal investigations and consequences. If things escalated to the point of criminal investigation, your system isn't working.
The first step is early detection, enforcement, and auditing. The FAA should be beefed up so that they can rely on their own agents for enforcing the rules, together with the ability to ramp up fines, stop production, and other gradual escalation until there are compliance to regulation.
What does that mean to you? People have died in fatal 737 Max crashes - is that not truly beyond the pale?
Sometimes, consequences _do_ need to be dire.
I had a boss once who used to calm everybody down when things were going badly saying "It's OK. Nobody is going to die." And he was right. We just build websites. No matter which customer was yelling on the phone like the world was ending, it was at worst a website outage.
But some jobs, you can't say "Nobody is going to die." Canonically these are rocket science and brain surgery. But building airliners is 100% a job where if you don't do it right people are going to die. And airliners are more serious, brain surgery kills one patient when you make a mistake, rocket science kills a few astronauts. Faulty airliners kill hundreds of passengers at once.
In my opinion, consequences for trading off even small increases in risk of death for hundreds of people at once just to meet financial targets _should_ be dire.
Boeing didn't kill people overnight, it comes as gradual escalation and ignoring boneheaded mistakes over and over again.
If someone is being investigated for crime, the problem with the company began a long time ago. Consequences doesn't matter because what was minor issues became big issues.
Dire consequences doesn't do anything. You're looking at justice not prevention.
Should we also start imprisoning everyone who voted for Obama because Obama's DoD conducted drone strikes against weddings, churches, and other civilian facilities and gatherings resulting in more civilian deaths than Bush's?
Shareholders are no more responsible for the misdeeds of management than voters are for the misdeeds of politicians, after all.
Your proposal goes against the core tenants of justice, liability, and property rights that have guided the civilization responsible for every part of your life that you cherish - from the device and connection you're posting with to the appliances that you cannot live without, to the economic systems that have lifted more human beings out of poverty than any other economic system ever conceived.
What's the argument in favor of your proposal that outweighs these cons?
P.S. - I upvoted your comment because as much as I vehemently disagree with your proposal, I believe we should all have the decency to discuss ideas we disagree with rather than attempt to censor them.
Our system does not treat seriously the bad behavior of corporations. It is a way for shareholders to get only the upside and not suffer the consequences.
Long ago, I divested from a mutual fund when I realized that it made me an indirect owner of Philip Morris. As shareholders, we can make choices that harm people and yet we risk no consequences beyond losing our investment.
If it is a serious argument that we should jail more CEOs, then all who profit from criminal corporate behavior should be punished.
>then all who profit from criminal corporate behavior should be punished.
American, European, and British citizens profit from exploitation of the global south, exploitation that often includes violence. Should all American, European, and British citizens be punished simply for being beneficiaries of activity they don't necessarily endorse or support?
What about shareholders who didn't make a choice to purchase shares of the companies in question, like recipients of pensions where the pension fund purchased shares in pursuit of producing a return for the workers they have promised to support financially?
I am not convinced that we should jail shareholders. I am also not convinced that legal entities designed to limit liability should exist.
As for the second part of your question about those who inadvertently and ignorantly own shares in criminal enterprises, I think it is a good question and I do not have an answer. Maybe pension funds should be responsible for their investments.
* Shareholders do not directly commit crimes. We should hold those that directly commit the crime liable.
* Shareholders often hold assets that hold stocks. Should I be responsible if I own an index fund with stocks in a company that owns stocks in a company that commits a crime?
* Shareholders do not have perfect information about the inside operations of a company. I cannot read internal emails to determine if I own a shares in a company that is planning on committing a crime.
* Shareholders can physically be outside of the legal jurisdictions that the company is operating from. Is it fair if Venezuelan shareholders are effectively unpunished while US resident shareholders are held responsible?
If shareholders were legally responsible for the actions of the companies they own, they would expect and be entitled to more transparency.
I remain unconvinced that the system we were born into just happens to be the right way to do things. I can currently extract profit by owning pieces of corporations that harm individuals and society. This seems less than ideal to me.
While I agree with your argument here, that opening line really raises questions.
Do we want "capital markets" at all if they're structured in a way that incentivizes risking innocent people's lives to reward the market participants with increased profits, without any equivalently existential consequences when that risk goes bad and hundreds of people die as the next Boeing airliner ploughs a hole in the ground?
Something's deeply wrong with how things work now, and capitalism is looking awfully like the root cause.
I don't refute that there are big problems with how things are currently being run, but what evidence exists suggesting that an alternative economic system is the solution?
Please correct me if I'm wrong, but China has far more industrial accidents and avoidable deaths than the US does, no?
We also didn't have the same extent of the kinds of problems being discussed here in the past, while the US was still a capitalist country then too, right?
That makes me ponder whether a change in the implementation of capitalism is to be blamed more so than capitalism itself - if not a combination of that and other factors unrelated to the economic system.
It's not difficult to draw a line back to when we shifted away from a more "stakeholder-y" capitalism towards shareholder value maximization as a motif, but that begs the question: why were we more unified and stakeholder oriented back then, but not so much anymore, if the rationale behind shareholder value maximization was as true then as it is now?
It still runs capitalism, just more state controlled. It's the mirror side of the corporate-controlled government of the US.
Shareholder value maximization is not what changed, but zero regulation happened, and securitization so that nobody knows where to really go with pitchfork and torches. Probably somewhere overseas to seize random tax haven assets.
It's not exactly capitalism, but it is a regulatory failure that exposes the corruption of the institutions that oversee Boeing. Corruption is the cause.
Our implementation mostly uses lobbying and the revolving door instead of direct bribes, but nevertheless results in 737 MAX.
Maybe we can improve the system in the U.S. and make it less corrupt. I hope so, but I am not very optimistic.
I want free markets, free trade, private property, and the capitalism that arises from these forces. But our current implementation is not proving itself to be ideal.
That's BS. Big shareholders can get seats on the board of directors and have influence over management decision-making.
Jail time for shareholders is probably going too far in most circumstances, but forfeiture of shares is pretty reasonable.
From who, and to who?
From only those big shareholders with seats on the board, from the "little guy", or from both?
What happens to the forfeited shares in your proposal? Are we redistributing them? Are they getting nationalized? Mandatory buybacks? Destruction of those shares, increasing the voting power of the other shares?
I don't think so. The scenario isn't an eminent domain "give it up 'cause we want that property" it's "you did wrong [because it did wrong and you own it], and this is your punishment." It's basically a fine, and fines aren't unconstitutional.
Furthermore, in this specific case, Boeing has plead guilty to a felony, which makes the existence of a legal wrong pretty crystal clear.
https://constitution.congress.gov/browse/essay/artI-S9-C3-3-...
https://constitution.congress.gov/browse/essay/amdt5-9-1/ALD...
The level is aggressive ignorance that we see in HN comments about legal issues is both hilarious and depressing. Most HN users are educated US citizens and yet somehow they're still ignorant about the basics. I guess that's an indictment of our educational system?
Also, do you think the fine for a parking ticket is a taking? Does the government have to compensate me for the fair market value of the money it took? You application to the takings clause to these kids of scenarios is absurd.
No sternly worded letter, no slap on the wrist... Consequences!
I'd even "scare them incorrupt" by threatening to nationalize the company if no sufficient corrective actions are implemented to stop being a net negative to society.
Now that's the way to discipline the shareholders, which is a different problem than disciplining the leaders.
The "401k objection" is often used as cover by the defenders of those people, in a ploy to avoid accountability: "shares are held by all kinds of common people in their 401ks, and all you be doing is punishing those innocents!" My answer to that is to require public companies (with brokerages) to maintain a registry of the beneficial owners of their shares, then just nationalize the shares of the largest shareholders (as those are the people/organization with any real influence).
As for predictable objections of "it's impossible to collect that info1!1" they're already 90% of the way there, because they already know where to mail proxy statements. I think you can get the rest of the way with extra reporting requirements and onerous penalties for non-compliance (e.g. forfeiting the shares after a suitable grace period or if there is evidence of evasion).
Out of curiosity, if one were to "steelman" my proposal... If nationalization of companies were a consequence of public companies behaving badly, would it not pressure shareholders to divest from bad actors, rather than doubling down on those whose leaders lacking moral scruples?
What I'm trying to ask is: wouldn't it result in a better (moderately regulated) "free market" if there were consequences to leaders and shareholders alike?
Maybe if regulators grew a sack and started absolutely deleting companies for wrongdoing, people would think twice before they invest in them or the various institutional funds that invest in them. Wishful thinking.
Also I think that governments are wary of destabalising companies with big fines - especially banks. A shareholder dilution will not threaten the finances of structurally important entities.
You're in charge of a safety-critical business.
You make decisions that trade safety for profit.
People die.
You are charged with murder and go to jail for a very long time, just like any regular citizen.
This really should not be controversial or complicated. If you kill people, there are consequences. That's how the world works for 99.9999% of the human race. The same standard should be applied to CEOs as the proxy for the corporate entity that they are.
To argue anything else is to argue that so long as you have enough money, it's perfectly acceptable to kill as many people as you want in as gruesome a fashion as you'd like.
The price of being a scumsucking robber baron murdering thousands of people for profit should be extreme. The profits gained from such behavior should be clawed back with the full force of government from any source even remotely related. The company should be gutted and auctioned off, or nationalized if they're "too big to fail". Investors immediately and irrevocably lose all stakes, no exceptions. All recovered moneys should be distributed to victims and families.
Boeing never should have happened and it should never happen again. But this behavior and exploitation and mass murder will not stop so long as it's profitable and murderers just walk away with zero repercussions and keep their billions in blood money.
Boeing is not a case of incompetence. This is a case of pure and simple greed. They've ignored safety reports and FAA guidance. They even rigged the FAA inspection process to let them rubber-stamp things in-house (while ignoring failing reports). This has been a long decline and they've made the worst decisions the entire time.
Even if it were incompetence or ignorance, it absolutely does not matter. If you run over a kid because you were texting or simply not paying attention to the road, you go to jail. If your incompetence leads to hundreds and thousands of deaths, you should be just as culpable.
Stop making excuses for billionaire mass murders. Drag them to the gallows instead.
You're in charge of a safety-critical business.
You make decisions that trade safety for profit.
People die.
Let me use a different example.
People die all the time in motor accident all the time. It is a regular occurrence that close calls happen all the time, sometime with nobody's fault. The solution for like 90% of time is actually simple but also politically unpalatable: just reduce the amount of driving that's needed to be done. You don't need more traffic police or amazing self driving technology or draconian punishment. You can then concentrate your police resources on stuff elsewhere that matters.
That's it.
Advocating draconian consequences isn't really going to move the needle. Maybe it will even scare all the risk adverse CEOs and now you have dangerous executives in charge who will be insensitive to the consequence of possibly serving jailtime and being ruined.
Plus, there's also time and money wasted in pursuing extreme punishment. Beyond past a certain point, there's going to be no meaningful difference. What's the difference of being in utterly extreme pain and being in utterly extreme pain 1000x?
This sounds super amazing but where do you stop? I am software developer working on the latest cool algorithm to control traffic lights to help with congestion. I fuck up, green turns on opposite sides of the road, car accident, 10 people instantly dead. I go to jail as lead dev on software that runs?! CEO goes to jail because project may have required 10 QA people but he only hired 3 to save a few bucks...?
These things is why you have government and you have regulation. We put people in offices whose job is large part is to protect the citizens. Expecting a CEO to act in the best interest of citizens is like trusting a fat kid around apple pie :)
Do you know what this means? It means getting the UHC treatment.
When dictators publicly executed advisor 1 and then advisor 2 and then advisor 3, they would still manage to always find someone greedy/desperate enough to want to take a crack on chance #4 or #5. But it did nothing to make the advisors better, it just meant that the next guy had to be even more greedy or desperate.
It's entirely possible to run a company like Boeing in a responsible way that's still profitable. Indeed, that used to be true for Boeing itself.
Much better to defuse responsibility in the executive suite and pressure shareholders in general to ensure good governance.
Reckless, impulsive, emotionally empty people won't be deterred at all
I think it kinda does? Dictators tend to demand unethical behavior from subordinates, and they tend to demand loyalty more than results while also expecting results.
Ask anyone in Vietnam if they think the very common prison sentences for executives has led to positive material changes and they will laugh at the idea.
Au contraire. Most executives will justify their pay packages by saying they shoulder all of the risk.
Well, what risk? Losing their jobs? When you make in a year what most people make in an entire career, that's not a risk. Losing their wealth? See the prior statement, but take into account that they have money managers who are paid to do nothing but diversify holdings and manage risk. They can't be held liable in a civil suit as individuals; that's the entire point of incorporation.
Either they have risk to justify their compensation or they don't. They don't. So we need to find some risk.
When you look for another way to assign risk to increase the quality of the decisions made by c-suites, Leavenworth starts to look like a fairly attractive option.
And it would be for the convicted, when you consider that the crimes actually happened in Indonesia and Ethiopia.
As the CEO you're in a unique position to ask for more controls, more safety, more audit. So unless you went above and beyond and things were truly out of your control, then yes, you should be held responsible when disaster strikes. If you think this is too much risk, then you're free to walk from the job (and the 8 figures pay package).
We should not accept large organizations, bureaucracy and lack of visibility as a deference.
In that framework a CEO putting "safety first" will not have to worry in case a black swan events happen, it's the CEO who decided to do some "cost optimization" that will have to answer if the company routinely kills or injures people.
Feels like a strawman, or at least a misunderstanding of what "responsibility" is. Shareholders are willing to pay dearly for executives not because they need a fall guy in case something go wrong, they do so because someone in that position can easily fuck up the business, and therefore it's worth paying extra to get someone more qualified (at least in theory), so that doesn't happen. It's not any different than you not picking the cheapest guy on cragislist to housesit when you're on vacation. The premium isn't because you want a fall guy to sue in case your house burns down, it's so you don't end up with a guy who fucks up your house while you're away.
For further evidence, see how the market reacted to the murder of United Healthcare's CEO yesterday. The stock barely moved when the news broke and is still up for the month as of about half-an-hour ago. That's not the behavior of a market that sees the CEO as a watchful guardian of assets and a risk-bearer of corporate decisions; it's the behavior of a market that sees everyone as utterly disposable.
The only reason they're down today is because speculators are beginning to worry that they'll run out of executives to refuse to enter into the marketplace of sane solutions to America's healthcare cost crisis.
Activist investors and private equity are a counter to this. If it's really true that companies are ineptly run that all it takes is for someone who cares to turn it around, it should be easy to make a bunch of money by buying a company, exercising the tiniest of shareholder pressure over management, and then selling it after the company's turned around. Moreover, this strategy working would mean it's possible to get above average returns, which all institutional investors would be interested in. The board of Harvard isn't going to be very happy with their investment manager if Stanford is getting 1.5x returns by exercising good corporate governance. That's not to say corporate governance is prefect for all companies. The fact that activist investors exist at all suggests some companies at least are performing below average, but the claim that "Shareholders couldn't care less if someone fucks up the house" is delusional.
>For further evidence, see how the market reacted to the murder of United Healthcare's CEO yesterday. The stock barely moved when the news broke and is still up for the month as of about half-an-hour ago. That's not the behavior of a market that sees the CEO as a watchful guardian of assets and a risk-bearer of corporate decisions; it's the behavior of a market that sees everyone as utterly disposable.
counterpoint: https://www.bloomberg.com/news/articles/2024-08-13/new-starb...
That's literally what happened at my last company. Actually they didn't even have to turn it around. They just destroyed employee morale with layoffs and got Oracle to buy the place, and they've gutted the company further.
Which isn't good when you consider that it's EMR software, but, hey. It's been a profitable gutting, meaning that it's good for everyone from shareholders to doctors to patients.
I wasn't making a normative claim, only disagreeing with OP's characterization that executives' pay packages are justified by the threat of going to jail.
>If you're rewarded for your good decisions, it seems normal to also be punished for the bad ones, in a proportional manner.
FAANG engineers are paid pretty well. Should they go to jail (or even fined 5-6 figure sums) for bugs they're responsible for?
Software bugs caused 900 miscarriages of justice and "at least four suicides"[1]. The Crowdstirke bug caused millions of machines to go down and bililons in damage[2]. Sure, that might not compare to crashing 2 planes, but it feels entirely arbitrary to exclude those two cases.
[1] https://en.wikipedia.org/wiki/British_Post_Office_scandal
[2] https://www.cio.com/article/3478068/counting-the-cost-of-cro...
>FAANG engineers have little impact on the org individually
Sounds like the "Responsibility will turn out to be so diffuse that no individuals will be found to be liable" excuse a few comments up. FAANG engineers are 100% responsible for memory corruption bugs that they introduce.
The diffuse nature of the after effects of faang engineers actions make them harder to prosecute, but potentially much more devastating than even the tragedy of two airline crashes.
When there is no justice, vigilantes and lynch mobs materialise.
I think an accountability approach lets engineers build for safety leveraging their expert knowledge, in contrast to a rule based approach which favors compliance and bureaucracy. Accountability will select for leaders with an understanding of good engineering and safety culture, rather than leaders who are good at bureaucracy and compliance.
I worked in the financial sector for a bit, where some leaders have personal accountability (eg chief compliance officer). I've seen questionable projects die because the company couldn't find someone to stay in that accountability role. The financial sector is not necessarily a good example of what I'm talking about generally, but in my particular experiences accountability seemed to work.
tl;dr: Fewer rules, more personal accountability.
Patent law uses the concept of "a person having ordinary skill in the art" (PHOSITA) to determine which patents are novel and which are non-novel. The idea is that if an invention is obvious to a PHOSITA at the time of invention, the invention isn't novel or surprising. I think we could use the same concept in risk management.
If, at the time a decision is made, a PHOSITA would say a decision is likely to lead to serious harm, then someone in a leadership position should face criminal liability if that decision later does in fact lead to harm.
I think a) who should face the criminal liability, b) what we mean by "likely" c) what we mean by serious harm are all topics you could get into at length. But before you fiddle too much with the knobs on a, b, and c we would probably need to determine if criminal liability is the correct solution. I obviously think so.
Probably untrue, to the point that Boeing may prefer the government do this instead of pursuing the company as a whole. The problem was nobody was connecting the cost cutting to outcomes.
If so, that sounds like (reckless) criminal negligence in the most charitable case and wilful disregard bordering malice in the worst case.
Quite possibly.
Lets not make these into some clueless clowns, they knew darn well the risks and took them. Mass manslaughter would be a good start. Would be...
Nothing is pursued at all costs. Someone in a safety-critical function thinking they’re pursuing safety at all costs is incredibly dangerous because it suggests they don’t know the boundaries of their envelope.
That's negligence at best. This sort of high-level strategy is the vast majority of the job descriptions for senior leadership.
Negligent Homicide.
Also sometimes you can shuffle all the profits to a different set of paperwork and have the old paperwork vanish along with its consequences. Very neat system.
Just to be clear though, are you proposing that they should have these charges brought up against them and given the same rights to due process that everyone else gets, are you proposing something more akin to extrajudicial detention - a suspension of due process and the suspension of habeas corpus?
I do think there needs to be legal culpability for anybody who was informed of risks and pushed on regardless. Though I can see where it would be very hard to prove anything.
It really is a tough problem here. I hope that somebody will be seriously punished for the deaths of hundreds, but I’m very doubtful.
It's about recognizing that you can't, and putting safeguards in place to ensure that even with that desire—even when it's so overriding that in other circumstances we might classify it as a mental illness—the amount of harm that can do to people is strictly limited.
I'd go a step further. Follow the Truong My Lan case [1] - make these people actually fear getting executed.
I'm not a fan of the death penalty at all. It is disproportionately affecting the poor and otherwise disadvantaged. But for ultra rich people making money off of risking the death of others? Maybe that is what is needed to get rabid capitalism under control.
If the government keeps going on with not actually doing anything to the ultra rich until they steal from other ultra rich (SBF, Madoff), eventually people will take the law into their own hands otherwise. This United Health CEO will not have been the last, but "citizen justice" is not what anyone should want.
[1] https://www.cbsnews.com/news/vietnam-death-sentence-tycoon-t...
This country has been an oligopoly since its founding and apart from a few edge cases (FDR preventing the complete transition to socialism by placating the masses with the New Deal) the working class have never really had power.
CEOs, especially of large companies, are glorified management
It’s a fascinating idea to consider. If we could hold shareholders of companies like UnitedHealthCare or Boeing accountable for unethical behavior… it would sure stop fast.