November 21, 2010

Capital Punishment for Corporate Crooks?

Looks like Matt Taibbi's visit with David Sirota in Denver last week was a raucous time. Here's an idea that came from it, excerpted from Sirota's syndicated column:
"Deterrence — it’s the vaunted idea behind “tough on crime” sentences for violent offenses. Lock the door, throw away the key, and the theory says that heinous acts will be prevented. However, things haven’t worked out that way because the toughest “tough on crime” policies are most focused on crimes of passion, derangement and destitution — crimes that are often not calculated and therefore not deterrable. This is probably one of the reasons why the murder rate has been higher in death penalty states than in non-death penalty states, leading most criminologists to conclude that capital punishment does not hinder conventional homicide.
But what about crimes of economic homicide? These are the opposite of crimes of passion. When, say, a speculator securitizes bad mortgages and peddles them to pension funds as safe investments, that fraud involves exactly the kind of calculation that might be deterred via the prospect of harsh punishment.
“What if a bank CEO was given life without parole?” I asked Taibbi. “What if instead of country club jail, one of these guys was shown experiencing prison like a regular convict? That would have to stop some of the worst stuff, right?”
“Right, and go a step further,” Taibbi countered. “How about putting a few of them in the electric chair? Are you telling me Goldman Sachs execs aren’t then going to change?”
Provocative.

It' not clear exactly where we would draw the line in such cases. Maddoff? Ebbers? They were stealing entire fortunes. So perhaps there could be a case for that, putting aside the question of whether they and those like them are psychopathically unmoved by the threat of death. But they're both is prison for life already. So perhaps that already deters others from committing these kinds of crimes. But Sirota and Taibbi are advocating the execution of the Blankfein's of the world as well.

I'm not sure we want to go as far as sentencing snake-oil investment bankers to the electric chair. That's even harsher than the Sharia law of chopping off a thief's hand. Should it then be a utilitarian calculus of how many people they gravely harm? So that perhaps we might fry Enron CFO Andy Fastow who effectively looted the retirement funds of thousands of workers, but not, say, the analyst who gave a bad mortgage-backed security an AAA rating at Standard & Poor's? Drawing the line might be tough sometimes.

Still, it's nice to finally see some well-placed outrage. I think we can all agree that stricter investment regulations and stiffer penalties for breaking them are in order. And long overdue.

4 comments:

  1. Julian,

    I can understand the outrage but I think increasing the stick size does not resolve problems.

    The root cause of lack of business ethics is that children are not educated regarding morals by their parents or teachers. With lack of moral education, it cannot be expected that they will become ethical adults. A society which is measuring success with money, the greed is likely to increase. Hence, in my view we need to focus on building a moral society, which will then conduct business ethically. I do know this is a tall order, and difficult to implement. However, that should not disuade us from following the right path.

    Sonia

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  2. Agreed. Still, interesting to consider if deterrence has any affect.

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  3. I often wonder why social feedback fails to function as a deterrent to so-called white collar crime. I suppose in a society organized around class, economic behavior regulated by statute was a subset of that which was regulated by society. Business leaders who violated the code would have been wealthy but shunned. What's the point of great wealth if you have no friends?

    Things are different today. What if the standards of that class in 21st Century America have become so untethered from society as a whole, no longer responsible leadership and service, that they have become, in effect, a criminal culture, organized in effect by themselves for themselves. Do you suppose ANY statue can regulate their behavior?

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  4. I guess it's just about how much money you can amass and then retire with, regardless of how you actually made it.

    It seems to have become a cynical every-man-for-himself attitude.

    But I do think that a combination of better education--especially in ethics but also in humanities and philosophy more widely--coupled with stricter regulations, can ultimately work well enough.

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