>Contrast that to how individuals get the hammer put down on them by the justice system if they so much as fart in the wrong room. The lesson from the last 50 years should be: If you want to commit a crime and get away with it, do it as a corporation.
That's because most crimes "individuals" do are straightforwardly illegal and easy to prosecute, whereas the "crime if a corporation does it" are not. It's not any different than say, simple property crimes (eg. stealing or vandalism) vs white collar crimes, both of which can be perpetrated by individuals but the latter are far harder to prosecute. Stealing a candy bar is an open and shut case, especially with surveillance footage. A long firm fraud[1] is far harder to prosecute. If you buy a truckload of candy bars on credit, fail to repay the vendor, and declare bankruptcy, prosecutors are going to have a hard time prosecuting the case. Having bad business acumen isn't a crime, so on the surface nothing illegal has happened. To prove wrongdoing they must prove that you intentionally acquired goods on credit without intending to pay it back, which is far harder.
> That's because most crimes "individuals" do are straightforwardly illegal and easy to prosecute, whereas the "crime if a corporation does it" are not
Maybe that’s something that should be adjusted by a legislative body.
Crimes are only “easy” or “difficult” to prosecute because of the laws as they’re written.
>Crimes are only “easy” or “difficult” to prosecute because of the laws as they’re written.
Yes and no. Yes in the sense that you can make crimes very easy to prosecute, no in the sense that doing so usually makes unobjectionable or even good behavior illegal in the process. Take insider trading for example. It would be very easy to simply make selling the stock of a company you work for, or are in any other way party to, outright illegal. But this would be bad for a lot of reasons; it would make it harder for businesses to compensate employees, it would encourage employees of successful companies to leave early taking important business knowledge with them, etc. Some behavior is simply harder to make illegal because it's harder to identify by its nature, which subsequently makes it harder to enforce laws against it.
> Yes in the sense that you can make crimes very easy to prosecute, no in the sense that doing so usually makes unobjectionable or even good behavior illegal in the process
I’m no legal expert, ofc, but I’d bet that a good enough legislature could strike a balance that society can be okay with.
Sure, there are always compromises that can be made and my point wasn't about insider trading specifically, it was that there are tradeoffs to consider. But let's take your example, how long is the blackout period and how long is the open period? I would contend that there is almost no open period short enough that a motivated insider couldn't trade on their non-public knowledge if they were "lucky" enough to have it during the open period, so you're kind of back at square one where you still need the SEC and DoJ to investigate and borderline cases will slip through the cracks. And for everyone else, they've lost some liquidity in case of personal emergency, etc. Again, this isn't to argue against blackout periods specifically, they might be good policy, just pointing out that law and law enforcement is not always easy.
DoJ Put hundreds of J6 fools behind bars because they aren't monied and influential enough to drag out the process. Meanwhile, Georgia has a mountain of criminal evidence from four years ago and they haven't gotten anywhere but for a few guilty pleas from the low level stooges.
Clearly crimes were committed, and clearly layers and layers of management were in on the joke, but only the few little fish at the bottom who were dumb enough to ever put things into writing with a paper trail went to jail.
A lot of the alleged rogue traders were far less rogue than their employers would like you to believe, similar with the LIBOR fixing scandal, etc.
J6 is very similar because there will never be a paper trail of the Orange man sending written orders to storm the Capitol. Everything is a wink and a nod.
The guy at the top never actually says the thing, the next rung down maybe says it but only 1-1 in-person in a secure environment, a few levels down maybe a phone call & hopes not to be tapped, a few more layers down you start to get to the idiots who send a text/email.
To be fair that was the one instance they have him dead to rights, true.
It is a bit unexpected I suppose for a normally friendly party to be recording your phone call. He did work in a less regulated environment than banking so recorded phone call probably caught him by surprise. No one was that dumb at banks (most calls are recorded and there’s often even a beep to remind you the line is recorded).
Most crimes done by individuals are intentional. That is most often not the case with corporations. Intentionality is an important requirement in most crimes.
That doest mean that there isn't plenty of room for more centralized civil protections against negligence and recklessness.
That's a big assertion to make without any evidence. There's a lot of individual crime which is not intentional (e.g. driving related) and there is a lot of corporate crime where someone clearly made a decision. In particular corporations employ lawyers so they have people qualified to decide if a crime is likely being committed.
Interestingly, driving infractions are mostly noncriminal.
Corporations are giant responsibility diffusion machines and more often than not they stumble into illegal activity rather than internally commit to it. Hence, they are not acting intentionally. Also relevant is my assertion that this bumbling illegal behavior also needs better enforcement - it's just civil in nature and not criminal.
> we would remove the requirement of a crime being intentional for corporations
You still have the problem of punishing diffuse guilt. The correct answer is fines. Massive fines, potentially to the point of bankruptcy. We don't like to do that, however, because corporations have many stakeholders who may not deserve punishment, e.g. employees.
No, that's not why "we" don't like to do that, as there's countless way around that problem. They don't like to do that because it hurts the main stakeholders: those holding the reigns, the 0.1%.
There's countless ways around the issue of "average" employees being punished. E.g. hard caps on top employee compensation for X years. Bans on dividends.
Forced stock dilution, now that's a solid one. Create extra shares equivalent to 20% of market cap, given to the government who sells them on the open market.
I'm sure there's holes in these but plenty of smarter people than me who can easily make them watertight.
> countless ways around the issue of "average" employees being punished. E.g. hard caps on top employee compensation for X years. Bans on dividends
How do either of these help an employee of a company that was just poofed?
> there's holes in these but plenty of smarter people than me who can easily make them watertight
No. There aren't. Both the caps you proposed--capping dividends and salary--have known workarounds. Stock buybacks exist because they're more tax efficient than dividends. Health insurance is tied to employment because in WWII the U.S. government capped wages.
There is really one solution to corporate malfeasance: criminaly prosecuting where you have evidence of individual criminality and massive fines in every other case. We bankrupted our automakers without hurting their jobs. That's actually less intrusive than trying to fuck with their capital structure by e.g. banning dividends, which just incentivises leverage.
I agree the correct answer is fines, but I disagree that the government should concern itself with whether or not the company decides to take it out on employees who don't deserve it. It's up to the company to decide how it should be run. As long as the government disincentivizes the actions by making the fines high enough, that is good enough.
> I disagree that the government should concern itself with whether or not the company decides to take it out on employees who don't deserve it
Those employees disagree with you and they vote. Every district has large employers whose employees would, as a voting bloc, flip a primary or even general election.
I honestly don't believe this is the case. I think Americans would largely support increased fines for corporate malfeasance. I think it much more likely that the large fines aren't assessed because those in the position to be fined also as a rule have more influence over the system itself. Though the result is the same in the end I guess.
> Americans would largely support increased fines for corporate malfeasance
Americans do. But every time it comes up, the discussion gets derailed with these ancilliary ideas. Just look at this thread. Fines are old and boring.
> the large fines aren't assessed because those in the position to be fined also as a rule have more influence over the system
There is also the practical matter of the power to levy large fines being, itself, immensely powerful. You don't want to create a fine czar only to lose control of them in a term or two.
You are trying to turn “the corporations are committing crimes” into “the peasants are starving”. I know that this is board of diverse backgrounds, but you have to be very out of touch for that hilarious reversal to be convincing.
> You are trying to turn “the corporations are committing crimes” into “the peasants are starving”
No, I'm pointing out the real limitations on the types of punishments that folks--typically on the left, with good intentions but breathlessly naively--like to propose. Ignoring the board doesn't make you a smarter player.
I'm then pointing out the option that works within those limitations to exact tremendous justice. The option that when it comes up, anyone in its crosshairs will immediately start pointing to hare-brained schemes like a "corporate death penalty" to get out of. Massive. Fines.
(For those who prefer jail time to fines, do you really thing Bytedance's CZ would trade his 6 months in jail for the tens of billions he's personally walked away with?)
I have been thinking. Maybe corporate fines should work like civil forfeiture. You do not attack the corporation, you attack the shares. You fine individual shares. And fines could be larger than value of the share. Next time it is sold the sale price goes toward the fine. And so does any dividend paid.
> You do not attack the corporation, you attack the shares. You fine individual shares. And fines could be larger than value of the share.
You're again reinventing corporate fines in a way that makes them problematic. You've not only dissolved limited liability, which makes investing in equities a rich man's game, you're proposing going after tens if not hundres of millions of Americans if a single Fortune 500 breaks a law. That's mechanically impossible.
> Next time it is sold the sale price goes toward the fine. And so does any dividend paid.
Poor people pay the fine. Rich borrow against their shares.
None of these problems exist with massive fines. None of them add anything, procedurraly or punitively, over massive fines. The idea that shareholders are going to do legal scrutiny when many professional investors barely read public filings is laughable. Re-inventing fines is rolling your own legal system when we have centuries of good law to rely on deriving from corporations suing each other.
That or sharply raise the severity of lesser offenses if the perpetrator benefits financially from negligence with potential penalties including (a) corporate death penalty (revocation of charter) (b) nationalization.
Isn't that already the case? For instance Wells Fargo was fined $185M for fraudulently opening accounts customers didn't want[1]. Wells fargo (ie. management) weren't scheming to fraudulently open accounts. They only set aggressive sales goals, and that caused some employees to go rogue and commit fraud themselves.
I'm skeptical that the intentions of the Wells Fargo executives were pure and white as the driven snow.
The incentives align to encourage executives to commit crimes in service of short-term gains — even in the extreme case of Wells Fargo, Carrie Tolstedt and John Stumpf have both avoided prison time and ended up money ahead to the tune of tens of millions of dollars, even after clawbacks and fines.
Not only shouldn't intent matter, we should assume the worst. Whether assuming the worst is a workable enforcement regime, I don't know — but it most accurately models a reality where the most rational behavior for executives is indifference to the law.
The point isn't that wells fargo management didn't scheme to intentionally defraud customers, it's that the government was able to punish wells fargo for defrauding customers without having to prove they intentionally schemed to do so.
I'll disagree with the point that corporate crimes aren't intentional, they most certainly can be. There are plenty of examples of companies deciding that it's more profitable to "do crime" and just pay the fine if caught. Danske Bank famously have a post in their budget to pay fines for breaking banking laws.
The problem is to prove that something is done intentional, on a "corporate level", whatever that means in the given case. Imagine having a law where breaking it would mean that the business have to shutdown. A competitor could pay off someone inside the company to break the law deliberately to have the legal system remove competition.
This is a bullshit argument that people in charge of these companies make. How do you know the "thief" that stole merchandise from a store wasn't going to come back to pay for it in an hour? You don't... you just assume the worst, which should be the case for corporations.
> That's because most crimes "individuals" do are straightforwardly illegal and easy to prosecute, whereas the "crime if a corporation does it" are not. I
Yes, but why are individual crimes easy to prosecute and corporate crimes not. These are not things that just popped into being like a thunderstorm. They are a part of an economic and social system that makes things in such way.
The GP did not mean "individual crimes". The meaning was: "most crimes that an individual will commit turn out to be easy to prosecute".
I.e., shoplifter steals candy bar, surveillance camera has clear view of the shoplifters face, and of the theft, and security camera in parking lot gets license plate of car they drive away in. Easy conviction for prosecutor, as there little question of who committed nor of what crime was committed.
Contrast that with the GP's example "business type" crime. To prove the "business" committed a crime, they have to find a way to prove the business, when buying the truckload of candy bars, at the time of the purchase, intentionally never intended to pay back the loan taken out to buy the truckload. Proving intent (i.e., effectively "mind-reading") is way more difficult than proving a crime happened in the "shoplifter" example above. There's no security camera footage recording the "intent" of the business when it purchased the truckload of candy bars.
> They are a part of an economic and social system that makes things in such way.
It’s difficult to prove intent but we make that necessary to prove when it doesn’t have to be. It could be that negligence is enough for it to be a crime.
The difficulty with corporations is that demonstrating anything about their behavior at all (negligence, intent, ignorance, malice, stupidity...) requires doing so for a corporate body, in the sense of that word that refers to a thing visibly composed of many other distinct things.
What does a corporation want? What does that question even mean? Was a corporation negligent? Does that refer to its officers? Its employees? Specific employees? A written plan?
It's not that hard to come up with a definition of what you mean by a corporation for the purposes of defining a specific type of behavior. For example, you may regard negligence as being a property of the board, exhibited by the decisions the board makes. However, any given definition likely misses cases where a reasonable person would still tend to feel that "the corporation was negligent".
This doesn't come from the for-profit aspects of a corporation, or its existence as part of a capitalist economy. It comes from the aggregate nature of a corporation, and talking about any sort of intent-ful behavior in the context of an aggregate is challenging.
For lots of problems the boring answer is: because there is no easy solution. For me as a software developer, I can imagine a lawyer asking "but why are there so many bugs in applications?".
Would we be able to have a world in which there are almost no bugs? Yes, definitely. Would that be a better world?... I tend to say no. Because we trade more bugs for faster development. Because not all bugs are critical. Because some requirements are not completely consistent. And other reasons.
I imagine it's the same with the law. That is not to say there are no improvements to be made, but unless multiple people with lots of experience in the field come and say "this would be better with no side effects" I would be cautious.
> They are a part of an economic and social system that makes things in such way
If you're trying to imply such crimes are hard to prosecute because The Powers That Be™ deliberately made it that, how does that explain the difficulty in prosecuting long firm fraud (and other white collar crimes)? You can argue that price fixing being hard to prosecute helps "corporate America" or whatever, but basically everyone is united against long firm fraud. Yet, it's hard to prosecute. Why is that?
The thing to look for would be the way that making long firm fraud easy to prosecute would lead to companies being accountable for things they don’t want to be accountable for.
Like what? Moreover, what does this hold for public policy? Should we bring back debtor's prisons? That would be the obvious solution to long firm fraud.
>I’m not arguing about debtors prisons? I’m not sure why you’ve focused on it
Because that's seemingly what you were asking about? If not clarify what you originally meant rather than beating around the bush then being surprised when people aren't focusing on the things you want.
>>>Like what? Moreover, what does this hold for public policy? Should we bring back debtor's prisons? That would be the obvious solution to long firm fraud.
>>I’m not an expert, but the way you wrote your comment seemed to be discounting this possibility for no discernible reason
>Debtor's prisons were widely considered to be cruel, which is why they were abolished basically everywhere in the developed world.
At least a portion of this question from personal opinion goes towards how "united" the general "everyone" is against fraud.
The idea is similar to Tragedy of the Commons issues. The collective community, or aggregate view is "fraud bad", yet the individual, provided opportunity and anonymity, acts in the their own self interest, especially where punishment is viewed as difficult or low plausibility.
Similar issues occur with the general concept of honesty, and views of social honesty. Surveyed, personal belief is that most respondents would state that other humans should reply honestly, with accurate information. However, many, in personal action and isolated opportunities are quite willing to embellish, neglect to correct a mistake, or outright lie.
Neglecting to correct a mistake is one of the most difficult, and shows up quite frequently in markets. With the markets often congratulating recipients for taking advantage of fools who priced something "wrong." Lots of various rationalizations that then get used. "Its their own fault", "they won't notice the difference", "I'm just more clever", "we deserve it because of our status", ect... Usually, seems more frequent the further away, the less personal, and the more abstract the lie or theft. Much like the article title. Office Space did this joke a long time ago.
Peter: Ah no, you don't understand. It's very complicated. It's, uh, it's aggregate, so I'm talking about fractions of a penny here. And over time they add up to a lot.
Joanna: Oh okay. So you're gonna be making a lot of money, right?
Peter: Yeah.
Joanna: Right. It's not yours?
Peter: Well it becomes ours.
Joanna: How is that not stealing?
Mileage may vary on the comparison, yet I found similarities with a lot of entertainment media, that eventually made me pull away. Personal belief is most respondents are opposed to their own suffering and torture, yet quite happy to read / watch media that often amounts to systematic character torture. Laugh happily eating popcorn while miserable people on screen suffer, yet would not want to be transposed into the same situations. It's ok, its abstract, and not especially personal. It's just entertainment.
That's like saying "you can tell this is an Aspen by the way it is". The idea is that we should have control over those laws dude. We didn't just spawn in a video game and are forced to deal with it. "Cause that's what Dad says" isn't how it's supposed to be.
> That's because most crimes "individuals" do are straightforwardly illegal and easy to prosecute, whereas the "crime if a corporation does it" are not.
That's part of the point and problem because it is by design. Rich people and corporations like treating their problems as so complex as to be completely intractable. "How do you tax me when I don't have income?!" "How can I be responsible for a system of decisions?!" Etc. Rich people and corporations want nothing but upsides, and they have designed the system to work this way.
A great example of this is Steve Cohen, who got away with insider trading for years. https://www.youtube.com/watch?v=1szayJV505M. You're telling me that a small business owner whose direct reports repeatedly commit and are convicted of fraud would just be able to walk away? Yea, right. In Cohen's case, he just walked away and bought a sports team.
Sure - then don't let them get big enough that they start to affect public at large. Name and shame the company, not the individuals. Let the public and market decide if such a company lives or dies. Right now, we are letting them get big enough that they are turning back and are eating us.
That's because most crimes "individuals" do are straightforwardly illegal and easy to prosecute, whereas the "crime if a corporation does it" are not. It's not any different than say, simple property crimes (eg. stealing or vandalism) vs white collar crimes, both of which can be perpetrated by individuals but the latter are far harder to prosecute. Stealing a candy bar is an open and shut case, especially with surveillance footage. A long firm fraud[1] is far harder to prosecute. If you buy a truckload of candy bars on credit, fail to repay the vendor, and declare bankruptcy, prosecutors are going to have a hard time prosecuting the case. Having bad business acumen isn't a crime, so on the surface nothing illegal has happened. To prove wrongdoing they must prove that you intentionally acquired goods on credit without intending to pay it back, which is far harder.
[1] https://en.wikipedia.org/wiki/Long_firm_fraud