One way of holding corporations accountable is by lifting the limitation of liability as a penalty for extreme misconduct. Liability limitation is kind of the mother of all entitlements.
It is fairly easy to determine that a collective, as a whole, is liable for some action. However, it is very hard to determine the culpability of any specific individual in the collective in isolation. The net result is that the collective is guilty, but then the liability just poofs out of existence when we attempt to prosecute the individuals separately.
It would probably be better if we assessed the guilt of the collective, then assess the lossless distribution of that liability amongst the members. The liability and guilt is known; now it is just a question of who and what bears the responsibility.
This is not a complete solution as a malicious corporation could argue that all of their evil is perpetrated by Joe the janitor, but it solves one of the problems of liability just disappearing if you make the situation complex enough, and boy howdy are lawyers good at doing that.
The problem of making sure we apportion the responsibility in a fair and just manner will be left as a orthogonal problem that I will not attempt to address here.
I think it's better to pursue prison time for the relevant decision makers (including past employees) for the most egregious crimes.
Yes, maybe you want to include some scaling function so larger shareholders that should have more agency bear more liability. But then you are likely going to get games played to on paper to dilute shareholdings though shell companies. Unless big transparent voting blocks are directly needed for their purposes.
The problem with your second statement is that is seems to be unclear who the relevant people actually are most of the time and we just end up with fall guys. Especially when it is the environment dominating individual agency where in effect you could swap all the people and get the same outcome most of the time.
However, I don't think it would be correct to turn illegal behaviour (by the corporation) into a monetary punishment for non-illegal investing. That provides an incentive for execs to choose illegality as in the worst case that they are found out, the stock price would take a hit, but the decision makers would likely be unaffected in any meaningful sense.
Taken to the extreme, you could have a situation where a corporation's execs decide to start a new hit-person service (obviously somewhat hidden and only available to their biggest customers) and then if it gets discovered, no-one gets to spend time in prison for it.
Alternatively, in the instances where the corporation defrauds investors, the investors then get to be punished twice (c.f. Bernie Madoff).
I generally agree with the recent Germany decision to imprison the VW execs for the Dieselgate scandal (I haven't followed the details of that case however): https://news.ycombinator.com/item?id=44098091
Frequent problems are that the fines are too small to function as deterrents, or that there's a principal-agent problem, where the directors don't act in the best interest of the shareholders.
It's very possible that no person did anything wrong at all, but combined there was illegal behavior.
For example: Action A+B is illegal, and A by itself and B by itself are legal. A company did A+B, but the individual employees only did A, or only did B, and neither knew about the other.
> it is just a question of who and what bears the responsibility.
Are you implying you will make someone liable for doing nothing wrong? Simply because of his co-worker? Who would agree to work under such conditions?
That's a really interesting idea. Can you give some real live example of such situation that really happened?
If you know floor is wet, you cant let people in
If you know insider information, you cant trade.
If you know sb have disabilities, you must provide assistance.
If you give immunity for these, the lawyer will ensure the one in the act never know those information. OTOH, if we hold this to a person, someone can be hold accountable for some systemic communication failure
Personally I'm extremely curious to hear about legal examples of the same, if you can provide tangible ones!
This leaves out an important part of liability and the concept of trust as a whole - neglect. Simply doing nothing wrong is not the end-all be-all. If you did nothing wrong, it's possible you should have been aware of potential things that could have gone wrong, and prevented them.
If the company and procedures are such that illegal things can happen in tandem that's something that should have been caught, and prevented. This is why we have, for example, licensing for engineers.
A civil engineer does not only need to consider his part, his bridge. He must consider the conditions, the inspectors, the wind, the future. He may be wrong, and of course we require some slack. But still, that expectation is there.
If, hypothetically and arbitrarily, a CEO claims to not be responsible for some company's evil action, I can turn around and argue that by being CEO it is his job to assume that responsibility, and that his apparent ignorance of the situation is not a defense, but rather proof of his own neglectful conduct.
Just forwarding it to the original driver would make far more sense.
Its stupid to apportion blame to a whole company, or steve the janitor, but the company directors are right there and should be personally liable for criminal conduct on behalf of the company.
Make management personally responsible, and they will rapidly roll out measurements to ensure all their underlings are following the law.
Executives should be held accountable for making decisions or approving company direction that break laws
I know there's a lot of complexity here with how businesses operate
But it is really messed up that individuals can enrich themselves an incredible amount by directing companies to break laws, and often suffer zero consequences for that because the corporate veil is such a strong mechanism
Isn't that already the case? If an executive ordered a hit on someone, that doesn't become magically legal because he was doing it on behalf of the company.
But also the problem isn't that it becomes "magically legal",the problem is that the corporate veil means that if a company takes illegal actions then often only the company is held accountable, instead of the people responsible for directing the company to take illegal actions
And it takes a high bar (like ordering a hit) to make the legal system try and hold individuals accountable for company actions
I am arguing that is absurd. I think individuals inside companies take advantage of this often to get away with illegal shit to enrich themselves at the company's expense
https://en.wikipedia.org/wiki/EBay_stalking_scandal
Note that while minions went to jail, the CEO came out of this scot-free.
Because it was determined that the minions committed the crime and that the CEO didn't know about it?
>The CEO Wenig's messages were deemed "inappropriate" by eBay, but eBay's internal investigation concluded that the CEO did not know about the stalking and harassment activities.
I can't imagine them concluding otherwise.
There have been many situations where corporate incentives or structures, plus the innate power imbalance, pressure low level employees to commit crimes that benefit the corporation and the fact that employers are not responsible for the actions of their employees when not directly ordered means that those structures aren't fixed.
Even if the subordinates went rogue and he wasn't aware? Where do you draw the line? Should UPS's CEO be responsible if one of the delivery drivers crashed into a pedestrian?
For example, if they consistently drove the company towards a culture of safety, and incentivized subordinates to prioritize safety and disincentivized unsafe practices, then perhaps they would share no responsibility for such an incident. They did what they were supposed to do.
If however they set ever more aggressive profit goals and other metrics, and incentivized those at all costs among their subordinates, and presided over a company culture that focused on profits above all else, then perhaps the should share some portion of the responsibility.
What is a leader without responsibility? If they reap the rewards of the successes of their subordinates, then they must also reap the outcomes of the failures of their subordinates. By any other logic, a CEO should only be paid commensurately with the tangible benefit they directly provide to the company with their own two hands.
Convicting an executive for explicitly ordering a hit on a specific person? Fairly easy. Convicting an executive for letting several anonymous people die in order to increase profits? Virtually unheard of.
Another way forward is that the presumption of innocence should be a sliding scale based on the amount a person has benefited. So if you made $100 million from the company, the bar is very low; you don't get to make $100 million unless everything is absolutely squeaky clean. If you were just an average joe taking home a $50k paycheck, you get much more benefit of doubt. So it's basically like making a lot of money off any endeavor is itself something that requires extra-good conduct; the default position is no one gets to make a lot of money at all.
In theory at least, usually the CEO is legally responsible for the actions of the corporation. And all employees are accountable for their own actions
In practice we’ve seen that, at least big corporations, and their executives, get away with just paying fines and settling lawsuits
I wonder if we would also have mandatory market rate buy-back of securities for when a shareholder can't find a buyer but also no longer wants to bear the risk of the corporation's behavior? Similarly, mutual funds might refuse to hold securities that expose them to criminal punishment.
Why would investors want to get involved when they're one lawsuit away from going personally broke? Limited liability is a good idea and shareholders really shouldn't be held responsible for the actions of the C-suite.
I know snarking is fun, but it's really annoying when it's clear you didn't read my comment before replying.
The ends do sometimes justify the means. That's why we can require people to get vaccinated or be licensed to drive. It's insane to think otherwise; OBVIOUSLY we act this way and it's not controversial.
And if you think that means shareholders will be on eggshells. Yeah great. Maybe we'll have fewer psychopaths as CEOs, or at the very least if you are a CEO that fucks up badly you will never fail up.
My reason for the corporate veil is essentially a social theory, that society benefits from the higher level of investment that is made possible by letting people shelter their personal assets to a reasonable extent. It's essentially a government manipulation of the economy.
A better idea that is both far less extreme as well as sorely needed, is simply... drumroll... charging employees (executives and others responsible) with criminal charges (and jail time)!
It might kill high-frequency trading and other forms of parasitic "investment", but I don't see any reason why it would kill the kind of long-term investment pension funds usually do.
1st violation: add a warning symbol to your company logo, so consumers can see what kind of company they are dealing with
2nd violation: add a second warning symbol
3rd violation: lose the trademark
Going after executives might be a lot more viable, though. Generally they have much more direct power than major shareholders (since "sell" is usually the only option they have)
I wonder if someone has studied this formally and quantitatively.
Limited liability makes a lot of sense in the context of protecting small business owners from being in debt until their death if anything goes wrong in their business - even if it wasn't through any fault of their own. It has been extended an awful lot since then.
Or create a new position "patsy" or "chief scapegoat" that employees can fight for.
The point is that if you require some one person to be legally liable, then you'll simply create a new industry of scapegoats to hire.