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Author Topic: How to fix corporate corruption  (Read 5221 times)

sluissa

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Re: How to fix corporate corruption
« Reply #45 on: November 28, 2011, 10:08:13 pm »

I have an idea to fix corrupt corruption.

Put every sitting member of the SEC in jail along with the worst offenders on Wall Street, gut the SEC's rules and regulations and rebuild them with more oversight and more coordination with criminal investigators.

Seriously. I just read this: http://money.cnn.com/2011/11/28/news/companies/citigroup_settlement_rejected/index.htm?hpt=hp_t2

And it's the reason nothing ever changes. The SEC simply takes its bribe money from offenders, they get to walk away without ever admitting guilt of any kind, and go on to cook up the next, greatest way to defraud investors. Meanwhile the SEC simply fills its coffers and ensures that it has the money and the clout to defend the financial markets. Just like bad mortgages, it's a cyclic blackhole designed to take money from investors and put it in the pockets of traders and stock brokers.

So yeah. The SEC has been under agency capture for so long, it no longer represents the interests of the American people and barely represents the interests of the market itself. They are literally there to whitewash financial malfeasance so banks and traders can go back to work with a clean record. And all it costs is $30 million to $150 million worth of money defrauded from investors.


This, Ladies and Gentlemen, is how the French Revolution started. Let's try to stay away from hyperbolic calls to action. Let's not lose our heads here.

We know things are broken. We're trying to figure out ways to fix it and stop it from happening again. Punishment is all well and good, but if you're trying to call for indescriminate punishment for anyone even standing next to the wrongdoers, well.... that's another thing. Also, just saying "tear it down and rebuild it better" doesn't tell anyone HOW to make it better.
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Lagslayer

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Re: How to fix corporate corruption
« Reply #46 on: November 28, 2011, 10:34:37 pm »

The only way to repair the system and keep it in check is for the masses to actually pay attention. The vast majority of people just don't care unless it hits them directly, and usually even then just get information 3rd or 4th hand. Not sure if this is going to happen, though.

nenjin

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Re: How to fix corporate corruption
« Reply #47 on: November 29, 2011, 01:27:36 am »

Quote
We know things are broken. We're trying to figure out ways to fix it and stop it from happening again. Punishment is all well and good, but if you're trying to call for indescriminate punishment for anyone even standing next to the wrongdoers, well.... that's another thing. Also, just saying "tear it down and rebuild it better" doesn't tell anyone HOW to make it better.

When the institution responsible for safeguarding the integrity of trading, that is there to ensure a level playing field for all investors, are in the pocket of the worst offenders, the solution isn't a mystery. You fire those people, at the very least, possibly find them complicit, and you institute criminal penalties for systemic and egregious violations of ethical trading. We stop treating financial fraud like it's not a crime and stop worrying about "the chilling effect" on commerce like the people ruining us are the only thing keeping us going. You start holding organizations responsible for the behavior of their members, instead of excusing the practices and the environment that fostered it in the first place.

Did you not even read the article? The SEC doesn't even think Citibank should have to disclose WHAT they did, let alone admit culpability. Makes it a little hard to fix what's broken when you don't know how it was broken in the first place, AND "the authorities" don't seem to give a shit either, doesn't it? Citibank says they shouldn't have to disclose anything because it would take time and money away from pursuing other cases of financial malfeasance elsewhere. That's their excuse. Don't prosecute us because that's time not spent prosecuting someone else for the same thing. And the SEC agrees with them! WTF!

This isn't randomly pointing fingers at anyone involved with Wall Street, this is pointing a finger directly at the institution that claims to police this farce for doing absolutely nothing other than imposing a financial penalty, which they routinely under-estimate. Honestly, this is one place where I think Obama blew it. The people who orchestrated the financial collapse were made part of the solution, which hasn't solved anything and has served to continue to prop up the institutions responsible and continued to excuse their behavior. But why should we expect different? We handed the power of a solution over to the people most likely to abuse it.

The current system is rotten to its core. Corporations get a pass to buy their way out of criminal liability for the very fraud that has crippled the world-wide economy, yet the average citizen doesn't get to pay their way out of being guilty. If the gatekeepers are corrupt, they deserve to be replaced AND punished. If the system makes corruption legal, then the system is broken and needs to be rebuilt to not serve profit above all else.

Investors lost $700 million so Citibank could make $150 million, which is about the amount they had to pay to the SEC in penalties after they were caught (and after people said $33 million wasn't enough.) No skin off anyone's teeth, right? If that's what the rules call for, then the rules suck and the people writing them are almost as culpable as the offenders.

Quote
The only way to repair the system and keep it in check is for the masses to actually pay attention.

People actually have to willing to make a change, which:

Quote
This, Ladies and Gentlemen, is how the French Revolution started. Let's try to stay away from hyperbolic calls to action. Let's not lose our heads here.

Pretty much guarantees will never happen. It's like it's not a crime if it doesn't happen on your block. When are we going to start calling fraud for what it is? It's a crime and people should be going to jail for it.

That's a damn sight better than people got during the French Revolution. Bernie Madoff went down because he was stupid/greedy enough not to surround himself with a corporation to shield himself from liability.
« Last Edit: November 29, 2011, 02:04:39 am by nenjin »
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sluissa

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Re: How to fix corporate corruption
« Reply #48 on: November 29, 2011, 05:47:06 am »

My problem was with the "The entire SEC should go to jail" call. The SEC has near to 4000 employees and I find it hard to believe that each and every one of them should be in prison.

Even just talking about the 5 commisioners. They change every 5 (1 each year) years and are appointed by the president. Perhaps we should be looking higher, than just the SEC
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GlyphGryph

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Re: How to fix corporate corruption
« Reply #49 on: November 29, 2011, 09:29:45 am »

I think the majority of the SEC should probably be in prison, but by no means should we stop there. Being a part of and supporting a criminal organization, even if you don't directly engage in any crimes yourself, is probably worth at least a month or two of jail time. The mailroom clerk could probably get off on the basis of not having been aware.

But talking about it is a joke - crimes are only crimes in the US if the perpetrator is stupid or poor, or made the mistake of pissing off someone more powerful. How do you suppose we make changes in such a system?
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timotheus

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Re: How to fix corporate corruption
« Reply #50 on: November 29, 2011, 01:54:30 pm »

This is some great discussion, but we're getting a little off topic.

How about:

005) All corporations have no right to legal privacy, in regards to their financial records/history.
(Should take care of the current SEC hijinks that are going on with Citibank, and others)

006) Corporations are restricted to donating $1000 to political persons.

007) Political figures, once elected, must forfeit and all holdings (business ownership, stocks, property beyond their home, etc), and cannot, for a period of 15 years after their final term is up. Also excludes transferring ownership to spouse. Retirement packages are exempt (401k, IRA)
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timotheus

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Re: How to fix corporate corruption
« Reply #51 on: November 29, 2011, 01:58:44 pm »


I can see how that could be seriously abused. For instance, forming a "shell" corporation which has maybe 10 employees (the CEO and Board) and "outsources" all functions to the main company. On paper, they'd be complying with the rule but could get away with paying whatever they wanted.

I say this because in the late 90's there was a craze for laying off many of your employees and then turning around and rehiring them as contractors. The reason? Lowers the company's headcount, and profit per employee was an investor metric that was in vogue at the time (not to mention you can get out of paying benefits that way). Nortel took it to ridiculous extremes, where nearly everybody I worked with was a contractor, even many who had "been with" Norte for a decade.

Brings up an excellent point on shell corporations.

008) No corporation can own another corporate entity.

Really goes back to stripping corporations of 'legal person entity' status. If that is gone, determining the legal rights a corporation does have becomes something to work on.
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Duuvian

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Re: How to fix corporate corruption
« Reply #52 on: December 04, 2011, 08:23:10 pm »

news.yahoo.com/us-agents-laundered-drug-money-report-180012421.html

Citing unnamed current and former federal law enforcement officials, the newspaper said the agents, primarily with the Drug Enforcement Administration, have handled shipments of hundreds of thousands of dollars in illegal cash across border.
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Montague

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Re: How to fix corporate corruption
« Reply #53 on: December 04, 2011, 10:27:57 pm »

A "maximum wage" law would only encourage corruption. CEOs would struggle to funnel as much money out of the company as possible to make up what they cannot legally make up in wages. Companies would offer entitlements, bonuses, stock options and whatever to circumvent the wage laws to attract the best qualified executives. It would create entire legions of lawyers hired to figure out legal loop holes to circumvent them anyways.

Also, how would the law work if you were a sole proprietor of a business? Say if you are a highly skilled engineering consultant or subject matter expert and were paid something like 3 million a year? If you got carpel tunnel syndrome or something and hired a person to type up reports, would that employee really deserve and require a 300,000$ a year salary?

What would be the point of a maximum wage anyways? The ultra-rich don't get rich through wages anyways, they get rich by collecting interest, capital gains and dividends from investments and other such mechanisms and you can't effectively without stagnating the economy by punishing investment.

As for donating to political causes... what about charitable organizations that also do political lobbying?
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timotheus

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Re: How to fix corporate corruption
« Reply #54 on: December 05, 2011, 01:09:55 pm »

A "maximum wage" law would only encourage corruption. CEOs would struggle to funnel as much money out of the company as possible to make up what they cannot legally make up in wages. Companies would offer entitlements, bonuses, stock options and whatever to circumvent the wage laws to attract the best qualified executives. It would create entire legions of lawyers hired to figure out legal loop holes to circumvent them anyways.

Also, how would the law work if you were a sole proprietor of a business? Say if you are a highly skilled engineering consultant or subject matter expert and were paid something like 3 million a year? If you got carpel tunnel syndrome or something and hired a person to type up reports, would that employee really deserve and require a 300,000$ a year salary?

What would be the point of a maximum wage anyways? The ultra-rich don't get rich through wages anyways, they get rich by collecting interest, capital gains and dividends from investments and other such mechanisms and you can't effectively without stagnating the economy by punishing investment.

As for donating to political causes... what about charitable organizations that also do political lobbying?

Montague, this is concerning corporations. First, Sole proprietorship != corporation. Second, you keep saying 'maximum wage'. That was not discussed. It was total income from that corporation. This includes wage, and also bonuses, options, etc.

The point is to reduce the disparity between incomes in large corporations. The point of this thread is "how to fix corporate corruption", not how to penalize the ultra-rich.

Thanks for taking the time to leave your comments. Do you have some ideas on how it could better work?
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Dwarf

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Re: How to fix corporate corruption
« Reply #55 on: December 05, 2011, 04:06:49 pm »

Also, how would the law work if you were a sole proprietor of a business? Say if you are a highly skilled engineering consultant or subject matter expert and were paid something like 3 million a year? If you got carpel tunnel syndrome or something and hired a person to type up reports, would that employee really deserve and require a 300,000$ a year salary?

No, he doesn't deserve or require 300k a year and neither do you deserve or require 3m a year.
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Newbunkle

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Re: How to fix corporate corruption
« Reply #56 on: December 06, 2011, 05:21:17 pm »

I don't believe it can be fixed because of the nature of our system. Capping pay to tackle wealth disparity is like sticking a band-aid over a decapitated body that's squirting blood all over the place. Believe me, I've tried. (Not really).

The main problem is that the traditional employer/employee relationship is inherently abusive, regardless of pay levels. Imagine you were going to join an organization, but you could choose to work as an equal or a servant. Nobody in their right mind would choose servitude over equality. The reason that so many people do live to serve is because of a lack of meaningful choice. It's the result of exploitation.

I know a common response to this is that they just need to work harder, or study, or relocate. Several years ago I would have said the same thing because I wanted it to be true. My arguments on the internet were riddled with instances of the just world fallacy. Thinking laterally for a moment, if everyone in the world performed perfectly and achieved equal results, there would still be gross inequality and suffering. It's because of limited opportunities and unequal access to resources, but I might be jumping ahead a bit there.

Inequality is the result of an imbalance of power rather than an imbalance of wealth, though the former eventually leads to the disparity in earnings. Wealth inequality is a nice convenient distraction from the real issue, and often skews the debate. A sizeable portion of the public subscribe to the idea that wealth is automatically the result of success, but any objective look at the situation shows that this is untrue. I think that it's the just-world fallacy coming into play again. People are anxious and looking for some sort of order or meaning to things.

Because people automatically attribute wealth to success, they jump to the conclusion that redistribution of wealth is unfair. In some cases it might be, but this is the result of trying to tackle the symptom instead of the cause. Some people do earn wealth due to their own hard work and merit, but they end up caught in the same net as the ones who don't. It's like trying to cram the wrong jigsaw piece into a hole.

The imbalance of power that allows people to be exploited is down to unequal access to the Earth's living space and resources. These things were essentially free - available to use for any living thing that needed it (for 3.5 billion years!). Okay, that's not entirely accurate, but it's close enough for me to make my point. My point is that the ability to share in the Earth's resources is not something given, it's something that exists unless taken away. As far as I can see, the only reason to arbitrarily deny this ability to masses of people is to put them in a position where they are powerless. (He who controls the spice...).

The consequences of this should be obvious. You can't live independently, so you have to go to someone who has what you need. In return they can pretty much demand what they like. Yes, there are multiple people you can go to, but there are also far more people like you that they have to choose from. Opting out isn't possible, so what happens? Yeah, you're a serf.

In order to "succeed" you often end up becoming the master of someone else. The rationale is that people need to work for others or they'll starve. That's true, but that doesn't mean servitude is the answer. Wouldn't enabling them to work as an equal also allow them to earn a living?

The system we have now is not so different from feudalism now that I think about it. Instead of being rewarded land from your master you can buy it, but you earn money by working for your master. Same difference if you ask me. Some of us even have the same aristocracy as we did back then, and they own more than a third of my country's land, lol.

So to cut a long post short, you fix corporate corruption by elliminating the ability for people to obtain positions of privilege and abuse that position to subjugate others.

And just to clarify, I'm not a communist, socialist, anarchist, or whatever. I don't label myself; it's boring and clouds the debate. I don't have a preference for planned economies or free markets. I'm not against property as long as it doesn't cause suffering or destitution for others. I'm not against business as long as it's voluntary and grown through merit. I believe that what people want to do with their share is up to them. Maybe people should even have free land for building a home on.

We already agree that human rights can't be given away, even voluntarily. I think a share of the Earth should be impossible to lose as well. Doing so leaves you at the mercy of others.

PS I lied about cutting it short.
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Montague

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Re: How to fix corporate corruption
« Reply #57 on: December 06, 2011, 10:30:10 pm »

I'm not sure wealth disparity is or should be something that must be 'fixed', I see it as something unavoidable, as there are huge disparities of talents, skill, materialism and ambition between different people

Although that said, I think severing the influence the government has over larger corporations and reducing the barriers to entry for markets would help a lot, as smaller businesses employ more people and compete with larger ones. Setting tariffs on goods from countries with dissimilar economic policies (China, ect) would make American made products more competitive, while encouraging trade with our allies above others.

The way the system is set up now, it really punishes ethical conduct of business and awards risk, corruption and gaming of the system. Setting up more government regulations is not the answer, but setting up an intelligent legal framework for conducting business and allowing maximum freedom and simplifying the corporate tax code, would probably go a long way to opening up the market and allowing ethical businesses to better compete when the larger corporations no longer have so much sway with government policy and vise versa.

As for resource scarcity, there isn't much that can be done about that and if there is, it will be the adaptable and striving nature of the free market that will evolve a solution, not so much trying to implement a police state to ration it all out. I think governments, business and individuals should start now in figuring out how to deal with the issue of resource scarcity, but the nature of the beast is for short-term gains and solving short-term problems. How the world is going to adapt to ever rising prices for fuel, food and material, while ignoring the inevitable problem of it, is a mystery to me.
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