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The Importance Of Being Pragmatic

July 30, 2009 4:36 PM

What makes law so interesting is that, on the tough questions, there is no clearly right answer. This is because, once we are removed from the trivial and commonplace, legal decisions are based on policy considerations and empirical determinations. The problem is that, inevitably, competing policies judgments pull in opposite directions, and - as good as science is today - the facts most critical to decision-making are usually unprovable assumptions about which reasonable persons can disagree. While society is in the midst of making a tough legal decision, lawyers, judges, legislators, columnists, and citizens muster the best arguments they can to persuade others as to the rectitude of their position. For some period of time, the right answer seems beyond reach. Eventually, though, one side's arguments begin to sound more persuasive to a majority of the populous. Ultimately, a consensus is reached on the correct position for society to adopt. There is now a "right" answer to the question. It's critical to understand, however, that this answer is only "right" because of the consensus, and not the other way around. (This is a pragmatic view of the law; if the reader is interested in a more in-depth philosophical discussion, see Michael L. Seigel, A Pragmatic Critique of Modern Evidence Scholarship, 88 Northwestern University Law Review 995 (1994).)

So, at one time, the consensus in the United States was that "separate but equal" schools satisfied the Fourteenth Amendment's due process clause; today, it would be hard to find anyone who endorsed that previously "right" answer. At present, a debate rages about whether gays should be permitted to marry as a matter of the law's guarantee of "equal protection"; a generation from now, there will be a right answer to this question as well.

Given my pragmatic philosophy, John's position that collective entity criminal liability is "wrong" in some absolute sense simply does not compute. In part, he bases his conclusion on the proposition that criminal liability is "different" than civil or administrative liability. He claims that a liberal government can under no circumstances impose corporate criminal liability because of the collateral harm it causes to innocent people, which is categorically immoral. (I love how he resorts to the Soviet Union, Maoist China, and the German Nazis to support his arguments every chance he gets. You can't get any more immoral than genocidal communism and fascism!)

John bristled at my labeling him a formalist. But formalism is exactly what his argument boils down to. For, as I understand him correctly, if we simply relabeled criminal punishment and called it an "administrative sanction," he would have no problem leveling it at a corporation that has violated the law. (In his first post, he wrote, "Criminal law is penal law. It's about punishment. It is not designed to compose disputes, provide compensation to wronged parties, or impose administrative sanctions.") This is, however, a mere semantic or "formalistic" distinction. Administrative and criminal penalties are different only by degree. If administrative penalties are high enough, they will produce the same result as a criminal conviction: a loss by the company of a considerable amount of money. If so, they would have all of the beneficial effects associated with criminal punishment - retribution (though technically we wouldn't be "allowed" to call it that), deterrence, rehabilitation, and incapacitation - as well as the negative effect of harming some innocent shareholders, employees, and consumers. And threatening such penalties would encourage the corporation to cooperate against the individuals directly responsible for the wrongdoing.

It just so happens that, rather than creating a system of truly effective administrative remedies to counter white collar crime, our society has chosen instead to enact and enforce criminal statutes. One could argue about the wisdom and efficiency of this choice (it shifts regulatory responsibility and power from administrative specialists to generalist prosecutors), but the moral issue does not change. Only the words.

Perhaps John would argue that super-large administrative remedies would be as immoral as criminal sanctions because of the collateral damage they would do to innocents. This would, at least, be a consistent position to take. And it leads to this fundamental question: is it ever moral to harm innocents to achieve a great public good?

As much as we might not like it, the honest answer is "sometimes." War is a very patent example of when we make this painful calculus. Innocents - eighteen-year-old citizens whose otherwise routine and productive lives are interrupted by a draft - are sent to the front lines and sacrificed for the protection of the homeland. If we did not act this way, Nazis would now be running our government. (My turn!) Here's another difficult example. Let's say an innocent five year old, visiting his dad at the nuclear power station where he works, is about to push a button that will cause a meltdown and result in a million deaths. Shouting "stop" isn't working and no one is in reach of the kid. Nuclear disaster is imminent. An armed guard on the scene can stop the child only by shooting to kill. (Shooting to injure is too risky, especially at a small, moving target.) Should the guard fire?

There is no absolute "right" answer to this question. Some would say it is never right to kill an innocent, regardless of consequences - it is usurping the will of G-d. Others would say that to let a million persons die unnecessarily is the true immoral act. The co-called right answer lies only in consensus.

So, back to the prevention and punishment of white collar crime. Can we justify harming some innocents for the greater good of protecting the public from the havoc that would be wreaked by unchecked criminal behavior in the powerful corporate sector? One hundred years ago, the Supreme Court answered that question in the affirmative when it decided the New York Central case. It seems to me that society has reached the consensus that the Supreme Court was right in balancing the competing concerns.

If John took a step back, he'd realize that even he does not see these things in black and white. As he stated earlier, "[c]riminal punishment always wreaks harm on the innocent. The families and dependents of convicted criminals are inevitably adversely affected by the incarceration or impoverishment of the offender, both materially and emotionally. Hence, criminal liability always punishes the innocent . . . ." The difference between that harm and the harm of corporate criminal liability is, according to John, that in the former case it is "an unfortunate collateral effect of visiting punishment on the blameworthy that should be minimized as much as possible," while in the latter case latter case the "punishment is intentionally directed toward those who have not committed an offense."

This is not a legitimate distinction. First, in both cases it is not the government's intention to injure the blameless; rather, such injury is a foreseeable but unpreventable consequence of punishing those who are to blame. (Remember that John does not disagree with my contention that, without corporate criminal liability, many egregious offenders would escape detection and prosecution.) Moreover, even if one accepts this distinction, so what? Again, to use the war analogy, if the government enacts a draft, it is directly inflicting harm on those who are forced into battle against our enemies. We believe, however, that their "ultimate sacrifice" is justified by what is at stake. In fighting white collar crime, the stakes are less significant, but so is the harm to the innocents. And the government does take steps to keep this harm to a minimum.

Up to this point, John and I have been treating all corporate crime generically, debating in general terms whether corporate criminal liability can be justified in light of our values and its costs and benefits to society. I'm ready to move beyond that subject to take on the question of under what circumstances an alleged corporate criminal should be pursued.




Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.