There is something fundamentally wrong with the way our government regulates corporations. Actually, the problem shows up in my own statement in that I use the term "regulates". Right now, there is an adversarial relationship between the government and corporations. The government passes regulations and the corporations try to get around them. Actually, this is only true for a small minority of corporations, but it only takes a few rotten apples to spoil the barrel. Most corporations employ people like you and me who don't intentionally go around doing damage in the name of a buck. But there are a few organizations out there that will be happy to bury poisonous industrial waste in your backyard if they can do it without being caught.
The problems with the current regulation scheme are:
- The bad corporations can just ignore the regulations and declare bankruptcy when they get caught. The officers and owners of the corporation aren't be held accountable.
- The businesses themselves are generally more knowledgeable about what should be regulated than the government. It will be hit or miss whether the government regulations actually prevent problems from occurring. They will, of course, prevent problems from recurring, but most of the time the government regulators will be operating on hindsight.
Here is how I think the mechanism should work. I don't expect these ideas to be adopted any time soon, but I am throwing them out for consideration.
- Corporations should be responsible for establishing there own health and safety standards. This isn't an entirely new idea. For example, organizations like the Underwriter's Laboratories and the National Fire Prevention Association have been doing this for years.
- Corporations should also be responsible for conforming to the standards they set.
- They would do this by creating "Public Wellbeing Issues" and then adopting standards to address those issues.
- If a "Public Wellbeing Issue" affects the general public or worker safety, then it would be the corporation's responsibility to adopt standards that correct the issue or present the issue to the government if there were substantial safety vs. economic trade offs that needed to be made.
- Anyone could make a corporation aware of a Public Wellbeing Issue.
- Once made aware of the issue, the corporation must address it or be held accountable.
- The key to making this work is accountability. If a corporation fails to address a Public Wellbeing Issue and someone gets injured, there have to be severe consequences. These would include forbidding the officers and directors from holding corporate positions and breaking the shield of corporate immunity for significant owners (anyone with a more than 1% collective interest in the corporation). The officers, directors, and significant owners would then share civil and criminal liability for whatever happened. Note that this accountability would not apply to events no one predicted, only to things the corporation knew about and failed to address adequately.