10 ms·

When a company values profits above all else, the only thing that can save us from that company’s gross negligence is fines strong enough to eliminate those ver

When a company values profits above all else, the only thing that can save us from that company’s gross negligence is fines strong enough to eliminate those very same profits (and ideally the company’s budget for bribing politicians too).

InCityDreams 4y ago
Should be on a case by case basis. If eliminating profits causes 11 other people in the company to lose their jobs, is it worth it?
bluefirebrand 4y ago
Not even fines to the company will stop it. You have to go directly after the people who are making decisions for the company. Executives seem to have a pretty good time tanking companies to line their pockets and then leave before the company has to deal with the fallout.
- falcolas 4y ago
  I really wish I could refute this. The protections incorporation provides for executives seem a bit too strong in cases like these.
  - anonymouskimmer 4y ago
    Which protections are these? I thought that incorporation didn't give any protections for maliciousness, it's just that DAs rarely go after executives because any particular blame is so distributed throughout the corporation that it would make any case difficult to prosecute.
    - genocidicbunny 4y ago
      The diffusion of responsibility is one of those protections. There should definitely be some strict liability for certain corporate malfeasance, where it doesn't too much matter who specifically did the deed, the executive/C-level is responsible and takes the fall (and maybe throw the BoD in there too). Then prosecution comes down to 'Did your company do X? If yes, you're guilty.'
      - a_cardboard_box 4y ago
        Not only would that be effective in disincentivizing the malfeasance, it has the added benefit of limiting the scale of corporations to what execs can effectively manage.
      - ocdtrekkie 4y ago
        Exactly. If the CEO goes to prison if the company commits X crime, the CEO has a strong incentive to ensure the business is not doing that. If the CEO's only concern is shareholder profit, crime usually pays pretty well.
        ticviking 4y ago
        The idea that a 10000 year jail sentence must be served by every share holder disturbed in proportion to how much they owe would make “shareholder value” mean “not making me check into jail to serve my 2 days of the sentence for my 1 share” which might change corporate behavior a bit. Especially if insuring shareholders income against that risk becomes a line item in the budget.
        ocdtrekkie 4y ago
        I think shareholders might be too detached from decisionmaking for that to make sense. It'd definitely have a huge negative impact on stock values, but I'm not sure it would prevent corporate malfeasance.
        meheleventyone 4y ago
        If nothing else it would make jail nicer in that case.
        kevin_thibedeau 4y ago
        A more realistic approach is to take away personhood rights that these corporations rely on. A 10 year ban on political donations and lobbying would be a good starting point. Then prison for the C-levels if they violate those terms which are directly under their control.
    - SauciestGNU 4y ago
      I think what you're describing is the difficulty in "piercing the veil" of an LLC to hold individuals accountable. You can search that legal principle and learn more about how an LLC structure shields individuals from repercussions for their actions.
    - MomoXenosaga 4y ago
      I remember a nice Obama quote "the buck stops with me". If you get the big pay check for leadership it is your responsibility when shit goes bad. Sadly about the worst consequence a failed CEO has is that he/she doesn't get invited to play golf for a few years.
    - sumedh 4y ago
      > it's just that DAs rarely go after executives I think after taking down Enron and Arthur Andersen and lot of people lost their jobs, which does not look good on TV. Politicians on both sides stopped supporting taking down execs/companys. So now the new normal is to push for fines.
- kingTug 4y ago
  I always wonder what will come first: laws to jail negligent execs for the next disaster, or an ambitious legislator with a magic solution to jail negligent execs for the current disaster.
  - RajT88 4y ago
    Neither. There's a web of power and influence invisible to people who aren't part of the system. Politicians who could create this legislation don't get reelected if they aren't participants; their election war chest evaporates. This is how monied interests managed to design the system to work.
  - klyrs 4y ago
    Where by "magic" you mean an ex post facto law? I'm all for going after execs for their crimes, but let's try to keep that particular part of the constitution in tact.
    - neltnerb 4y ago
      The article describes some pretty blatant negligence, though I suppose suggesting that a legislator might get involved implies ex-post facto lawmaking. Maybe the responsibility is too diffuse. But these "no one could have predicted this" kind of Therac-25 situations with multiple people responsible are exactly where that boss -- the one getting paid the big bucks (for the risk they take! for the difficult decisions they have to make! for the complex structures they have to oversee!) -- to actually take responsibility for the decisions inherent in the incentive structure they created in the workplace that they have total control over.
      - gruez 4y ago
        > The article describes some pretty blatant negligence Is it? The article tries strongly to imply that the whistleblower is right and the manager is wrong, but that's never conclusively established. With the same facts presented in the article, I can paint a different story of the whistleblower trying to make a mountain out of a mole hill, and how he was obviously wrong everyone else seems to think it's fine.
- blue039 4y ago
  It is interesting that we can use RICO go to after mob bosses even when they have layers and layers of indirection to protect them. But with CEOs it seems RICO doesn't apply.
  - ticviking 4y ago
    CEOs generally aren’t racketeering so they can’t usually be hit with that
    - blue039 4y ago
      The main driver of RICO, however, wasn't to stop racketeering. It provided the provisions for the FBI to pursue mob bosses for hits they ordered. Prior to RICO it was very difficult to throw a mob boss in jail for such things. All we need to do is extract that portion of the bill. However, I suspect the answer is like usual. Congress does not represent the people and their corporate owners would not be pleased. Larry Fink would probably have a millenia worth of consecutive life sentences alone. We might spur innovation in healthcare technology just making him serve the time he owes.
  - ydlr 4y ago
    The reason for that is there are only a tiny number of crimes that qualify as RICO predicates. We need to expand RICO to include more types of criminal activity.
- Eddy_Viscosity2 4y ago
  Exactly, fining companies doesn't do anything. Fine and jail the PEOPLE doing these crimes.
  - somenameforme 4y ago
    There's always plausible deniability so that if anybody does take the fall it's probably going to be some mid level suit that was 'just following orders.' I'd rather that liability starts with the CEO and Chairman. You need to make sure executives cannot simply hide behind fallguys. You then create a top-down incentive for these people to genuinely make sure everything is on the up and up. The biggest problem is that this probably creates a strict cap on how large a single corporation can grow, which sounds much more like a feature than a bug.
    - Eddy_Viscosity2 4y ago
      This is all well and good to say, but impossible to implement within our current system. That's what's so depressing about it. And by 'impossible' I grant its theoretically possible, just not in practical terms. Of course the other side of the coin is that even if it was implemented, then prosecutors, and hence government, would now have this new power over CEOs and it wouldn't be long before some corrupt politician got in office and used it corruptly.
      - eunoia 4y ago
        Sarbanes-Oxley would seem to imply that it’s possible to enact new laws that enforce consequences for fraud among top level executives? In theory at least I guess. Maybe someone else can comment on how it actually works in practice.
        Eddy_Viscosity2 4y ago
        Its not enough for the laws to exist, they must also be enforced.
    - gruez 4y ago
- gumby 4y ago
  > You have to go directly after the people who are making decisions for the company. Usually in this case the person really making the decision doesn't take the blame; that just flows downhill.
- lost_tourist 4y ago
  Yeah, it's one thing when you make some billionaires lose money, it's another thing when you potentially give thousands of people cancer because you polluted their land and air with carcinogens.
voytec 4y ago
Cost of fines would be transferred to customers. What can hurt is jail.
- eastbound 4y ago
  HSBC leaders never went to jail for being the bank of trafficking $2bn of drugs. As in, they recognized the deed, and signed off with the DoJ a deal with no executive would be sent to prison. Truth be told, CIA needed the drug sales to fund ISIS before it was cool, but I digress. Anyway, if you expect corporations to be held responsible in penal courts…
- Ekaros 4y ago
  Breach the corporate veil. Throw any share holders in jail for varying times.
- jakzurr 4y ago
  A most appropriate use for prisons in the US. Finally.
- yamtaddle 4y ago
  If a company can just pass fines on to the consumer and not suffer badly for it, competition in their market is totally fucked. Which, sure, is probably true in many industries, but it's not supposed to be the case that any given business can just pass extra costs to consumers. If they could, they should already have been charging higher prices.
  - techdragon 4y ago
    Railroad companies basically don’t have competition. Check out a track ownership map and see how little overlap there is, if you need to use the railroad to move stuff odds are you have one choice, and when it goes further than their track, sometimes you’ll have to truck it from one rail yard to another company’s rail yard because there’s so little interaction between railroads.
    - 4y ago
deepsun 4y ago
Not always. It's not law enforcement that keeps everyone from committing crimes, because you cannot put a policeman watching everyone. Way more efficient way is self-policing, that's the main difference of developed cultures IMO.
haliskerbas 4y ago
That's kind of the definition of a company in our current system. It's working as designed.
sebazzz 4y ago
That's why companies cannot be allowed to run a nuclear power plant. A place where negligence has no place.
- abfan1127 4y ago
  can you point out a human organization not susceptible to negligence?
  - jraph 4y ago
    There's a question of motivation. A public service ought to be motivated to deliver a good service. It won't be motivated by taking shortcuts. A private company seeks profit and cannot afford to lose money, contrary to a public service which can be not profitable. Offering a good service it a means to be profitable but that's not the end goal, even if many people actually want to do good work. Of course there's a big if. IF the government throws enough money at it. This IF is unfortunately too often "IF only". If not, we are back to shortcuts.
    - stickfigure 4y ago
      The service I get from AAA's DMV services is far superior to the service I get from the DMV itself.
    - Am4TIfIsER0ppos 4y ago
      bureaucrats and civil servants get paid regardless of how shit they do their jobs because the government puts a gun to your head to pay their wages and consume whatever service they provide (also applies to some "private" companies)
- notch898a 4y ago
  They should be run by an entity devoid of negligence, like the US government.
- quorgs 4y ago
  Can't disagree but The Ministry of Medium Machine-Building Industry of the USSR wasn't exactly driven by profit motive and we still got Chernobyl.
pessimizer 4y ago
We're not only not going to fine them, but we're going to make special laws to protect them from the threat of their employees getting sick days.
groot2581 4y ago
This only works if execs have the company's best interests at heart, which they don't. They reap the benefits when things go well but jump ship as the company files bankruptcy when things go south. You need Unions. Blue collar workers care about safety and can pressure execs into doing the safe thing when the incentives aren't there higher up.
- Ekaros 4y ago
  Also labour protections when reasonable action is taken to stop unsafe acts. If someone got fired for stopping unsafe thing they should get big enough payout. Probably years worth of wages.
  - notch898a 4y ago
    That exists. https://www.osha.gov/laws-regs/mou/2012-07-16 https://www.osha.gov/laws-regs/mou/2012-07-16 Note regarding "refusing to work under certain conditions:" https://www.osha.gov/workers/right-to-refuse https://www.osha.gov/workers/right-to-refuse I used to work in interstate freight (barge, not train). They make it crystal clear any employee has the right to stop work and are protected. The rail workers could have stopped working under their dangerous conditions, they just negligently kept going. The big bad railroad is to blame, but so are the employees.
    - vsareto 4y ago
      The regulation was vague, so now you have a situation where two sides are interpreting things differently: >She said: “The regulation at the time stated that a wheel bearing was bad when it had ‘visible seepage’. But that was very vague, and the bosses used that vagueness to their advantage. For me, it was whenever oil was visible on the bearing. For my bosses, they wanted actual droplets and proof it would leak on the ground. That's probably why we have an audio leak story, because the company may have some ground to stand on because of this vagueness.
- colejohnson66 4y ago
  > You need Unions. The railway has unions. They even wanted to strike at the end of last year over working conditions, but Congress and Biden quickly passed a law in December to prevent it.
pasquinelli 4y ago
just nationalize it
- gruez 4y ago
  Because the US government never did anything negligent/shady right?
boringg 4y ago
Fines?! No, executives doing jail time is the only solution.
ROTMetro 4y ago
As another HN poster posted fines need to be 1-10% per incident of controlling stock put into trust of the relevant enforcement agency unable to be sold or diluted for 10 years. Can't get your act together then eventually overship/control/adult supervision goes to the government.

InCityDreams 4y ago

Should be on a case by case basis. If eliminating profits causes 11 other people in the company to lose their jobs, is it worth it?

bluefirebrand 4y ago

Not even fines to the company will stop it. You have to go directly after the people who are making decisions for the company. Executives seem to have a pretty good time tanking companies to line their pockets and then leave before the company has to deal with the fallout.

falcolas 4y ago
I really wish I could refute this. The protections incorporation provides for executives seem a bit too strong in cases like these.
- anonymouskimmer 4y ago
  Which protections are these? I thought that incorporation didn't give any protections for maliciousness, it's just that DAs rarely go after executives because any particular blame is so distributed throughout the corporation that it would make any case difficult to prosecute.
  - genocidicbunny 4y ago
    The diffusion of responsibility is one of those protections. There should definitely be some strict liability for certain corporate malfeasance, where it doesn't too much matter who specifically did the deed, the executive/C-level is responsible and takes the fall (and maybe throw the BoD in there too). Then prosecution comes down to 'Did your company do X? If yes, you're guilty.'
    - a_cardboard_box 4y ago
      Not only would that be effective in disincentivizing the malfeasance, it has the added benefit of limiting the scale of corporations to what execs can effectively manage.
    - ocdtrekkie 4y ago
      Exactly. If the CEO goes to prison if the company commits X crime, the CEO has a strong incentive to ensure the business is not doing that. If the CEO's only concern is shareholder profit, crime usually pays pretty well.
      - ticviking 4y ago
        The idea that a 10000 year jail sentence must be served by every share holder disturbed in proportion to how much they owe would make “shareholder value” mean “not making me check into jail to serve my 2 days of the sentence for my 1 share” which might change corporate behavior a bit. Especially if insuring shareholders income against that risk becomes a line item in the budget.
        ocdtrekkie 4y ago
        I think shareholders might be too detached from decisionmaking for that to make sense. It'd definitely have a huge negative impact on stock values, but I'm not sure it would prevent corporate malfeasance.
        meheleventyone 4y ago
        If nothing else it would make jail nicer in that case.
      - kevin_thibedeau 4y ago
        A more realistic approach is to take away personhood rights that these corporations rely on. A 10 year ban on political donations and lobbying would be a good starting point. Then prison for the C-levels if they violate those terms which are directly under their control.
  - SauciestGNU 4y ago
    I think what you're describing is the difficulty in "piercing the veil" of an LLC to hold individuals accountable. You can search that legal principle and learn more about how an LLC structure shields individuals from repercussions for their actions.
  - MomoXenosaga 4y ago
    I remember a nice Obama quote "the buck stops with me". If you get the big pay check for leadership it is your responsibility when shit goes bad. Sadly about the worst consequence a failed CEO has is that he/she doesn't get invited to play golf for a few years.
  - sumedh 4y ago
    > it's just that DAs rarely go after executives I think after taking down Enron and Arthur Andersen and lot of people lost their jobs, which does not look good on TV. Politicians on both sides stopped supporting taking down execs/companys. So now the new normal is to push for fines.
kingTug 4y ago
I always wonder what will come first: laws to jail negligent execs for the next disaster, or an ambitious legislator with a magic solution to jail negligent execs for the current disaster.
- RajT88 4y ago
  Neither. There's a web of power and influence invisible to people who aren't part of the system. Politicians who could create this legislation don't get reelected if they aren't participants; their election war chest evaporates. This is how monied interests managed to design the system to work.
- klyrs 4y ago
  Where by "magic" you mean an ex post facto law? I'm all for going after execs for their crimes, but let's try to keep that particular part of the constitution in tact.
  - neltnerb 4y ago
    The article describes some pretty blatant negligence, though I suppose suggesting that a legislator might get involved implies ex-post facto lawmaking. Maybe the responsibility is too diffuse. But these "no one could have predicted this" kind of Therac-25 situations with multiple people responsible are exactly where that boss -- the one getting paid the big bucks (for the risk they take! for the difficult decisions they have to make! for the complex structures they have to oversee!) -- to actually take responsibility for the decisions inherent in the incentive structure they created in the workplace that they have total control over.
    - gruez 4y ago
      > The article describes some pretty blatant negligence Is it? The article tries strongly to imply that the whistleblower is right and the manager is wrong, but that's never conclusively established. With the same facts presented in the article, I can paint a different story of the whistleblower trying to make a mountain out of a mole hill, and how he was obviously wrong everyone else seems to think it's fine.
blue039 4y ago
It is interesting that we can use RICO go to after mob bosses even when they have layers and layers of indirection to protect them. But with CEOs it seems RICO doesn't apply.
- ticviking 4y ago
  CEOs generally aren’t racketeering so they can’t usually be hit with that
  - blue039 4y ago
    The main driver of RICO, however, wasn't to stop racketeering. It provided the provisions for the FBI to pursue mob bosses for hits they ordered. Prior to RICO it was very difficult to throw a mob boss in jail for such things. All we need to do is extract that portion of the bill. However, I suspect the answer is like usual. Congress does not represent the people and their corporate owners would not be pleased. Larry Fink would probably have a millenia worth of consecutive life sentences alone. We might spur innovation in healthcare technology just making him serve the time he owes.
- ydlr 4y ago
  The reason for that is there are only a tiny number of crimes that qualify as RICO predicates. We need to expand RICO to include more types of criminal activity.
Eddy_Viscosity2 4y ago
Exactly, fining companies doesn't do anything. Fine and jail the PEOPLE doing these crimes.
- somenameforme 4y ago
  There's always plausible deniability so that if anybody does take the fall it's probably going to be some mid level suit that was 'just following orders.' I'd rather that liability starts with the CEO and Chairman. You need to make sure executives cannot simply hide behind fallguys. You then create a top-down incentive for these people to genuinely make sure everything is on the up and up. The biggest problem is that this probably creates a strict cap on how large a single corporation can grow, which sounds much more like a feature than a bug.
  - Eddy_Viscosity2 4y ago
    This is all well and good to say, but impossible to implement within our current system. That's what's so depressing about it. And by 'impossible' I grant its theoretically possible, just not in practical terms. Of course the other side of the coin is that even if it was implemented, then prosecutors, and hence government, would now have this new power over CEOs and it wouldn't be long before some corrupt politician got in office and used it corruptly.
    - eunoia 4y ago
      Sarbanes-Oxley would seem to imply that it’s possible to enact new laws that enforce consequences for fraud among top level executives? In theory at least I guess. Maybe someone else can comment on how it actually works in practice.
      - Eddy_Viscosity2 4y ago
        Its not enough for the laws to exist, they must also be enforced.
  - gruez 4y ago
gumby 4y ago
> You have to go directly after the people who are making decisions for the company. Usually in this case the person really making the decision doesn't take the blame; that just flows downhill.
lost_tourist 4y ago
Yeah, it's one thing when you make some billionaires lose money, it's another thing when you potentially give thousands of people cancer because you polluted their land and air with carcinogens.

voytec 4y ago

Cost of fines would be transferred to customers. What can hurt is jail.

eastbound 4y ago
HSBC leaders never went to jail for being the bank of trafficking $2bn of drugs. As in, they recognized the deed, and signed off with the DoJ a deal with no executive would be sent to prison. Truth be told, CIA needed the drug sales to fund ISIS before it was cool, but I digress. Anyway, if you expect corporations to be held responsible in penal courts…
Ekaros 4y ago
Breach the corporate veil. Throw any share holders in jail for varying times.
jakzurr 4y ago
A most appropriate use for prisons in the US. Finally.
yamtaddle 4y ago
If a company can just pass fines on to the consumer and not suffer badly for it, competition in their market is totally fucked. Which, sure, is probably true in many industries, but it's not supposed to be the case that any given business can just pass extra costs to consumers. If they could, they should already have been charging higher prices.
- techdragon 4y ago
  Railroad companies basically don’t have competition. Check out a track ownership map and see how little overlap there is, if you need to use the railroad to move stuff odds are you have one choice, and when it goes further than their track, sometimes you’ll have to truck it from one rail yard to another company’s rail yard because there’s so little interaction between railroads.
  - 4y ago

deepsun 4y ago

Not always. It's not law enforcement that keeps everyone from committing crimes, because you cannot put a policeman watching everyone. Way more efficient way is self-policing, that's the main difference of developed cultures IMO.

haliskerbas 4y ago

That's kind of the definition of a company in our current system. It's working as designed.

sebazzz 4y ago

That's why companies cannot be allowed to run a nuclear power plant. A place where negligence has no place.

abfan1127 4y ago
can you point out a human organization not susceptible to negligence?
- jraph 4y ago
  There's a question of motivation. A public service ought to be motivated to deliver a good service. It won't be motivated by taking shortcuts. A private company seeks profit and cannot afford to lose money, contrary to a public service which can be not profitable. Offering a good service it a means to be profitable but that's not the end goal, even if many people actually want to do good work. Of course there's a big if. IF the government throws enough money at it. This IF is unfortunately too often "IF only". If not, we are back to shortcuts.
  - stickfigure 4y ago
    The service I get from AAA's DMV services is far superior to the service I get from the DMV itself.
  - Am4TIfIsER0ppos 4y ago
    bureaucrats and civil servants get paid regardless of how shit they do their jobs because the government puts a gun to your head to pay their wages and consume whatever service they provide (also applies to some "private" companies)
notch898a 4y ago
They should be run by an entity devoid of negligence, like the US government.
quorgs 4y ago
Can't disagree but The Ministry of Medium Machine-Building Industry of the USSR wasn't exactly driven by profit motive and we still got Chernobyl.

pessimizer 4y ago

We're not only not going to fine them, but we're going to make special laws to protect them from the threat of their employees getting sick days.

groot2581 4y ago

This only works if execs have the company's best interests at heart, which they don't. They reap the benefits when things go well but jump ship as the company files bankruptcy when things go south. You need Unions. Blue collar workers care about safety and can pressure execs into doing the safe thing when the incentives aren't there higher up.

Ekaros 4y ago
Also labour protections when reasonable action is taken to stop unsafe acts. If someone got fired for stopping unsafe thing they should get big enough payout. Probably years worth of wages.
- notch898a 4y ago
  That exists. https://www.osha.gov/laws-regs/mou/2012-07-16 https://www.osha.gov/laws-regs/mou/2012-07-16 Note regarding "refusing to work under certain conditions:" https://www.osha.gov/workers/right-to-refuse https://www.osha.gov/workers/right-to-refuse I used to work in interstate freight (barge, not train). They make it crystal clear any employee has the right to stop work and are protected. The rail workers could have stopped working under their dangerous conditions, they just negligently kept going. The big bad railroad is to blame, but so are the employees.
  - vsareto 4y ago
    The regulation was vague, so now you have a situation where two sides are interpreting things differently: >She said: “The regulation at the time stated that a wheel bearing was bad when it had ‘visible seepage’. But that was very vague, and the bosses used that vagueness to their advantage. For me, it was whenever oil was visible on the bearing. For my bosses, they wanted actual droplets and proof it would leak on the ground. That's probably why we have an audio leak story, because the company may have some ground to stand on because of this vagueness.
colejohnson66 4y ago
> You need Unions. The railway has unions. They even wanted to strike at the end of last year over working conditions, but Congress and Biden quickly passed a law in December to prevent it.

pasquinelli 4y ago

just nationalize it

gruez 4y ago
Because the US government never did anything negligent/shady right?

boringg 4y ago

Fines?! No, executives doing jail time is the only solution.

ROTMetro 4y ago

As another HN poster posted fines need to be 1-10% per incident of controlling stock put into trust of the relevant enforcement agency unable to be sold or diluted for 10 years. Can't get your act together then eventually overship/control/adult supervision goes to the government.