The Corporate Death Penalty

There's an interesting column on SiliconValley.com from Dan Gillmor (IMHO, one of the few smart columnists out there) about a probably-unimplementable idea: Killing illegal companies. The notion appeals to me though -- but even more, the idea of bad companies wearing electronic tracking bracelets amuses me. *grin*

Comments

Harm done to "innocents"

[bhurt]

I find it humorous that *any* concern to the people who would be harmed in a corporate death penalty, or in any corporate fine. No such considerations are ever given to *human* criminals who are punished. How often do you hear a judge say something like "I know you committed this crime, and you've admitted it, and normally I'd sentence you to life imprisonment for it, but since you have a wife and family who are depending upon you for financial support, and parents and siblings who would be emotionally harmed by your incareration, I'm going to commute you sentence to 60 days of probation"?

I'm a NAIC club member and stock investor. I'm also an employee. *Both* of these attributes have a certain amount of risk involved- the company I am working for may go out of buisness, or may simply downsize me, with little or no warning. The stocks I buy may declare bankruptcy, or plummet in price so far that the stocks may as well be worthless. You can't avoid risk, so you manage it. You don't put all your money into one stock, you diversify. That way if one company bombs, it doesn't take your entire portfolio with it. You keep you skills current, live in a city with many job opportunities, and keep technical contacts up, so when you loose your current job you can get another one. Risk is a fact of life.

Re:so then..

[nyet]

Nice Troll.

Since you are so fond of Jefferson, I have a quote for you.

"If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property. Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from any body. Accordingly, it is a fact, as far as I am informed, that England was, until we copied her, the only country on earth which ever, by a general law, gave a legal right to the exclusive use of an idea. In some other countries it is sometimes done, in a great case, and by a special and personal act, but, generally speaking, other nations have thought that these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices."
- Thomas Jefferson, Letter to Isaac McPherson, August 13, 1813

Corporations are imaginary

[tbo]

Jesus, I can't believe the crazy "logic" that has led people to consider something like a corporate death penalty. Corporations are imaginary--they are a legal fiction. I have never seen a corporation, nor have you. The only reality is people. Trying to impose a "death penalty" on something that is no more than words on a piece of paper is just plain silly.

As for the argument that corporations are created by the State, and are thus subject to destruction by the state (kind of like Bill Cosby's stand-up routine where he says to his kid, "I brought you into this world, boy, and I can take you out of it."), that's also just plain wrong. Just because the State has to approve the creation of a corporation does not mean the State created it--that's the same as claiming the State creates all houses because it has to grant building permits.

If you were to "kill" corporation X, what happens to its assets? What happens to your grandmother who lives off a pension that is heavily in X's stocks and bonds? Just liquidating a company gives you its book value, which is generally nowhere near its market capitalization... What happens to the employees?

Corporations, in many ways, are similar to democracies, except the shareholders are the citizens. Even though we have a democracy, we don't punish citizens for the acts of the government they may or may not have voted for (the punishment of poor governance is generally enough). Likewise, we shouldn't punish shareholders for the actions of the corporate executive.

A much simpler and more reasonable solution is to make executives liable for any violations of criminal law committed by their company. The legal entity of the corporation should still offer protection against civil liability (e.g., getting sued for not honoring warranties, etc.), but not against criminal prosecution (suit for manslaughter for knowingly selling excessively dangerous products without proper warning to consumers).

there is precedent

[Jonathunder]

There is precedent for doing this.

corpwatch.org has a well-researched article by Russell Mokhiber discussing cases going back more than a century of states revoking the corporate charter of corporations found guilty of crimes. The state granted the charter in the first place, giving "birth" to that corporation, and what the state gave it can take.

Absolutely!

[etceteral]

As others have posted here, for legal purposes a corporation is an "entity" - that's what "incorporate" means... "to form or embody"

Therefore, it makes logical sense that something that is created entirely by the State can be killed by the State (lets thank god 1984 isn't here yet, when the State starts making babies, the same logic will apply =( ).

Note that a corporate death penalty can be taken to mean a couple of different things. For example, if Microsoft lost its case and was sentanced to death, does that mean:

1. Microsoft and all its subsidaries have their charters revoked and are auctioned off?
2. Microsoft as a holding company is dissolved and all of its subsidaries are now free, independant entities (wow - kind of like when a slaveholder died in the pre-Civil War south?), or
3. title to all of the above falls back to the State, which can do any of the above as it pleases (as in the case of a person who dies, doesn't have any dependants or relatives living, and leaves no will.

A similar but unrelated question is "when should the corporate veil be pierced for investors in a corporation that commits criminal acts?" Shouldn't the investors/shareholders - who are the OWNERS be held responsible for the actions of the organization they are a part of? People would THINK a lot more on Wall Street if they were, and perhaps the mindless and ruthless actions of Transnational Corporations would be help back somewhat if the investors knew they would be liable (criminally or civily) for them...


Hmm.. another question, should/could Firestone or Ford be charged with murder? Manslaughter? If proven that they had knowledge of the fatal consequences of their actions and as a corporation did nothing about it - perhaps. Also... cigarette companies? Can they be charged with murder, since they're aware as a company that they are more or less responsible for thousands of deaths each year? Makes me wonder if Florida is a death penalty state...


So yeah, they should be treated exactly as people. =)

He's got it backwards

[MeowMeow Jones]

Why would you want to punish the corporation instead of the executives? It's just an imaginary thing anyway.

I'm sure the executives at Avant! would have rather had the corporation killed than having to pay $27 million dollars out of thier own pockets.

That's why you form a corporation in the first place. The primary purpose of a corporation is not to IPO. It's to tranfer liability from you personally to this imaginary fixture.

Trolls throughout history:

The real problem is...

[Bonker]

That Corporations, and therefore all companies have 'legal rights' in much the same way a living breathing person does. A corportation can declare bankruptcy, regardless of the fact that it's CEO and board took the money and ran. A coporation can also earn income and pay taxes (when it doesn't find a way to wriggle out of them via all the business-targeted loopholes in the tax code.)

The real crime here is that while a corporation or a company is realy a posession even if it is owned by hundreds or thousands of people, it serves as a protective sheild for real criminal behavior.

It is said that a society grows more corrupt the more laws it has. Well, rather than imposing new laws that punish a corporation or its members for wrongdoing, I propose instead removing laws and tax code that grant corporations 'person status'. Remove the laws and tax code that allow a corporation to profit instead of its owners. Remove everything that grants rights to a corporation, and I think you'll start to see a little better accountability.

This actually exists...

[mech9t8]

...it's called revoking a corporation's charter, and up till a hundred years ago was done when a corporation was found to be no longer serving the public good. There is currently a petition underway to revoke Phillip Morris' charter.

For more on this, see the AdBuster's web site:
http://adbusters.org/campaigns/corporate/tour/1.ht ml
--
Convictions are more dangerous enemies of truth than lies.