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We've Known for 75 Years Why GM Killing Customers Isn't Treated as "Real Crime"

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From flickr.com/photos/29778206@N04/3044390985/: Renaissance Center / GM World Headquarters
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Reprinted from neweconomicperspectives.org

The New York Times headline was dominated by a seemingly strong word: "G.M. Is Fined Over Safety and Called a Lawbreaker."

As I will explain, however, the seeming strength of the label "lawbreaker" is undercut by the rest of the title, the text of the article, and the reality of the Justice Department's refusal to apply the rule of law to powerful domestic corporations and their controlling officers.

The first discordant note is the word "safety." The article reports that GM, for the purposes of avoiding the expense of repairing a design defect that endangered the lives of its customers, covered up the defect and caused the death and injury of a number of those customers. The article does not report the (minor) cost of GM fixing its design defect. The article does not report on the number of people who were injured and killed because GM designed a defective ignition system, knowingly hid the defect from its customers and the government, and once it knew that its defective design was injuring and killing its customers GM deliberately covered up the existence of the defect and the cause of the easily avoidable injuries and deaths. The article states that GM was finally required to recall 2.6 million vehicles due to the defective design of the ignition switches.

The second note of weakness in the title is the word "fine." The only punishment is to the shareholders through a fine against GM. No officer was fined or sanctioned by the government. The article says that the paltry fine against GM was the largest the regulator could impose.

The third note of weakness is not by the NYT, but by the government. The title does not use any of the words used to describe criminal prosecutions against elite corporate officers and corporations. The article does not even ask why the Department of Justice failed to prosecute the GM officers that led this sometimes fatal fraud. Did the safety regulator even make a criminal referral against GM or its (ir)responsible executives?

The fourth note of weakness applies to both the paper and the government. There is not a word in the article about the unethical nature of the conduct. It's horrific to fail to discuss GM's crimes, but it is beyond obscene to fail to discuss its moral implications. The NYT ran a stronger story on GM's lawyers, but it too avoided any discussion of GM's crimes or ethics.

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Reckless Vehicular Homicide

GM's actions occurred nationwide, so GM and its officers could be prosecuted under many different state laws. When GM's customers drive their cars they are subject to prosecution if they violate their state Reckless Vehicular Homicide laws. The common legal definition of "reckless" is: "willful or wanton disregard for the safety of others." (The statutory name, legal standard, and punishment vary among the states). "Willful or wanton disregard for the safety of others" is what the government says GM and its officers and employees exhibited.

The case for calling GM's behavior "reckless" is far stronger than the typical Reckless Vehicular Homicide case because such cases are typically the product of a single spontaneous act produced by a split second driving "decision" that may not have been consciously planned in any meaningful sense. In GM's case, its reckless behavior was considered, deliberate, done for the purpose of financial gain for GM and the officers and senior employees involved, and covered up. Indeed, that last element may itself be a state and federal criminal act. GM's cover up of the defects would allow an aggressive prosecutor to characterize the entire combined activity as aggravated recklessness under some state laws. (The cover up would also greatly increase that punitive damages would be awarded in civil suits against GM by the victims -- which is why GM is gearing up ready the sordid American corporate tactic of "strategic bankruptcy" to try to minimize its victims' recoveries even in the civil context.)

Would murder and maiming by any other name smell as fetid?

We label something a "crime" for important purposes. Crime is very different from tort even though the legal "elements" of the tort and crime are often the same. Often, the only difference is the degree of the burden of persuasion ("beyond a reasonable doubt" v. "the preponderance of the evidence"). Only public prosecutors can bring criminal actions and only criminal convictions can lead to incarceration (with the important exception of "contempt of court"). U.S. defendants in a serious criminal case have a constitutional right to counsel. We give the government the monopoly on bringing criminal cases because it is such a vital responsibility and because we know that vigilantes invariably degenerate into scourge of society. When we treat a wrong as a crime when make a societal declaration that the conduct is so harmful that it must be defined as illegitimate and subject to sanctions that typically include imprisonment.

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Edwin Sutherland was right about elite white-collar crime; and he's still right

This year is the 75th anniversary of Edwin Sutherland's 1939 Presidential address to the annual meeting of sociologists in which he announced the concept of white-collar crime. My readers will see, in Sutherland's first paragraph, why his work is so attractive to me.

Economists and most criminologists don't understand financial crimes

"This paper is concerned with crime in relation to business. The economists are well acquainted with business methods but not accustomed to consider them from the point of view of crime; many sociologists are well acquainted with crime but not accustomed to consider it as expressed in business. This paper is an attempt to integrate these two bodies of knowledge. More accurately stated, it is a comparison of crime in the upper or white-collar class, composed of respectable or at least respected business and professional men, and crime in the lower class, composed of persons of low socioeconomic status."

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http://neweconomicperspectives.org/
William K Black , J.D., Ph.D. is Associate Professor of Law and Economics at the University of Missouri-Kansas City. Bill Black has testified before the Senate Agricultural Committee on the regulation of financial derivatives and House (more...)
 

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