3 strikes your out
March 8, 2003 11:56 AM Subscribe
What About Three-Strikes-and-You're-Out for Corporate Criminals? California State Senator Gloria Romero recently introduced a bill that would hold California's law-breaking corporations to the same standard to which the state holds its law-breaking citizens. Three strikes and you're out. (original link from Robotwisdom)
Three strikes is a judge's discretionary sentence primarily for violent and dangerous criminals using criminal misconduct as a warning flag to get them off the streets before they commit a heinous act we all will regret.
This three strikes analogy is flawed and needs more thought.
I agree as citizens we should be able to choose not to do business with companies that rob us. And I would be happy to get a fat check from Enron as restitution.
posted by xtian at 12:50 PM on March 8, 2003
This three strikes analogy is flawed and needs more thought.
I agree as citizens we should be able to choose not to do business with companies that rob us. And I would be happy to get a fat check from Enron as restitution.
posted by xtian at 12:50 PM on March 8, 2003
jacquilynne, any such plan to re-employ people would constitute nasty ol' socialism, right?
Instead, think market forces -- if a rogue corporation is thrown out of business, that opens up market share for their (hopefully more honorable) competitors, who would be fools not to snap up those experienced employees to meet the increased staffing requirement.
posted by George_Spiggott at 12:55 PM on March 8, 2003
Instead, think market forces -- if a rogue corporation is thrown out of business, that opens up market share for their (hopefully more honorable) competitors, who would be fools not to snap up those experienced employees to meet the increased staffing requirement.
posted by George_Spiggott at 12:55 PM on March 8, 2003
There's nothing wrong in principle with such a law, and I think in general it's a good idea but needs some thought to avoid loopholes that once again target the wrong people while the Dick Cheneys get away scot free. I don't even agree with 3-strikes-and-you're out regarding individuals, but I might believe it for corporations or businesses. Three strikes is a silly rhetorical game, a cheap and easy solution to real social problems, but in the case of three strikes and you can't do business in this state, period, is something even the most mild-mannered shareholder will go apopleptic over.
I think in general, we'd need not so much a 3-strikes policy, but just some fucking teeth in general in our regulation of businesses. Dumping toxins into drinking water isn't just an EPA fine (when it gets applied, due to the underfunding of the EPA), it's attempted murder, it's homicide. If I dumped in the nearby reservoir the same stuff some companies do, I'd expect a long stay in jail. If I pilfered the kind of dough these companies do, I'd expect a long stay in jail, regardless of three strikes or not. The problem isn't 3 strikes- it's that many times, these businesses don't really even get 1 strike!
That said, if we did a 3 strikes, there'd be three big concerns raised:
A) what happens to the rank-and-file employees? Actually, I'd say that's a non-issue; if it's a big corporation doign useful work, some other entrepreneurs will swoop in and re-form the business because it's profitable. If it's not profitable or possible to do ethically, then it shouldn't be reformed and those people will have to find a new line of work.
B) In that instance, if the "business" is dissolved because of 3-strikes, what prevents the same scoundrels from just forming a new company under a new name? I guess you'd have to peg the 3-strikes in some way to the top dogs that ran the company as well, and effectively "disbar" them from practicing business for x years. So not only would the company be prevented from existing in that state/country, the executives would be given as part of the penalty an extended unemployment benefit of $478 a week for those years if this rendered them unable to support themselves in any job.
C) Of course, nafta/wto/other "trade" agreements have already been shown to be forceful in overriding law with the most undemocratic and totalitarian courts devised in ages; California could find itself being sued for tens of billions of dollars if it implements this, with the full support of George Bush et al at the federal level. This shouldn't be a concern, but it will be, because such lawsuits attempting to dictate local law by companies that aren't even in the same country have proven successful...
posted by hincandenza at 1:05 PM on March 8, 2003
I think in general, we'd need not so much a 3-strikes policy, but just some fucking teeth in general in our regulation of businesses. Dumping toxins into drinking water isn't just an EPA fine (when it gets applied, due to the underfunding of the EPA), it's attempted murder, it's homicide. If I dumped in the nearby reservoir the same stuff some companies do, I'd expect a long stay in jail. If I pilfered the kind of dough these companies do, I'd expect a long stay in jail, regardless of three strikes or not. The problem isn't 3 strikes- it's that many times, these businesses don't really even get 1 strike!
That said, if we did a 3 strikes, there'd be three big concerns raised:
A) what happens to the rank-and-file employees? Actually, I'd say that's a non-issue; if it's a big corporation doign useful work, some other entrepreneurs will swoop in and re-form the business because it's profitable. If it's not profitable or possible to do ethically, then it shouldn't be reformed and those people will have to find a new line of work.
B) In that instance, if the "business" is dissolved because of 3-strikes, what prevents the same scoundrels from just forming a new company under a new name? I guess you'd have to peg the 3-strikes in some way to the top dogs that ran the company as well, and effectively "disbar" them from practicing business for x years. So not only would the company be prevented from existing in that state/country, the executives would be given as part of the penalty an extended unemployment benefit of $478 a week for those years if this rendered them unable to support themselves in any job.
C) Of course, nafta/wto/other "trade" agreements have already been shown to be forceful in overriding law with the most undemocratic and totalitarian courts devised in ages; California could find itself being sued for tens of billions of dollars if it implements this, with the full support of George Bush et al at the federal level. This shouldn't be a concern, but it will be, because such lawsuits attempting to dictate local law by companies that aren't even in the same country have proven successful...
posted by hincandenza at 1:05 PM on March 8, 2003
We should extend the practice to politicians as well... now how many DUI offenders are running this country? :-)
posted by clevershark at 1:19 PM on March 8, 2003
posted by clevershark at 1:19 PM on March 8, 2003
I'd just like to see corporate criminals busted just ONCE. It's hard enough to get just one conviction on them let alone get enough for a three strikes law.
posted by whirlwind29 at 1:34 PM on March 8, 2003
posted by whirlwind29 at 1:34 PM on March 8, 2003
I'd like to see all criminals referred to and treated as just "criminals".
posted by 2sheets at 1:46 PM on March 8, 2003
posted by 2sheets at 1:46 PM on March 8, 2003
California State Senator Gloria Romero recently introduced a bill that would hold California's law-breaking corporations to the same standard to which the state holds its law-breaking citizens.
Hey ... I'm all for it - but I might remind the good senator that organizations like, oh, I don't know, the Democratic Party of California are also corporations (whether non-profit or not). So then, glancing at something like this might provide a bit of fun ... as according to the proposed law, it seems as though the Democratic Party itself has already got more than 3 strikes.
Would the senator say that political parties shouldn't be held to the same "standards" as "law-abiding" citizens? Or would she perhaps say that the actions of a few individuals obviously shouldn't be allowed to destroy an entire organization? Or try to assert that maybe a lot of prosecutions are for political, rather than purly legal reasons? Oops - she just built a case against her own law ... because the same reasons she'd use to try to exempt herself and her party also apply to corporations.
posted by MidasMulligan at 1:57 PM on March 8, 2003
Hey ... I'm all for it - but I might remind the good senator that organizations like, oh, I don't know, the Democratic Party of California are also corporations (whether non-profit or not). So then, glancing at something like this might provide a bit of fun ... as according to the proposed law, it seems as though the Democratic Party itself has already got more than 3 strikes.
Would the senator say that political parties shouldn't be held to the same "standards" as "law-abiding" citizens? Or would she perhaps say that the actions of a few individuals obviously shouldn't be allowed to destroy an entire organization? Or try to assert that maybe a lot of prosecutions are for political, rather than purly legal reasons? Oops - she just built a case against her own law ... because the same reasons she'd use to try to exempt herself and her party also apply to corporations.
posted by MidasMulligan at 1:57 PM on March 8, 2003
It's certainly a novel approach, and given that California is one of the nations most populous states, it could have a strong impact on businesses across the country who do business there. Firms that run afoul of California law and find themselves unable to do business there any longer may lose enough of their consumer base that they will end up bankrupt or simply shut down. I have no doubt that opponents of the measure will argue that putting companies out of business in this way could have a devastating impact on the economy - not just in California, but also in the other states where the company had been doing business.
I think this argument has some merit - in part because each state has their own laws and regulations, and what may be perfectly acceptable behaviour in New York might be illegal in California. At the same time, however, companies should be well aware of what the laws are for each state they do business in, and they should be expected to follow those laws. If a company is consistently engaging in actions that are serious enough to result in major fines or the death of customers (the criteria that would trigger the corporate three-strikes law), there's certainly a question as to what, if any, benefit there is in their continuing to do business.
posted by thorswitch at 2:33 PM on March 8, 2003
I think this argument has some merit - in part because each state has their own laws and regulations, and what may be perfectly acceptable behaviour in New York might be illegal in California. At the same time, however, companies should be well aware of what the laws are for each state they do business in, and they should be expected to follow those laws. If a company is consistently engaging in actions that are serious enough to result in major fines or the death of customers (the criteria that would trigger the corporate three-strikes law), there's certainly a question as to what, if any, benefit there is in their continuing to do business.
posted by thorswitch at 2:33 PM on March 8, 2003
PETA: Gone. Greenpeace: Gone. Ruckus Society: Gone. Most California unions: Gone.
posted by MidasMulligan at 2:34 PM on March 8, 2003
posted by MidasMulligan at 2:34 PM on March 8, 2003
then you should be overjoyed to support it, mm.
posted by five fresh fish at 2:50 PM on March 8, 2003
posted by five fresh fish at 2:50 PM on March 8, 2003
Hey ... I'm all for it - but I might remind the good senator that organizations like, oh, I don't know, the Democratic Party of California are also corporations (whether non-profit or not). So then, glancing at something like this might provide a bit of fun ... as according to the proposed law, it seems as though the Democratic Party itself has already got more than 3 strikes.
Perhaps she actually believes the principles would do more to keep her own party in line. I have no doubt that there are party adherents in both camps who wish their party as a whole was more ethical/principled. In any case, MidasM, you've made a speculation/prognostication about her viewpoints, not a counterargument to her proposal (which I guess you weren't making anyway, because you did say you were all for it, so I am just running on and on but anyway...
But I agree with hincandenza. There are some problems with the three strikes concept in general, and furthermore, punishing a corporation is hard: the burden of responsibility is unclearly distributed (and gets more unclear as accusations are leveled). I can see how three strikes could be a deterent... but complicated or problematic in some situations. How are assets distributed (like chapter 11)? What if the perpetrators of the crime are also large shareholders -- or "creditors" -- and stand to benefit from liquidation (corporate suicide!)? What compensation is given to employees cut adrift?
The underlying problem is the (1) distribution/deflection of responsibility and (2) the fact that those with lots of money are powerful, and it's harder to really penalize them or keep them in line. I'm not a fatalist about it: I do think we as a society should try hard, but nobody should think there's an easy bandaid solution.
posted by namespan at 2:50 PM on March 8, 2003
Perhaps she actually believes the principles would do more to keep her own party in line. I have no doubt that there are party adherents in both camps who wish their party as a whole was more ethical/principled. In any case, MidasM, you've made a speculation/prognostication about her viewpoints, not a counterargument to her proposal (which I guess you weren't making anyway, because you did say you were all for it, so I am just running on and on but anyway...
But I agree with hincandenza. There are some problems with the three strikes concept in general, and furthermore, punishing a corporation is hard: the burden of responsibility is unclearly distributed (and gets more unclear as accusations are leveled). I can see how three strikes could be a deterent... but complicated or problematic in some situations. How are assets distributed (like chapter 11)? What if the perpetrators of the crime are also large shareholders -- or "creditors" -- and stand to benefit from liquidation (corporate suicide!)? What compensation is given to employees cut adrift?
The underlying problem is the (1) distribution/deflection of responsibility and (2) the fact that those with lots of money are powerful, and it's harder to really penalize them or keep them in line. I'm not a fatalist about it: I do think we as a society should try hard, but nobody should think there's an easy bandaid solution.
posted by namespan at 2:50 PM on March 8, 2003
jacquilynne, any such plan to re-employ people would constitute nasty ol' socialism, right?
Well, you know, (or, probably you don't, so I'm going to tell you), I'm Canadian. We're big fans of socialism up here in the frozen North.
To be less flippant than my initial comment, this law would be completely unenforceable without major fallout. There are plenty of innocent wage slaves in any business who had nothing to do with the illegality that may have taken place. And while the competition might pick up some of the skilled workers to help meet the increased demand for their services, they won't need or want them all because there are efficiencies in scale. And what of the not-so-skilled? Even criminal corporations have janitors. Further, what of the example of a far reaching price fixing conspiracy. When you throw every power company currently in your state out of your state, who exactly provides you with power? And what kind of massive disruptions are caused by the transition?
The biggest problem, though, is the tendency this would have to consolidate industries in certain hands. Shut down a major supplier of X and who is the most likely to meet the demand? Not some new player in the X market, but rather the largest suppliers of X not shut down. Do that a couple of times and suddenly Global X Corp has a monopoly on X just because they haven't yet been caught doing 3 bad things.
posted by jacquilynne at 2:52 PM on March 8, 2003
Well, you know, (or, probably you don't, so I'm going to tell you), I'm Canadian. We're big fans of socialism up here in the frozen North.
To be less flippant than my initial comment, this law would be completely unenforceable without major fallout. There are plenty of innocent wage slaves in any business who had nothing to do with the illegality that may have taken place. And while the competition might pick up some of the skilled workers to help meet the increased demand for their services, they won't need or want them all because there are efficiencies in scale. And what of the not-so-skilled? Even criminal corporations have janitors. Further, what of the example of a far reaching price fixing conspiracy. When you throw every power company currently in your state out of your state, who exactly provides you with power? And what kind of massive disruptions are caused by the transition?
The biggest problem, though, is the tendency this would have to consolidate industries in certain hands. Shut down a major supplier of X and who is the most likely to meet the demand? Not some new player in the X market, but rather the largest suppliers of X not shut down. Do that a couple of times and suddenly Global X Corp has a monopoly on X just because they haven't yet been caught doing 3 bad things.
posted by jacquilynne at 2:52 PM on March 8, 2003
Ah, I'd jumped to the conclusion that anyone who appeared to be arguing for corporate impunity must be what we laughably call "a conservative" down here.
Anyway, I agree that to stop the operations of a corporation because of the decisions of its principals may have unwelcome consequences. But since the principals already have a kind of immunity, the law has no teeth. Corporations often simply decline to pay fines, and ignore court orders. Enforcement is long in coming, and usually tied up by lawsuits and appeals using the salaried lawyers they're already paying for.
But I think you have a point, that this law could punish too many of the wrong people. Better, perhaps, to selectively weaken some of the protetcions that insulate corporate officers from the consequences of their actions.
posted by George_Spiggott at 3:09 PM on March 8, 2003
Anyway, I agree that to stop the operations of a corporation because of the decisions of its principals may have unwelcome consequences. But since the principals already have a kind of immunity, the law has no teeth. Corporations often simply decline to pay fines, and ignore court orders. Enforcement is long in coming, and usually tied up by lawsuits and appeals using the salaried lawyers they're already paying for.
But I think you have a point, that this law could punish too many of the wrong people. Better, perhaps, to selectively weaken some of the protetcions that insulate corporate officers from the consequences of their actions.
posted by George_Spiggott at 3:09 PM on March 8, 2003
If the law were effective it wouldn't be punishing anyone, because the wage peons would refuse to do things that were clearly unethical or illegal. They'd have great incentive to have the balls to stand up against doing wrong.
I also don't believe that killing a company would have a great long-term effect on the working population. If the company is of any size at all, it operates in an environment where its products/servicers are in strong demand. You can destroy the company, but you can't destroy the demand: someone else will step in to fill the vacuum, and that new company is going to need, yes, even janitors.
Enforcement with teeth behind it would be a damn fine thing for the health, safety, and welfare of us all in the long run.
posted by five fresh fish at 3:15 PM on March 8, 2003
I also don't believe that killing a company would have a great long-term effect on the working population. If the company is of any size at all, it operates in an environment where its products/servicers are in strong demand. You can destroy the company, but you can't destroy the demand: someone else will step in to fill the vacuum, and that new company is going to need, yes, even janitors.
Enforcement with teeth behind it would be a damn fine thing for the health, safety, and welfare of us all in the long run.
posted by five fresh fish at 3:15 PM on March 8, 2003
Be sure to check out the extremely creepy They Rule website
(Flash 5 required, but worth it.)
One problem with Jesse Jackson's (credit where credit is due) "Corporate Death Penalty", is that most corporate board of directors are composed of *proxy agents*, hired guns who sit on several corporate boards and vote the way large mutual funds and outside concerns tell them.
This is why (as in They Rule), it seems that corporate boards are so incestuous. But for the most part, these proxies don't personally hold a lot of stock in the companies they direct. And this is one of the reasons so many corporations seem so indifferent to the public.
If you kill the corporation, therefore, the same proxies who may have been responsible for the first malfeasance shrug and go sit on their other boards. If you ban them, personally, you have just banned an underling who was only following orders. So you have to find so way of punishing the real forces behind the throne.
The *real* villains, however, the big mutual funds, etc., try to hide behind the public, just calling themselves "shareholders". And my, isn't this new law *unfair*, just targeting poor, innocent "shareholders" like us and some retired grandmother!
But even if its effects are mitigated, this three strikes law, or corporate death penalty, if you like, is certainly a step in the right direction to regain corporate responsibility.
posted by kablam at 3:21 PM on March 8, 2003
(Flash 5 required, but worth it.)
One problem with Jesse Jackson's (credit where credit is due) "Corporate Death Penalty", is that most corporate board of directors are composed of *proxy agents*, hired guns who sit on several corporate boards and vote the way large mutual funds and outside concerns tell them.
This is why (as in They Rule), it seems that corporate boards are so incestuous. But for the most part, these proxies don't personally hold a lot of stock in the companies they direct. And this is one of the reasons so many corporations seem so indifferent to the public.
If you kill the corporation, therefore, the same proxies who may have been responsible for the first malfeasance shrug and go sit on their other boards. If you ban them, personally, you have just banned an underling who was only following orders. So you have to find so way of punishing the real forces behind the throne.
The *real* villains, however, the big mutual funds, etc., try to hide behind the public, just calling themselves "shareholders". And my, isn't this new law *unfair*, just targeting poor, innocent "shareholders" like us and some retired grandmother!
But even if its effects are mitigated, this three strikes law, or corporate death penalty, if you like, is certainly a step in the right direction to regain corporate responsibility.
posted by kablam at 3:21 PM on March 8, 2003
Midas, you seem to be the only one here using the wildly over-broad classification of corporation towards non-profit groups, political parties, and just about any registered group with more than a few members- hell, in England individual people can classify themselves as corporations- and you've conveniently managed to make it into an attack on groups you personally hate.
No - I'm merely demonstrating that if one is talking about a law - it should be objectively applied to everyone equally. In the US, filing as a corporation has both rights and responsibilities - doesn't matter whether it's a for-profit or a non-profit operation. This proposed law is an attempt to apply additional responsibilities to corporations. Fine - then apply them to all corporations. Especially those like a couple that I mentioned - that delibrately break the law over and over as a normal part of their political tactics.
There are some problems with the three strikes concept in general, and furthermore, punishing a corporation is hard: the burden of responsibility is unclearly distributed (and gets more unclear as accusations are leveled). I can see how three strikes could be a deterent... but complicated or problematic in some situations. How are assets distributed (like chapter 11)? What if the perpetrators of the crime are also large shareholders -- or "creditors" -- and stand to benefit from liquidation (corporate suicide!)? What compensation is given to employees cut adrift?
This is the more coherent reason that this law is just plain idiotic. All laws have intended consequences, and unintended consequences - and in this case, the unintended consequences are likely to be an order of magnitude greater than the intended consequences. For instance:
1. Some above said that fines don't work, because corporations just see fines as a cost of doing business. Untrue - their own perspective is that they continually do cost-benefit analysis. In many instances, these calculations conclude that simply paying a fine is much cheaper than a protracted court battle with often highly political state regulators (anyone who believes that corporations are self-interested, but regulatory bureaucrats are nothing but completely objective, high-minded, non-political saints ... is just naive) . This law pretty much assures that would end. There would be no settlements - because this law would change the calculus. California would become home to large numbers of decades long court battles - to the detriment of both the business environment and the taxpayer.
2. Corporations would adjust. Some would move out of the state. Other would choose to incorporate elsewhere. Most would alter the compensation packages for senior executives. Why? Every corporation in California would wind up paying considerably more for business insurance. Corporations don't pay fines folks, they buy business insurance, and their insurers pay the fines. But what this does is tend to spread risk across entire industries. It might be nice, for instance, to think that one mean energy company could get put out of business, and other wonderfully moral ones would step in - but what would happen in practice is that actuarial tables would change - and every energy company doing business in California would simply wind up with much larger insurance bills (and - speaking of unintended consequences - would have the right to go to regulators to request rate increases to pay the higher costs).
3. Businesses operate in networks ... they both produce and consume goods or services. You want to close a corporation? Okay - it's not just the corporation that goes out of business - thus hurting a lot of employees that did nothing at all wrong - but also means every company - big or small - that supplied the corporation abruptly takes a bottom line hit. When large companies close plants for economic reasons, it is not at all uncommon for entire cities to die, because so many supporting businesses grow up around supplying them. Now you are talking about the state itself deciding to do this.
The bizzare thing is that it's quite likely that the top executives of any such corporation will wind up doing fine. They'll either re-incorporate in another state, or start another sort of business.
This law will never pass ... and would significantly harm Californians if it did. Naive, simplistic self-righteousness is not a very good foundation upon which to legislate.
posted by MidasMulligan at 4:28 PM on March 8, 2003
No - I'm merely demonstrating that if one is talking about a law - it should be objectively applied to everyone equally. In the US, filing as a corporation has both rights and responsibilities - doesn't matter whether it's a for-profit or a non-profit operation. This proposed law is an attempt to apply additional responsibilities to corporations. Fine - then apply them to all corporations. Especially those like a couple that I mentioned - that delibrately break the law over and over as a normal part of their political tactics.
There are some problems with the three strikes concept in general, and furthermore, punishing a corporation is hard: the burden of responsibility is unclearly distributed (and gets more unclear as accusations are leveled). I can see how three strikes could be a deterent... but complicated or problematic in some situations. How are assets distributed (like chapter 11)? What if the perpetrators of the crime are also large shareholders -- or "creditors" -- and stand to benefit from liquidation (corporate suicide!)? What compensation is given to employees cut adrift?
This is the more coherent reason that this law is just plain idiotic. All laws have intended consequences, and unintended consequences - and in this case, the unintended consequences are likely to be an order of magnitude greater than the intended consequences. For instance:
1. Some above said that fines don't work, because corporations just see fines as a cost of doing business. Untrue - their own perspective is that they continually do cost-benefit analysis. In many instances, these calculations conclude that simply paying a fine is much cheaper than a protracted court battle with often highly political state regulators (anyone who believes that corporations are self-interested, but regulatory bureaucrats are nothing but completely objective, high-minded, non-political saints ... is just naive) . This law pretty much assures that would end. There would be no settlements - because this law would change the calculus. California would become home to large numbers of decades long court battles - to the detriment of both the business environment and the taxpayer.
2. Corporations would adjust. Some would move out of the state. Other would choose to incorporate elsewhere. Most would alter the compensation packages for senior executives. Why? Every corporation in California would wind up paying considerably more for business insurance. Corporations don't pay fines folks, they buy business insurance, and their insurers pay the fines. But what this does is tend to spread risk across entire industries. It might be nice, for instance, to think that one mean energy company could get put out of business, and other wonderfully moral ones would step in - but what would happen in practice is that actuarial tables would change - and every energy company doing business in California would simply wind up with much larger insurance bills (and - speaking of unintended consequences - would have the right to go to regulators to request rate increases to pay the higher costs).
3. Businesses operate in networks ... they both produce and consume goods or services. You want to close a corporation? Okay - it's not just the corporation that goes out of business - thus hurting a lot of employees that did nothing at all wrong - but also means every company - big or small - that supplied the corporation abruptly takes a bottom line hit. When large companies close plants for economic reasons, it is not at all uncommon for entire cities to die, because so many supporting businesses grow up around supplying them. Now you are talking about the state itself deciding to do this.
The bizzare thing is that it's quite likely that the top executives of any such corporation will wind up doing fine. They'll either re-incorporate in another state, or start another sort of business.
This law will never pass ... and would significantly harm Californians if it did. Naive, simplistic self-righteousness is not a very good foundation upon which to legislate.
posted by MidasMulligan at 4:28 PM on March 8, 2003
So why three strikes and the corporation is out? Why not three strikes and the CEO and company officers are out (of business, for good), and three strikes and the board is out (of boardrooms, for good)?
posted by troybob at 4:53 PM on March 8, 2003
posted by troybob at 4:53 PM on March 8, 2003
Am I the only one who thinks of the idea of the Democrats and Republicans having their charters removed as an argument in favour of this law?
posted by Pseudoephedrine at 5:00 PM on March 8, 2003
posted by Pseudoephedrine at 5:00 PM on March 8, 2003
Magnificent crap. You're claiming that applying the idea of a law meant to punish corporate malfeasance should "equally" be administerrd to organizations by classifying them as similar corporate entities and therefore punished more heavily for acts of civil disobedience.
I'm not saying anyone should be re-classified ... they are already corporations. They are corporate entities. They are supposed to obey the law. You want to raise the stakes for corporations that break the law? Okay - raise them for all corporations.
Truly and utterly ridiculous. To even equate the typical illegal actions of individuals within an anti-war group- which you yourself say is a political statement- and the typical illegal actions of a stock board member covertly manipulating the market- which is essentially outright fraud and/or theft- destroys any concept of "equality" in what you are suggesting- which, by the way- is essentially a whine that boils down to "well if you're going to pick on corporations, here's how I think we should treat Greenpeace." You're saying Greenpeace protestors should be arrested to be fair to CEOs that "now face more responsibility."
It's obviously ridiculous for anyone whose political orientation wants to take revenge on "big business". You want to single out some crimes in certain types of corporations as those you can use to destroy the entire corporation - but want to exempt other crimes and other types of corporations from any such responsibility. Non-profits try to "manipulate" markets all the time (what's a boycott?). Tree-sitters try to stop logging companies with fully legal rights by breaking the law. You want to insist upon the rule of law? Okay - but it has to be universal.
posted by MidasMulligan at 5:05 PM on March 8, 2003
I'm not saying anyone should be re-classified ... they are already corporations. They are corporate entities. They are supposed to obey the law. You want to raise the stakes for corporations that break the law? Okay - raise them for all corporations.
Truly and utterly ridiculous. To even equate the typical illegal actions of individuals within an anti-war group- which you yourself say is a political statement- and the typical illegal actions of a stock board member covertly manipulating the market- which is essentially outright fraud and/or theft- destroys any concept of "equality" in what you are suggesting- which, by the way- is essentially a whine that boils down to "well if you're going to pick on corporations, here's how I think we should treat Greenpeace." You're saying Greenpeace protestors should be arrested to be fair to CEOs that "now face more responsibility."
It's obviously ridiculous for anyone whose political orientation wants to take revenge on "big business". You want to single out some crimes in certain types of corporations as those you can use to destroy the entire corporation - but want to exempt other crimes and other types of corporations from any such responsibility. Non-profits try to "manipulate" markets all the time (what's a boycott?). Tree-sitters try to stop logging companies with fully legal rights by breaking the law. You want to insist upon the rule of law? Okay - but it has to be universal.
posted by MidasMulligan at 5:05 PM on March 8, 2003
but what would happen in practice is that actuarial tables would change - and every energy company doing business in California would simply wind up with much larger insurance bills.
This presupposes that these insurers will cover being shut down by the government for a third conviction for criminal misconduct. I'm trying to imagine the auto insurance company that would write me a policy covering me in case of say, a third conviction for vehicular manslaugher. It boggles the imagination. In the situation you're describing, the insurance companies would have clauses allowing them to dump a business after at most the second conviction. All insurance companies work this way.
posted by George_Spiggott at 5:19 PM on March 8, 2003
This presupposes that these insurers will cover being shut down by the government for a third conviction for criminal misconduct. I'm trying to imagine the auto insurance company that would write me a policy covering me in case of say, a third conviction for vehicular manslaugher. It boggles the imagination. In the situation you're describing, the insurance companies would have clauses allowing them to dump a business after at most the second conviction. All insurance companies work this way.
posted by George_Spiggott at 5:19 PM on March 8, 2003
Personally, I'd like to see those responsible for causing billions of dollars of damage to our public through fraud get the death penalty. To my mind, they are economic terrorists, and should be dealt with as such.
But that's just me.
posted by moonbiter at 5:31 PM on March 8, 2003
But that's just me.
posted by moonbiter at 5:31 PM on March 8, 2003
The boycott issue is what really slays me about the laissez-faire crowd. They invoke the mystical power of market forces as an adequate substitute for enforcement, claiming that "no-one will buy from an amoral company that abuses the public."
But when customers actually try to put this into practice by doing precisely that, refusing en masse to buy from that company, the same people disparage them as leftie pinkos, accuse them of conspiracy and of "attacking" the company and so forth. There's simply no reasoning with this kind of thought process.
posted by George_Spiggott at 5:36 PM on March 8, 2003
But when customers actually try to put this into practice by doing precisely that, refusing en masse to buy from that company, the same people disparage them as leftie pinkos, accuse them of conspiracy and of "attacking" the company and so forth. There's simply no reasoning with this kind of thought process.
posted by George_Spiggott at 5:36 PM on March 8, 2003
In the situation you're describing, the insurance companies would have clauses allowing them to dump a business after at most the second conviction. All insurance companies work this way.
Actually - this is good - rational discussion. The difficulty is that there would be far fewer convictions. Most corporate legal cases are settled prior to conviction. The company - usually with full agreement (and even prompting) from the insurers - agrees to a fine because it is much cheaper than a long court battle. They would no longer do so - they'd fight.
I guess the main problem I have is that in practice corporate law is a nightmare. I only know the details of one sector - financial services - but I know it well, because my own firm's business is to integrate the IT and business processes required for compliance with that body of law. I'll tell you a secret that no government agency or private firm would be likely admit - but that is nonetheless absolutely true: Every bank, brokerage, and other financial services firm in America broke numerous laws today. They do every day. Because they are criminals? No - because it is categorically impossible to follow the immense, byzantine body of law applied to the industry.
Take, for instance, the Patriot Act. Title III of the Act applies to financial companies. The law gets passed, and then a period of time passes during which bureaucrats translate the law into regulations (and this process itself often badly distorts the original intent of the law). And when you are talking about a law that is over 100 pages in length, an immense number of interpretations are necessary. When initial regulations are issued, corporate legal departments then do the initial analysis of what changes the company will need to make for compliance. The Patriot Act required significant database integration for large firms - something that is very expensive, and takes months to do. Further, it is impossible for every bit of the law to be either followed by companies, or enforced by regulators.
So what generally happens is after some time has passed, regulators will choose several very high profile cases, and make a big deal out of them ... not so much to enforce the law, as to suggest to the industry which parts of it they will be focussing on. In the case of the Patriot Act, Wells Fargo and Western Union have both gotten multi-million dollar fines in the past few months.
The Western Union case, for instance, focussed on the data aggregation question. Firms always needed to file "SAR's" - Suspicious Activity Reports - when activity by an individual exceeded particular thresholds during a given time period. What the Patriot Act did is forced firms to track customers across the whole firm ... in other words, an individual trying to do a particular type of transaction over a given amount of money would trigger a SAR - however, after the PA, an individual doing a number of transactions below the thresholds at several different firm locations has to have a SAR filed by the company if the cumulative amounts hit the threshold. This is what Western Union got nailed for - it simply didn't have the systems in place capable of catching this. (Click here to read the actual settlement).
As is normal, FinCEN and the firm settled. The settlement included both a fine, and an agreement about specific steps the firm would take to reach compliance. The settlement was also read in depth by the legal and compliance departments across Wall Street, as it helped then more fully understand the specifics of how the regulators would be interpreting the law.
This, folks, is the norm of trying to do business legally. It is just flat out juvenile to think that in anything other than rare cases there is some clearly evil man who, as an individual, did something horrible. The vast majority of day-to-day business is composed of conitunal, evolving conversations between regulators and businesses. A good deal of the time it is just sort of understood that large firms will be focussed upon for fines, and will settle, as a means of applying political standards to business. Large firms just accept this. And both the regulators and the business understand that settling is in both of their best interests.
There's a reason Elliot Spitzer went after Merrill Lynch first last year, and then the Chase's and Citi's of the world, and completely ignored huge numbers of smaller institutions engaged in the same activities. First, because he's political - and nailing little firms doesn't get any headlines. But also because in getting settlements with the giants, the smaller firms will generally alter their behavior too.
So then - what does this proposed law do? Well first, it penalizes large firms in a profoundly unfair way. It is sort of understood, and tolerated, that the Spitzers of the world will go after the giants and nail them with fines - at least in part for the benefit of their own careers. With this law, however, suddenly three large fines and the entire corporation is killed. Do competitors take it's place? Yeppers. Not competitors that are any better - but rather, competitors that weren't quite big enough to attract the same attention from regulators - but who may well have been engaged in the exact same activities.
Second - it will make regulation impossible. Regulators do not have inexhaustible resources. The entire regulatory system is built upon the tacit understanding that most cases will be resolved and settled. firms generally don't want to fight in court because it's not good PR, but mostly because it's just cheaper to settle. However - if it is going to be a court battle (which this law would force it to be) - corporations will almost always win ... because they have the resources to keep scarce regulator attorneys tied up for years if they need to.
Well, I've gone on too long here. Point is, this proposed law is like many that issues from legislators ... very good at making a dramtic statement, probably quite good for the senator's next election campaign, certainly very popular with the simplistic minds that think "it's easy, a corporation is just like a person" (apparently kind of forgetting that the average "person" doesn't have several hundred thousand regulations they've got to comply with daily) ... but ultimately would not be just, would not have it's intended effects, and would likely have fairly severe unintended effects.
posted by MidasMulligan at 6:45 PM on March 8, 2003
Actually - this is good - rational discussion. The difficulty is that there would be far fewer convictions. Most corporate legal cases are settled prior to conviction. The company - usually with full agreement (and even prompting) from the insurers - agrees to a fine because it is much cheaper than a long court battle. They would no longer do so - they'd fight.
I guess the main problem I have is that in practice corporate law is a nightmare. I only know the details of one sector - financial services - but I know it well, because my own firm's business is to integrate the IT and business processes required for compliance with that body of law. I'll tell you a secret that no government agency or private firm would be likely admit - but that is nonetheless absolutely true: Every bank, brokerage, and other financial services firm in America broke numerous laws today. They do every day. Because they are criminals? No - because it is categorically impossible to follow the immense, byzantine body of law applied to the industry.
Take, for instance, the Patriot Act. Title III of the Act applies to financial companies. The law gets passed, and then a period of time passes during which bureaucrats translate the law into regulations (and this process itself often badly distorts the original intent of the law). And when you are talking about a law that is over 100 pages in length, an immense number of interpretations are necessary. When initial regulations are issued, corporate legal departments then do the initial analysis of what changes the company will need to make for compliance. The Patriot Act required significant database integration for large firms - something that is very expensive, and takes months to do. Further, it is impossible for every bit of the law to be either followed by companies, or enforced by regulators.
So what generally happens is after some time has passed, regulators will choose several very high profile cases, and make a big deal out of them ... not so much to enforce the law, as to suggest to the industry which parts of it they will be focussing on. In the case of the Patriot Act, Wells Fargo and Western Union have both gotten multi-million dollar fines in the past few months.
The Western Union case, for instance, focussed on the data aggregation question. Firms always needed to file "SAR's" - Suspicious Activity Reports - when activity by an individual exceeded particular thresholds during a given time period. What the Patriot Act did is forced firms to track customers across the whole firm ... in other words, an individual trying to do a particular type of transaction over a given amount of money would trigger a SAR - however, after the PA, an individual doing a number of transactions below the thresholds at several different firm locations has to have a SAR filed by the company if the cumulative amounts hit the threshold. This is what Western Union got nailed for - it simply didn't have the systems in place capable of catching this. (Click here to read the actual settlement).
As is normal, FinCEN and the firm settled. The settlement included both a fine, and an agreement about specific steps the firm would take to reach compliance. The settlement was also read in depth by the legal and compliance departments across Wall Street, as it helped then more fully understand the specifics of how the regulators would be interpreting the law.
This, folks, is the norm of trying to do business legally. It is just flat out juvenile to think that in anything other than rare cases there is some clearly evil man who, as an individual, did something horrible. The vast majority of day-to-day business is composed of conitunal, evolving conversations between regulators and businesses. A good deal of the time it is just sort of understood that large firms will be focussed upon for fines, and will settle, as a means of applying political standards to business. Large firms just accept this. And both the regulators and the business understand that settling is in both of their best interests.
There's a reason Elliot Spitzer went after Merrill Lynch first last year, and then the Chase's and Citi's of the world, and completely ignored huge numbers of smaller institutions engaged in the same activities. First, because he's political - and nailing little firms doesn't get any headlines. But also because in getting settlements with the giants, the smaller firms will generally alter their behavior too.
So then - what does this proposed law do? Well first, it penalizes large firms in a profoundly unfair way. It is sort of understood, and tolerated, that the Spitzers of the world will go after the giants and nail them with fines - at least in part for the benefit of their own careers. With this law, however, suddenly three large fines and the entire corporation is killed. Do competitors take it's place? Yeppers. Not competitors that are any better - but rather, competitors that weren't quite big enough to attract the same attention from regulators - but who may well have been engaged in the exact same activities.
Second - it will make regulation impossible. Regulators do not have inexhaustible resources. The entire regulatory system is built upon the tacit understanding that most cases will be resolved and settled. firms generally don't want to fight in court because it's not good PR, but mostly because it's just cheaper to settle. However - if it is going to be a court battle (which this law would force it to be) - corporations will almost always win ... because they have the resources to keep scarce regulator attorneys tied up for years if they need to.
Well, I've gone on too long here. Point is, this proposed law is like many that issues from legislators ... very good at making a dramtic statement, probably quite good for the senator's next election campaign, certainly very popular with the simplistic minds that think "it's easy, a corporation is just like a person" (apparently kind of forgetting that the average "person" doesn't have several hundred thousand regulations they've got to comply with daily) ... but ultimately would not be just, would not have it's intended effects, and would likely have fairly severe unintended effects.
posted by MidasMulligan at 6:45 PM on March 8, 2003
Just for the record, there certainly are non-profit corporations out there of all political stripes that do unethical and illegal things and ought to be punished for them. Enron-type acccounting, directors embellizing money, deceptive practices to fundraise, engaging in prohibited political activity etc. It all happens--probably much less frequently than with for-profit corps., but even a little bit is too much. If anything, their tax-advantaged status ought to make them subject to even higher standards than for-profit corporations. There's just no excuse for that kind of behavior from organizations that are supposed to be working for the public good.
As far as the three strikes thing goes, it's as stupid of an idea applied to corporations as it is applied to individual criminals. Doesn't it bother anybody that the threshhold for life in prison is based on an analogy to baseball? Talk about arbitrary. One size does not fit all in law.
This is not to say that corporate leaders and even corporations themselves shouldn't be prosecuted to the full extent of the law when they misbehave. Let's just not extend a bad idea any further than it has already gone.
posted by boltman at 7:23 PM on March 8, 2003
As far as the three strikes thing goes, it's as stupid of an idea applied to corporations as it is applied to individual criminals. Doesn't it bother anybody that the threshhold for life in prison is based on an analogy to baseball? Talk about arbitrary. One size does not fit all in law.
This is not to say that corporate leaders and even corporations themselves shouldn't be prosecuted to the full extent of the law when they misbehave. Let's just not extend a bad idea any further than it has already gone.
posted by boltman at 7:23 PM on March 8, 2003
So then - what does this proposed law do? Well first, it penalizes large firms in a profoundly unfair way. It is sort of understood, and tolerated, that the Spitzers of the world will go after the giants and nail them with fines - at least in part for the benefit of their own careers. With this law, however, suddenly three large fines and the entire corporation is killed.
Midas -- would changing the fine size make a difference, you think? Assuming you accept the framing of the article about the way the $9 billion in question changed hands (ie, by stealin'), this seems like something bigger than a regulation that tripped a piddly million dollar fine. Would a $1 billion dollar threshold make a difference? A $5 billion threshold?
Your explanation of day to day dance between business and regulators helps me see a bit more why corps and money men are often very keen on rolling it back. Thanks.
One more thing, though. The "corporate death penalty" is clearly a means to an end... a deterent to corporate crime and corruption, trying to do something about the sense that things like Enron just slide off the perpetrators. Said death penalty obviously has its problems.... what would you propose instead? Or do you think the current ballance is about right?
posted by namespan at 7:46 PM on March 8, 2003
Midas -- would changing the fine size make a difference, you think? Assuming you accept the framing of the article about the way the $9 billion in question changed hands (ie, by stealin'), this seems like something bigger than a regulation that tripped a piddly million dollar fine. Would a $1 billion dollar threshold make a difference? A $5 billion threshold?
Your explanation of day to day dance between business and regulators helps me see a bit more why corps and money men are often very keen on rolling it back. Thanks.
One more thing, though. The "corporate death penalty" is clearly a means to an end... a deterent to corporate crime and corruption, trying to do something about the sense that things like Enron just slide off the perpetrators. Said death penalty obviously has its problems.... what would you propose instead? Or do you think the current ballance is about right?
posted by namespan at 7:46 PM on March 8, 2003
it's just a hunch, but I'm guessing that any kind of "corporate death penalty" would, for the reasons that so many have enumerated above, be just as much of a deterrent (i.e., not at all) and be applied just as capriciously as the actual death penalty.
posted by Vidiot at 8:58 PM on March 8, 2003
posted by Vidiot at 8:58 PM on March 8, 2003
One more thing, though. The "corporate death penalty" is clearly a means to an end... a deterent to corporate crime and corruption, trying to do something about the sense that things like Enron just slide off the perpetrators. Said death penalty obviously has its problems.... what would you propose instead? Or do you think the current ballance is about right?
Actually, I personally agree with boltman - I think the "three strikes" law as applied even to individuals is puerile and abusive. The reason we have "judges" is because it is understood that the law is a fixed entity frozen in print, while it is intended to be applied to the utterly messy and never completely definable realm of human action. Life in prison for stealing a pizza or something - simply because it was a third offense - is something I'd consider a gross miscarriage of justice.
So far as a corporate death penalty - I'm personally just not sure what sort of laws might help (though I can say for certain that laws like the one under discussion probably won't). Most of the large financial services firms I work with (and that in the past I worked for) are composed of good, ethical people that do try to follow the law. While a very few extreme cases (like Enron) get most of the press, most fines - corporate fines - really aren't a matter of an individual doing something, but have more to do with systems. You can get an entire board, and executive management that is ethical, and does try to implement significant policies, checks and balances, and a positive corporate culture, and double the reams of law already on the books, and none of that will be able to stop the small percentage of individuals that do nasty things. Law cannot apply well to groups - of any kind. A large corporation with thousands of employees (or a huge, Fortune 500 one with tens of thousands of employees) will contain the same percentage of slightly bad folks, and really bad folks, as any randomly selected group from society will.
I frankly don't know what the answer - if any is needed. The really extreme offenders that would desrve a death penalty are usually handed one by the market itself.
posted by MidasMulligan at 10:13 PM on March 8, 2003
Actually, I personally agree with boltman - I think the "three strikes" law as applied even to individuals is puerile and abusive. The reason we have "judges" is because it is understood that the law is a fixed entity frozen in print, while it is intended to be applied to the utterly messy and never completely definable realm of human action. Life in prison for stealing a pizza or something - simply because it was a third offense - is something I'd consider a gross miscarriage of justice.
So far as a corporate death penalty - I'm personally just not sure what sort of laws might help (though I can say for certain that laws like the one under discussion probably won't). Most of the large financial services firms I work with (and that in the past I worked for) are composed of good, ethical people that do try to follow the law. While a very few extreme cases (like Enron) get most of the press, most fines - corporate fines - really aren't a matter of an individual doing something, but have more to do with systems. You can get an entire board, and executive management that is ethical, and does try to implement significant policies, checks and balances, and a positive corporate culture, and double the reams of law already on the books, and none of that will be able to stop the small percentage of individuals that do nasty things. Law cannot apply well to groups - of any kind. A large corporation with thousands of employees (or a huge, Fortune 500 one with tens of thousands of employees) will contain the same percentage of slightly bad folks, and really bad folks, as any randomly selected group from society will.
I frankly don't know what the answer - if any is needed. The really extreme offenders that would desrve a death penalty are usually handed one by the market itself.
posted by MidasMulligan at 10:13 PM on March 8, 2003
s according to the proposed law, it seems as though the Democratic Party itself has already got more than 3 strikes
That would mean that the Republican Party very likely has 3 strikes as well. And I must say I'm all for a law that'd dissolve both major political parties overnight.
posted by eustacescrubb at 6:09 AM on March 9, 2003
That would mean that the Republican Party very likely has 3 strikes as well. And I must say I'm all for a law that'd dissolve both major political parties overnight.
posted by eustacescrubb at 6:09 AM on March 9, 2003
I don't think the intent is so much to penalize the "really extreme offenders," but to severely discourage anyone from even attempting to pull an extreme offense.
The Enron debacle was incredibly harmful to a lot of people, yet no one is going to be adequately punished for it. The perps are going to pretty much get away with it scot-free, which just goes to encourage others to pull the same stunt.
posted by five fresh fish at 11:13 AM on March 9, 2003
The Enron debacle was incredibly harmful to a lot of people, yet no one is going to be adequately punished for it. The perps are going to pretty much get away with it scot-free, which just goes to encourage others to pull the same stunt.
posted by five fresh fish at 11:13 AM on March 9, 2003
Thanks, Midas - & others - for an informative thread. But I do want to press you MM on this one:
The Enron debacle was incredibly harmful to a lot of people, yet no one is going to be adequately punished for it.
Vs.
The really extreme offenders that would desrve a death penalty are usually handed one by the market itself.
Many people also want to see a just consequence applied to the senior staff at the corporations, who enriched themselves before the markets - in their partial state of ignorance - pronounced its sentence. Would that be fair?
posted by dash_slot- at 6:41 AM on March 10, 2003
The Enron debacle was incredibly harmful to a lot of people, yet no one is going to be adequately punished for it.
Vs.
The really extreme offenders that would desrve a death penalty are usually handed one by the market itself.
Many people also want to see a just consequence applied to the senior staff at the corporations, who enriched themselves before the markets - in their partial state of ignorance - pronounced its sentence. Would that be fair?
posted by dash_slot- at 6:41 AM on March 10, 2003
Er, that was my point: Bernie and the Gang have pocketed kerjillions of stolen dollars and there is no indication that they will be punished. They will not spend life behind bars. They will not have their ill-gotten gains entirely taken away, leaving them scrambling for jobs at McD's. They will not be banned from executive-level work.
Nothing of any consequence is going to happen. They will live out their lives as incredibly wealthy men, wanting for nothing and feeling no pain.
Meanwhile, tens of thousands of commoners are going to be eating dogfood in their retirement years, because Bernie's got their money.
That just sucks.
posted by five fresh fish at 9:24 AM on March 10, 2003
Nothing of any consequence is going to happen. They will live out their lives as incredibly wealthy men, wanting for nothing and feeling no pain.
Meanwhile, tens of thousands of commoners are going to be eating dogfood in their retirement years, because Bernie's got their money.
That just sucks.
posted by five fresh fish at 9:24 AM on March 10, 2003
Many people also want to see a just consequence applied to the senior staff at the corporations[...]
Well, one could address the problem at its source. (How Corporate Law Inhibits Social Responsibility)
There are a couple of picayune (heh) problems associated with this approach, however. (Left as an exercise for the reader.)
posted by Opus Dark at 11:23 AM on March 10, 2003
Well, one could address the problem at its source. (How Corporate Law Inhibits Social Responsibility)
There are a couple of picayune (heh) problems associated with this approach, however. (Left as an exercise for the reader.)
posted by Opus Dark at 11:23 AM on March 10, 2003
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posted by jacquilynne at 12:45 PM on March 8, 2003