Tuesday, October 30, 2007

Liberty and Justice for All Corporations

Exxon really made headlines in 1989 when one of their tankers ran aground in Alaska, spilling an estimated 11 million gallons of crude oil. For the sake of scale, that's as if every single person in the New York City had a gallon jug filled with oil, and just poured it into the harbor. They were subsequently fined $5B for the mess, in part due to their gross negligence; the captain was drunk so he left command to a junior officer who allegedly had no business being in command.

This was an environmental tragedy, to be sure. However, Exxon has been appealing the judgement pretty much continuously since it originally came down, five years after the spill. They have had some successes and some setbacks, but they keep at it; at this time they've gotten the fine down to $2.5B but they've now managed to get the Supreme Court to hear the case on the grounds that it's excessive and unconstitutional. For crying out loud! Unconstitutional! A corporation is protected by the Constitution?

I have to wonder what the punishment would have been for an individual, had they accidentally dumped eleven million gallons of toxic waste into the ocean. Into a habitat which is now destroyed. Into a habitat where lots of things used to live. Into a habitat from which many people drew their livelihoods.

Yet, what has Exxon had to do? Nobody went to jail. They had to clean it up, but then it was their mess in the first place. Now they're complaining that despite making almost $40B a year, that a $2.5B fine is punitive?

The Washington Post and Wired have some articles on this travesty of Constitution Law.

On top of all this, Exxon now says it's paying too much in taxes? Its $40B in profit isn't enough, it needs more?!? So, they'll make more money, while the taxes that they don't pay need to be made up somewhere else. Who'll bear the burden then? The taxpayers. That sounds like a good idea!

In some ways it's inevitable. Corporations now have full protection under the law as citizens, but they have none of the restrictions. They can engage freely in international commerce, for instance. (Ask any Mexican national how easy it is to work in the United States, for a contrasting view.) When they violate the law, spewing toxins into our environment and harming the people, they get fined, then they negotiate and appeal their ways out of the fines, and nobody gets personally punished. "Cost of doing business." If the fines are less than the profit to be gained, it only makes business sense to violate the law and bring on environmental catastrophe; shareholders expect nothing less. Individuals still can't pull these stunts, though, because there's an actual personal cost involved. The person goes to jail.

Perhaps it's high time we actually hold people accountable for their actions. I propose that a corporation doing an action that would lead an individual to jail should be jointly served by the board members of that corporation, and they should not be tried as individuals but rather as a collective acting together in a common interest. Further, fines levied against a company should be directly charged to the shareholders. This might make the shareholders interested if the corporation is doing Bad Things, and maybe then the shareholders would care.

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