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Comment by Gatsky | Hacker News Reader

It’s basically the case that there are no effective punishments for corporate entities. The argument has been made elsewhere for a corporate ‘death penalty’, an actual destruction of value, brand and IP and wholesale confiscation of assets. Obviously implementation would be an issue, but imagine if there was even a possibility J&J could be sentenced to ‘corp-death’ for its role in the opioid crisis. The share price wouldn’t be going up, that’s for sure.

Otherwise I think we’ll just keep being surprised by corporate amorality, over and over again.

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outright destroying a company would inflict a lot of collateral damage. some rich people would see a fraction of their portfolio go to zero, which would certainly sting, but many more middle-class workers would lose their only job.

the IP part may have some value though. it would be interesting to see what would happen if every successful judgment resulted in all relevant patents going to the public domain. play funny business with a certain pharmaceutical and it becomes a generic ahead of schedule.

I suspect "make an example out of 'em" style punishments are just not very effective. if every few years a big company gets a back-breaking fine, it would make for some good news stories, but it would also be pretty easy to design a portfolio resilient against these outcomes.

if I could wave a magic wand and set up the system exactly how I wanted, I would implement pretty much the opposite. moderate fines (maybe 1.5-2x the illicit gains) with a very high rate of conviction. raise the salary of prosecutors and investigators until you get people who can make it happen. I believe this would not only be more effective, but much more fair.

> many more middle-class workers would lose their only job.

So it'd be very much like an ordinary death penalty, then, with dependents left behind in a worse position. Well, fortunately it would also mean you shouldn't work for a bad company the same way you shouldn't assist criminals generally, in that you can share in the blame.

Fire the board, upper management, and ceo... confiscate stock from all shareholders and do an ipo with it. install new management from the industry. Ban existing management from serving in that capacity for the rest of their lives. Now let's see who f*'s up.

Think of the poor workers is such a poor argument as any worker can be laid off or fired at a moment's notice.

Yes you make a good point about collateral damage affecting workers. Perhaps there could be a ‘death row’ lasting 5 years so workers can make a soft-landing.

Fines aren’t going to work, I think that is pretty clear, as many others have said. They are very much an instrument of ‘make an example of ‘em’ aren’t they?

I bet that when a large bank thinks about their ‘worst case scenario’, they are thinking about Lehman Brothers, not a mega fine. Being a senior executive in a company that got corp-deathed is surely career ending.

Collateral damage is fine, it helps deter others from doing business with immoral businesses doing wrong.

Imprisoning a criminal causes a lot of collateral damage to their family, yet we do it all the time.

The problem is that courts are restricted by the country they reside in, while corporations can be multinational. After a certain point (say, 1 billion valuation), companies can pick and choose what countries to do business in.

If a corporate "death penalty" becomes a thing in the USA, large, profitable companies will shift their main business overseas to other, less risky countries. They may still sell their products to US consumers, but it becomes very difficult for the US courts to shut down a company that isn't officially in the US. The best they can do is forbid that company from doing business in the US.

That’s what encourages companies to pull stuff like this.

They know that at worst they’ll have a small hit on quarterly profits, but stocks won’t change and nothing serious will happen because nobody wants to hurt those poor job creators.

the point is to create a negative expected value with low variance for illegal behavior. if the expected value is positive, it is still rational to employ illegal tactics. if the expected value is negative but the variance is high (ie good chance of getting away with it), people are going to be tempted to roll the dice anyway. once you set fines to a level where EV is negative, it should be much more effective to increase the rate of conviction than to continue jacking up the penalties.

think about speeding. a speeding ticket is a meaningful amount of money to most people (usually well over $100 in the us); in some states (eg Virginia) speeding turns into a criminal offense if you are going 20+ over. and yet, most people still speed sometimes and a sizeable chunk of drivers speed almost all the time. on the other hand, speed camera tickets give a $40-50 fine but they get you every time you go 12+ over the limit as you pass the camera. almost no one exceeds the limit by more than 10mph in photo enforced zones. the fine is much lower, but the consistent enforcement makes it much more effective.

I'd add some jail time for the corporate leadership, including board members.

Just confiscate the shareholders' ownership by court ruling. The company keeps running as it did before.

Still collateral damage in the form of private savings being wiped out, but you can bet this won't happen more than once before the rest of the capitalist class wises up.

Jail time for board members and executives is probably also effective.

How about going after the executives? They've long used responsibility and even personal liability as justification for their high salaries yet continually escape punishment.

>Obviously implementation would be an issue

Civil forfeiture seems like no big deal, I dunno what the issue would be here.

There does not need to be a special case. Just higher penalties and fines.

If you sent a normally functioning company into a forced bankruptcy, another company will be more than willing to pick up the assets, manufacturing, and jobs while wiping out the top management and investors.

And wiping out the top management and investors is exactly the incentive you need so companies seek to avoid forced bankruptcy.

Jobs, capital assets, and technology are preserved. I fail to see how this is a disadvantage. Volkswagon should have been hit with a $1 trillion dollar fine, and for every shareholder and executive to be completely wiped out.

I assume that was bsder's point.

And that’s a good thing. The company that picks it up wouldn’t want the same thing to happen to itself so it would stop the bad behavior.

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