Self-study
The following passage is adapted from an article published in 1993.
P1
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Question ·
How severe should punishment be for corporate crime?
E.g., crime where a corporation profits from harming consumers
Economists' Answer ·
Depends solely on a cost-benefit analysis
E.g., if profits were $6 million, then a fine in excess of that would suffice
P2
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Economists' Answer ·
Punishment should only affect earnings
Morality should not be a factor in determining the punishment
P3
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Critique / Major Premise ·
Economists' approach is impractical
Sub-premise ·
Cost-benefit analysis must account for estimated detection ratios
Not every crime is detected. If corporations were punished only for the crimes that are detected, they would actually be incentivized to keep committing the crime and reaping profits.
Sub-premise ·
Accounting for detection ratios greatly increases severity of financial penalites
E.g., if detection ratio is 1-in-10, then the penalty has to be at least 10 times profit. If penalty is only, say 5x profit, then it's worth it for the company to keep committing that crime.
P4
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Sub-premise ·
Actual detection ration is closer to 1-in-10
Such high fines might put corporations out of business and throw thousands of people out of work. That's not practical.
Main Point ·
Another criterion for punishment, in addition to cost-benefit analysis, must be considered
For example, we could assign moral weight to particular crimes to determine a punishment that is just and practical
Passage Style
Critique or debate
10.
Suppose a corporation is convicted ██ █ █████ ██████ █ █████████ █████ ██ ████████ █████ ██ ███ ████████ ███ ██████ █████ ██ ████ ██████ ██ ███████ █████ ███ ██ ███ █████████ ██████████
a
a fine exactly █████ ██ ███ █████████████ ██████ ████ ██████████ ███ █████
The author wouldn’t want this, because it doesn’t take the detection ratio into account.
b
a fine slightly ██████ ████ ███ █████████████ ██████ ████ ██████████ ███ █████
The author wouldn’t endorse this, because this isn’t enough to take into account the detection ratio of 1-in-10. If the corporation has only a 10% chance of getting caught, then a penalty that’s only slightly higher than the profits earned would make committing the crime financially justifiable.
c
a fine enough ██████ ████ ███ █████████████ ██████ ████ ██████████ ███ █████ ██ ███████████ █████████ ███████ ██ ███ █████ ███████ ███████ ███ ███████████ ███ ██ ████████
This is the penalty most likely to be endorsed, based on the author’s view at the end of the passage: “the astronomical penalties necessary to satisfy the full reckoning of cost and benefit might arguably put convicted corporations out of business and throw thousands of people out of work. Thus, some other criterion in addition to the reckoning of cost and benefit—such as the assignment of moral weight to particular crimes—is necessary so that penalties for corporate crimes will be practical as well as just.” Some other criterion — such as moral weight of a crime — should be part of the determination of financial penalties.
d
a fine determined ██ ██████ ███ █████████████ ██████ ████ ██████████ ███ █████ ███ ███████ ██ ███████ ██ █████ ██ ███████ ███ █████████ █████
The author wouldn’t support this because this “might put convicted corporations out of business and throw thousands of people out of work.” The fact that a financial penalty that takes only cost/benefit into account would need to be so high to take into account the detection ratio is why the author thinks we need a different criterion besides cost/benefit.
e
a fine high ██████ ██ ███ ███ ███████████ ███ ██ ████████
The author doesn’t want corporations to go out of business, so the author wouldn’t endorse this.