For many years, cigarette companies fraudulently hid evidence that smoking causes a myriad of health issues. Cigarette company managers directly hid the evidence their research teams found, cigarette company boards of directors knew and hid the same information. Enormous human suffering and pain has been knowingly caused by these people. Why did they do it? The managers and directors received huge salaries and bonuses for many years and retired fat and happy.
Is this an isolated incident?
No. The exact same pattern has played out over and over again. Before the 2007 financial crisis, real estate agents, mortgage managers, and bank directors knowingly got people into homes they could not afford then took enormous multi-million dollar bonuses each year. When the house of cards collapsed, these people kept their ill-gotten gains.
The same thing continues to happen all the time in many businesses ranging from Wells Fargo’s fake accounts, Exxon’s half century of hiding climate change information, Comcast & TWC’s payments to landlords and cities for exclusive monopolies, Volkswagen’s falsifying of environmental data from their diesel cars, and many other areas.
This is a systemic problem that needs a systemic solution.
The reason that these issues have been happening and will continue is that corporate managers, boards of directors, and shareholders can collect enormous financial wins while taking risks with other peoples lives that they will not be held accountable for.
How do we stop systemic abuses like those perpetrated by cigarette company managers, bankers scamming the system for big bonuses, and oil companies hiding climate change research?
Make managers, directors, and shareholders PERSONALLY liable for their actions when in their positions for twenty years. If they commit unethical or illegal acts today, then when they are discovered in ten years we can sue them and take their salary and bonuses back that they had illegitimately earned. Do not allow companies to buy insurance companies to cover this risk. If people are afraid personally, they will not make the business decisions that put someone else’s life below their own personal gains.
Some people have argued that shareholders should not be liable for decisions of boards of directors or managers they can’t directly control. My suggestion is that they can and should be liable so that they seize this control and enforce strict standards on their boards of director and managers.
Others have argued that managers and employees should not be responsible for decisions made higher up. The same argument was made at the Nuremberg trials that the concentration camp guards were just following orders or didn’t really know what was going on. Those people put their own financial / career well being over the very lives of others. If you are asked to do something unethical or if your company is doing something harmful to the world, then you should be obligated to quit and find a better place to work. You should not be able to keep financial gains that you obtained at the expense of other people.
To summarize, make these changes to our law and you will see a lot of the extremely harmful abuses by businesses disappear overnight:
- Make company managers, boards of directors, and shareholders directly and personally liable for unethical decisions and actions of their company.
- Do not allow companies to buy insurance policies that protect individual managers or directors or shareholders from the effects of unethical behavior.