5/20/2014 10:19:00 AM Editorial
Punishment should fit the criminal
Reading about the meager $35 million fine levied against General Motors for failing to report a potentially fatal flaw in its vehicles, that had resulted in at least 13 deaths, got me thinking about how flawed our system of justice is because we operate too frequently on the premise that the punishment should fit the crime rather than that the punishment should fit the criminal.
$35 million is corporate pocket change for a company like General Motors, which generates $41.5 million daily. The fine will have no effect on how the company does business. The associated bad publicity may have some effect, but even that will be negligible because people have continued to buy the company's vehicles, confident that the government will take effective action to make sure defects in the cars are corrected. That confidence is misplaced in the present anti-government regulation marketplace. Corporations, like individuals, will most often change their behavior only when they know it will cost them dearly.
Companies like General Motors do a cost-benefit analysis when making decisions and if they think it is cheaper to risk customers' lives than to make an investment in those customers' safety, they risk their customers' lives, as GM did in the case of the defective ignition switch for which they are being fined. They had insurance to cover lawsuits for the deaths, so they were not taking a financial risk while sacrificing a few customers. It was strictly a business decision; there was no intention to kill customers, just a reasonable risk that a few might be killed.
Sadly, we all make decisions based on a similar cost-benefit analysis and make the same choice to risk the lives of people we know and don't know when we drive under the influence, use cell phones while driving, exceed the speed limit, and commit other illegal acts. We don't expect to kill anyone, but we make the choice to risk killing someone for our convenience or to meet some other personal goal.
Punishment under the law is designed to fit the crime committed by legislatively established penalties. The maximum fine for GM not reporting the defective ignitions switch is $7,000 a day, that's .00016% of daily revenue. For a small business like us, a $7,000 a day fine would bankrupt us almost immediately, for corporations like GM it is like nothing at all.
Our legal system would be much more effective at preventing criminal acts if punishment was established based on the criminal and the crime. What I mean is, the law should set a penalty amount for each crime based on the ability of the criminal to pay the penalty rather just setting a cash amount.
As an example, in a case such as this with General Motors, the penalty should be set at a specific minimum portion of each days revenue for the period of time during which the violation takes place, say for instance 1% of daily revenues, which would have made GM's daily fine about $415,000 and would have had a deterrent effect.
The same method should be applied to all violations of the law. Instead of one dollar amount for everyone, penalties should be assessed based on earnings. For example, speeding penalties set at one day's earnings for every five miles driven over speed limit; one week's earnings for first offense driving under the influence; one week's earnings for using a cell phone while driving, etc.
Such a penalty assessment method, whether applied against corporations or individuals, would more likely result in any cost-benefit analysis recommending compliance with the law.