Three strikes for corporations

Karl Denninger has an idea for forcing corporations to abide by the law:

Our current “justice system”, in short simply makes fraud a business model that has costs dramatically smaller than what the offenders can steal through their misconduct. Judge Rakoff is exactly correct in refusing to endorse this model, as despite the claims that this is an “effective” model for discipline of wrong-doing we have decades of experience with it now and all it has produces is serial re-offenders.

Were this a violent criminal context we would have protests on the courthouse steps demanding “three strikes” and similar laws, and we’d get them, exactly as we did years ago.

It is well beyond the time that we should have a “three strkes” rule for corporate misconduct and put a stop to the “neither admit or deny” negotiated settlement.

If individuals can be locked up for life on the basis of three felonies, then obviously it makes a great deal of sense to shut down a corporation after it commits three felonies as well. Corporations only exist by the action of the state and they are terminated by a subsequent action of the state on a regular basis.

While regulators could theoretically keep corporations under control, the historical fact is that they are rapidly captured by the very corporations they are meant to police and transformed into an insurance policy. Imagine how often banks would be robbed if each time someone robbed a bank, they were forced to pay a fine equal to about five percent of what they stole and told not to do it again… or they would pay another similar fine.

The present system of fraud and theft legalized after the fact isn’t good for the nation or the economy, and it isn’t even beneficial for the corporations in the long run. Veal may make for a nice meal, but if you eat all the calves, you’re not going to be eating beef for very long.