NEW YORK—The Supreme Court says that corporations have the same rights as individuals. When they misbehave, shouldn't they face consequences as serious as those imposed upon an individual?
Corporations get away with murder. For at least a year, management of Toyota knew that brakes in millions of its cars might fail. A 2009 ABC News investigation found that at least 16 people had died. "Safety analysts found an estimated 2,000 cases in which owners of Toyota cars including Camry, Prius and Lexus, reported that their cars surged without warning up to speeds of 100 mph," reported the network. Yet Toyota did nothing. Instead they blamed their customers, saying they were resting their floormats on the gas pedals.
On May 18, Toyota finally faced the wrath of the federal government. Its "punishment": a paltry $16.5 million fine, which amounted to 5.5 percent of its 2009 profit and went into the U.S. Treasury's general fund. A far more appropriate punishment would be nationalization without compensation. Toyota's American operations ought to be seized and operated by the federal government. The U.S. government has not only the right, but also the duty to take over criminal corporations.
A 5.5 percent fine is a slap on the wrist. Nationalizing a company protects the public interest. It brings in significant cash assets that can be used to compensate the victims.
Nationalization can also serve the interest of public safety. The mine explosion that left at least 25 coal miners dead in West Virginia earlier this year left the public feeling helpless and frustrated at the slow rescue attempt by Massey Energy, the site's owner and operator. In 2009, the Upper Big Branch mine received 450 safety violations. Massey Energy paid the U.S. Mine Safety and Health Administration less than $1 million. That's less than 1 percent of its annual profits, or roughly $2,000 per violation. If you get caught speeding in Virginia, you'll pay more than what Massey Energy pays for deliberately risking lives.
British Petroleum is spending $6 million a day on its response to the explosion at its Deepwater Horizon oil drilling platform in the Gulf of Mexico. But that's a drop in the bucket next to the cost that will be borne by the people of Louisiana, Alabama, Mississippi and Florida. The disaster is spilling the equivalent of one Exxon Valdez wreck into the gulf every four days—and it's been three weeks. Thousands of fishermen will be ruined. The tourism industry, already in trouble due to the economic collapse, will be devastated. The full extent of the ecological damage won't be understood for years. BP failed to ensure that a "blowout preventer" at the Deepwater Horizon would work in the event of an emergency. Rather than wait for the clueless execs at BP to come up with a solution, a seizure by the federal government of BP (the American operations, anyway) would put the corporation under the jurisdiction of an organization that could assign experts from NOAA and the U.S. Navy, among other agencies, to stop the leak. After the leak is plugged, the publicly owned, former BP's profits could help defray the costs of the cleanup and extend benefits to fishermen and other victims.
We're a rich country—the problem is that out-of-control corporations are hogging the wealth.