6 ms·

What, if any, might be some of the unintended consequences of this?

zdragnar 3y ago
Tens of thousands of employees without work, and if they have company stock, they lose their retirement. That's the usual reason given for not imposing a corporate death penalty.
colechristensen 3y ago
The “chickenshit” arguments against this is that it will hurt employees of the fined company or investors who didn’t know any better. Grandma’s IRA is full of index stocks, she didn’t choose any of this and shouldn’t be punished. It’s not so hard to motivate media to spread this message. The problem with that argument is that it makes it so nobody is ever responsible, competition must act the same or risk losing to the misbehaving competitors, and all you have to do to be above the law is have employees, investors, and misbehavior complicated enough to be difficult to understand who is responsible.
maeil 3y ago
None that make a significant dent in the benefits. The societal benefits of getting companies to actually abide by the law on a wide scale are much larger than any realistic consequence. Including the death of a few big companies, which yes, may mean unemployment for all of their employees. And if you want to prevent this, nationalization (which can be temporary) is always an option, as was seen in many countries with banks around 2008-2009.
ars 3y ago
You end up punishing the wrong people, i.e. you punish people who might have unknowingly gained from this, but did not cause it. You also end up punishing ordinary people who did nothing wrong. A better punishment is putting the company under receivership whose goal is reforming the behavior of the company. If you can identify the right people you can fire them, but it's not always possible: The manager pressures the employees to deliver better results, the employee cheats "a little", and doesn't tell the manager that that's how he got results. In that scenario who is responsible? The manager will say "I didn't tell him to cheat, and I didn't know he did it", the employee will say "it's not my fault, the manager set such expectations that he forced me to cheat". There's no clear answer, so instead focus on reforming the culture.
- colechristensen 3y ago
  Punish the investors by forcing them to price the risk of enforcement by having enforcement apply meaningful financial punishment. On the flip side this rewards well behaving competition giving a real market advantage. For FAANG this means fines need to be on the order of $100B for something significant. You might have to do this once or twice but once the risk is real investors will put appropriate pressure on boards, and influential employees paid in stock will have personal motivation.
  - ars 3y ago
    That won't work because the investors that actually have influence with the board also know exactly the right time to jump ship before slow moving regulators manage to do anything. You are again punishing exactly the wrong people.

Tens of thousands of employees without work, and if they have company stock, they lose their retirement. That's the usual reason given for not imposing a corporate death penalty.

colechristensen 3y ago

The “chickenshit” arguments against this is that it will hurt employees of the fined company or investors who didn’t know any better. Grandma’s IRA is full of index stocks, she didn’t choose any of this and shouldn’t be punished. It’s not so hard to motivate media to spread this message. The problem with that argument is that it makes it so nobody is ever responsible, competition must act the same or risk losing to the misbehaving competitors, and all you have to do to be above the law is have employees, investors, and misbehavior complicated enough to be difficult to understand who is responsible.

maeil 3y ago

None that make a significant dent in the benefits. The societal benefits of getting companies to actually abide by the law on a wide scale are much larger than any realistic consequence. Including the death of a few big companies, which yes, may mean unemployment for all of their employees. And if you want to prevent this, nationalization (which can be temporary) is always an option, as was seen in many countries with banks around 2008-2009.

ars 3y ago

You end up punishing the wrong people, i.e. you punish people who might have unknowingly gained from this, but did not cause it. You also end up punishing ordinary people who did nothing wrong. A better punishment is putting the company under receivership whose goal is reforming the behavior of the company. If you can identify the right people you can fire them, but it's not always possible: The manager pressures the employees to deliver better results, the employee cheats "a little", and doesn't tell the manager that that's how he got results. In that scenario who is responsible? The manager will say "I didn't tell him to cheat, and I didn't know he did it", the employee will say "it's not my fault, the manager set such expectations that he forced me to cheat". There's no clear answer, so instead focus on reforming the culture.

colechristensen 3y ago
Punish the investors by forcing them to price the risk of enforcement by having enforcement apply meaningful financial punishment. On the flip side this rewards well behaving competition giving a real market advantage. For FAANG this means fines need to be on the order of $100B for something significant. You might have to do this once or twice but once the risk is real investors will put appropriate pressure on boards, and influential employees paid in stock will have personal motivation.
- ars 3y ago
  That won't work because the investors that actually have influence with the board also know exactly the right time to jump ship before slow moving regulators manage to do anything. You are again punishing exactly the wrong people.