I know this is just a fact of our market driven world, but it is wild to me that Twitter has considerations and is treated as an individual. Corporate law is just nuts.
I know this is just a fact of our market driven world, but it is wild to me that Twitter has considerations and is treated as an individual. Corporate law is just nuts.
It's IMO one of the big failings of our laws that CEOs directing companies aren't also who gets cited in front of a court or made to pay for stuff. "The company" is, as if that's a thing. Somebody...
It's IMO one of the big failings of our laws that CEOs directing companies aren't also who gets cited in front of a court or made to pay for stuff. "The company" is, as if that's a thing. Somebody gets money when the company makes profits, so naturally they ought to be held responsible for stuff, too. Or in other words, if the CEOs get bonuses when the company produces excess profits under their direction, it stands to reason that they ought to be made to pay money into the company when the company loses money from decisions made under their leadership (even if this is in the past). Responsibility would go a long way to reigning CEOs in.
People do complain about it sometimes, but I don’t think they’ve thought about the practical consequences of not treating organizations as legal entities. It would likely be a world in which no...
People do complain about it sometimes, but I don’t think they’ve thought about the practical consequences of not treating organizations as legal entities. It would likely be a world in which no large projects ever get done because nobody would want to take personal responsibility for them.
How do you do payroll without companies being legal entities? Imagine a world where everyone worked for people instead of organizations. When you work for someone personally and they die unexpectedly, do you have to wait until you get paid out of their estate?
If someone wants to sue the city, should they have to sue the mayor instead? What if you want the city to pay damages and the mayor doesn’t have any money? What if the damages happened years ago when the city had a different mayor?
There’s a sense in which organizations aren’t real, there are only people. But every day we talk about companies and charities and governments like they’re real. We make contracts with organizations like they’re real. They have bank accounts like they’re real. When they screw someone over we want to be able to take them to court like they’re real.
IANAL but isn't it possible to make some kind of legal entity which is less like a person and more like a special sort of a thing that is a company? I know companies aren't exactly like people in...
IANAL but isn't it possible to make some kind of legal entity which is less like a person and more like a special sort of a thing that is a company? I know companies aren't exactly like people in law but the impression I get is they are perhaps more like people than they need to be.
So you can still do all the admin stuff like payroll and legal continuity in the case of death/retirement/etc but also have the executives/shareholders carry some more responsibility for the way the legal entity acts. Given that they are, after all, the ones controlling it. It seems like it's far too easy for the humans to get away with almost anything because they're "not the company"
If we can’t hold owners liable then the laws should at least force them to step down from companies and no longer be able to make money off of them. If there’s no risk involved being a company...
If we can’t hold owners liable then the laws should at least force them to step down from companies and no longer be able to make money off of them.
If there’s no risk involved being a company owner they’ll just do whatever they want. Which is equally as bad as if there was too much risk.
"Hey you, you presided over this company while it did something terrible! Now walk away with more money in your bank account than most people will see in a lifetime" OH NO. Anyway.. I want to see...
"Hey you, you presided over this company while it did something terrible! Now walk away with more money in your bank account than most people will see in a lifetime"
OH NO. Anyway..
I want to see executives busted down to a level commensurate with what the company did under their control. Like the head of BP when BP poisoned the Gulf of Mexico, he should be personally fined to the point where he's not quite a financial burden on the state, but definitely has to work the night shift in one of his former garages in order to put food on the table for the rest of his life. Obviously that's a very extreme example, but just making people walk away into luxurious retirements isn't much of an incentive to be better.
Is the CEO not responsible for the people who are responsible for making sure the people who do the safety checks are double and triple checked? Is that not the whole point of a hierarchy, that...
Is the CEO not responsible for the people who are responsible for making sure the people who do the safety checks are double and triple checked? Is that not the whole point of a hierarchy, that the buck travels all the way up? The CEO usually gets a bonus when things go well, so they must be responsible for the good stuff otherwise they wouldn't get the bonus - so surely it works the other way too? (I do know it doesn't, but it should)
That's why they are paid so much, isn't it? Because they are responsible. They're obviously not getting all that money for operational stuff, they don't do operational stuff. They have meetings and play golf and decide that instead of building a corporate culture based around doing things properly, they'll have one which prefers to cut some corners and make a few more points of profit. The CEO's decisions must mean something, otherwise why do they exist?
In this particular case yes, the head of BP at the time should be made near-as-dammit destitute. The guy ran a company that poisoned an entire ecosystem and you think he should be allowed to quietly retire into the kind of luxury almost no other human being will ever experience? I will admit that I'm not entirely on board with retributive justice as a general concept but there are times where it seems like actions that ultimately lead to millions of life forms dying should have some amount of consequence. Some old rich dude lying on a yacht and feeling a bit bad about things really doesn't sit right.
fwiw Tony Hayward, BP's CEO at the time, currently runs... an oil company. So he's not even been disallowed from working in the same field. He's won several awards for leadership since Deepwater Horizon. Estimates are that he's currently "worth" somewhere between $20-40m which puts him in the top 0.01% of all humanity.
Let's consider a hypothetical corporation: A plumber sets up an LLC to operate his business under. As his business grows, he hires a couple of employees. Unkbeknownst to him, one of the employees...
Let's consider a hypothetical corporation: A plumber sets up an LLC to operate his business under. As his business grows, he hires a couple of employees. Unkbeknownst to him, one of the employees has a bad day and damages a customer's plumbing system, and then they opt to cover it up rather than fix or report it. As a consequence, the customer's home floods and their property is damaged.
In the current system (as I understand it, though I am not a lawyer and could be wrong here), the LLC will compensate the customer and may sue the the former employee. If it's particularly bad, maybe the employee even faces criminal charges. The business owner is not personally liable, since he did not know about or condone the former employee's actions.
In the case you are proposing (please tell me if I'm misunderstanding), it sounds like the business owner is found personally liable, not the LLC or the former employee. In such a world, surely businesses would be heavily incentivized to not hire employees and, if they absolutely must, to only hire extremely skilled, carefully vetted employees with a long work history. I, personally, would not want to be an employee in such an economic system because I don't think I would be employed for much longer.
Yup, that's pretty much it. People who run businesses should be responsible for the things those businesses choose to do. Choose is an important word there. I'm not quite sure how that's an...
Yup, that's pretty much it. People who run businesses should be responsible for the things those businesses choose to do. Choose is an important word there. I'm not quite sure how that's an strange thing to think.
Obviously there's nuance. In your example then the business owner would have accident insurance, which they would do normally anyway. Employee makes mistake, insurance pays out, carpet gets replaced or whatever, everyone's fine. Just like it would happen right now. Mistakes happen and I'm not saying string up the CEOs every time there's a mistake. Although some mistakes are far more serious than others - for example, if I mistakenly kill someone with my car that's still going to court and might end in criminal charges for me.
But in the current system it appears to be possible for a corporation to commit significant wrongdoing and as far as I can see there's no incentive for CEOs to not do that. That wrongdoing might come about via negligence by creating a corporate culture which cuts corners on materials or training or procedures - or the execs might even be actively involved in making not-illegal-but-definitely-bad decisions (eg, Philip Morris covering up research showing smoking causes cancer, Nestle's milk formula stuff, etc)
If I run a business and my employee stabs a customer then of course that's not my fault. Murder is not part of my standard business operations. But if my business, in it's normal operations, commits a little light ecocide despite everyone following protocol, then that absolutely should land on me. I didn't ensure my business was running in a suitably fail-safe way. My decisions led to that result. Maybe the courts look at the case and decide I had done everything I could and it was just bad luck - in which case, fine. Everyone goes home.
Not knowing about doing the bad stuff is not an excuse for anyone else, why do CEOs get that luxury? If I get pulled over for speeding and I say "sorry, wasn't looking at the speedo" the cops don't just wave me on my way.
I would say so, if only because that's a pretty major part of what a CEO does. They are the face of the company, they are the one that the buck stops at. And the idea that they are accountable for...
I would say so, if only because that's a pretty major part of what a CEO does. They are the face of the company, they are the one that the buck stops at.
And the idea that they are accountable for everything is how they justify a CEO getting compensated 50x the value of average employees.
If the CEO WAS involved in the day to day operations, and those bad decisions DID make their way up to him, then I'd actually be less inclined to judge him for it, because that's a collaborative decision making process and he was just one person out of many weighing in there.
But to take ownership and accountability of the entire operations of the company, and then isolating himself from the info needed to watch out for stuff like this? That's on him. He COULD have had that information, if he wanted it. He SHOULD have put himself in a position to prevent it.
Make no mistake. I completely agree with you, but the biggest problem is that the one to make the laws are the ones with all the money and all the influence. So these companies will lobby...
Make no mistake. I completely agree with you, but the biggest problem is that the one to make the laws are the ones with all the money and all the influence. So these companies will lobby government to not make laws like that.
If we could at least do it this way, then we could remove harmful people from positions of power. It’s not a great solution, obviously but it’s more likely to happen, then getting lobby groups to change their position about punishing themselves.
And I know you joke: but these awful people actually would feel punished walking away with lots of money. Because it’s not ALL the money.
I reckon they'd feel even more punished if they had to live like a normal human for the rest of their lives. You're right in that the corporate capture of government makes this impossible, and...
I reckon they'd feel even more punished if they had to live like a normal human for the rest of their lives.
You're right in that the corporate capture of government makes this impossible, and even in the best case scenario, politicians from the elite class wouldn't ever want to do this. But goddamn, maybe we'd have less psychopaths in power making psychopath decisions if the worst case scenario wasn't "retire rich".
Well, sure, I think it’s reasonable to debate to what extent limited liability is a good thing. In some cases there is personal liability. This is called “piercing the corporate veil.” People on...
Well, sure, I think it’s reasonable to debate to what extent limited liability is a good thing. In some cases there is personal liability. This is called “piercing the corporate veil.” People on the board of directors of a company will often have liability insurance for this.
It's possible, but you now need your legislators to write two parallels sets of laws and regulations, one to govern corporations and another to govern individuals, sole proprietorships,...
IANAL but isn't it possible to make some kind of legal entity which is less like a person and more like a special sort of a thing that is a company?
It's possible, but you now need your legislators to write two parallels sets of laws and regulations, one to govern corporations and another to govern individuals, sole proprietorships, partnerships, etc. They'd have to do this for each and every single thing.
It's much more straightforward to just treat the corporation as its own legal entity. Being a common law tradition, situations where that distinction leads to weirdness can be interpreted around as not being applicable to non-human persons. For example, we don't really need to worry about marriage and family law for a corporation to the same extent we may need to for a private firm. Or you may just decide that it's absurd to claim a corporation, which is a fictitious entity, can meaningfully have "religious beliefs" that would be protected under the 1st amendment. (But you'd have to be less insane than the Robert's Court to assert such a thing.)
Oh no, the lawmakers have to do some work?! And make laws which specifically cover corporate behaviour because corporations aren't humans and trying to treat them as such has led to... well, this...
Oh no, the lawmakers have to do some work?! And make laws which specifically cover corporate behaviour because corporations aren't humans and trying to treat them as such has led to... well, this mess we see around us where massive crimes and injustices are being committed all the time by corporate entities with little to no recourse?
Not sure I consider that a downside as an actual plus point that we should really get on to doing ASAP...
I think if you spent some time thinking about what it actually entails to create an entirely parallel legal structure, as well as the downsides of getting it wrong and the potential for abuse and...
I think if you spent some time thinking about what it actually entails to create an entirely parallel legal structure, as well as the downsides of getting it wrong and the potential for abuse and likelihood of corruption from poorly designing the parallel structure, you might not be so glib about it.
Firstly I genuinely don't see how that's a bad thing because even trying and getting some things wrong can't be worse than not trying at all. It's not like we have to do everything all at once...
Firstly I genuinely don't see how that's a bad thing because even trying and getting some things wrong can't be worse than not trying at all. It's not like we have to do everything all at once overnight. One law at a time until corporations aren't people. Might take years. But laws are things made up by humans, we can make up whatever we want - we're not talking about rewriting physical laws here. It's possible. But on the other hand I don't do very well with the Weird World Of Law that often seems to make no sense whatsoever so perhaps I have no clue.
Secondly I think sometimes it's good to say "naa, fuck it, let's just do the thing" rather than worrying about it being too hard. In this context, like so, so many - it's not an issue because literally not a single thing any of us say or do on this website is going to have any sort of effect in the real world. So while we're playing fantasy government, why not try to imagine a world which is actually better, instead of the shitty one we already have?
Trying to do what though? It's literally just an incredible amount of extra work with a ton of room for error and basically no upside that we don't already get through other means. This is not at...
Firstly I genuinely don't see how that's a bad thing because even trying and getting some things wrong can't be worse than not trying at all.
Trying to do what though? It's literally just an incredible amount of extra work with a ton of room for error and basically no upside that we don't already get through other means.
it's not an issue because literally not a single thing any of us say or do on this website is going to have any sort of effect in the real world
This is not at all a safe assumption on the internet. Some of us (including me) are professional policy analysts and advisors. We also have plenty of lawyers on this very site. We're not playing "fantasy government" we're talking about things that have tangible impacts on peoples' lives and when voter behavior is led by simplistic or magical thinking it tends to have disastrous consequences.
I dunno, it seems like a pretty safe assumption. There is absolutely no way that any lawyer, politician or policy wonk worthy of their job is going to take anything I say even remotely seriously....
I dunno, it seems like a pretty safe assumption. There is absolutely no way that any lawyer, politician or policy wonk worthy of their job is going to take anything I say even remotely seriously. I have IRL friends who work in think tanks you've probably heard of and they don't pay any attention to my anti-corporate/anti-capitalist ravings - and to them I'm an actual person (sometimes even an in-person person), not some random nutter on the internet.
We aren't going to "do the thing" because, as you say, legal systems aren't up to us. We're just discussing hypotheticals here on Tildes. Yes, you could certainly imagine something that works...
We aren't going to "do the thing" because, as you say, legal systems aren't up to us. We're just discussing hypotheticals here on Tildes.
Yes, you could certainly imagine something that works differently, and maybe get some good fiction out of it? But if it's changed enough, it's not really a criticism of anything happening in the real world anymore. It's just a fictional universe. For a hypothetical to be about something people could really do something about, it has to be based on choices actually available to them.
Are you saying my hypothetical is too hypothetical? Eep. I wasn't aware there was a limit on hypotheticality! :) I think it's OK to criticise things in a way that involve making significant...
Are you saying my hypothetical is too hypothetical?
Eep. I wasn't aware there was a limit on hypotheticality! :)
I think it's OK to criticise things in a way that involve making significant hypothetical changes to the world, partly because it's good to play about with big ideas just to see where they go, and partly because none of this matters anyway. It's a different sort of a discussion to the one I suspect you want to have and that's fine.
Sure, you can be as hypothetical as you want and you can criticize what you want. Others might not be convinced if they think you’re being unrealistic, though, and maybe say so? I think this is...
Sure, you can be as hypothetical as you want and you can criticize what you want. Others might not be convinced if they think you’re being unrealistic, though, and maybe say so?
I think this is all okay as long as people seem to be enjoying the discussion.
Surely we already do have parallel laws to a large extent. For example, if a corporation commits a crime, it doesn't get arrested and go to jail. I would actually like to see most corporations...
Surely we already do have parallel laws to a large extent. For example, if a corporation commits a crime, it doesn't get arrested and go to jail.
I would actually like to see most corporations treated more like people in this regard. The punishment for a corporation that commits a crime should sting just as badly as the punishment for a person who commits a crime. If you commit a serious crime, you can expect to devote much of your wakeful life to facing the charges because they are that bad, and if you are found guilty, you can expected to see your freedom severely curtailed for a sizeable portion of your life.
Likewise, a corporation that commits a serious crime should not be able to continue doing business as usual. Facing crime charges should be an extremely frightening prospect for the corporation that is felt across the organization. The corporation should face a person-like sentence and a person-like loss of freedom for the duration of that sentence. Hell, in jurisdictions with the death penalty, perhaps judges and jury should have the option to shut it down permanently, and it should be shut down for similar reasons that a person may be executed (e.g., egregious homicide). A corporation should be just as wary of committing crime as real people are.
The only defense should be if someone within the organization commits an illegal act that is "unknown" to the corporation (e.g., someone faked a passing OSHA test, which was not known or condoned by the hierarchy overseeing such tests, and the corporation reported the crime, preserved evidence, and otherwise complied with law enforcement upon the crime's discovery). In that case, it goes without saying, the individual in question should face the full brunt of the law and see a lengthy prison sentence. But if the corporation did anything to aid or encourage crime (e.g., employers were placed under high pressure to meet difficult quotas while their supervisors deliberately looked the other way), then their culpability should increase accordingly.
I'm not sure what to do about entities that, for the good of society, really need to remain fully functional even throughout a criminal sentence, such as major banks. I do think that if a corporation reaches such a status, though, then it's really quite an altogether different sort of entity from your run-of-the-mill LLC or whatnot, and they should receive different treatment under the law (e.g., maybe too-big-to-fail corporations should see extensive, invasive regulation to prevent such issues in the first place; meanwhile, perhaps small-enough-to-fail corporations should see less red tape than they do currently, but at the risk of major disturbance to their business if they, say, scam a customer or steal wages from an employee).
Like I mentioned before, we get to do this owing to the common law tradition. Stuff that isn't applicable to a fictional entity just doesn't apply, and we make determinations about what is and...
Surely we already do have parallel laws to a large extent. For example, if a corporation commits a crime, it doesn't get arrested and go to jail.
Like I mentioned before, we get to do this owing to the common law tradition. Stuff that isn't applicable to a fictional entity just doesn't apply, and we make determinations about what is and isn't applicable based on legal precedent.
The corporation should face a person-like sentence and a person-like loss of freedom for the duration of that sentence.
Why and how though? These aren't real things with any sort of independent will. If you restrict freedom and loss of agency for a corporation, the people who comprise it will simply leave. Then you have basically a new crop of people who had nothing to do with the old decisions having to live under the covenants put under them by misbehavior from others. This kind of happens under certain conditions. Like Volkswagen has been put under some pretty strict legal obligations as a result of Dieselgate, but for the most part the liability for malfeasance falls on the people within the organization who had a fiduciary duty to keep things kosher.
There is room to say more responsibility should fall on those people, and simply slapping fines that cost less than the benefits of behaving badly aren't achieving desired outcomes. But that's a corporate governance discussion, there's no need to try and build new and elaborate legal frameworks to do it.
There is also a valid argument to be made that entrepreneurship would not be as widespread if founders were liable for what a company does. It's already extremely expensive and risky to found...
There is also a valid argument to be made that entrepreneurship would not be as widespread if founders were liable for what a company does.
It's already extremely expensive and risky to found something. At least this way only what you put in can be lost. If you fuck up your new company (a common occurence) your life would be probably ruined.
But there's a big difference between a company going bankrupt and a company being charged with a crime. Many fledgling companies go bankrupt, sure, but when a company is found to do irreparable...
But there's a big difference between a company going bankrupt and a company being charged with a crime. Many fledgling companies go bankrupt, sure, but when a company is found to do irreparable harm to society or the environment, the law doesn't really know what to do. You can't put a company in jail, so what happens is the company gets a slap on the wrist fine, and the executives that made the decision get to give themselves a golden parachute since they made the company so much money during that short term.
Of course "the law" is a very nebulous concept when personified, but we do know what to do – prosecute for criminal negligence (and introduce other offenses under which company executives can be...
when a company is found to do irreparable harm to society or the environment, the law doesn't really know what to do.
Of course "the law" is a very nebulous concept when personified, but we do know what to do – prosecute for criminal negligence (and introduce other offenses under which company executives can be charged for criminal activities carried out by their companies – or for not preventing their companies from doing so and taking all necessary and reasonable measures to prevent the company from carrying out these offenses) and prosecute vigorously (it is in my opinion always better to prosecute more cases, but less harshly rather than a few cases with tough sanctions – criminals need to believe that they are likely to get caught to deter them, and sadly white collar criminals are rarely caught and even more rarely properly tried).
There is nothing, legally speaking, preventing corporate officers who oversee a company that commits crimes from being imprisoned. The issue, from what I understand, is more of a reluctance to...
There is nothing, legally speaking, preventing corporate officers who oversee a company that commits crimes from being imprisoned. The issue, from what I understand, is more of a reluctance to apply the law than the law itself. A company being a legal entity doesn't shield wrongdoers from criminal liability - it's just old-fashioned money and lawyers that does that.
I think the suggestion that large projects wouldn't get done is pretty hyperbolic. There may be some that could have been done without that degree of regulation and oversight, that won't because...
I think the suggestion that large projects wouldn't get done is pretty hyperbolic. There may be some that could have been done without that degree of regulation and oversight, that won't because of it. But I'd argue that those projects shouldn't be done if they can't be completed without having to allow loopholes for people to commit crimes unpunished.
The analogy of the city and mayor doesn't really hold up. Maybe if mayors were appointed in the same way CEOs are or if cities existed for a narrow purpose the way a company does. A city can't just stop existing the same way a company can.
To your last point, yes they're real, but we do ourselves an enormous amount of harm by confusing groups of people (institutions, companies, etc.) with individuals. First in a legal sense by creating these tricky legal situations where people are able to orchestrate crimes without repercussions. And second in a sense of actually understanding how those groups function. I go a little more crazy every time someone says some broad statement like "the government thinks x" or "mcdonald's wants y". They don't have thoughts or desires or fears, they are made up of people who do. The only way we can put limits on those groups is for actual human individuals to suffer consequences for going outside those limits.
Your third and first paragraph are entwined, to me, in actually supporting the idea of needing the "corporate" entity. I work in insurance and we have: people that analyze losses and pricing in a...
Your third and first paragraph are entwined, to me, in actually supporting the idea of needing the "corporate" entity.
I work in insurance and we have:
people that analyze losses and pricing in a state
people that recommend new markets in a state
people that program state expansions
people that write to the state for approval
and so on...
It's not possible for the work of entering a new market in a new state to be accomplished by one person or even a small group. It needs teams and teams working in cooperation.
And each of these teams is going to have their own impressions of the best way to do such a thing, like:
starting with an optimistic rate vs conservative rate
launching to a small group vs a large group
building just a front end vs whole system
etc
They will have managers, who will have managers, and there will be a single CEO, but.... it's just like American politics. The president has a higher level of power, but each wing and department has a lot of their own opinions and sway.
There is never one prescribed method that will always be done by everyone mechanically just when a CEO says to enter a new market.
And even then, there might be pushback based on later analysis or pivots to different markets entirely based on the need behind what the ask was. Examples like:
We need more customer numbers so losses are permissible in the short term
We need more market positivity before a conference so launch timelines are strict
etc
It would be impossible to conduct all this work if each of those involved were separate entities.
It would be absolutely impossible to do this repeatedly, nationally, without being a combined entity.
So yes, the corporation on paper can't have opinions. But all these components will, and their particular culture of interacting together creates impressions of that "the company wants."
This isn't about creating crime-loopholes... it's about enabling production at scale.
Crimes happen, but that's a people problem, not a fact-of-corporate-entity-existing problem.
You're right that I do agree with the need for there to be a corporate entity. My arguments had more to do with the need for the law to be more nuanced in it's ability to hand down repercussions...
You're right that I do agree with the need for there to be a corporate entity. My arguments had more to do with the need for the law to be more nuanced in it's ability to hand down repercussions and that the assumption that companies can be punished in the same way individuals can be, insofar as disincentivizing illegal activity, is naive. The point I was trying to make regarding companies having desires was to flesh this point out. Very often the culture of a particular company contains conflicting and opposing interests. And for a large section of any given one all that is desired is to get paid and go home. These conflicts compounded with the complexity that occurs at these large scale projects creates situations where people are harmed entirely on accident and, by extension, situations where crimes can be passed off as being accidental.
If your argument is that large scale production is impossible while fully enforcing the law, then it is about both creating crime loop holes and enabling production at scale because the two would be inseparable. And I simply disagree with the assertions that A) crimes "happen" rather then being something performed by people and B) crimes being a people problem makes them a separate issue from corporate entities, since we've already discussed that these entities are comprised of people and the manner in which corporate entities exist is not fixed.
If a court decides that a company is liable then they can fine the company and it will pay out of general funds. It seems like that's a lot easier than if they had to assign blame to individuals?...
If a court decides that a company is liable then they can fine the company and it will pay out of general funds. It seems like that's a lot easier than if they had to assign blame to individuals? That would require a lot more testimony about who did what. Probably multiple trials.
Also, once you figure out which individual is to blame, what if they're some ordinary worker who doesn't have any money? (The boss typically doesn't actually do the work.)
This would have a chilling effect. Why should anyone work for a company where you could be blamed for big failures? Better to find a safer job. You'd at least want to have liability insurance like doctors have.
The fact that fining a company is easier doesn’t really contradict my argument that it’s ineffective. These sorts of investigations should be difficult and complicated. In terms of low level...
The fact that fining a company is easier doesn’t really contradict my argument that it’s ineffective. These sorts of investigations should be difficult and complicated.
In terms of low level individuals taking the blame for corporate wide crimes, this is another reason higher ups should be held personally responsible, because then it would be their responsibility to make sure low level employees aren’t committing crimes. Also it would prevent them from using their employees to commit the crimes while hiding from the liability as you described.
I understand you would like it to work that way. I don't see how the courts would hold, say, the CEO of Kaiser liable for a doctor's mistake, without also blaming the doctor? Similarly for other...
I understand you would like it to work that way. I don't see how the courts would hold, say, the CEO of Kaiser liable for a doctor's mistake, without also blaming the doctor? Similarly for other mistakes.
But we've gotten pretty far away from talking about the real world anyway, so you can imagine it working however you like.
To your first point, you're 100% correct. You know what could happen if your ancient project disappointed your emperor, pharaoh or basileus in the ancient world? He might kill you, or exile you,...
To your first point, you're 100% correct. You know what could happen if your ancient project disappointed your emperor, pharaoh or basileus in the ancient world? He might kill you, or exile you, or ruin you. Large scale projects still happened all the time, because there was money to be made and glory to be had, even with this risk.
The idea that personal punishment for incompetence or negligence would stop large scale projects ignores the last 10,000 years of human history.
Yes, things were different back then, but I don't think ancient history is all that relevant here. Large projects back then were often done using slave labor. It happened, but I don't think it's a...
Yes, things were different back then, but I don't think ancient history is all that relevant here.
Large projects back then were often done using slave labor. It happened, but I don't think it's a great place to look for examples of how to do things? Yes, they could punish slaves, but that has nothing to do with anything we care about.
Or if you want to actually pay your workforce, large amounts of money are needed. During ancient times, this wealth was accumulated via war and plunder. Again, not a great example.
This is pretty far removed from the modern world. Also, the modern world has much more infrastructure than they did! Every big building in a modern city, every ship, bridges, highways, and so on. It's a lot. They were nearly all funded by organizations of some sort. (Occasionally a rich person might fund a project personally.)
So okay, maybe it's an exaggeration to say that no large projects would be done, but I still think there would be a lot fewer large projects, because it would harder to do. And we'd be a lot poorer because of it.
As far back as the Neolithic, people were coordinating large scale projects like Stonehenge across vast distances, without (as far as we can tell) slaves or states. I'm a bit off topic, you're...
As far back as the Neolithic, people were coordinating large scale projects like Stonehenge across vast distances, without (as far as we can tell) slaves or states.
I'm a bit off topic, you're obviously right, less would be done and less capital would be produced. But the Earth has never produced as much as it does today, and it's a hellscape for probably the majority of people. Maybe we should accept a lower level of profit and productivity if it means we can have a fairer and more equitable society.
We used not to have limited-liability companies (a few hundred years ago) but it makes it very difficult to attract investment (e.g. if I buy a share in a company, am I now personally liable for...
We used not to have limited-liability companies (a few hundred years ago) but it makes it very difficult to attract investment (e.g. if I buy a share in a company, am I now personally liable for its actions).
CEOs do have some duties of care (but usually only to make money for investors, aka "fiduciary responsibilities") and in some jurisdictions they are introducing sensible policies such as corporate/industrial manslaughter (if workers are killed in factory incidents the directors of a company can be tried criminally). Rolling these laws out further would make sense.
Here in the US the problem is in the name; they're limited liability companies, a.k.a. LLCs. Making CEO's liable for the things the company does is kind of a cheap way to fix the problems of...
Here in the US the problem is in the name; they're limited liability companies, a.k.a. LLCs.
Making CEO's liable for the things the company does is kind of a cheap way to fix the problems of business malfeasance, though. For instance, what if the CEO isn't directly involved in the problem behaviour? What if that liability becomes another excuse to increase their salaries?
I really don't have a better solution right now, but there needs to be some sort of action, and an imperfect action is better than inaction.
Not too many details, but here is a summary for those who can't watch the video: https://www.nytimes.com/2023/07/07/technology/twitter-sues-wachtell-lipton.html
Interesting and maybe not as clear cut as what it sounds like originally. I hate Musk, so it pains me to say he might have a point, but the timing of the $90 million dollar payment, only 10...
Interesting and maybe not as clear cut as what it sounds like originally. I hate Musk, so it pains me to say he might have a point, but the timing of the $90 million dollar payment, only 10 minutes before the deal closed was a bit odd, but it was also a bit less than the +$100 million that the banks received on their end for closing the deal. It's odd that the success fee wouldn't have been stipulated in the original contract, but it sounds like a relatively common thing in that sort of business and they were apparently still working for Twitter up until the sale had properly concluded. It's not like they could've depended on Musk to actually pay his bills.
It's also funny that, as LegalEagle points out, the only reason that Twitter had to pay for the services of the law firm in the first place was because Musk himself had been trying to back out of the deal that he got himself into originally. All of this is on Musk, totally unforced errors that show what an incompetent person he is.
I first read about it on Axios where they pointed out that the stock market, in a way, put a dollar value on the attorney’s efforts: *On Friday, July 8, 2022, Twitter shares closed at $36.81,...
I first read about it on Axios where they pointed out that the stock market, in a way, put a dollar value on the attorney’s efforts:
*On Friday, July 8, 2022, Twitter shares closed at $36.81, which meant that the market valued the company at $30 billion — a $14 billion discount to the amount that Musk had promised to pay for it.
That weekend, Twitter hired Wachtell to fight Musk's lawsuits and to ensure that he paid the full $44 billion.
Because Wachtell was successful in doing so, Twitter's shareholders saw the value of their shares rise by $14 billion. The $90 million fee to Wachtell represents about 0.6% of the increase in value the law firm ensured.
The payment was authorized by the people who ran Twitter at the time, and the fees were paid in line with the original agreement – roughly 60-80% of the fees that the investment banks in question...
The payment was authorized by the people who ran Twitter at the time, and the fees were paid in line with the original agreement – roughly 60-80% of the fees that the investment banks in question were paid.
Matt Levine has (I feel) a slightly more accurate take on this which another commenter linked to.
I agree that the payment was authorized by the prior board, I simply used unauthorized because that's what Elon is suing them for - not that I believe him or want him to win.
I agree that the payment was authorized by the prior board, I simply used unauthorized because that's what Elon is suing them for - not that I believe him or want him to win.
I know this is just a fact of our market driven world, but it is wild to me that Twitter has considerations and is treated as an individual. Corporate law is just nuts.
It's IMO one of the big failings of our laws that CEOs directing companies aren't also who gets cited in front of a court or made to pay for stuff. "The company" is, as if that's a thing. Somebody gets money when the company makes profits, so naturally they ought to be held responsible for stuff, too. Or in other words, if the CEOs get bonuses when the company produces excess profits under their direction, it stands to reason that they ought to be made to pay money into the company when the company loses money from decisions made under their leadership (even if this is in the past). Responsibility would go a long way to reigning CEOs in.
People do complain about it sometimes, but I don’t think they’ve thought about the practical consequences of not treating organizations as legal entities. It would likely be a world in which no large projects ever get done because nobody would want to take personal responsibility for them.
How do you do payroll without companies being legal entities? Imagine a world where everyone worked for people instead of organizations. When you work for someone personally and they die unexpectedly, do you have to wait until you get paid out of their estate?
If someone wants to sue the city, should they have to sue the mayor instead? What if you want the city to pay damages and the mayor doesn’t have any money? What if the damages happened years ago when the city had a different mayor?
There’s a sense in which organizations aren’t real, there are only people. But every day we talk about companies and charities and governments like they’re real. We make contracts with organizations like they’re real. They have bank accounts like they’re real. When they screw someone over we want to be able to take them to court like they’re real.
IANAL but isn't it possible to make some kind of legal entity which is less like a person and more like a special sort of a thing that is a company? I know companies aren't exactly like people in law but the impression I get is they are perhaps more like people than they need to be.
So you can still do all the admin stuff like payroll and legal continuity in the case of death/retirement/etc but also have the executives/shareholders carry some more responsibility for the way the legal entity acts. Given that they are, after all, the ones controlling it. It seems like it's far too easy for the humans to get away with almost anything because they're "not the company"
If we can’t hold owners liable then the laws should at least force them to step down from companies and no longer be able to make money off of them.
If there’s no risk involved being a company owner they’ll just do whatever they want. Which is equally as bad as if there was too much risk.
"Hey you, you presided over this company while it did something terrible! Now walk away with more money in your bank account than most people will see in a lifetime"
OH NO. Anyway..
I want to see executives busted down to a level commensurate with what the company did under their control. Like the head of BP when BP poisoned the Gulf of Mexico, he should be personally fined to the point where he's not quite a financial burden on the state, but definitely has to work the night shift in one of his former garages in order to put food on the table for the rest of his life. Obviously that's a very extreme example, but just making people walk away into luxurious retirements isn't much of an incentive to be better.
Is the CEO not responsible for the people who are responsible for making sure the people who do the safety checks are double and triple checked? Is that not the whole point of a hierarchy, that the buck travels all the way up? The CEO usually gets a bonus when things go well, so they must be responsible for the good stuff otherwise they wouldn't get the bonus - so surely it works the other way too? (I do know it doesn't, but it should)
That's why they are paid so much, isn't it? Because they are responsible. They're obviously not getting all that money for operational stuff, they don't do operational stuff. They have meetings and play golf and decide that instead of building a corporate culture based around doing things properly, they'll have one which prefers to cut some corners and make a few more points of profit. The CEO's decisions must mean something, otherwise why do they exist?
In this particular case yes, the head of BP at the time should be made near-as-dammit destitute. The guy ran a company that poisoned an entire ecosystem and you think he should be allowed to quietly retire into the kind of luxury almost no other human being will ever experience? I will admit that I'm not entirely on board with retributive justice as a general concept but there are times where it seems like actions that ultimately lead to millions of life forms dying should have some amount of consequence. Some old rich dude lying on a yacht and feeling a bit bad about things really doesn't sit right.
fwiw Tony Hayward, BP's CEO at the time, currently runs... an oil company. So he's not even been disallowed from working in the same field. He's won several awards for leadership since Deepwater Horizon. Estimates are that he's currently "worth" somewhere between $20-40m which puts him in the top 0.01% of all humanity.
Let's consider a hypothetical corporation: A plumber sets up an LLC to operate his business under. As his business grows, he hires a couple of employees. Unkbeknownst to him, one of the employees has a bad day and damages a customer's plumbing system, and then they opt to cover it up rather than fix or report it. As a consequence, the customer's home floods and their property is damaged.
In the current system (as I understand it, though I am not a lawyer and could be wrong here), the LLC will compensate the customer and may sue the the former employee. If it's particularly bad, maybe the employee even faces criminal charges. The business owner is not personally liable, since he did not know about or condone the former employee's actions.
In the case you are proposing (please tell me if I'm misunderstanding), it sounds like the business owner is found personally liable, not the LLC or the former employee. In such a world, surely businesses would be heavily incentivized to not hire employees and, if they absolutely must, to only hire extremely skilled, carefully vetted employees with a long work history. I, personally, would not want to be an employee in such an economic system because I don't think I would be employed for much longer.
Yup, that's pretty much it. People who run businesses should be responsible for the things those businesses choose to do. Choose is an important word there. I'm not quite sure how that's an strange thing to think.
Obviously there's nuance. In your example then the business owner would have accident insurance, which they would do normally anyway. Employee makes mistake, insurance pays out, carpet gets replaced or whatever, everyone's fine. Just like it would happen right now. Mistakes happen and I'm not saying string up the CEOs every time there's a mistake. Although some mistakes are far more serious than others - for example, if I mistakenly kill someone with my car that's still going to court and might end in criminal charges for me.
But in the current system it appears to be possible for a corporation to commit significant wrongdoing and as far as I can see there's no incentive for CEOs to not do that. That wrongdoing might come about via negligence by creating a corporate culture which cuts corners on materials or training or procedures - or the execs might even be actively involved in making not-illegal-but-definitely-bad decisions (eg, Philip Morris covering up research showing smoking causes cancer, Nestle's milk formula stuff, etc)
If I run a business and my employee stabs a customer then of course that's not my fault. Murder is not part of my standard business operations. But if my business, in it's normal operations, commits a little light ecocide despite everyone following protocol, then that absolutely should land on me. I didn't ensure my business was running in a suitably fail-safe way. My decisions led to that result. Maybe the courts look at the case and decide I had done everything I could and it was just bad luck - in which case, fine. Everyone goes home.
Not knowing about doing the bad stuff is not an excuse for anyone else, why do CEOs get that luxury? If I get pulled over for speeding and I say "sorry, wasn't looking at the speedo" the cops don't just wave me on my way.
I would say so, if only because that's a pretty major part of what a CEO does. They are the face of the company, they are the one that the buck stops at.
And the idea that they are accountable for everything is how they justify a CEO getting compensated 50x the value of average employees.
If the CEO WAS involved in the day to day operations, and those bad decisions DID make their way up to him, then I'd actually be less inclined to judge him for it, because that's a collaborative decision making process and he was just one person out of many weighing in there.
But to take ownership and accountability of the entire operations of the company, and then isolating himself from the info needed to watch out for stuff like this? That's on him. He COULD have had that information, if he wanted it. He SHOULD have put himself in a position to prevent it.
Make no mistake. I completely agree with you, but the biggest problem is that the one to make the laws are the ones with all the money and all the influence. So these companies will lobby government to not make laws like that.
If we could at least do it this way, then we could remove harmful people from positions of power. It’s not a great solution, obviously but it’s more likely to happen, then getting lobby groups to change their position about punishing themselves.
And I know you joke: but these awful people actually would feel punished walking away with lots of money. Because it’s not ALL the money.
I reckon they'd feel even more punished if they had to live like a normal human for the rest of their lives.
You're right in that the corporate capture of government makes this impossible, and even in the best case scenario, politicians from the elite class wouldn't ever want to do this. But goddamn, maybe we'd have less psychopaths in power making psychopath decisions if the worst case scenario wasn't "retire rich".
Well, sure, I think it’s reasonable to debate to what extent limited liability is a good thing. In some cases there is personal liability. This is called “piercing the corporate veil.” People on the board of directors of a company will often have liability insurance for this.
It's possible, but you now need your legislators to write two parallels sets of laws and regulations, one to govern corporations and another to govern individuals, sole proprietorships, partnerships, etc. They'd have to do this for each and every single thing.
It's much more straightforward to just treat the corporation as its own legal entity. Being a common law tradition, situations where that distinction leads to weirdness can be interpreted around as not being applicable to non-human persons. For example, we don't really need to worry about marriage and family law for a corporation to the same extent we may need to for a private firm. Or you may just decide that it's absurd to claim a corporation, which is a fictitious entity, can meaningfully have "religious beliefs" that would be protected under the 1st amendment. (But you'd have to be less insane than the Robert's Court to assert such a thing.)
Oh no, the lawmakers have to do some work?! And make laws which specifically cover corporate behaviour because corporations aren't humans and trying to treat them as such has led to... well, this mess we see around us where massive crimes and injustices are being committed all the time by corporate entities with little to no recourse?
Not sure I consider that a downside as an actual plus point that we should really get on to doing ASAP...
I think if you spent some time thinking about what it actually entails to create an entirely parallel legal structure, as well as the downsides of getting it wrong and the potential for abuse and likelihood of corruption from poorly designing the parallel structure, you might not be so glib about it.
Firstly I genuinely don't see how that's a bad thing because even trying and getting some things wrong can't be worse than not trying at all. It's not like we have to do everything all at once overnight. One law at a time until corporations aren't people. Might take years. But laws are things made up by humans, we can make up whatever we want - we're not talking about rewriting physical laws here. It's possible. But on the other hand I don't do very well with the Weird World Of Law that often seems to make no sense whatsoever so perhaps I have no clue.
Secondly I think sometimes it's good to say "naa, fuck it, let's just do the thing" rather than worrying about it being too hard. In this context, like so, so many - it's not an issue because literally not a single thing any of us say or do on this website is going to have any sort of effect in the real world. So while we're playing fantasy government, why not try to imagine a world which is actually better, instead of the shitty one we already have?
Trying to do what though? It's literally just an incredible amount of extra work with a ton of room for error and basically no upside that we don't already get through other means.
This is not at all a safe assumption on the internet. Some of us (including me) are professional policy analysts and advisors. We also have plenty of lawyers on this very site. We're not playing "fantasy government" we're talking about things that have tangible impacts on peoples' lives and when voter behavior is led by simplistic or magical thinking it tends to have disastrous consequences.
I dunno, it seems like a pretty safe assumption. There is absolutely no way that any lawyer, politician or policy wonk worthy of their job is going to take anything I say even remotely seriously. I have IRL friends who work in think tanks you've probably heard of and they don't pay any attention to my anti-corporate/anti-capitalist ravings - and to them I'm an actual person (sometimes even an in-person person), not some random nutter on the internet.
We aren't going to "do the thing" because, as you say, legal systems aren't up to us. We're just discussing hypotheticals here on Tildes.
Yes, you could certainly imagine something that works differently, and maybe get some good fiction out of it? But if it's changed enough, it's not really a criticism of anything happening in the real world anymore. It's just a fictional universe. For a hypothetical to be about something people could really do something about, it has to be based on choices actually available to them.
Are you saying my hypothetical is too hypothetical?
Eep. I wasn't aware there was a limit on hypotheticality! :)
I think it's OK to criticise things in a way that involve making significant hypothetical changes to the world, partly because it's good to play about with big ideas just to see where they go, and partly because none of this matters anyway. It's a different sort of a discussion to the one I suspect you want to have and that's fine.
Sure, you can be as hypothetical as you want and you can criticize what you want. Others might not be convinced if they think you’re being unrealistic, though, and maybe say so?
I think this is all okay as long as people seem to be enjoying the discussion.
Surely we already do have parallel laws to a large extent. For example, if a corporation commits a crime, it doesn't get arrested and go to jail.
I would actually like to see most corporations treated more like people in this regard. The punishment for a corporation that commits a crime should sting just as badly as the punishment for a person who commits a crime. If you commit a serious crime, you can expect to devote much of your wakeful life to facing the charges because they are that bad, and if you are found guilty, you can expected to see your freedom severely curtailed for a sizeable portion of your life.
Likewise, a corporation that commits a serious crime should not be able to continue doing business as usual. Facing crime charges should be an extremely frightening prospect for the corporation that is felt across the organization. The corporation should face a person-like sentence and a person-like loss of freedom for the duration of that sentence. Hell, in jurisdictions with the death penalty, perhaps judges and jury should have the option to shut it down permanently, and it should be shut down for similar reasons that a person may be executed (e.g., egregious homicide). A corporation should be just as wary of committing crime as real people are.
The only defense should be if someone within the organization commits an illegal act that is "unknown" to the corporation (e.g., someone faked a passing OSHA test, which was not known or condoned by the hierarchy overseeing such tests, and the corporation reported the crime, preserved evidence, and otherwise complied with law enforcement upon the crime's discovery). In that case, it goes without saying, the individual in question should face the full brunt of the law and see a lengthy prison sentence. But if the corporation did anything to aid or encourage crime (e.g., employers were placed under high pressure to meet difficult quotas while their supervisors deliberately looked the other way), then their culpability should increase accordingly.
I'm not sure what to do about entities that, for the good of society, really need to remain fully functional even throughout a criminal sentence, such as major banks. I do think that if a corporation reaches such a status, though, then it's really quite an altogether different sort of entity from your run-of-the-mill LLC or whatnot, and they should receive different treatment under the law (e.g., maybe too-big-to-fail corporations should see extensive, invasive regulation to prevent such issues in the first place; meanwhile, perhaps small-enough-to-fail corporations should see less red tape than they do currently, but at the risk of major disturbance to their business if they, say, scam a customer or steal wages from an employee).
Like I mentioned before, we get to do this owing to the common law tradition. Stuff that isn't applicable to a fictional entity just doesn't apply, and we make determinations about what is and isn't applicable based on legal precedent.
Why and how though? These aren't real things with any sort of independent will. If you restrict freedom and loss of agency for a corporation, the people who comprise it will simply leave. Then you have basically a new crop of people who had nothing to do with the old decisions having to live under the covenants put under them by misbehavior from others. This kind of happens under certain conditions. Like Volkswagen has been put under some pretty strict legal obligations as a result of Dieselgate, but for the most part the liability for malfeasance falls on the people within the organization who had a fiduciary duty to keep things kosher.
There is room to say more responsibility should fall on those people, and simply slapping fines that cost less than the benefits of behaving badly aren't achieving desired outcomes. But that's a corporate governance discussion, there's no need to try and build new and elaborate legal frameworks to do it.
There is also a valid argument to be made that entrepreneurship would not be as widespread if founders were liable for what a company does.
It's already extremely expensive and risky to found something. At least this way only what you put in can be lost. If you fuck up your new company (a common occurence) your life would be probably ruined.
But there's a big difference between a company going bankrupt and a company being charged with a crime. Many fledgling companies go bankrupt, sure, but when a company is found to do irreparable harm to society or the environment, the law doesn't really know what to do. You can't put a company in jail, so what happens is the company gets a slap on the wrist fine, and the executives that made the decision get to give themselves a golden parachute since they made the company so much money during that short term.
Of course "the law" is a very nebulous concept when personified, but we do know what to do – prosecute for criminal negligence (and introduce other offenses under which company executives can be charged for criminal activities carried out by their companies – or for not preventing their companies from doing so and taking all necessary and reasonable measures to prevent the company from carrying out these offenses) and prosecute vigorously (it is in my opinion always better to prosecute more cases, but less harshly rather than a few cases with tough sanctions – criminals need to believe that they are likely to get caught to deter them, and sadly white collar criminals are rarely caught and even more rarely properly tried).
There is nothing, legally speaking, preventing corporate officers who oversee a company that commits crimes from being imprisoned. The issue, from what I understand, is more of a reluctance to apply the law than the law itself. A company being a legal entity doesn't shield wrongdoers from criminal liability - it's just old-fashioned money and lawyers that does that.
I think the suggestion that large projects wouldn't get done is pretty hyperbolic. There may be some that could have been done without that degree of regulation and oversight, that won't because of it. But I'd argue that those projects shouldn't be done if they can't be completed without having to allow loopholes for people to commit crimes unpunished.
The analogy of the city and mayor doesn't really hold up. Maybe if mayors were appointed in the same way CEOs are or if cities existed for a narrow purpose the way a company does. A city can't just stop existing the same way a company can.
To your last point, yes they're real, but we do ourselves an enormous amount of harm by confusing groups of people (institutions, companies, etc.) with individuals. First in a legal sense by creating these tricky legal situations where people are able to orchestrate crimes without repercussions. And second in a sense of actually understanding how those groups function. I go a little more crazy every time someone says some broad statement like "the government thinks x" or "mcdonald's wants y". They don't have thoughts or desires or fears, they are made up of people who do. The only way we can put limits on those groups is for actual human individuals to suffer consequences for going outside those limits.
Edit for grammar
Your third and first paragraph are entwined, to me, in actually supporting the idea of needing the "corporate" entity.
I work in insurance and we have:
It's not possible for the work of entering a new market in a new state to be accomplished by one person or even a small group. It needs teams and teams working in cooperation.
And each of these teams is going to have their own impressions of the best way to do such a thing, like:
They will have managers, who will have managers, and there will be a single CEO, but.... it's just like American politics. The president has a higher level of power, but each wing and department has a lot of their own opinions and sway.
There is never one prescribed method that will always be done by everyone mechanically just when a CEO says to enter a new market.
And even then, there might be pushback based on later analysis or pivots to different markets entirely based on the need behind what the ask was. Examples like:
It would be impossible to conduct all this work if each of those involved were separate entities.
It would be absolutely impossible to do this repeatedly, nationally, without being a combined entity.
So yes, the corporation on paper can't have opinions. But all these components will, and their particular culture of interacting together creates impressions of that "the company wants."
This isn't about creating crime-loopholes... it's about enabling production at scale.
Crimes happen, but that's a people problem, not a fact-of-corporate-entity-existing problem.
You're right that I do agree with the need for there to be a corporate entity. My arguments had more to do with the need for the law to be more nuanced in it's ability to hand down repercussions and that the assumption that companies can be punished in the same way individuals can be, insofar as disincentivizing illegal activity, is naive. The point I was trying to make regarding companies having desires was to flesh this point out. Very often the culture of a particular company contains conflicting and opposing interests. And for a large section of any given one all that is desired is to get paid and go home. These conflicts compounded with the complexity that occurs at these large scale projects creates situations where people are harmed entirely on accident and, by extension, situations where crimes can be passed off as being accidental.
If your argument is that large scale production is impossible while fully enforcing the law, then it is about both creating crime loop holes and enabling production at scale because the two would be inseparable. And I simply disagree with the assertions that A) crimes "happen" rather then being something performed by people and B) crimes being a people problem makes them a separate issue from corporate entities, since we've already discussed that these entities are comprised of people and the manner in which corporate entities exist is not fixed.
If a court decides that a company is liable then they can fine the company and it will pay out of general funds. It seems like that's a lot easier than if they had to assign blame to individuals? That would require a lot more testimony about who did what. Probably multiple trials.
Also, once you figure out which individual is to blame, what if they're some ordinary worker who doesn't have any money? (The boss typically doesn't actually do the work.)
This would have a chilling effect. Why should anyone work for a company where you could be blamed for big failures? Better to find a safer job. You'd at least want to have liability insurance like doctors have.
The fact that fining a company is easier doesn’t really contradict my argument that it’s ineffective. These sorts of investigations should be difficult and complicated.
In terms of low level individuals taking the blame for corporate wide crimes, this is another reason higher ups should be held personally responsible, because then it would be their responsibility to make sure low level employees aren’t committing crimes. Also it would prevent them from using their employees to commit the crimes while hiding from the liability as you described.
I understand you would like it to work that way. I don't see how the courts would hold, say, the CEO of Kaiser liable for a doctor's mistake, without also blaming the doctor? Similarly for other mistakes.
But we've gotten pretty far away from talking about the real world anyway, so you can imagine it working however you like.
To your first point, you're 100% correct. You know what could happen if your ancient project disappointed your emperor, pharaoh or basileus in the ancient world? He might kill you, or exile you, or ruin you. Large scale projects still happened all the time, because there was money to be made and glory to be had, even with this risk.
The idea that personal punishment for incompetence or negligence would stop large scale projects ignores the last 10,000 years of human history.
Yes, things were different back then, but I don't think ancient history is all that relevant here.
Large projects back then were often done using slave labor. It happened, but I don't think it's a great place to look for examples of how to do things? Yes, they could punish slaves, but that has nothing to do with anything we care about.
Or if you want to actually pay your workforce, large amounts of money are needed. During ancient times, this wealth was accumulated via war and plunder. Again, not a great example.
This is pretty far removed from the modern world. Also, the modern world has much more infrastructure than they did! Every big building in a modern city, every ship, bridges, highways, and so on. It's a lot. They were nearly all funded by organizations of some sort. (Occasionally a rich person might fund a project personally.)
So okay, maybe it's an exaggeration to say that no large projects would be done, but I still think there would be a lot fewer large projects, because it would harder to do. And we'd be a lot poorer because of it.
As far back as the Neolithic, people were coordinating large scale projects like Stonehenge across vast distances, without (as far as we can tell) slaves or states.
I'm a bit off topic, you're obviously right, less would be done and less capital would be produced. But the Earth has never produced as much as it does today, and it's a hellscape for probably the majority of people. Maybe we should accept a lower level of profit and productivity if it means we can have a fairer and more equitable society.
We used not to have limited-liability companies (a few hundred years ago) but it makes it very difficult to attract investment (e.g. if I buy a share in a company, am I now personally liable for its actions).
CEOs do have some duties of care (but usually only to make money for investors, aka "fiduciary responsibilities") and in some jurisdictions they are introducing sensible policies such as corporate/industrial manslaughter (if workers are killed in factory incidents the directors of a company can be tried criminally). Rolling these laws out further would make sense.
Here in the US the problem is in the name; they're limited liability companies, a.k.a. LLCs.
Making CEO's liable for the things the company does is kind of a cheap way to fix the problems of business malfeasance, though. For instance, what if the CEO isn't directly involved in the problem behaviour? What if that liability becomes another excuse to increase their salaries?
I really don't have a better solution right now, but there needs to be some sort of action, and an imperfect action is better than inaction.
If corporations are people and Elon Musk bought a corporation, is that slavery?
Matt Levine wrote about this too.
Not too many details, but here is a summary for those who can't watch the video: https://www.nytimes.com/2023/07/07/technology/twitter-sues-wachtell-lipton.html
Paywalled.
Archived.
Interesting and maybe not as clear cut as what it sounds like originally. I hate Musk, so it pains me to say he might have a point, but the timing of the $90 million dollar payment, only 10 minutes before the deal closed was a bit odd, but it was also a bit less than the +$100 million that the banks received on their end for closing the deal. It's odd that the success fee wouldn't have been stipulated in the original contract, but it sounds like a relatively common thing in that sort of business and they were apparently still working for Twitter up until the sale had properly concluded. It's not like they could've depended on Musk to actually pay his bills.
It's also funny that, as LegalEagle points out, the only reason that Twitter had to pay for the services of the law firm in the first place was because Musk himself had been trying to back out of the deal that he got himself into originally. All of this is on Musk, totally unforced errors that show what an incompetent person he is.
I first read about it on Axios where they pointed out that the stock market, in a way, put a dollar value on the attorney’s efforts:
*On Friday, July 8, 2022, Twitter shares closed at $36.81, which meant that the market valued the company at $30 billion — a $14 billion discount to the amount that Musk had promised to pay for it.
That weekend, Twitter hired Wachtell to fight Musk's lawsuits and to ensure that he paid the full $44 billion.
Because Wachtell was successful in doing so, Twitter's shareholders saw the value of their shares rise by $14 billion. The $90 million fee to Wachtell represents about 0.6% of the increase in value the law firm ensured.
lol
Under what charges though? Corporate sex without consent?
Did you watch the video? Unauthorized payment of fees not stipulated in the original contact minutes before Muskrat took over the company.
The payment was authorized by the people who ran Twitter at the time, and the fees were paid in line with the original agreement – roughly 60-80% of the fees that the investment banks in question were paid.
Matt Levine has (I feel) a slightly more accurate take on this which another commenter linked to.
I agree that the payment was authorized by the prior board, I simply used unauthorized because that's what Elon is suing them for - not that I believe him or want him to win.