Freeway chases, shootings, floods, fires, famous people acting stupid. We’ve seen it a thousand times, but when 1001 comes around, we are still excited. We can’t keep our eyes off this stuff. Where are we? We are in the world of “Newsertainment,” the real reality TV. Oh, and one more item for the list: corporate executives doing the perp walk.
Even in big super-profitable companies, employees commit crimes for company profits. Why would they do that? Isn’t the company making enough money already? Dumb question. There is no such thing as enough.
Bribes. Phony accounting. Furtive disposal of toxic waste. Ignoring workplace safety. Insider trading. Greenwashing. Lying to congress. Threatening whistle-blowers. Just a few of many.
Those caught, at least sometimes, are charged and prosecuted. If due process finds them guilty, punishment follows. This legal mechanism we all understand and accept: the alleged bad guys should have their day in court, and if the evidence is there, pay the price.
But that’s only step one. Once the employee is convicted, we must also punish the company. This should occur even if the actions of the individual are taken on his own initiative, and not directed by a superior within the company or by any other employee or agent of the company.
Such punishment should occur even if the offending employee is not an executive or a decision-maker within the company. Sanctions should be applied even if the original perpetrator of the crime is an entry- level employee or a new-hire.
Punishing the individual deters him from further criminality, the intended effect. But if punishment does not reach beyond individuals, the employer has no incentive to hire better people.
We might compare two competing companies. If company A guards against criminal employee behavior and its competitor B does not, then in the absence of penalties, company B with the looser standards has a competitive advantage.
Company B is now more likely to gain market share over time, with corresponding greater odds of survival in the corporate arena. Although the offending employee may be gone, company B has no reason to hire an honest replacement. One evildoer can thus easily replace another.
Note it is not necessary for a personnel department to say “let’s hire some crooks, because we know we can get away with it”. Human resources staff would be justly offended by this suggestion. Rather it is a matter of what does not occur. If there is no penalty for hiring people likely to commit a crime, then there is no incentive to apply safeguards making their hiring less likely.
To disrupt this pattern, therefore, when employees break the law for the sake of the corporation, the company must also be penalized. Automatically.
Can we do this in the current era of corporate privilege? No, we cannot. Corps, though not human, currently enjoy constitutional protection which prevents application of such penalties. The Founders did not intend this.
But in the post-corporate personhood era, which many dedicated citizens are working hard to make a reality, we will gain control over these now unaccountable organizations and pass laws enabling these kinds of penalties. Companies will thereby be incentivized to hire more honest folks.
Corporations are not, and never have been “people.” Once corporate personhood is eliminated, rights that have been mistakenly provided to them will be removed. They will still get due process of course. We are not returning to the wild west. But due process for corporations does not have to be the same as due process for bona-fide human citizens.
Punishment of the employee will then be followed by punishment of the corp. Note that we are not suggesting the reverse: that employees should be automatically penalized for corporate wrongdoing. That would not be possible or desirable whether corporations are considered persons or not.
When the company is held liable, but no individual employee crime can be identified, then no person can or should be punished. Eliminating corporate personhood does not loosen the standards for criminal prosecution of people. Corporations are not people, but people are still people.
When the company is punished, it should hurt. Symbolic punishment is useless. If you could buy yourself out of a murder conviction for pocket change, it wouldn’t be much of a deterrent. The same principle applies here. For crimes of sufficient gravity, therefore, painful punishment will be delivered. Currently, companies are often fined for various infractions, but the amounts are usually small enough to be regarded as incidental business expenses.
For minor crimes, that’s fine. But for the really bad stuff, we will get the company’s attention. Increased fines will be proportional to the company’s prosperity. If two companies (or their employees) commit the same crime, the larger of the two companies will pay the larger fine.
What about equal punishment for equal crimes? We are not abandoning that principle. We are just measuring the severity of punishment in pain instead of dollars. Different size companies will pay different amounts for the same crime, but the pain, or economic suffering they experience will be the same.
Remember the following. In fact, write it on your wall:
If a fine doesn’t tank the stock price, its a slap on the wrist.
Sometimes a company is fined, and the stock price actually rises. It is a stock-holder sigh of relief that the problem is over. This should never happen.
There are cases, however, when the behavior of the company is so egregious that no fine is sufficient, and the company must be dissolved. Coming up: “The Execution of Corporations.”