« Wolf at the door open thread | Main | Dear God Make it Stop, Open Thread »

May 07, 2018

Comments

The ethanol requirement likely creates more additional pollution than the additional diesel emissions created by circumventing emissions testing.

In the case of Volkswagen, the employees were clearly working to implement something that senior management wanted: passing the pollution tests with the engines that they had. In the case of Starbucks, what the manager did had no tie to anything senior management had indicated the least desire for.

Which, to my mind, makes a significant difference.

The ethanol requirement likely creates more additional pollution than the additional diesel emissions created by circumventing emissions testing.

Could be. Although IIRC the actual diesel emissions of those cars were astronomical, even compared to other diesels.

In reply to ChasWT, a more balanced view.

Ugh,

Agree, the gift of limited liability tends to promote diffusion of responsibility and the avoidance of punishment. There is also the basic issue of cost externalities. However, if shareholders insist that corporations are "people", then when the the corporation commits a crime, they should be punished appropriately, i.e., the risk of owning equities should be much higher. Only in the matter of corporate crime does the excuse, "How could I have known?" fly.

The German constitution explicitly forbids the extradition of German citizens without exception. So, they have to be charged either in a German court or arrested on foreign soil.

Somehow, the Wells Fargo ("experts in highway robbery!") scandal got omitted here.

The USA doesn't do regulation any more. It does DRONE STRIKES.

But Obama Didn't. Even. Try. Sad.

i.e., the risk of owning equities should be much higher.

I agree with this, even as an owner of equities.

i make the same distinction that wj does between the starbucks and vw cases.

that said, i'm not sure the starbucks manager deserves any corporate shield at all. unless it's starbucks policy to call the cops on people who use their shops as a place to meet friends.

Demonstrating once again that IANAL. But my understanding is the the "corporate shield" protects owners (i.e. shareholders). That is, they are not personally responsible for misbehavior by the company that they (partially) own.

But it does NOT protect employees. They are still responsible for their individual actions. (I'm missing McKinney, who could be explaining what I've got wrong....)

wj,

society provides this limited risk protection to shareholders as a public policy to promote the common good...however misguided it may be.

Therefore, the public has the ultimate right to delimit the parameters of this protection.

So if we had a policy that rolled up and confiscated the assets of a coal company that recklessly caused the death of 29 miners, well, tough shit, shareholders. Maybe they (shareholders) should take some responsibility for their agents, eh?

"but how could you decide what's fair, bobbyp?"

My response is this: we already have. What's your point?

My point (obviously not very clearly made) was that the Starbucks manager isn't entitled to the corporate shield. Neither are the Volkswagen execs.

In common law, there is a gap between individual and corporate liability for criminal offences which can be, and has been, addressed by legislation.
For example:
https://en.wikipedia.org/wiki/Corporate_manslaughter_in_English_law

shortly after the completion of the big dig in boston, a woman was crushed to death when a concrete ceiling panel gave way and fell on her car as she was driving through. turned out somebody had decided to use unsuitable fasteners. to save money.

the MA AG took the unprecedented step of bringing charges of manslaughter against the company involved. the criminal penalty for manslaughter for a corp in MA at that time was a $5K fine.

to my knowledge, no criminal charges were brought against any natural human person.

bobbyp,

if shareholders insist that corporations are "people", then when the the corporation commits a crime, they should be punished appropriately, i.e., the risk of owning equities should be much higher.

I disagree. 99+% of the real live people who own shares in a public company have zero influence over its behavior, and the value of their shares may have already declined as a result of the crime. Even worse, some of the shareholders - lots, probably - weren't shareholders when the crime was committed. Why punish a bunch of mutual fund investors?

I personally think we should go much harder against the corporate execs. You want a 7-8 digit salary for running the company? Then accept accountability for what happens.

I would, however, draw a distinction between illegal activities that the corporate exec knew (and presumably approved) of, and those that he merely should have known about. The latter definitely doesn't get him off the hook. But I would want the former to get more draconian punishments.

I will be announcing my opinion and decision on corporate power and responsibility next Tuesday at noon eastern unusual time.

Whatever I decide will be very, very big, either for or against and, it goes without saying, though I am saying it, my decision will be very very powerful and highly and responsibly responsible, though certainly NOT PERSONALLY responsible.

If I hear of any of you trying to guess what my momentous decision, one of the biggest decisions in American history, will be ... and it will be my decision alone unless things go tits up and then it will be Obama's or crooked Hillary's decision mutually together alone, so lock THEM up, Mueller, if their decision turns out to be full of crap .... I will send out my people, probably Rudy, to contradict whatever you might be guessing about this decision, but you'll want to keep your eyes on my lips alone as I throw my voice.

So place your bets. I'm not saying this is happening, but I know some very, very smart people, and their last names begin with TRUMP and end in -SKI, are placing THEIR bets with their offshore brokers on the Moscow stock exchange.

You wanna little taste, talk to my sons. Kanye, my man, you know what to do. Just sayin.

The ruble stops here, though it goes through many, many different accounts throughout the world before it stops here.

See, those dirty guys.... JAIL! .... in the fake newsrooms gave you the wrong dope about what the dope will do:

https://www.marketwatch.com/story/trump-tells-macron-he-will-pull-us-out-of-iran-deal-new-york-times-2018-05-08?siteid=bigcharts&dist=bigcharts

Whad I tell you? Hanh? Whad I tell you?

What did I tell you?

All eyes on ME.

My boys have a complicated spread trade on in Brent crude. Whichever way it jigs, and it will jig every which way cause that's the plan, we make out.

Stay tuned.

There are many hours left in the day to jag the world off.

You got mock questions?

I have a mockery of answers.

https://talkingpointsmemo.com/livewire/trump-mueller-interview-four-hours

They say "follow the money". You CAN'T follow my money. My money follows YOU.

I send my people out to feed the geese:

https://www.youtube.com/watch?v=aSn1g-6h1OQ

In New Russia, money launders YOU!

Where is Yakov Smirnov, now that we really need him?

After the break-up of the Bell System I worked for one of the Baby Bells. Parts of the company had a rather cavalier attitude towards some of the restrictions the consent decree put on our business activities. After the second time in court on a violation, the judge demanded that the CEO appear before him the next day. At that session, the judge announced, "If USWest is back here again, you personally will be going to jail."

Corporate training on the dos and don'ts of the decree was immediately revamped and gained new emphasis. The line "You personally can go to jail" became a tag phrase for the effort. Focused people's attention.

byomtov,

I disagree. 99+% of the real live people who own shares in a public company have zero influence over its behavior

Well sure, but corporate ownership is highly concentrated and those who do control those giant piles of stock certificates certainly do have a good deal of influence.

and the value of their shares may have already declined as a result of the crime.

Maybe. How much have BP shares declined since the Gulf oil spill?

Why punish a bunch of mutual fund investors?

That's why they call it diversification. Is this too cavalier? Perhaps.

I personally think we should go much harder against the corporate execs. You want a 7-8 digit salary for running the company? Then accept accountability for what happens.

So, if a CEO knocking down $20m/yr. is responsible for damages in the billions, how are those damaged made whole? Jail time doesn't cut it.

If you haul a CEO off to jail, the corporation can just hire another equally criminal one.

If the CEO "didn't know" then he didn't know. What punishment do you propose for "ineffectual management"?

The latitude currently provided under current law by the corporate shield is excessive, and mocks the very concept of accountability.

Thanks.

I guess it would depend on what sort of punishment you're talking about and how it would be shared among shareholders (based on how much a given shareholder owned of the company?).

I'm leaning in byomtov's direction, but I'd be curious to know more specifics.

bobbyp,

corporate ownership is highly concentrated and those who do control those giant piles of stock certificates certainly do have a good deal of influence.

Yes. So punish those people - board members, say, and others involved in the decision-making.

How much have BP shares declined since the Gulf oil spill?

On April 20, 2010, the day of the spill, BP closed at $40.47. It went into a decline and its low, $18.10, a 55% drop, was reached on June 20. This was the period when the magnitude of the damage was becoming known. It did not get back to $40.00 until December of 2017. It has risen this year, but the annualized growth since the spill is about 1.5%.

BP has also paid a 5-6% dividend, which matters, but the S&P 500 dividend adjusted annualized return over the same period is 10.4%

Exxon's price grew at 5% over the period, with roughly a 4% dividend.

So yes, BP investors paid a price, and a very steep one in the period following the spill. I'm very confident you appreciate just how big that price was.

So, if a CEO knocking down $20m/yr. is responsible for damages in the billions, how are those damaged made whole? Jail time doesn't cut it.

They are made whole by payments from the corporation, but that is normal liability law. Piling financial punishments on the corporation on top of that is overkill, IMO. And if the corporation lacks the resources to cover its liabilities then additional financial penalties are useless.

Let's punish the guilty.

If you haul a CEO off to jail, the corporation can just hire another equally criminal one.

That doesn't do the guy in jail any good.

If the CEO "didn't know" then he didn't know. What punishment do you propose for "ineffectual management"?

Whatever we do about negligence in general.

The latitude currently provided under current law by the corporate shield is excessive, and mocks the very concept of accountability.

I agree, but the people getting the big benefit are the execs.

I think byomtov makes an excellent point about dealing with "ineffectual management" as negligence.

I think byomtov makes an excellent point about dealing with "ineffectual management" as negligence.

Likewise.

Here's my big idea : people should be held responsible for their actions. They shouldn't be able to hide behind the fact that they committed harmful or criminal acts while acting on behalf of a corporate entity.

Did they know what they were doing?
Did they fail to exercise oversight or other governance that was within their scope of responsibility?

Then they should be accountable.

What punishment do you propose for "ineffectual management"?

Corporate raiders sometimes enact the punishment.

Charles,

Corporate raiders sometimes enact the punishment.

But it is inadequate, because:

Severance pay, i.e "golden parachutes."

Raiders cannot exact fines, or take away stock, or send people to jail.

They may have an incentive not to come down too hard, because they may need a little help from the soon-to-be-former CEO in figuring out what the company is all about.

Class consciousness.

It seems to me that US courts are relaxed about expropriating the assets of foreign corporations like BP or Toyota. US corporations not so much.

If all the execs were in jail, who would pay Michael Cohen ?
https://www.theatlantic.com/technology/archive/2018/05/the-strange-case-of-atts-payments-to-michael-cohen/559994/

The Russians, of course.
https://slate.com/news-and-politics/2018/05/trump-lawyer-michael-cohen-received-usd500-000-from-russian-oligarch-linked-company.html

Where is Yakov Smirnov, now that we really need him?

He's got his own 2000 seat theatre in Branson, MO, so I guess people who go to Dollywood take in a show by him.

http://www.yakov.com/schedule/

no collusion. no puppet.
so much draining.

hey look! a liberal!

byomtov,
All good points. However I would argue that existing social public controls of private corporations are severely stunted...leading to the misallocation of economic outputs, income distribution, and political power.

Lawsuits and jailing a few bad CEO's may have their uses, but when it comes to these matters I believe such measures come up short.

See here and here (looks like a good book!).

Thanks.

bobbyp,

I would argue that existing social public controls of private corporations are severely stunted...leading to the misallocation of economic outputs, income distribution, and political power.

I don't disagree. I just have some different ideas. I sort of like Greenfield's idea of not letting corporate parents hide behind limited liability, at least up to a point.

The question of jailing some people may or not help a lot, but that's not the only reason to do it. If you can be jailed for driving drunk and killing someone, why not for "managing drunk" on greed and killing several people. I find it odd that it is considered a triumph of justice that Don Blankenship was sent to prison for all of a year.

I find it odd that it is considered a triumph of justice that Don Blankenship was sent to prison for all of a year.

Indeed. Apparently under current law, that was the maximum sentence that could be handed down.

Alpha Natural Resources bought Massey in 2011 for $7.1 billion and settled claims against Massey for $200 million+. I would assume this pending liability was factored into the purchase price.

The reader is left to judge for themselves as to the fairness of these outcomes.

Just to be clear, Blankenship was charged with:

  • Conspiracy to violate mandatory federal mine safety and health standards,
  • Conspiracy to impede federal mine safety officials,
  • Making false statements to the United States Securities and Exchange Commission (SEC),
  • And securities fraud.
The four counts charged carry a maximum penalty of 31 years of imprisonment.

However, he was only convicted of conspiring to violate federal mine safety standards. Hence the lighter sentence.

wj,

That says more about the law than about what Blankenship did.

Or maybe more about the ability of the prosecutor to make his case....

if you're gonna break the law, it helps to be a rich white guy.

Worse, miners feared losing their jobs if they spoke out about their dangerous working conditions.

"We knew that we'd be marked men and the management would look for ways to fire us," a miner named Stanley Stewart told a House committee.

Special snowflakes like Bari Weiss know absolutely NOTHING about the suppression of free speech.

wj,

Maybe. But I see nothing in that list that suggests that, you know, twenty-nine miners dies as a consequence of his behavior.

There are, of course, other issues tp consider when it comes to corporate ownership, control, transparency and accountability....

https://www.newyorker.com/news/news-desk/the-michael-cohen-revelations-are-a-crash-course-in-shady-corporate-entities
Trump, according to his published financial disclosure, owns five hundred and sixty-five different companies, each of which is a black box. We can’t see what is inside them. And, as the case of Columbus Nova demonstrates, it is possible that there are other companies that Trump doesn’t technically own but that manage nothing but Trump assets, or which otherwise serve as entities designed to transfer his funds.`

Maybe. But I see nothing in that list that suggests that, you know, twenty-nine miners dies as a consequence of his behavior.

byomtov,
I definitely agree that the penalties are way too low. But only convicting him on one misdemeanor charge also contributed to the mildness of the sentence.

I also wonder why the state (since it isn't a Federal matter) didn't charge him with negligent homicide. Seems like a pretty obvious charge....

Trump, according to his published financial disclosure, owns five hundred and sixty-five different companies, each of which is a black box.

If memory serves, most of those are LLCs rather than corporations. (Which is common in real estate; although I don't know how many are that kind.) But while that limits liability for loss, I wonder if it also limits criminal liability.

McKinney, are you there?

"I also wonder why the state (since it isn't a Federal matter) didn't charge him with negligent homicide. "

Because West Virginia, that's why.

If they really wanted tougher enforcement of mine safety, they'd be voting for different people.

Trump, according to his published financial disclosure, owns five hundred and sixty-five different companies

a true American, he contains multitudes.

contains multitudes? Or is swathed in multitudes for concealment?

also, via Dr. Duncan Black:

EXCLUSIVE: Steve Bannon was target of bribery plot by top Qatari who invested in Ice Cube's basketball league to get to Trump's strategist and boasted 'Mike Flynn took our money', rapper claims in court.

In the immortal words of Samuel Clemens, it is too many for me. My mind, it is undone.

If I worked for the Onion, I'd be sprucing up my resume, because all opportunities for satire have been sucked out of the room.

It's rip and read, friends.

[Mark Russell said that line after reporting the "cake in the shape of a key" carried to Iran. Now with Oliver North installed as president of the NRA it seemed apt to recall it. Everything old is new again.]

Everything old is new again.

Including North looking more and more like Ross Perot...

But while that limits liability for loss, I wonder if it also limits criminal liability.

it's about money laundering, tax evasion, and hiding the buyers' names.

https://www.usatoday.com/story/news/2017/06/13/trump-property-buyers-make-clear-shift-secretive-llcs/102399558/

It’s also worth bearing in mind that various state organisations can very effectively limit their liability.
This kind of event (the apology, that is) is quite unusual...
http://www.bbc.co.uk/news/uk-44070304

And we’ll not know for thirty years or so whether (as seems quite likely) the Foreign Secretary at the time signed off on the action.

"The discussion in that thread brought to mind the recent arrests of two African-American men at Starbucks, including the call made by the store manager to the police, the resulting protests, and the reaction/response of Starbucks' CEO."

If I can go on a freeform diversion--this issue, combined with this article on the joke/callback to Are You Being Served makes me feel like we really need to focus on proportionate responses. Yes you can have a policy that people need to buy something to sit at one of your tables very long, but there is a HUGE proportionate difference between saying "tables are for customers, will you be buying something soon" and calling the cops. Similarly if someone makes a joke that if you squint just right MIGHT possibly be slightly offputting, telling them that it was slightly offputting is totally different than referring them to a disciplinary committee for a sexual harassment investigation.

Sebastian, I wish I'd written that second paragraph.


what you have learned from the things you do

I'm a computer guy.

Thirty five years ago, while I was still a larval hacker, I worked with a guy named Steve Alexander who taught me two important things about the corporate world.

(when I was overworking but not getting rewarded)
Joel, make sacrifices for the company if you want to, but don't ever believe that the company will make sacrifices for you in return. [Big computer company] will never love you back.


(when I asked him to review a rather overheated memo)
Joel, you can't simultaneously antagonize and influence: you have to choose which of those goals you're pursuing. Tell someone off if you must, but don't make the mistake of thinking you'll change their mind in the process.

I think of that second one as "Alexander's Law"

The comments to this entry are closed.

Blog powered by Typepad