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This was a response to comment on the immediately preceding post. It suggests a practical way of bringing corporations under the law without depending on corrupt politicians who have been bought off. The recent actions by Massey Energy, Goldman Sachs, and Wellpoint suggest remedial measures are long overdue.
Corporations are institutionally incapable of acting
ethically. They will only do so
when the penalty for being caught breaking the law is greater than any likely
profit from doing so. The recent
cases of Massey Energy, Goldman Sachs, and now Wellpoint demonstrate this sad
In addition, their wealth and power make elected officials
unlikely allies against them except for the short term – and than, as the
Republicans and too many Democrats demonstrate, they will do what they can to
appear on the people’s side while loyally serving their real paymasters. Nor is
corporate media an ally.
Corporations have become a new aristocracy, largely above
the law, which they simply buy off or pay relatively painless fines. Unlike the old aristocracy, neither
decency nor generosity amount for much because should any CEO so act, it will
be at the cost of profit and of share value, and they will risk being ousted in
a take over bid. Such positions of
leaders attract sociopaths who will use the perks of leadership primarily to
feather their own nests.
In other words, we have created and sustained institutional
sociopaths morally worse than the old aristocracy, organizations that will
actually penalize decent people acting decently if it costs them profit. The only likely exceptions will be the
first generation of founders, if they have a strong ethical vision.
The alternative to relying on
politicians, and a reasonable one, is the “Corporate Death Penalty.”
If a corporation breaks the law
three times within 20 years, using the same logic conservatives love to employ
with real people, the company has its assets sold to the highest bidder with
the money going first to pay for damages, second, to pay for the sustenance and
retraining of its wag employees, and if any remains, to pay off public debt. If a national law is its third strike,
it goes to reduce the national debt.
If a state law, it reduces the state debt. Shareholders get
nothing. Their shares’ value falls
Top management is prohibited from
ever working together, to destroy the culture of corruption they created and
sustained. The firm’s name is
abolished for a generation. It is
as dead as a company can be.
The penalty is so draconian that
with a second conviction share prices will suffer seriously. This in itself will virtually guarantee
that top management will be ousted as a preventive measure, and very strict
rules enforced vis-à-vis the law.
Even a first conviction will raise questions about the competence of top
management, and may cost them their positions.
This environment will hopefully
push back against the advantages sociopaths currently possess in rising to
leadership positions. If it fails
to do so, at least it will help keep them under control, or eliminate them from
The logic of the corporate death
penalty is to create such circumstances that it will almost never need to be
employed. One ‘execution’ should
do the job because top management will then rigorously self-police because they
stand to lose a great deal with even a second conviction. And if they do not, shareholders will.
The profit orientation of the market will then work to improve behavior rather
than as it does now, to encourage corruption.