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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 b

by ATsch 10y ago

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?

lostlogin 10y ago
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.
- cortesoft 10y ago
  I am pretty sure most of the manufacturing workers had no idea. Probably a very, very small percentage of the employees knew about the device.
  - ATsch 10y ago
    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. Detailed analysis of the cheat: https://www.youtube.com/watch?v=xZSU1FPDiao https://www.youtube.com/watch?v=xZSU1FPDiao
- cptskippy 10y ago
  There was no device for them to know about. Some engineers altered software that manipulated existing systems under guidance from management.
freehunter 10y ago
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.
- loceng 10y ago
  They probably wouldn't pay the $15B fine if they weren't allowed to sell cars in the U.S. anymore..
- imron 10y ago
  The only issue is the matter of scale 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.
- Scarblac 10y ago
  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.
  - freehunter 10y ago
    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.
enraged_camel 10y ago
>>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.
- rahimnathwani 10y ago
  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.
  - akiselev 10y ago
    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.
    - jlmorton 10y ago
vadym909 10y ago
in other words- Too big to Fail? The equivalent of which in human terms is too rich to be prosecuted.
bmelton 10y ago
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.
HannibalLecter 10y ago
Companies like VW if it was dismantled would lose their patents and licenses. So you couldn't just reopen a company like that as the state would take possession of that IP. They would have to completely reinvent the product line, making it pretty difficult to do what you're suggesting. As for the employees, well that's not going to matter quite as much as these kinds of companies are laying off those jobs anyway as AI will continue to improve to the point where manufacturing will be all automated.
Qantourisc 10y ago
Good, point, I'd say cut of the head instead ? Basically fire the entire management.
- subway 10y ago
  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.
  - legooolas 10y ago
    Should you then hold individuals accountable for their own incompetence (rather than malice)? Where do you draw the line between it being the corporation's fault and the individual? (I suspect these questions are part of the reason it is the way it is currently)
    - imglorp 10y ago
      There was no incompetence here, just malice. Fires, jail and fines for the involved execs, but don't hurt the customers and shareholders and the rest of the employees.
      - ATsch 10y ago
        The issue here is that no execs claim to be involved, and there are no documents to confirm nor deny it.
    - hinkley 10y ago
      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.
TheCoelacanth 10y ago
> 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.
- ATsch 10y ago
  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?

by ATsch 10y ago

lostlogin 10y ago

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.

cortesoft 10y ago
I am pretty sure most of the manufacturing workers had no idea. Probably a very, very small percentage of the employees knew about the device.
- ATsch 10y ago
  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. Detailed analysis of the cheat: https://www.youtube.com/watch?v=xZSU1FPDiao https://www.youtube.com/watch?v=xZSU1FPDiao
cptskippy 10y ago
There was no device for them to know about. Some engineers altered software that manipulated existing systems under guidance from management.

freehunter 10y ago

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.

loceng 10y ago
They probably wouldn't pay the $15B fine if they weren't allowed to sell cars in the U.S. anymore..
imron 10y ago
The only issue is the matter of scale 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.
Scarblac 10y ago
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.
- freehunter 10y ago
  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.

enraged_camel 10y ago

>>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.

rahimnathwani 10y ago
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.
- akiselev 10y ago
  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.
  - jlmorton 10y ago

vadym909 10y ago

in other words- Too big to Fail? The equivalent of which in human terms is too rich to be prosecuted.

bmelton 10y ago

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.

HannibalLecter 10y ago

Companies like VW if it was dismantled would lose their patents and licenses. So you couldn't just reopen a company like that as the state would take possession of that IP. They would have to completely reinvent the product line, making it pretty difficult to do what you're suggesting. As for the employees, well that's not going to matter quite as much as these kinds of companies are laying off those jobs anyway as AI will continue to improve to the point where manufacturing will be all automated.

Qantourisc 10y ago

Good, point, I'd say cut of the head instead ? Basically fire the entire management.

subway 10y ago
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.
- legooolas 10y ago
  Should you then hold individuals accountable for their own incompetence (rather than malice)? Where do you draw the line between it being the corporation's fault and the individual? (I suspect these questions are part of the reason it is the way it is currently)
  - imglorp 10y ago
    There was no incompetence here, just malice. Fires, jail and fines for the involved execs, but don't hurt the customers and shareholders and the rest of the employees.
    - ATsch 10y ago
      The issue here is that no execs claim to be involved, and there are no documents to confirm nor deny it.
  - hinkley 10y ago
    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.

TheCoelacanth 10y ago

> 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.

ATsch 10y ago
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?