Corporate fines just end up being passed on to workers who had nothing to do with the decision. "We had to (lay off 10% of our workforce|cut worker pay by 10%|etc.) because of these unfair fines."
Corporations aren't people--they can't make the decision to do unethical things. Yes, I understand the law, I'm saying the law is incorrect. People do unethical things, and people should be held responsible for their actions.
Fining decision-makers might be an acceptable alternative to jail time, as long as the minimum fine is some sort of multiple of profits gained, to prevent criminals from just figuring a slap on the wrist fine into their decision-making math.
> Corporate fines just end up being passed on to workers
No they don't, they get passed on to shareholders. The market cap of the company decreases by the amount of the fine (plus any predicted future effect of the lost money) and the stock price goes down to reflect that.
If the company could get away with paying workers less or decreasing its workforce in order to boost profitability, it already would have. It's not waiting for a fine to justify doing so.
> No they don't, they get passed on to shareholders. The market cap of the company decreases by the amount of the fine (plus any predicted future effect of the lost money) and the stock price goes down to reflect that.
Ehh, if they have to, but execs are going to do their very best not to pass on costs to shareholders.
Even if shareholders foot the bill, why would that be a desirable outcome? Are you arguing that we have to fine corporations instead of holding the decision makers responsible? What do you have against people taking responsibility for their own actions?
> If the company could get away with paying workers less or decreasing its workforce in order to boost profitability, it already would have. It's not waiting for a fine to justify doing so.
But they couldn't pay workers less or decrease workforce, because they needed those workers to execute the unethical business plan. They weren't waiting for a fine to cut workers, they were waiting for the cash cow to stop producing milk to cut workers who were necessary to keep the cash cow going.
> but execs are going to do their very best not to pass on costs to shareholders.
But it's not up to execs, execs don't control the share price, no matter how much they wish they could. The market does. The market sees the fine, it adjusts the market cap, done.
> Even if shareholders foot the bill, why would that be a desirable outcome?
Because shareholders elected the board. That's the entire foundation of joint-stock corporations, that shareholders get the rewards but also suffer the losses.
Why would you assume the market efficiently adjusts for things like fines? Have you seen the stock market lately? There is at best a loose correlation between business reality and stock prices.
Why would there be a 1 to 1 relationship between the price of stocks and reality, when most investing is blind passive investing that ignores reality by design?
It doesn't really matter that much if he thinks or knows a stock is under or over valued if he also expects that bad valuation to be maintained for any significant length of time.
Stock prices are not rational and there is no consistent way to calculate the value of a company. An expensive media campaign that accomplishes nothing related to their business offerings and may even lose the company significant amounts of money can end up raising a stock price. And you also don't have unlimited time to try and wait out stocks which also have so many other random factors being thrown in over the years.
> But it's not up to execs, execs don't control the share price, no matter how much they wish they could. The market does. The market sees the fine, it adjusts the market cap, done.
Not directly, but surely I don't need to explain to you what effect cutting costs typically has on share price?
> Because shareholders elected the board. That's the entire foundation of joint-stock corporations, that shareholders get the rewards but also suffer the losses.
Sorry, I'm missing the part of this where you answered the question. Why is this a desirable outcome? What is the problem with holding human beings responsible for their own actions?
I don't give a fuck about the foundation of joint-stock corporations. If the foundations of joint-stock corporations result in sociopaths profiting off harming people with no consequences, the foundations of joint-stock corporations need to change or be discarded completely.
> surely I don't need to explain to you what effect laying off a bunch of workers might have on share price?
Surely you do, because sometimes the stock goes up if the workers weren't needed in the first place, sometimes it goes down because it shows the company is flailing, and sometimes it does nothing because it's business as usual.
You're operating under an illusion that execs have control over how the market will respond.
> Sorry, I'm missing the part of this where you answered the question.
And I'm missing the part where anything I wrote gave you the excuse to be rude. Please be civil, this is HN.
I had to double check and you were not responding to me, but yes, it was in fact you who was passive aggressive rude and underhanded with your snide “surely I don’t have to”, conceited, pretentious, snarky response. If you’re going to accuse others of being rude, you should start. This is not reddit. Are you lost? Pretentious pomp should best be left at the door anywhere outside of the reddit quarantine of awful humans.
What normal people are concerned about: "Corporations are destroying people's lives for the profit of a few."
What Hacker News is concerned about: "Someone was slightly snarky in an internet post."
I didn't accuse anyone of being rude. I don't care if you're rude to me. This whole "rudeness" thing is just a transparent way of distracting from the question:
Why can't we hold executives personally, financially or criminally responsible when they make decisions that harm other people?
Because "make decisions that harm people" is vague, and criminal codes should be explicit and clear? Who the fuck would want to do business if someone can arbitrarily claim they broke some vague law that most surely would not get applied fairly and equally? It's a terrible idea.
> Because "make decisions that harm people" is vague, and criminal codes should be explicit and clear?
Nobody was proposing that "make decisions that harm people" should be the wording of the criminal code. Obviously nobody's drafting legal language to be passed as law on Hacker News.
We're discussing, at a high level, the concept of holding people responsible for their actions. If a concrete example would help you, consider the Ford Pinto case, where people committed murder (a law that's already on the books, in clear language) and didn't go to jail for it because it was behind the veil of a corporation.
> Who the fuck would want to do business if someone can arbitrarily claim they broke some vague law that most surely would not get applied fairly and equally?
Oh no, what will we do without sociopaths in charge of the economy? Who will want money if they can't harm other people to get it?
Maybe it's just me, but I feel like if people decide not to go into business because their business doesn't work without harming people, that's a good thing?
If you're worried about people being treated unfairly, why are you completely ignoring everything that's being said about businesses harming workers and customers? Why are you only worried that the rich and powerful might be treated unfairly, despite a complete lack of historical precedent for that happening?
Sure, of a law is on the books, then hold people responsible. But we are talking about 3rd party printer ink here. Why is criminality and jail even being mentioned at all?
"Destruction of property" is a law on the books in some form in pretty much every jurisdiction[1].
When you sell a printer to someone, it's no longer your property, it's their property, and if you destroy it, that's destruction of property.
Arguably there's also some cyber crimes involved here as well.
If I hacked into your printer and bricked it, I'd go to jail, no question. Why is HP above the law in your mind, when they did it on a much larger scale?
that's simply how civile law, the most popular legal system in the World, works: the trial establishes if the company harmed people and decides if the decision makers are to be punished or not.
Nothing hard about it.
OTOH the way corporate law is applied today is neither fair or applied equally and it mostly harms people and benefit corporations, I don't see a problem if we reverse the outcome
less corporations that operate on higher ethical standards sounds like a win-win to me
The person answered your question implicitly, you just didn't understand it.
Not only that, you're completely wrong in the earlier exchange about laying off workers. I think you need to understand business better to see that it doesn't work out the way you think it does. Shouting "fuck" on HN with a wrong take doesn't make you right.
If you have any problems with my understanding of business, feel free to say what they are, but so far you've just claimed that I'm wrong without any reason, and objected to my choice of words.
Pretty much. Yesterday I wanted to grab some Fanta for in the park.
A 0.33L can would’ve been too little, but a 1L bottle too much, and a 1.5L bottle far too much. 0.50L was the perfect size.
The pricing?
0.33L - €0.66 (€2.00 per L)
0.50L - €1.48 (€2.96 per L)
1.00L - €1.93 (€1.93 per L)
1.50L - €2.09 (€1.39 per L)
Initially this made me angry, as it is very clear they figured out that the 0.5L bottle is the most convenient size, and put a huge premium on that, as people that need that size (for say, in a backpack) will pay it for lack of alternative. In other words, the price the market will bear.
But then I reminded myself, modern companies will always try to give you the least amount of value for the highest price the market will bear.
This is also why you should never feel bad if you can get one over on a company. Pricing error that gets you expensive shoes for €1? Screw ‘em. Contractual obligation that effectively gives you lifetime for €1? Screw ‘em. They’ll do the same to you whenever they can.
I wish businesses believed in being synergistic with their customers and nurturing loyalty, but alas. Not the times we live in.
Pretty much everyone: Businesses should operate in a free market. Let the market decide! Things shouldn't be regulated by the government if they don't absolutely need to be.
Also pretty much everyone: Wait, the decisions businesses make that affect me absolutely suck!
> This is also why you should never feel bad if you can get one over on a company. Pricing error that gets you expensive shoes for €1? Screw ‘em. Contractual obligation that effectively gives you lifetime for €1? Screw ‘em. They’ll do the same to you whenever they can
I recently saw a £700 bicycle carbon fork on sale for £70, new, the shop just forgot a zero. I didnt buy it out of feeling bad :(
I'm guessing a component like that was being sold by a local bike shop or a small chain, not an inhuman multinational corporation. I hope you told somebody about the error rather than just leaving it for the next person to buy.
If a company like Amazon mispriced something that way, I'd gladly buy it.
In the UK at least they can refuse to sell at that price if it is an error. A displayed price is not a contract but an invitation to tender. It only becomes different legally if the low price was a deliberate bait-and-switch thing or similar.
Supply and demand presumes that I would have wanted something else than Fanta - since I (and presumably others) did not, Fanta had market power :).
As an aside, the example would be even more dramatic with non-sugar, where the 0.5L bottle is €1.88, but the 1L bottle is €1.95, due to both the price premium of ‘convenient size’ and ‘healthy alternative’ being stacked.
> Supply and demand presumes that I would have wanted something else than Fanta
That's not how S&D works. S&D is in-play even if Fanta had a monopoly. Even if the prices were set by the government. Governments have tried every scheme imaginable to repeal the law of S&D, but they never work.
BTW, I gave up all soda about 15 years ago. It took about a year to finally stop craving it. I no longer have any desire for it.
Besides the health issues, it has saved me a ton of money in aggregate.
> A firm with market power chooses a point on the demand curve that it faces. It sets a price as a markup over marginal cost and then produces enough to meet demand at that price. A firm with market power does not take the price as given and then determine a quantity to supply. In fact—strictly speaking—there is no such thing as a supply curve when a firm has market power.
Soda for me is a guilty pleasure, like a good barbecue, or a bottle of red wine. But I appreciate the heads-up!
> The market cap of the company decreases by the amount of the fine (plus any predicted future effect of the lost money) and the stock price goes down to reflect that.
Purely in theory in a vacuum, yes. In practice, you'll have a very hard time finding examples where that actually happened. At best, the stock takes a momentary dip and next ~week it's back to where it was.
Well in reality it's a gradual decrease over time as the fine moves from hypothetical low-probability to actually happening. By the time the fine happens it's often already been "priced in".
But so what if the stock is back up the following week? More things happened over the following week. You're missing the fact that it would have been up even higher if it weren't for the fine. (Alternatively, the stock also might go down even further the following week. But similarly, it wouldn't have gone down as much if not for the fine.)
This is not theory, this is how stocks actually work in the aggregate. If they didn't, you'd be able to make a lot of easy money off the stock market otherwise.
In the parlance of an old internet meme, "why not both"?
Also, they _are_ cutting employees. There have been a lot of layoffs recently, and some of them have explicitly stated it'd not because they can't afford those employees.
Yes HP is laying off employees just like pretty much every other large tech company right now. Which shows you it has nothing to do with fines, and rather everything to do with industry-wide overexpansion during COVID and high interest rates now.
I don’t know how to deal with people who talk about the economy in terms of a perfect competition free market where all participants have full knowledge and are all equal in terms of power. If a physicist talked in terms of zero friction or spherical cows, we would laugh them off and never listen to them again. And yet people continue to talk about the economy with these assumptions that make zero friction and spherical cows look like practical applied physics.
I don't know where the requirement of full knowledge became part of the definition of a free market.
Because it isn't true.
Another word for lack of knowledge is "risk".
The amount of risk is factored into the price of everything you buy and sell. For example, a name brand item sells for a higher price than a generic item because the name brand carries with it less risk for the buyer.
They do not get "passed on to the workers." That's not how that works - not how any of that works.
A business needs a certain number of workers for a certain output. Those workers need to be paid a market amount for their skillset, for the amount of output. If the company does not have the funds to pay them - due to fines or competition or any other reason, the company lays off workers and reduces output and revenue - giving those sales to competitors, or goes out of business.
Yes, if the solution to "we broke printers" is to refund every single affected sale, the company will lay off workers, reduce output, and close down if that happens enough. Their competition will increase output to fill the unmet demand, and hire workers.
That literally is the point of the fine, and is a good thing, not a bad thing.
>Corporate fines just end up being passed on to workers who had nothing to do with the decision. "We had to (lay off 10% of our workforce|cut worker pay by 10%|etc.) because of these unfair fines."
This is like "if you raise the minimum wage we'll only have to lay people off" which is equally self serving and utterly, completely wrong.
Employees dont pay. Shareholders pay. If they could have fired 1 employee and collected a bit of extra profit they would already have done so.
> If they could have fired 1 employee and collected a bit of extra profit they would already have done so.
But they couldn't pay workers less or decrease workforce, because they needed those workers to execute the unethical business plan. They weren't waiting for a fine to cut workers, they were waiting for the cash cow to stop producing milk to cut workers who were necessary to keep the cash cow going.
If you can run a successful business by selling $100 objects that cost $20 each to make and result in an average of $90 of fines per sale, and make it up by mistreating your workers, I applaud you.
But if they could mistreat their workers they would so anyway independent of the object in question. $100 sale - $20 costs - $90 fine = -$10 per unit. Nobody's going to do that unless having that in people's hands makes them money somehow. (We have seen that with game systems--sell at a loss and make it up on the games.)
Corporations aren't people--they can't make the decision to do unethical things. Yes, I understand the law, I'm saying the law is incorrect. People do unethical things, and people should be held responsible for their actions.
Fining decision-makers might be an acceptable alternative to jail time, as long as the minimum fine is some sort of multiple of profits gained, to prevent criminals from just figuring a slap on the wrist fine into their decision-making math.