Spanking the Corporation
Apr. 24th, 2007 01:53 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
jamesqIt's possible I've mentioned this idea in other, larger, posts. I thought it deserved its own entry so I'm putting it here.
The problem: Corporations use the bottom line as their sole consideration for their actions. Right and wrong do not enter into it.
For example, a corporation may opt to pollute despite environmental protection laws. They will do this if the cost of cleaning up after themselves is greater then the cost of paying the fines. They don't give a damn about the environment, they only care about choosing the cheaper option.
Society (via the law and the government) needs a way of punishing corporations in a way that will hurt them in the one place they care about - their bank account. At the same time, the punishment should be able to give the same level of punishment to wildly differing sizes of companies. A million dollar fine will annihilate a small business, but could be largely ignored by a mult-national.
My proposed solution is to not fine corporations a set dollar amount, but to remove their profits for set periods of time. For example, a first offense for polluting would mean that they lose one day's profit. Double it for every additional offense. Eventually they will learn their lesson or be driven to bankruptcy.
I like this idea because it really does seem like an even-handed response to the problem of punishing entities that may have wildly different levels of assets.
As an aside, I'd add a second law about timeliness in paying the fine. Every day late you are paying would add some percentage to the fine. You can still appeal, but you can do it after you've paid your fine. If you win, you'll get your money back, but we get to hold onto it while you're still appealing.
Are there any legal or practical problems with this scheme (feel free to add your own)? I'm weak on any obvious, broad legal principles that may kill this. I can think of a few practical objections though:
1) Is the company making a profit? Do we change the fine to gross profits, or some percentage of net worth?
2) How do we stop a profitable company from claiming they're not (ala Hollywood accounting, where no movie ever makes a profit)? This might be a self-correcting problem with normal companies - if they don't show a profit, they lose investors. If they do show a profit, we use those figures to fine them.
Finally, we do have other, none-financial ways of punishing errant corporate citizens. We can jail their executives (ala Enron), or we can revoke their corporate charter - I think we can do this in principle, but I can't recall it ever being done for real. Perhaps instead of my fix, we simply impose these punishments more often.
Of course, this is all moot - our corporate masters would never allow us to elect a government with the will to enact these changes. Still, I can dream.
The problem: Corporations use the bottom line as their sole consideration for their actions. Right and wrong do not enter into it.
For example, a corporation may opt to pollute despite environmental protection laws. They will do this if the cost of cleaning up after themselves is greater then the cost of paying the fines. They don't give a damn about the environment, they only care about choosing the cheaper option.
Society (via the law and the government) needs a way of punishing corporations in a way that will hurt them in the one place they care about - their bank account. At the same time, the punishment should be able to give the same level of punishment to wildly differing sizes of companies. A million dollar fine will annihilate a small business, but could be largely ignored by a mult-national.
My proposed solution is to not fine corporations a set dollar amount, but to remove their profits for set periods of time. For example, a first offense for polluting would mean that they lose one day's profit. Double it for every additional offense. Eventually they will learn their lesson or be driven to bankruptcy.
I like this idea because it really does seem like an even-handed response to the problem of punishing entities that may have wildly different levels of assets.
As an aside, I'd add a second law about timeliness in paying the fine. Every day late you are paying would add some percentage to the fine. You can still appeal, but you can do it after you've paid your fine. If you win, you'll get your money back, but we get to hold onto it while you're still appealing.
Are there any legal or practical problems with this scheme (feel free to add your own)? I'm weak on any obvious, broad legal principles that may kill this. I can think of a few practical objections though:
1) Is the company making a profit? Do we change the fine to gross profits, or some percentage of net worth?
2) How do we stop a profitable company from claiming they're not (ala Hollywood accounting, where no movie ever makes a profit)? This might be a self-correcting problem with normal companies - if they don't show a profit, they lose investors. If they do show a profit, we use those figures to fine them.
Finally, we do have other, none-financial ways of punishing errant corporate citizens. We can jail their executives (ala Enron), or we can revoke their corporate charter - I think we can do this in principle, but I can't recall it ever being done for real. Perhaps instead of my fix, we simply impose these punishments more often.
Of course, this is all moot - our corporate masters would never allow us to elect a government with the will to enact these changes. Still, I can dream.
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no subject
Date: 2007-04-24 08:22 pm (UTC)Second - another way of scaling (and this is in the federal Green Party policy, to my knowledge) is to tax the pollution. That way, the amount of penalty is determined by the amount of pollution (which will likely to some extent correspond to the size of the company).
no subject
Date: 2007-04-24 08:46 pm (UTC)The idea
It also relies on honest accounting of pollution created. We're not getting this now as it is; adding an incremental punishment to the procedure makes a company more likely to throw their professional obfuscators into the mix.
This is not to say the idea won't work. I'm just pointing out the resources by which a company may be able to sidestep them.
It's important to discuss punishments, but we have to remember that the most effective punishment is still that delivered by the consumer. A government's best tool is one that encourages the consumer to support more environmentally friendly companies. If they can show that the incentive is coming from the coffers of companies that are not so ecologically cooperative, so much the better.
However, the most effective tool is actually reward. If there is a profit to be made from cleaning up their product, a company will seize it. The oilpatch has done this several times over, finding a market for several materials (such as potash) that would otherwise be released as pollutants in fuel. The trouble is that this is more easily said than done. It is essential that we always keep our eye on this option, however, because when it's available, it's the most effective one we've got.
no subject
Date: 2007-04-25 03:46 am (UTC)Rewards from the government for meeting and exceeding expectations on polution cutbacks for both corporations and private citizens.
Educating the populace and incorporating bans on companies that do not follow expectations.
Educating the companies on long term gain versus short term gain as I feel most corporations look at the short term gain.
The stick for companies that violate in the form of some kind of fine or punishment.
Not just the companies
Date: 2007-04-26 12:09 pm (UTC)It needs politicians with more than just their lobbyist handouts at stake.