Tuesday, June 21, 2005

An Immodest Proposal

The recent conviction of Tyco executives on charges of massive fraud and theft, the acts of terrorism on the part of the California energy traders and the use of thimerosal in vaccines even after the pharma companies knew it increased the risk of autism got me thinking about personal responsibility and business ethics.

Ever since 1873 or 1886, depending on how you want to cut it, corporations have enjoyed the rights of persons in the United States. Until then corporate charters could be and often were revoked when the legislature decided the company didn't serve the public good. Personally, I'd like to go back to those days, but it's part of the legal tradition now. So, corporations are people. And unlike real breathing human beings you can't throw them in jail or send them "up a long ladder and down a short rope".

Not only are they people, most of them are potentially immortal sociopaths by strict definition. In every for-profit corporate charter that I am aware of the officers have a fiduciary responsibility to maximize stockholder equity. Translated into English that means that anything they do has to be judged by a single standard, getting the most possible money for the owners no matter what. Conscience is forbidden by the Sacred Law of Contracts (La! The Heavens open. Saint Ayn and the Prophet Adam Smith descend and make the Holy $ign of the Dollar). If it will increase the value of the shareholders' assets the company is required to get rid of its employees' pensions, pollute the air, lobby Congress for special breaks and club cute little kittens and puppies to death (as long as the adverse publicity doesn't exceed the benefits of smashing fuzzy little animals).

What can you do to moderate this? Corporate responsibility doesn't make any sense historically. The whole point of a corporate entity from the Adventurers' Companies on down has been to insulate the assets of its owners and officers from any bad things that might happen to the firm.

The answer seems to be to treat them just like people.

These days tough-on-crime measures like Three Strikes, You're Out laws are very popular with law and order conservatives. Get caught at three serious crimes and you're in prison for the rest of your life. While you're in prison you can't do business on the outside. You can't enter into contracts. Economically you're the next best thing to dead.

Why not do the same thing to artificial people that you do to flesh and blood ones? If we're going to be consistent bring the Big Hammer down on corporate citizens who screw up three times. On the conviction for the third felony or serious misdemeanor the corporate charter would be revoked. Federal marshals or the County Sheriff would auction off the assets and give the proceeds to the creditors. Anything left over would go to the stockholders. In states with victim restitution laws some of it would go to those harmed by the actions of the former corporation.

It's consistent. It's simple. It's just.

The adventerous can add a wrinkle or two. It's a tenet of neo-liberal economics that everything has a value and that value can be expressed as money. Human life has a monetary value. Insurance actuaries calculate it down to the penny and pay out accordingly.

Regular people are motivated by things like patriotism, love, hate, and duty. They can be expected to understand these things. By fiduciary duty the only thing a corporate entity is supposed to understand is money. It should follow then, that since lives can be converted into money, money can be converted into lives.

The abstract worth of a human life isn't something that bottom-line-oriented CEOs should have to bother themselves with. So let us frame the question in terms they can understand. Money. The theft or fraud of the actuarial value of the median American's life would be the equivalent of a homicide. Ken Lay would ride the pipe for genocide on a par with the Nazi Holocaust. As a concession to the many worthwhile things a company does and in the spirit of human fairness a conviction wouldn't mean death for all of the employees. Only the CEO, President and Board of Directors would have to pay the ultimate penalty and redeem the rest.


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