I'm of the opinion that there should be a corporate death penalty (though I oppose the death penalty in criminal cases). There's some situations that are so ethically indefensible, wherein a corporation can cause incredible harm over a long period of time, that the only just outcome is for the company to be destroyed. The people responsible are shielded from any real consequence (how many people at VW knew about this, and how many are going to jail over it?). This is not a minor squabble over regulations; this is a conscious decision, involving many executives within the company, to willfully cause environmental destruction that directly costs human lives and health.
This is one of those cases where the corporate death penalty is the only just outcome I can think of.
$15 billion looks like a large sum; and maybe it's even enough to deter car companies from doing something similar in the future. Maybe. VW is worth $73 billion, and they generated a lot of money on the strength of their diesel campaigns. Amortized over the many years that they were shipping out these cars, it begins to look like a cost of doing business, rather than a massively punitive expense.
Such a "Coorporate death penalty" is likely counterproductive in several ways. On one hand you could just open a new company under a similar name and continue buisiness as usual, on the the other hand, what happens to the workers employed by VW? It would kill entire cities in many places of the world. For example, Wolfsburg, the VW headquarter city has a population of ~100 000, the factory alone employs 57,000 people, ignoring administration and managment for VW in Wolfsburg. The shareholders would still be richer and don't have to fear punishment, the managers are still well networked enough to quickly get a new job at Siemens or wherever and the only people suffering at the end are the guys putting the seats into the chassis who had nothing to do with the whole situation.
Also, what you are ignoring is that the US can't just come along and close a transnational or foreign company. Also, what about subsidaries? Does condé nast get closed if reddit violates the law? Does GM get closed if Opel cheats?
All of those things have direct comparisons to the individual death penalty or other pre-existing laws.
A human could be put to death even if they have a family to support, so the workers argument is settled. The only issue is the matter of scale, but the death penalty is pretty rare to begin with, and I would expect a corporate death penalty have even stricter requirements.
They don't have to close a transnational, they can just force them to stop doing business in the country. They can close their US operations and ban their imports. We already have import bans on companies, countries, and products.
For subsidiaries, it would depends on how far up the chain the crime went. If Opel committed the crime but GM didn't know, Opel dies. If GM knew, GM dies. You could likely even spin off the "innocent" subsidiaries. If a husband commits a crime and the wife was not involved, the wife doesn't go to jail. If they both did it but their children were not involved, the children don't go to jail, they go to live with another set of parents.
You're not wrong, but this is also the same argument your parent post was making, namely that it will have a large scale negative effect on many regions.
I feel it's a bit strange to argue for corporate death penalty by comparing it to individual death penalty, given how controversial the individual death penalty is.
It should be, they both should be very controversial. But it easier to argue for a corporate death penalty than it is for a corporate "life in prison" because both of those things look exactly the same.
In this case, VW claims they didn't know either, it was those pesky employees that put it in there "for some reason", and any evidence to the contrary probably does not exist anymore if there was any. So VW would be innocent in your case?
>>The shareholders would still be richer and don't have to fear punishment
This is actually an interesting thought. What if they did have to fear punishment? Perhaps in the form of having a percentage of the settlement/regulatory fees passed to them via their brokerage accounts. A mechanism like this would mean that potentially shady/unethical corporate behavior would be reflected much more strongly in the stock price, since holding onto those stocks would carry risks beyond just the stock price temporarily going down during lawsuits.
It would also put immense pressure on corporations to not do shady shit.
Do you mean in amounts that could exceed the value of their shares? If so, then you're talking about changing a fundamental of corporations: limited liability. If you're not, then I don't see any difference in impact whether the corporation pays or the stockholders pay.
Limited liability doesn't protect you from the value of a stock being wiped out. Lehman Brothers was a limited liability corporation but anyone holding their stock during the bankruptcy was still stuck with worthless stock or debt that they couldn't recover in the proceedings. The current fine mechanisms are inadequate and can't properly realign incentives against breaking laws that carry civil penalties, especially in a case as blatant as VW's cheating.
Perhaps increase fees/taxes on "toxic" shares in companies that have broken significant laws with intent or maybe force these companies to settle by issuing diluting stock that goes to agencies responsible for cleaning up the mess. Or even tax revenue instead of profit on these toxic shares which would create a huge incentive, especially for executives and large stock holders.
The point is to tweak and realign incentives, it doesn't have to be passing on extreme financial liability to shareholders. Most investors can't take a huge hit on their portfolio like a company with tens or hundreds of billions of dollars of revenue can.
This is precisely what the fine is doing. Fifteen billion dollars of the market capitalization was wiped out, directly impacting shareholders. The stock has lost about 40% of its value since news of scandal broke.
You can argue it should be worse, but we don't need some special new mechanism. The fine can be anywhere from $1 to the the market capitalization+1 and the effects would then range from a slap on the wrist to bankruptcy and the loss of all equity in the company for shareholders.
>>>>The shareholders would still be richer and don't have to fear punishment
>>This is actually an interesting thought. What if they did have to fear punishment?
What about people who may have invested in a fund that bought shares? Should the fund managers fear punishment? Should the people that bought into the fund be punished?
This is where the "punishment for those who benefit" gets complicated. It's hard to work out the people that should NOT be punished.
> It would kill entire cities in many places of the world. For example, Wolfsburg, the VW headquarter city has a population of ~100 000, the factory alone employs 57,000 people, ignoring administration and managment for VW in Wolfsburg.
Shutting down a company doesn't mean you destroy all of its assets. Factories or entire divisions could continue to run under new ownership. Just treat it as a Chapter 7 bankruptcy where the company owes the government more than the total of its assets.
> The shareholders would still be richer and don't have to fear punishment
Shareholders would lose out to the maximum extent allowed without piercing the corporate veil since their ownership stake in VW would become worthless.
> Also, what you are ignoring is that the US can't just come along and close a transnational or foreign company.
No, but they could close down the US subsidiary (Volkswagen Group of America) and take all assets that are in the US.
> Also, what about subsidaries? Does condé nast get closed if reddit violates the law? Does GM get closed if Opel cheats?
Easy, just sell them for whatever you can get for them.
So, corporations can just open (shell) subsidiaries to do their shady stuff for them and then the subsidiaries get declared bankrupt, which means the actual company survives and profits?
Just a thought on this - presumably some workers knew what the device did and others must have suspected. "Just following orders" is not widely seen as OK.
It was not even a device, it was a modified program. I highly doubt more than a dozen actual workers knew of it. How much management knew of it is hard to say.
I'm of the opinion we'd see far less corporate shenanigans if we were more willing to pierce the corporate veil and hold individuals accountable for their actions and orders.
Involuntary manslaughter and criminal negligence already have plenty of case law around them. Yes, you can be prosecuted for being a menace to society whether you meant to or not.
In addition, everyone who got screwed by buying a VW is now doubly screwed when they're trying to find a shop to perform routine maintenance, as the factory repair shops have apparently been put out of business.
While we're on the topic, can we sentence BP to death?
They destroyed the livelihoods of thousands, if not millions of innocent people, and thoroughly polluted huge swaths of the Gulf of Mexico coastline (and a bit of the Atlantic coast, as well). They caused the biggest single environmental disaster in United States history, and it was due to negligence.
If this wasn't an accident, but rather a deliberate attack "in the name of Islam", we would have gone back into Iraq. It would have been 9/11 all over again, but with far more actual damage caused. But since they're a company, they get a slap on the wrist and keep on going. (I'm exaggerating, I know they paid a lot, but they're still more than alive and kicking. I just wish their stock tanked more after the Brexit vote.)
If you want to make an example of a company with a clear-cut case, you can't really do better than this. They committed mass destruction of the Southern coastline. Seriously, if this was intentional it would be a war crime.
Nonono, don't compare anything to terrorism please: We have a far to belligerous action on terrorism, while we don't do much against other causes of death. Smoking still causes an order or magnitude more deaths of innocents than terrorism (non-smokers) and the people still defend it's ok to smoke on the sidewalk (and defend it's ok to kill Muslims without trial as long as it's a military action). Responses to terrorism are disproportionate.
That's kind of like Godwin's law. It's worth comparing things to the Nazis to reveal how little we despise other bad actions. But we have unreasonably strong negative feelings about both Nazis and terrorism, so it's not really helpful.
I couldn't agree more. I tend not to be a conscientious shopper but will very happily go out of my way to avoid spending a single penny with BP.
Utter scumbags - they should never have been let off the hook the way they were after that disaster. I fully expected the company to be on its knees at the very least but nope - they're trading happily ever after.
I know people who work for BP too. Sorry you took my comment to heart but obviously I'm not beating up all of those 80,000 individuals.
However, BP as a legal entity and a subset of its employees fucked up, causing untold damage to the world we live in. There are people who work for BP who I would hold accountable, and those people do not deserve to have my hard earned cash spent on their company.
The argument could also be made that a random person on the internet passing judgement on other people without knowing anything about them isn't a particularly right thing to do.
That's a sadly America-centric view of the world. Shell's spills in the Niger Delta are just as bad or worse and nobody cares because it's some weird foreign country that doesn't appear in their news:
The total volume of oil spilt was on the same order of magnitude - about half that at Deep Water Horizon. But the environmental and health problems are perhaps worse. It's close to shore and there's hardly any cleanup work, compensation or health protection.
I agree that not listing every oil spill isn't required to make a view American centric. That's not the issue though, it's a straw man. What's American centric is to focus on America even when similar things exist elsewhere.
You misunderstand what Americentrism is. It is about the presumption of US morals and standards when judging other countries and cultures. Some would say that your use of the word "America" to describe the United States is itself Americentrism.
>> "...and maybe it's even enough to deter car companies from doing something similar in the future..."
As anyone who's ever been near a major automaker's test engineering lab knows, ~all [0] of VW's competition is doing something similar, to varying degrees of sophistication. I remain perplexed by the pitchforks, outrage, and witch-hunt mentality displayed towards VW alone.
I am assuming you meant this as a figure of speech, but it is a very unfortunate one.
As for your edit:
I am assuming that the downvotes are because you express yourself in a way that doesn't help at all. The statistic being what they are you are either unware of the statistical insignificance of that number or you are but you are inflating it to make it seem more important than it really is.
Yes, statistically speaking there may be 59 'premature deaths', but that does not quantify just how premature those deaths were, nor does it acknowledge that transportation carries an enormous cost in lives over and beyond that tiny little bit extra because of these emissions.
Yes, VW did a really bad thing, yes, they should be punished. But the cost of transportation already being what it is the punishment seems to be roughly in line with the extent of the crime.
If you're really concerned about this you should campaign for us all to stop driving, that will really move the needle.
"If you're really concerned about this you should campaign for us all to stop driving, that will really move the needle."
I do that, too, to the best of my ability. And, whenever given the chance I argue for self-driving cars, too. Yes, the entire auto industry (and our addiction to it as a society) is terrible.
But, my point is that even the mild environmental and health regulations we have were defeated for years for VW profits, all while they advertised "clean diesel" and went head to head in the market with technologies that are actually superior and safer (unless those companies are cheating, too), claiming to be better than them by using falsified data.
My point is really that when a company in an industry that already kills on an unprecedented scale decides to willfully harm even more because they'll profit, there should be truly dire consequences. BP is another great example of a company that consistently made decisions that knowingly endangered entire communities over a long period of time. Their only regret seems to be getting caught.
Transportation is a fact of life, no amount of wishing is going to make it go away and you'd not be able to make a world without it work at the level that we're at currently. Of course we can do better, but that's likely going to be marginal rather than some kind of revolutionary change.
VW messed up, sure. I've been pretty explicit about my criticism of what they've done, and I would happily see Winterkorn serve jailtime (fat chance of that ever happening).
But I think you are magnifying the damage done way out of proportion.
FWIW, 15B for 59 premature deaths is a very large premium compared to what we, the western nations typically think a life in some Oil rich country is worth, and those people too are indirect victims of our transportation.
Proportionality is what it is all about and I really miss that element in your comments here.
The extent to which it cost human lives is a function of the arbitrary emission standards that governments have set. Those standards are obviously chosen as a trade-off between too many harmful consequences of pollution and being too expensive for car makers to comply with. So it's not as clear as "VW killed people" but more like "VW killed more people than we expected them to." The standards themselves still allow some harmful emissions to be released. If had more relaxed standards then all the extra harm caused by the VW cheating would simply evaporate.
But, we have the standards we have (which are already weaker than they need to be to avert a climate and air quality disaster going forward). If one company is permitted to fake results, it means all companies will have to fake results to compete.
My argument is that cheating our already lax air quality and environmental standards should be a tremendous deal. It shouldn't be something that can be swept under the rug or written off as a cost of doing business.
Under your theory of the crime it was some form of negligent homicide? And you want to hold all the receptionists accountable (lose of job) because they negligently did/failed to do what exactly?
Of course I don't want a receptionist who knew nothing of the crime to lose their job; but, the same scenario can be created for any person who goes to jail. No one wants a baby to grow up without their mother or father, but sometimes people commit crimes, and are punished with jail time, leading to suffering of their whole family. It's not good (and, I think there's a lot to be said for ending our carceral focused criminal justice system), but we as a society do seem to agree that sometimes the good of society as a whole trumps that of an individual or group.
I'm not suggesting that imposing a "death penalty" on a corporation would be a nice thing, or that it would make employees of the corporation happy. I'm not even saying it wouldn't have negative consequences for more than just those directly employed by the company. But, I am saying that when someone commits a truly heinous crime, our society removes them from society by force. Volkswagen has committed a truly heinous crime. If I had my druthers, the CEO and a wide variety of other executives who knew what was going on would be spending their days in a lonely grey room contemplating what they've done. That'd be a good start toward justice.
But, we also have to address the company as a whole. It was not one person who made this decision, and it's probably literally impossible to know who knew and who did what with any precision. Pretty much the entire company is suspect. We can't expect internal processes to correct this kind of malfeasance...they had years to do so, and chose profit over human lives.
Finally: Many corporations have died, through all manner of faults over the years...often, they've failed due to inefficiencies, the Innovator's Dilemma, etc. Very few companies have failed because they killed people. But, it is not the end of the world when a company, even a very large one, dies. It makes room in the market for new competitors. And, in this case, a shake up in the auto industry is a great thing. We need new auto companies that don't willingly trade human and environmental health for greater profits. While VW exists, and wields political power, those new companies (or old companies that want to do right by the world) are competing with a company shown to have no scruples. Ever tried to compete in a business that has high health and safety costs with a competitor that ignores health and safety regulations? That's a part of why Chinese manufacturing destroyed American manufacturing industries.
Someone else mentioned Enron in another comment. I think it's a useful example. The fallout from Enron was hard for a lot of people; and, it was painful across several industries for a little while. But, I believe we're better for killing Enron (and Arthur Andersen). And, I believe the world would be better off, in the long run, by killing VW.
I'm curious, are you a native English speaker? When you read my comment, do you genuinely believe I'm suggesting killing people (despite my explicitly saying in the previous comment that I oppose the death penalty for people)?
I don't think you're alone in interpreting my comment that way, but I'm not sure I understand why it's been so misinterpreted. I'd like to do better in the future (without giving up entirely on humor, though perhaps I shouldn't quit my day job).
Your rationale is appreciated but it is about the tone of the discourse. The sentence just makes one think about readers comments on some newspaper sites I guess every country has.
You're getting down-voted because you're asking for company executives, who are human beings, to be killed for something that hasn't quite proven out to be a "crime" yet.
Most reasonable people find that repulsive.
While we're at it, why don't we kill everyone who every bought a VW? Surely they are partly culpable.
"You're getting down-voted because you're asking for company executives, who are human beings, to be killed for something that hasn't quite proven out to be a "crime" yet."
Did you really interpret it that way? I'm speaking of companies, not people. Apologies for not being clear. I am speaking of a "corporate death penalty"; one for companies. The person I was replying to said other car companies are doing the same thing, and I would hope they would face consequences as well, if so.
I explicitly stated in my first comment that I oppose the death penalty for humans in criminal cases.
Can you make a public policy case for a "death penalty" for multi-billion-dollar companies in mainstream industries? Who does that help? Who does it harm? Is it the most effective way to achieve the goal of the policy?
Since we have neither a corporate death penalty nor adequate criminal statutes for malfeasance, how is the "corporate death penalty" superior than laws that make it more straightforward to hold managers and directors accountable criminally? People who are willing to commit crimes to enrich themselves using companies are unlikely to be especially motivated by the well-being of the company, its employees, or shareholders.
The investors lose. The companies are liquidated and the assets bought by new investors. This actually happened to GM, to a degree. The workers don't have to lose out.
Realistically speaking, it's far more likely that in an established industry like autos the cheating company will simply beat their competitors at market because they can sell cheaper, spend less on research, etc.
It's nice to imagine that maybe it would breed "super companies" that are tougher, smarter, and more efficient because they thought they had to be to compete. But, there aren't any order-of-magnitude wins to be had in automobile technology. There are no lone geniuses who figure out how to eke out 10% more efficiency with this one weird (but patentable) trick. It takes research over a long period time to make even modest gains, and a cheater in the market bleeds the honest companies of resources.
And, to go further: Because Volkswagen made these claims about diesel tech, other honest companies may have been wasting resources trying to match the dishonest VW claims...when there are actual better techs they could have been pursuing. This may have led to even less gains over the time VW were faking data.
Often shareholders have a degree of culpability. Arms companies and tobacco are examples where in my view shareholders are using their money to promote harm. Automakers fall somewhere on the harm - good spectrum and I'd mostly not put them down as a net good. Fossil fuel emissions would be be the key reason. Shareholders have a choice where to put their money and many (most?) choose high returns over anything else. I'd say punishing this behaviour might be worth considering.
Every time we assess a multi-billion-dollar penalty against a public company, we acknowledge that its shareholders share some culpability.
Do you think shareholders of a company like VW, which includes pretty much everyone with a retirement plan, shoulder _all_ the responsibility? Because that's pretty much what a "corporate death penalty" means.
Sure. I agree! I don't think it's fair for shareholders to reap returns that were derived in part from malfeasance.
The question isn't whether companies (and thus their shareholders) should be penalized for wrongdoing. It's whether shareholders should be zeroed out by a "corporate death penalty". I think it's an interesting question, why we don't have one of those.
I appear to be arguing with someone who has the same viewpoint as me. Perhaps a better summary of my view is that the existing penalty system would be OK if the fines were larger (and this hit shareholders hard enough to incentivise others not to break the law).
I'm more surprised that there are not more corporate "death penalties" meted out. Usually the beneficiaries of bailouts or bankruptcies are the entrenched managers who brought the corporation to where it might be subject to a death penalty.
Whereas if the corporation were liquidated, the assets would be bought up by different corporations and run by different management.
Banks, most of all, are just bags of assets that can be run by other managers who run the same types of assets (otherwise these assets would be illiquid and not need active management) at other banks.
The same goes for airlines: If an airline is a brand + planes (probably leased) and routes, why EVER bail out an airline? Especially a legacy airline when it's assets could be bought by an economically viable new airline?
We don't have corporate death penalties because to a first approximation there are no laws that enable us to do that. To put companies to death, we'd need to pass enabling laws. But those aren't the only new sanctions we can enable in new laws.
It seems to me that we can break down those impacted by sanctions against corporations as follows:
* Officers and directors of the company
* Employees of the company
* Shareholders in the company
* Customers of the company
When we think about how to structure sanctions against a company, we should think about where (a) deterrence will have the most effect and (b) where retribution is most warranted.
How does a "corporate death penalty" apply those effects? It seems to me:
* Officers and directors of the company have a demonstrated track record of harming their employers for personal short-term gain; see, for instance, every stock buyback scandal. Moreover, officers and directors tend to be wealthy and thus more likely to have a professionally or at least competently managed portfolio: they're diversified out of a lot of impact.
* Employees of the company have extremely limited ability to alter strategic decisions made by management, and so aren't useful for deterrence. They also tend not to profit from strategic high-level malfeasance, and so aren't deserving of much retribution. Meanwhile: mergers, spinoffs, and acquisitions are almost invariable dreadful for employees, huge numbers of whom are made redundant, pension obligations scrapped, benefits reduced, and so on.
* Shareholders have virtually no insight into the operation of their holdings. Moreover, vast numbers of shareholders don't even know they hold companies, because they do so through pension plans and mutual funds.
* Customers who, for instance, bought VW cars during this scandal did so in an effort to minimize their impact on the environment; the scandal is that VW lied to them. Not only are they demonstrably incapable of being deterred from future scandals, but it's hard to argue that they've in any way earned warranty confusion, loss of service stations and personnel, and slashed resale values.
Compare that to a new law making this kind of malfeasance a strict-liability felony for officers of the company. Doesn't that make much more sense than a death penalty?
While there are not criminal laws that could compel a liquidation directly, the equivalent could happen by making a restructuring unfeasible through fines, thereby forcing liquidation.
Sure, but the reason that doesn't happen is that you can't fine arbitrarily; companies can dispute them legally, and those cases are murderously expensive to try.
So I'm acknowledging that you could pass laws that make an effective death penalty (through fines or through literally forcing liquidation) a reality, but then asking: why would you want to do that? Aren't there better laws we could pass instead?
"Better laws" that directly target the management responsible for malfeasance could do the job instead of dismantling the corporation out from under that management. But the same lawyers fighting to keep creditors from forcing liquidation are also fighting for the management that hired them, no matter the shades of ethics involved in that. It's a difficult problem. In the case of VW you have suppliers and engineers being told to produce results that are not possible without cheating. And then that eventually becomes part of corporate culture and the cleverness of the cheat gets institutionalized and probably even spreads through the industry as employees move around at various levels and as suppliers sell, on the down-low, the means to cheat.
Group punishment for the actions of a few? Pretty indefensible.
If you think it is defensible perhaps you could explain why it's just that an assembly line worker should lose his livelihood because a few folks implemented this scheme? The worker had no actual or theoretical knowledge of the "crime". Further, the worker had no way of even spotting that a "crime" was taking place.
Companies die every day; almost never because of criminal behavior on the part of the company. People lose their jobs over it. Why not defend those companies from failing?
Would you suggest that Enron should have continued to exist because employees losing their jobs is a bad thing? Do you think we, as a society, would be better or worse off if bad companies, like Enron (and Volkswagen), are allowed to continue to exist? There is a certain necessary destruction in the free market. There's all sorts of things that the market corrects for (by killing off weak companies); why shouldn't society also impose some corrections based on some basic ethical factors?
Further, society does impose corrections on small companies; if my small company killed 59 people by hiding facts about my products, I'd pretty much certainly go to jail (as it should be). It is only very large corporations, and their executives, that are effectively immune to these kinds of corrections; even this, heralded as a huge penalty, is unlikely to impede VW significantly going forward.
What's so bad about opening up a place in the market for new auto makers, who don't cheat the system for profit? We are talking about criminal activity here over a period of years, not mere "irregularities".
Perhaps re-read my comment. I was not advocating a
"free market" solution to this particular problem, I was pointing out that were this a market failure instead of an ethical failure, no one would be arguing VW needs to continue to exist because "jobs".
We do not have a perfectly "free market" (and that's OK), though markets are nice things, and in some cases I am in agreement with wanting more free markets. But, do you sincerely believe the right answer to a company killing people is a boycott?
Enron was probably the last large example of a "corporate death penalty". Since then, in the US there has been a doctrine of minimizing "collateral consequences". Consequently there has been less criminal prosecution and more reliance on financial penalties.
Fun fact: I bought my first Aeron chair from the Arthur Andersen bankruptcy auction. I would have bought a shredder, too, but my dad recommended against it, saying, "Those shredders are worn out, son."
So, my question is: Would we be better off with Enron still existing, including the same executive team (VW executive team is still largely unchanged)? Would we be better off with a more aggressive response to the banking crisis a few years ago?
I believe ending criminal companies probably makes room for better companies, and in the long run makes our economy and our society healthier. I may be wrong; there are certainly negative impacts. But, I feel like the cost of looking the other way, or a slap on the wrist, is too high.
So, my question is: Would we be better off with Enron still existing
There are thousands -- millions? -- of innocent people who
would definitely have been better off had Enron survived. You could be right about the long term, but you're playing pretty fast and loose with other people's money.
"you're playing pretty fast and loose with other people's money"
I'd say Enron was playing fast and loose with other people's money; likewise VW was, too. Why blame me for the malfeasance of the executives at these companies, just because I think they shouldn't be allowed to do it again? The rolling blackouts Enron caused likely led to deaths (hospitals need power to keep machines and people running, refrigerators need power to prevent food-borne illnesses, etc.). It should be a really big deal when a company makes an intentional decision to harm people.
So where are the criminal prosecutions? My argument is that very large corporations wield so much power, and have disbursed responsibility so widely, that no one faces any significant consequences for making these decisions. I think maybe what I haven't really made clear is that I think we (we, as in, governments, nations, communities) don't seem to be equipped with legal tools needed to prosecute people within corporations, because responsibility for actions becomes this wisp of an idea that sort of floats around inside a company but never really sticks to anyone. And, when it does stick to someone, it sticks to low-level workers; trickle-down economics for blame.
My suggestion was barely thought out; an expression of frustration that companies like BP, and Shell, and VW will keep ticking after committing horrible crimes. And, more importantly perhaps, the C-levels at those companies still have jobs in those companies, in most cases. Blame trickled down, profits trickled up. The incentives remain for companies to skirt the law and put communities at risk.
Maybe there's some other way to hold executives accountable. I don't think this settlement has done that.
I regard it as a good thing that BP, and Shell, and VW (and so on) keep ticking along! People made bad decisions and should be punished. Companies cannot make decisions. Only people can.
There's no point in burning down the village because the mayor's corrupt. The town still has value!
I am constantly amazed at what gets written in the comments section of a site ostensibly focussed on startup companies and the tech industry. Quite frankly it can often be scary to see what people come up with in their outrageous outrage.
I find all calls to use the power of the state to destroy commerce unsettling. Seems to me the system, imperfect as it is, is functioning well enough in this case.
Certainly there should always be a constant review of regulation in light of events like this, but to confiscate and destroy an entire company for this type of cheat would be chilling for future investment and company formation. That directly leads to a lower level of living for everyone, far worse than the relatively minor increase in emissions in this case.
There seems to be an attitude around that corporations are some evil thing, and that is not healthy at all.
Not yours specifically, but yes, I find the 'herd stupidity' as displayed in your post and the many like it to be the single most scary/worrying trend and greatest threat to a prosperous, peaceful future.
One post like yours, I shrug my shoulders and/or roll my eyes and move on. A continuous barrage of populist drivel like it, anywhere 'the average voter' gets a chance to express their 'opinion' on anything really - I worry what goes through the minds of all those people I see out there walking through the city when I look out my window, and how stable they really are; and if that collective instability might culminate into a real societal upheaval given the right circumstances.
I think it's interesting that you consider my drivel "populist". I don't think I'm a populist, in the general case. And, I'm not sure I would put this in that category, either.
I'm not, at all, anti-corporation. I'm anti-criminal behavior. How is wanting the rule of law to apply equally a "populist" notion?
"Equality" is, admittedly, pretty tricky when talking about a fictional construct. But, when a company kills people we can't put the company in prison to protect people from it and to dissuade other companies from doing similar things. So, I think there should be other tools that can strip away the corporate veil that executives are hiding behind and stop the criminal company from being in a position to cause further harm.
Here's my "free market" question for you: Do you want to be in an industry where you're competing with companies that cheat on health and safety standards? They have lower compliance costs because they're cheating. What do you do? How do you deal with that? Do you want to have to cheat, break the law, and lie to customers, in order to compete effectively with them?
Dunno about the OP, but I do. I look at some comments and actually get the chills imagining what the poster would come up with, if he or she got hands on the reigns of power.
Personally, I think what was being proposed would be an awful idea, but not so odious that merely hearing idle conversation about it is disturbing. I mainly save that category for ideas with racist undertones and the likes. I suppose that's because in most such debates, an appropriate or at least plausible approach exists along similar lines to what's being discussed, albeit less extreme - in this case, what actually happened, fining a company over ten billion dollars, could be seen as a less extreme version of a corporate death penalty, and there are points in between that are at least not completely unthinkable - so the basic emotions behind the debate are a reasonable framework. Whereas with ideology motivated by prejudice, I think usually you should essentially throw the whole thing away and start fresh, because the premise is fundamentally irrational.
Death penalty sort of happened for Tokyo Electric after the earthquake. Turns out Tokyo Electric had a chance to prevent the disaster but didn't and things got out of control. The company wasn't able to pay fines and the government couldn't simply shut down the company that supplied 30% of the nation's electricity. So all of the executives were fired and the company went under government control.
How is this diesel-scandal the fault of the whole company and not of a few people who actively engaged in wrongdoings?!
Isn't this the whole reason for the invention of limited companies in the first place? It's considered a progress in human society to have developed limited liability laws. Besides, the good thing about not killing juristic persons is also true for not killing natural persons - it's considered an improvement by and large if a society gets rid of the medieval practice of executing prisoners.
According to Google finance, its 56 billion, and probably less after this news. The US branch is probably worth 10% of that, or 5.6 billion. That way, the 15 billion are basically a three-fold death penalty.
I don't think I see the comparison between what I've suggested (though I didn't really give enough detail to infer any real implementation plan for my suggestion, so I can see how there might be room for interpreting my comment in a lot of ways), and what Venezuela did when they socialized some companies and kicked some others out (though I am, by no means, an expert on the Venezuelan economy...perhaps you have a specific corporation in mind that committed some sort of atrocity in Venezuela and was shut down or forced to leave?).
I think I need you to be more specific, is what I'm trying to say.
Yes, I'm aware of the socialization of companies in Venezuala. I just don't understand what that has to do with what I'm suggesting. Were those companies that were socialized killing people, and was that the reason they were socialized? (And, to be clear: I'm not suggesting government ownership of companies.)
No, they weren't killing anyone. They were confiscated, which is what a "corporate death penalty" is. The result was the economy was utterly destroyed.
What do you intend by "corporate death penalty" if not being siezed?
First off, confiscating a company to keep it running at full profit is different from confiscating a company to put it through a shredder and sell off tiny remnants.
More importantly, think about the difference between a serial killer and a single person being executed. Venezuela is the former, while SwellJoe advocates the latter. Your comparison makes about as much sense as "we can't jail anyone, because if we jailed everyone there would be no workers left".
I still don't understand how you're comparing socializing a company to a bankruptcy liquidation of a company. Am I misunderstanding some dimension of this that you're intending?
In one case the government ends up owning and running the company, in the other, the assets are sold off to the highest bidder with the creditors (and in the case of a criminal company like VW, restitution for their victims, which in this case would be VW owners and public health systems, among others) receiving the proceeds.
How is that functionally the same?
And, regardless of that: The single most important element of my suggestion is that VW committed a crime (well, a number of crimes, spread over many years) and caused harm to human lives and health. Unless the Venezualan companies you're talking about were criminal companies causing harm to humans, it is unrelated to this conversation. No one (certainly not me) has suggested a bunch of random major companies should be owned by the government.
"Note you suggested more than just VW, the entire industry."
I see you're not alone in thinking my joking "line them all up against the wall" comment was intended to be taken seriously. Someone said, "everybody's doing it", and I meant to imply, "well, everyone who is doing it should be investigated and punished". I did not mean "everyone who ever sold a car should be put out of business".
I can't blame you for making that assumption, since others have made it, too. So, apologies for not being clear. I have no desire to see every car manufacturer closed down. Only the ones that have committed crimes on a level similar to Volkswagen (or worse, if there are any who've done worse things). In fact, I would like for the honest ones, the ones that are sincerely working on cleaner technology and accurately representing it in the market, to be able to compete in a market free from cheaters like Volkswagen.
If some automakers are cheating, and some are playing fair, the ones playing fair are effectively fighting with one hand tied behind their backs. They're virtually guaranteed to lose market share to the cheaters over time. That's the kind of screwed up market that no honest person wants to compete in.
I agree with you, depending on the implementation.
Many people replying seem to think you are advocating the execution of every man and woman who work for the company. I suspect that's not what you mean.
But how do you execute the entity economically?
To me, the right way to do it would be for the US government to take ownership of all the stock, and for the stock to be resold under a new corporate name. A criminal trial should then take place, with the C-suite officers and board of directors under scrutiny regarding their roles in the decisions, with clemency/immunity given to engineers and laborers for their full and complete testimony.
The only way the behavior changes is if you sanction it with meaningful consequences.
My words were probably poorly chosen; and it was a casual comment, intended to be taken casually, not as a call for a bloody revolution. I thought my disclaimer of being opposed to the actual death penalty for humans was sufficient to alleviate any fear that I actually ever want anyone killed, but the angry response seems to indicate otherwise.
The difference, obviously, is that it's not literal. In a corporate death penalty, no one is dying, everyone can bounce back and have a second chance (or third, or fourth, etc.) at success. With a real death, that's it. The end of consciousness.
I'm sorry, but I find the comparison ludicrous, despite the name.
The employees most likely will recover but the company won't. So there is no bouncing back for the company, it's not getting a second chance if it's discovered that a mistake has been made. So in my opinion the comparison can be made.
I hope that your penalty also applies to other entities such as states. In this case please relate the say 1k deaths caused by Volskwagen to the number of people killed in Afghanistan, Syria, Libya, Iraq, .. (you get the point) and multiply with approx 15 million $ per dead.
Have the US transfer this amount (should be north of a trillion) to the victims or their representatives and serve justice!
Yeah, that's worth talking about. Probably not in this thread, though, as I think it's pretty far off-topic. But, I'd prefer talking about prevention of further harm, rather than just paying off the survivors.
> There's some situations that are so ethically indefensible, wherein a corporation can cause incredible harm over a long period of time, that the only just outcome is for the company to be destroyed.
This would hurt those with claims against the company but no hand in the decisions as much (if not more) than the responsible actors.
A real corporate parallel of the death penalty -- or at least, an ultimate corporate penalty for serious violations -- should take a different form. A couple ideas:
(1) personal, joint-and-several, liability of corporate officers with responsibility over (whether or not directly involved) and those employees actively directing the offense,
(2) allowing piercing the corporate veil to make equity holders liable in the event the corporation itself and legally responsible officers and employees as described in (1) cannot meet the liability for the offense.
I think it's a conversation that should be had; I try not to be one of those folks who says hand-wavey things like, "Something must be done!" But, in this case, I don't know what the right answer is. Evil, and that's what this behavior is, on this scale is hard to fathom and hard to discuss at human scale.
You're probably right that there are better ways that cause less harm. I just don't know how to get there. Corporations at this level wield so much power, it's hard to figure out how governments or courts can effectively regulate them.
Regardless, I don't think this settlement is enough, because the people involved (generally, though I think a couple of low-level engineers were fired) will continue going to work each day, drawing their massive salaries. I'm willing to concede I don't have all the answers on what justice really looks like, but I'm confident it's not this. This just isn't enough for years of cold, calculated, destruction of human life for profit.
I agree with you. It's a corporation, not an actual human. And there are a lot of people that profited and knew about it, at some point you can't salvage any of it. It's brutally difficult to implement though, Germany isn't going to do it. It also seems easy to game as you start to liquidate the company, what stops the shareholders from investing in a new holding company that just buys up the VAG assets?
Maybe put a 30% tariffs on all of their imports for 30 years or something. What of splitting it up?
I don't think a corporate death penalty (revoking the company's license to operate) is the proper answer. Figuring out the actual damage done, a punitive fine with a multiplier on top of that, being forced to take back all products and significantly more incidences of managers going to jail would all be excellent things to try first.
The problem is that the regular factory workers are the ones that would end up paying the bigger price in a corporate death penalty situation, and that companies trading abroad would be able to escape the penalty (in this case, for instance, the US could simply forbid VW to do business on their soil).
I agree ... to a point. Instead of dissolving the entire corporation, I think that there should be (in cases like this) where the "Corporate Veil" can be pierced and individuals (in this case, Executive Officers) can be be brought to trial, sentenced, and held personally accountable for their decisions - including prison sentences.
That would get the CxO in other companies attention, in a double-quick-time fashion.
I do agree that fines that seem astronomical to us (USD15Bn is huge in any personal context), to a corporation can be just The Cost of Doing Business. Depending on how long they've been doing this, they may have made twice that amount.
The way to solve the problems that arise from the fact that organizations are not people isn't to treat them even more like people. You can't punish an abstract group. The others here are right: it would have enormous negative consequences. But that's beside the point. It wouldn't even do what you think it would do. There is nothing to punish. You're swinging your fists at a ghost.
Has there been any serious (I.e. not clearly biased by way of affiliation) study into the actual effects of the added pollution?
We're not talking smog monsters here, we're talking one chemical in particular (NPC), from one kind of engine by one car maker. I don't want to sound like I'm downplaying this, but given the kind of comments I see about this, I want to think the visceral reaction is based in rationality.
There's been some articles on the subject (which is, admittedly complicated, since so many things shoot toxins into the air, and our understanding of its impact is still uncertain):
I guess it's possible to look at these numbers, and compare them to the number of deaths caused by autos in general (even the ones that follow all the rules), and consider it a small thing; something that doesn't justify a massively disruptive response.
But, from my perspective, VW made a conscious decision, and an ongoing choice over many years, to violate the law, and caused illegal levels of dangerous emissions in exchange for greater profits.
So...I don't think I'm responding irrationally when I am extremely critical of a company that would make those decisions over a span of many years, knowingly trading human life and human health for greater profits.
I'm critical of internal combustion auto companies, in general, but I'm not calling for them to be destroyed, and I don't go out of my way to talk trash about them. I'm pretty specific in my ire toward VW (though others have suggested several car manufacturers are pulling similar tricks and emitting illegal and dangerous levels in real world environments), and if that's the case, I'd consider those to be criminal companies, as well. I hope such companies will also be investigated, and also face consequences. But, "everybody's doing it" shouldn't be a defense when the stakes are this high.
Can you define what a corporate death penalty entails?
Going off a direct analogy with a human, it appears it would require destroying the equivalent of the brain, so perhaps a forced wiping of the IT infrastructure, inventory ledgers, blueprints? Probably also a seizure of all patents.
At the end of the day it's just money, except it's probably simpler to just take it in cash. (Or however the $15B is expected to be disbursed).
Talking about the "brain" of a corporation may be pushing the analogy too far. And, I believe I've probably made this a much more contentious conversation than it needed to be by using emotionally charged language like "death penalty". And, I think a lot of folks are interpreting my opinion as much more black and white than it is.
My thinking is merely that at some point, we as a society should probably consider refusing to allow a corporation that has shown an ongoing wilful disregard of human life to continue to exist.
Fair enough. I was mostly intrigued by the concept of a corporate death penalty, or stopping one from existing (however you name it). How do you actually do it? If you block the name, they can just rename it. If you fire everybody, they can instantly join a replacement company. You could put a restraining order on the officers from working in the same industry (a la noncompete contracts).
There is lots more comments on this below, it's just an interesting problem.
I had been following this thread with a certain amount of blasé, but the thought of seizing a patent portfolio and releasing it into the public domain makes me raise an eyebrow or three.
There are many ways a big corporation could be killed. If some EU regulatory body decided that after this has happened in the US, all EU consumers are entitled to the same thing - VW would be dead instantly.
Same if they e.g. issued a ban on VW selling cars in the EU for say 5 years.
Crushing the company hits mostly the lower ranks who legitimately had no part in any of it (presumably; if you're a soldier in the Wehrmacht or the guy dumping toxic buckets, this doesn't apply).
We just need strict liability for corporate officers.
Well if we go to war with another country, there are a lot of people working for that government who did not commit the atrocities. I'm sure the accountant or janitor didn't necessarily know or approve of the war crimes, they just needed a job and didn't hurt anyone. That doesn't mean we shouldn't fight the war, you just recognize that sometimes innocent people are impacted. The blame lies with the leaders who did the bad thing. If they hadn't done the bad thing, their lower ranking innocent workers wouldn't have been impacted.
Every business decision comes with a cost/benefit analysis. Hurting your employees goes into the "cost" side, and if you do the bad thing anyway, obviously the "benefits" outweighed the "cost" of potentially hurting your employees.
That's different. Sometimes you have to defend yourself and then it's justified to go to war. Going to war without being threatened is a crime (like it was done numerous times by the US governement and is done now in Syria. Only because there is no judge makes it no less a crime.).
But you don't have to defend yourself from this company. You aren't in danger. As a result punishing the workers would be nothing but a crime.
Does one really believe that German soldiers had zero idea of the atrocities that were being committed? There were reports in internation news, rumours, physical evidence and millions upon millions of people being rounded up.
As for being the person dumping toxic buckets - they are doing the crime. They are culpable.
If all affected countries punished VW as hard as the US, the cumulative fine would be hundreds of billions. That would indeed be a death penalty. In fact, 15 billion is disproportionate in my opinion.
15 billion disproportionate ? Depends on how many people where effected (or even died) by this. Time there cost. I personally have no idea on these numbers, and it would largely be speculation.
Allowing some New World Judge the power to destroy all international subsidiaries of a global corporation with 610,067 employees at the stroke of a pen might not improve the situation.
WikiPedia places the economic cost at $39+ billion, by one measure.
"A peer-reviewed study published in Environmental Pollution estimated that the fraudulent emissions are associated with 45 thousand disability-adjusted life years (DALYs) and a value of life lost of at least 39 billion US dollars."
Citation? Why wouldn't the experts who studied this have accounted for that? I tend to want to trust the science, if it comes from reputable sources.
Anyway, CO2 is not comparable to NOx in terms of danger to human health; CO2 is a real problem, of course, but as I understand it, this was an environmental and human health trade-off that is not at all well-balanced. It produced out-sized harm in exchange for small reductions on the CO2 side. Even if the amount of NOx produced only increased by the same amount that CO2 decreased (which is not the case, if I understand it correctly), it would still be a bad trade. I'm no expert, but the experts I've read on the subject haven't been saying, "oh, it's really no big deal because CO2 went down."
The world police allow themselves to do this to countries, so why not corporations? And at what deaths/corporation employee number does killing the corporation become ok? Presumably there is a value? I don't know it.
This is one of those cases where the corporate death penalty is the only just outcome I can think of.
$15 billion looks like a large sum; and maybe it's even enough to deter car companies from doing something similar in the future. Maybe. VW is worth $73 billion, and they generated a lot of money on the strength of their diesel campaigns. Amortized over the many years that they were shipping out these cars, it begins to look like a cost of doing business, rather than a massively punitive expense.