Senator Elizabeth Warren claims that she is a “capitalist to [her] bones.” And, yet, in a desperate attempt to stake out the Left flank in an already crowded Democratic presidential field, the Massachusetts Senator is proposing to jail corporate CEOs.
In an op-ed published earlier this month in the Washington Post, Warren suggested that executives be “hauled out in handcuffs” for corporate mistakes, such as consumer data breaches.
Unfortunately, Warren’s attempt to stoke populist resentment of corporate America is not just campaign rhetoric or political hyperbole. Warren has introduced legislation, known as the Corporate Executive Accountability Act, which would impose jail time for CEOs of corporations with more than $1 billion in annual revenue if the company violated any civil law that “affects the health, safety, finances or personal data of one percent of the American population or one percent of the population of any state.”
CEOs who unknowingly preside over corporate mishaps would face a year in prison. Those who do so more than once could be jailed for up to three years.
Warren’s proposal would constitute a major expansion of the criminal law, which ordinarily is used to punish people for intentional acts that cause harm. In cases where harm results from accidental or negligent conduct, civil tort law provides the appropriate remedy.
Fortunately, a number of criminal law experts are pushing back against the idea.
In a thoughtful essay for Slate, law professors Carissa Byrne Hessick and Benjamin Levin describe Warren’s proposal as
“part of a broader pathology present on both the right and the left in this country: the assumption that the best way to solve a social problem is to pass a new criminal statute.”
Hessick and Levin argue that we should not “reflexive[ly] turn to punishment when we encounter bad conduct or injustice,” particularly where, as here, regulatory regimes and civil penalties are available.
They’re right. So is James F. Wood, the former U.S. Attorney for the Western District of Missouri, who argues in the Wall Street Journal that:
“Warren’s bill would make it harder for prosecutors to get the victims of corporate misconduct their due.”
As Wood explains, the current regime provides compensation in the form of fines and settlements to those who have been harmed. But the threat of jail time reduces incentives for corporate CEOs to settle.
“It’s one thing for your company to pay a fine, another for your life to be ruined. CEOs may simply refuse to settle, and victims will either lose out on the money they are due or have to spend exorbitantly to get it.”
Nevertheless, Warren proposes the slammer for any CEO who, in her view, “should have known” that things could go wrong at the expense of consumers.
Mark Zuckerberg, call your lawyer.