5 ms·

"The $16.45 million settlement was the largest civil penalty obtained under U.S. environmental statutes at the time. But it was still just a small fraction of D

by iinnPP 3y ago

"The $16.45 million settlement was the largest civil penalty obtained under U.S. environmental statutes at the time. But it was still just a small fraction of DuPont's $1 billion annual revenues from PFOA and C8 in 2005." Spotted the problem. The fix is simple, fine them 110% of the ill-gotten gross profits(from start to finish) attributed to all products impacted even slightly. Then provide an instant settlement to all children born with health defects who's biological parents purchased any of the products. No lawyer cuts. The amount is $10,000,000 each and permanently funded healthcare. Should the company go bankrupt, each person in position to become a whistleblower who chose not to, can work the rest of their lives paying "child support" equal to their earnings minus whatever social security gives. The same thing for the regulators who failed.

greenpresident 3y ago
Most theories of optimal fining are based on social costs S, discovery cost C, and discovery chance P. If, for example, you would like to maximize total welfare, you would fine S/P+C. A rational actor would only engage in the behavior of their expected gain was larger than the expected cost to society. The firms profit should be irrelevant in my opinion. But make these firms believe that they will have to cover the true costs of their behavior!
- plagiarist 3y ago
  Yeah, I mean, as long as we're idealizing, let's have them pay the actual costs that were externalized to society instead of merely wiping out profits from misdeeds.
- horsawlarway 3y ago
  > A rational actor would only engage in the behavior of their expected gain was larger than the expected cost to society. This is - bluntly put - a shite fucking idea. I am not trying to "maximize total welfare" where one way to accomplish that is to allow a bad actor to get ridiculously wealthy at the expense of everyone else (even if the total paid by everyone else is less than the bad actor makes). We have a term for this: Privatized profits and socialized losses. We're witnessing that this mindset is completely dysfunctional. It allows bad actors to accumulate immense wealth through behaviors that are net negatives for all other participants - further, those bad actors can then use that wealth to avoid or offset the share of their social costs that should be paid (ex: lobbying politicians, paying off regulators, bribing judges, etc) ---- There is a reason most people don't accept a deal where both parties gain, but one gains at a heavy advantage over the other: We know that allowing this behavior is bad for long term social stability, and we have all sorts of ideas about "Fair" that we apply to stop it: https://www.sciencedirect.com/topics/neuroscience/ultimatum-game https://www.sciencedirect.com/topics/neuroscience/ultimatum-... > The firms profit should be irrelevant in my opinion. But make these firms believe that they will have to cover the true costs of their behavior! The profit is the ONLY FUCKING THING that is relevant. The firms don't care about "true costs" (which, as an aside are often impossible to reasonably calculate). All the firms cares about is "Does bad behavior A lead to more net money, or less net money?" As long as the answer is "More net money" The firm is going to engage in bad behavior. The answer ALWAYS needs to be: Fine the bad behavior until it is not profitable. Full fucking stop.
  - manoDev 3y ago
    IMO, all that is necessary is the law strongly backing personal liability of C-level in all industries. Trying to penalize companies never works in practice, regulators CANT let large companies going bankrupt, cascading defaults of creditors, creating unemployment, etc. It never happens. Also, this penalizes the workers the most. Once psychopaths have certainty of personal consequences they will want to stay away from executive positions.
    - horsawlarway 3y ago
      There is too strong an incentive to assign fall men to positions of "public responsibility" and then operate behind them at will (profitably). I'd maybe be in favor of a law that demanded that fines be paid in equity of the company (starting with equity held by the C-level officers and board) at a steep discount on market price (say... 50% valuation). Engage in enough bad behavior and you become nationalized over time, and then the public can decide what to do with the result.
    - hedora 3y ago
      Regulators definitely could let large companies go bankrupt. They’d seize 100% of the stock and cancel any exit packages, then fire the board, and CEO, and claw back any remaining fines from the personal accounts and garnished wages of the executives responsible for the problem. This would protect the employees, customers and creditors of the company. Of course, it wouldn’t protect the people that own congress and the supreme court, so it will never happen.
  - reaperman 3y ago
    To be fair, if you follow the GP's formula, and magically plug in the correct numbers...you'll socialize the gains as well. Because the social losses of the pollution will be offset by the high fines. It's a fair system, it just moves agency for "who can pollute for the social good?" from the government to the private corporation. I don't love it personally, but it's decidedly not "Privatized profits and socialized losses". It's explicitly a system to make sure that the profits are shared from the damaging-corporation, to the government of the people damaged. In theory, I think they have a great point, which might be workable to inform future fine frameworks (we will always need fines in addition to anything else, and this isn't the worst way to set the fines). In reality, I suspect that captive government officials will set some of the variables far too "in-favor" of the corporations in exchange for backroom deals or cronyism. But it's far from the worst idea I've seen.
- hedora 3y ago
  That is why punitive damages are typically 10x. (S/P+C is roughly 10). In this case, it’d be a 10B fine, which is 33% of their current market cap. That seems about right. They make other stuff, so letting the company survive (but barely) probably maximizes societal utility moving forward.
ranting-moth 3y ago
Fine them 10x the ill gotten gross profits and imprison the perpetrators.
toomuchtodo 3y ago
3M is sunsetting their PFAS business at a cost of almost $2.3B. If they are voluntarily doing so, consider what future costs might be. https://www.reuters.com/business/3m-stop-making-forever-chemicals-take-up-23-bln-charge-2022-12-20/ https://www.reuters.com/business/3m-stop-making-forever-chem...
- b800h 3y ago
  By "sunsetting" do they mean selling it to a Chinese firm? No reason to suspect so, but you'd have to be mad not to, right?
  - mensetmanusman 3y ago
    They are simply stopping. 'Poof' gone. Multi billion dollar annual revenue supporting the semiconductor supply chain. They are not selling the business. What this means practically is that China will make it and the world will be worse off due to no regulations, but that is how the game theory plays out in the west time and time again over the last half century. I'm curious how much this is disrupting tsmc...
    - cptskippy 3y ago
      3M made an exception for key industrial applications. The translation is "In light uncovered impacts to human health and in anticipation of pending lawsuits, we're curtailing wreck-less, excessive, and unnecessary usage of the product in industries where it isn't strictly necessary."
- cptskippy 3y ago
  > 3M is sunsetting their PFAS business at a cost of almost $2.3B. This isn't some altruistic gesture and 3m isn't spending $2.3B to wind down the business. That estimated 2.3 is a pre-tax charge against quarterly earnings that will do littler more than cause it's stock price to dip. Businesses take these pre-tax charges all the time that lower their stock price AND also make unspecified retroactive account changes that mysterious cause their stock price to rise. I think a more accurate statement might be "3M is sunsetting their PFAS business to protect itself from future litigation and to leverage a $2.3B tax write off".
JoshTko 3y ago
This isn't enough, any executive involved in cover up should be civilly and criminally liable per person injured.
ROTMetro 3y ago
Someone here came up with the idea of Government ownership. First fine, 5-10% non-dilutable ownership that the Government can't divest for 10 years. That punishes the owners and adds the headache of having the Government now in-house instead of outside looking in. Keep it up and ultimately the Government holds a controlling stake in the company to force compliance.

by iinnPP 3y ago

greenpresident 3y ago

Most theories of optimal fining are based on social costs S, discovery cost C, and discovery chance P. If, for example, you would like to maximize total welfare, you would fine S/P+C. A rational actor would only engage in the behavior of their expected gain was larger than the expected cost to society. The firms profit should be irrelevant in my opinion. But make these firms believe that they will have to cover the true costs of their behavior!

plagiarist 3y ago
Yeah, I mean, as long as we're idealizing, let's have them pay the actual costs that were externalized to society instead of merely wiping out profits from misdeeds.
horsawlarway 3y ago
> A rational actor would only engage in the behavior of their expected gain was larger than the expected cost to society. This is - bluntly put - a shite fucking idea. I am not trying to "maximize total welfare" where one way to accomplish that is to allow a bad actor to get ridiculously wealthy at the expense of everyone else (even if the total paid by everyone else is less than the bad actor makes). We have a term for this: Privatized profits and socialized losses. We're witnessing that this mindset is completely dysfunctional. It allows bad actors to accumulate immense wealth through behaviors that are net negatives for all other participants - further, those bad actors can then use that wealth to avoid or offset the share of their social costs that should be paid (ex: lobbying politicians, paying off regulators, bribing judges, etc) ---- There is a reason most people don't accept a deal where both parties gain, but one gains at a heavy advantage over the other: We know that allowing this behavior is bad for long term social stability, and we have all sorts of ideas about "Fair" that we apply to stop it: https://www.sciencedirect.com/topics/neuroscience/ultimatum-game https://www.sciencedirect.com/topics/neuroscience/ultimatum-... > The firms profit should be irrelevant in my opinion. But make these firms believe that they will have to cover the true costs of their behavior! The profit is the ONLY FUCKING THING that is relevant. The firms don't care about "true costs" (which, as an aside are often impossible to reasonably calculate). All the firms cares about is "Does bad behavior A lead to more net money, or less net money?" As long as the answer is "More net money" The firm is going to engage in bad behavior. The answer ALWAYS needs to be: Fine the bad behavior until it is not profitable. Full fucking stop.
- manoDev 3y ago
  IMO, all that is necessary is the law strongly backing personal liability of C-level in all industries. Trying to penalize companies never works in practice, regulators CANT let large companies going bankrupt, cascading defaults of creditors, creating unemployment, etc. It never happens. Also, this penalizes the workers the most. Once psychopaths have certainty of personal consequences they will want to stay away from executive positions.
  - horsawlarway 3y ago
    There is too strong an incentive to assign fall men to positions of "public responsibility" and then operate behind them at will (profitably). I'd maybe be in favor of a law that demanded that fines be paid in equity of the company (starting with equity held by the C-level officers and board) at a steep discount on market price (say... 50% valuation). Engage in enough bad behavior and you become nationalized over time, and then the public can decide what to do with the result.
  - hedora 3y ago
    Regulators definitely could let large companies go bankrupt. They’d seize 100% of the stock and cancel any exit packages, then fire the board, and CEO, and claw back any remaining fines from the personal accounts and garnished wages of the executives responsible for the problem. This would protect the employees, customers and creditors of the company. Of course, it wouldn’t protect the people that own congress and the supreme court, so it will never happen.
- reaperman 3y ago
  To be fair, if you follow the GP's formula, and magically plug in the correct numbers...you'll socialize the gains as well. Because the social losses of the pollution will be offset by the high fines. It's a fair system, it just moves agency for "who can pollute for the social good?" from the government to the private corporation. I don't love it personally, but it's decidedly not "Privatized profits and socialized losses". It's explicitly a system to make sure that the profits are shared from the damaging-corporation, to the government of the people damaged. In theory, I think they have a great point, which might be workable to inform future fine frameworks (we will always need fines in addition to anything else, and this isn't the worst way to set the fines). In reality, I suspect that captive government officials will set some of the variables far too "in-favor" of the corporations in exchange for backroom deals or cronyism. But it's far from the worst idea I've seen.
hedora 3y ago
That is why punitive damages are typically 10x. (S/P+C is roughly 10). In this case, it’d be a 10B fine, which is 33% of their current market cap. That seems about right. They make other stuff, so letting the company survive (but barely) probably maximizes societal utility moving forward.

ranting-moth 3y ago

Fine them 10x the ill gotten gross profits and imprison the perpetrators.

toomuchtodo 3y ago

3M is sunsetting their PFAS business at a cost of almost $2.3B. If they are voluntarily doing so, consider what future costs might be. https://www.reuters.com/business/3m-stop-making-forever-chemicals-take-up-23-bln-charge-2022-12-20/ https://www.reuters.com/business/3m-stop-making-forever-chem...

b800h 3y ago
By "sunsetting" do they mean selling it to a Chinese firm? No reason to suspect so, but you'd have to be mad not to, right?
- mensetmanusman 3y ago
  They are simply stopping. 'Poof' gone. Multi billion dollar annual revenue supporting the semiconductor supply chain. They are not selling the business. What this means practically is that China will make it and the world will be worse off due to no regulations, but that is how the game theory plays out in the west time and time again over the last half century. I'm curious how much this is disrupting tsmc...
  - cptskippy 3y ago
    3M made an exception for key industrial applications. The translation is "In light uncovered impacts to human health and in anticipation of pending lawsuits, we're curtailing wreck-less, excessive, and unnecessary usage of the product in industries where it isn't strictly necessary."
cptskippy 3y ago
> 3M is sunsetting their PFAS business at a cost of almost $2.3B. This isn't some altruistic gesture and 3m isn't spending $2.3B to wind down the business. That estimated 2.3 is a pre-tax charge against quarterly earnings that will do littler more than cause it's stock price to dip. Businesses take these pre-tax charges all the time that lower their stock price AND also make unspecified retroactive account changes that mysterious cause their stock price to rise. I think a more accurate statement might be "3M is sunsetting their PFAS business to protect itself from future litigation and to leverage a $2.3B tax write off".

JoshTko 3y ago

This isn't enough, any executive involved in cover up should be civilly and criminally liable per person injured.

ROTMetro 3y ago

Someone here came up with the idea of Government ownership. First fine, 5-10% non-dilutable ownership that the Government can't divest for 10 years. That punishes the owners and adds the headache of having the Government now in-house instead of outside looking in. Keep it up and ultimately the Government holds a controlling stake in the company to force compliance.