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I look forward to the day that we punish corporations by removing their freedom (ability to operate) instead of fining them laughably small percentages of their

by njovin 5y ago

I look forward to the day that we punish corporations by removing their freedom (ability to operate) instead of fining them laughably small percentages of their yearly revenue for serious violations of laws and regulations. In reality I understand that this would harm the employees and the public to an unacceptable degree so maybe some form of “jail time” whereby all profits go directly to non-executive employees and price discounts would be more effective. Depriving shareholders of dividends may lead investors to “vote with their wallets” and we’d see more of an actual free market instead of what we have today where economy-destroying decisions go effectively unpunished and in some cases are rewarded by bail outs.

vmception 5y ago
Right, actually impairing a corporation leads to a monopoly and less competition which the state doesn’t want to be directly responsible for This guides the trend in enforcement actions or lack thereof There are some books on this
alien_ 5y ago
Confiscating profits wouldn't work, many companies are reinvesting their profits. Probably the best way would be to just make the fines hurt more, by using a fixed and non-negligible percentage of the monthly/yearly revenue, much like Finland does for traffic fines.
- reacharavindh 5y ago
  I can’t believe we as a society don’t adopt this idea more. Punishment should be a percentage of taxable income of that year. The impact should equally felt regardless of your current financial status. Extending this to a corporation would simply put them in back foot in a market.. which is indeed the punishment.
  - HWR_14 5y ago
    In the US, income based fines have questionable constitutional allowability. I fall on the "the seem constitutional" side, but some people apparently think it violates the 8th amendment.
  - humaniania 5y ago
    Percentage of revenue seems like the least likely to be gamed metric.
    - redler 5y ago
      This is also a problem since some businesses have very high nominal revenues and very low margins.
    - refurb 5y ago
      Two companies with $100M in revenue, one with 2% margin and one with 50% margin. You’d fine then the same amount?
      - dingaling 5y ago
        > You’d fine then the same amount? Progressive fines on people are based on their income, not how much they have left in the bank at the end of the month.
        refurb 5y ago
        Sure, but expenses don’t vary a much for people versus companies. You don’t meet many people who make $1M in a year who have unavoidable expenses of $900k.
        refurb 5y ago
        Even CNN disagrees with your take. https://edition.cnn.com/factsfirst/politics/factcheck_e58c20c6-8735-4022-a1f5-1580bc732c45 https://edition.cnn.com/factsfirst/politics/factcheck_e58c20... Fauci was wrong. Simple as that. Better to just own up to it.
tablespoon 5y ago
> I look forward to the day that we punish corporations by removing their freedom (ability to operate) instead of fining them laughably small percentages of their yearly revenue for serious violations of laws and regulations. I agree, but like you mentioned, the externalities on innocent parties would be too great. Also a lot of companies do not issue dividends, so focusing on them would do no good in a lot of cases. I think a threefold strategy would need to be implemented: 1. Direct action against executives in the board (e.g. heavy fines amounting to a large fraction of their total compensation and/or jail). 2. Confiscation of dividends for a period of time. 3. Forced issuance of new shares to dilute existing shareholders, with sale proceeds going to the government. One issue is that shares can be traded, so it's possible for a shareholder to benefit from some bad action, then avoid any punishment by selling the shares before the punishment is implemented. Maybe such people could be shared a per-share fine based on shares held at a particular date?
- bumby 5y ago
  >Maybe such people could be shared a per-share fine based on shares held at a particular date? I think it’s nearly impossible to expect most shareholders to understand the business underpinnings to this degree within the existing system. Think of pensioners with mutual funds, do you think most even understand all the businesses in those funds let alone the operations of those businesses? To me, this is akin at employees being punished as well. Both benefit from the business operations but it’s hard to expect employees to have knowledge and be responsible for the decisions of the C-suite.
  - anoncake 5y ago
    You are responsible for your property. If you own stock, you own part of a company so you are responsible for its actions. In the case of mutual funds, it's the funds' job to understand the businesses it invests in for you. There could be an exception for non-voting stock though.
    - reasonabl_human 5y ago
      Well this is just false. You are not at all responsible for a company’s actions just because you are a shareholder. HN is evidently quite out of its depth with these kinds of threads.
Bilal_io 5y ago
> maybe some form of “jail time” whereby all profits go directly to non-executive employees In theory this would give an incentive to some employees to mess up if they know they won't get caught.
jasonwatkinspdx 5y ago
One of my more radical political views is I'm 100% behind a corporate death penalty, as well as direct personal criminal consequences for company principals that engage in fraud or similar. The sad reality of the world is that once a business is past a threshold of power, it's nearly impossible to hold them accountable. Craven sociopaths know they can do what they do, and worst case, suffer some bad press while they move on to the next thing, banking 100's of millions the whole way. Make those people truly terrified of the consequences of their actions and politics will be utterly transformed.

by njovin 5y ago

vmception 5y ago

Right, actually impairing a corporation leads to a monopoly and less competition which the state doesn’t want to be directly responsible for This guides the trend in enforcement actions or lack thereof There are some books on this

alien_ 5y ago

Confiscating profits wouldn't work, many companies are reinvesting their profits. Probably the best way would be to just make the fines hurt more, by using a fixed and non-negligible percentage of the monthly/yearly revenue, much like Finland does for traffic fines.

reacharavindh 5y ago
I can’t believe we as a society don’t adopt this idea more. Punishment should be a percentage of taxable income of that year. The impact should equally felt regardless of your current financial status. Extending this to a corporation would simply put them in back foot in a market.. which is indeed the punishment.
- HWR_14 5y ago
  In the US, income based fines have questionable constitutional allowability. I fall on the "the seem constitutional" side, but some people apparently think it violates the 8th amendment.
- humaniania 5y ago
  Percentage of revenue seems like the least likely to be gamed metric.
  - redler 5y ago
    This is also a problem since some businesses have very high nominal revenues and very low margins.
  - refurb 5y ago
    Two companies with $100M in revenue, one with 2% margin and one with 50% margin. You’d fine then the same amount?
    - dingaling 5y ago
      > You’d fine then the same amount? Progressive fines on people are based on their income, not how much they have left in the bank at the end of the month.
      - refurb 5y ago
        Sure, but expenses don’t vary a much for people versus companies. You don’t meet many people who make $1M in a year who have unavoidable expenses of $900k.
        refurb 5y ago
        Even CNN disagrees with your take. https://edition.cnn.com/factsfirst/politics/factcheck_e58c20c6-8735-4022-a1f5-1580bc732c45 https://edition.cnn.com/factsfirst/politics/factcheck_e58c20... Fauci was wrong. Simple as that. Better to just own up to it.

tablespoon 5y ago

> I look forward to the day that we punish corporations by removing their freedom (ability to operate) instead of fining them laughably small percentages of their yearly revenue for serious violations of laws and regulations. I agree, but like you mentioned, the externalities on innocent parties would be too great. Also a lot of companies do not issue dividends, so focusing on them would do no good in a lot of cases. I think a threefold strategy would need to be implemented: 1. Direct action against executives in the board (e.g. heavy fines amounting to a large fraction of their total compensation and/or jail). 2. Confiscation of dividends for a period of time. 3. Forced issuance of new shares to dilute existing shareholders, with sale proceeds going to the government. One issue is that shares can be traded, so it's possible for a shareholder to benefit from some bad action, then avoid any punishment by selling the shares before the punishment is implemented. Maybe such people could be shared a per-share fine based on shares held at a particular date?

bumby 5y ago
>Maybe such people could be shared a per-share fine based on shares held at a particular date? I think it’s nearly impossible to expect most shareholders to understand the business underpinnings to this degree within the existing system. Think of pensioners with mutual funds, do you think most even understand all the businesses in those funds let alone the operations of those businesses? To me, this is akin at employees being punished as well. Both benefit from the business operations but it’s hard to expect employees to have knowledge and be responsible for the decisions of the C-suite.
- anoncake 5y ago
  You are responsible for your property. If you own stock, you own part of a company so you are responsible for its actions. In the case of mutual funds, it's the funds' job to understand the businesses it invests in for you. There could be an exception for non-voting stock though.
  - reasonabl_human 5y ago
    Well this is just false. You are not at all responsible for a company’s actions just because you are a shareholder. HN is evidently quite out of its depth with these kinds of threads.

Bilal_io 5y ago

> maybe some form of “jail time” whereby all profits go directly to non-executive employees In theory this would give an incentive to some employees to mess up if they know they won't get caught.

jasonwatkinspdx 5y ago

One of my more radical political views is I'm 100% behind a corporate death penalty, as well as direct personal criminal consequences for company principals that engage in fraud or similar. The sad reality of the world is that once a business is past a threshold of power, it's nearly impossible to hold them accountable. Craven sociopaths know they can do what they do, and worst case, suffer some bad press while they move on to the next thing, banking 100's of millions the whole way. Make those people truly terrified of the consequences of their actions and politics will be utterly transformed.