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.
