In class this week we briefly touched on methods in which states can hold corporations accountable. Collectively as a class we struggled to answer to this question. However, I think states frequently act to "check" the power of corporations and hold them accountable when they overstep or abuse their public authority using two methods: fines and creating new laws and regulations.
Fines are one way a state acts to hold a corporation accountable. A timely example of this can be seen in the UK. Just this week a UK watchdog, the Information Commissioner's Office, levied a $664k preliminary fine on Facebook for the Cambridge Analytica scandal. This fine was in response to Facebook mishandling user data and allowing a third party to improperly access data on millions of users. Being a global corporation, this could set the precedent for action on this issue by governments and we may see other states follow suit. This fine is the UK attempting to "check" the actions of Facebook and hold them accountable for violating the rights of UK citizens.
Creating and implementing new laws and regulation is another way states will hold corporations accountable. An example to look at is the BP oil spill in 2010. In response, President Barack Obama signed an executive order that put new rules in place that required corporations, like BP, to adjust how they operate. The US Bureau of Ocean Energy Management said that these new rules were "the most aggressive and comprehensive reforms to offshore oil and gas regulation oversight in U.S. history". New laws and regulations "checked" the power of corporations and limit their freedom of operation.
Both of these methods are reactionary tactics. States, at least democratic ones, tend to only hold corporations accountable once they have crossed some sort of line or when there is a large public outcry. Rarely do states take preventative action to limit a corporation, nor would this be received very well by the free-market. The good news though is that fines and the creation of laws and regulations are successful in checking the power of corporations and force them to change their operational procedures. Unlike in the international realm, corporations do abide by state rulings and states have the power to enforce their measures. So while these checks may come after the harm has been done, they are effective in holding corporations accountable.
Sources:
1. The White House, Office of the Press Secretary. "Executive Order 13547 - Stewardship of the Ocean, Our Coasts, and the Great Lakes". The White House President Barack Obama. Retrieved from: https://obamawhitehouse.archives.gov/the-press-office/executive-order-stewardship-ocean-our-coasts-and-great-lakes
2. Tony Romm and Elizabeth Dwoskin, "Facebooks is Slapped With First Fine for Cambridge Analytica Scandal". Washington Post. Retrieved from: https://www.washingtonpost.com/business/economy/2018/07/10/5c63a730-848b-11e8-8f6c-46cb43e3f306_story.html?utm_term=.aedba945bf35
Michael, I agree with you that collectively, we did not address this problem well in class. First, I think because it is an enormous task to accomplish in such little time. Next, I think we lacked focus on discussing the issue at the macro vs. micro level.
ReplyDeleteI also like that you brought up the question of fines and regulations. Not too long ago, when we discussed the issue in my economics class, we unanimously agreed that too many rules and regulations are stifling for many industries. That same week, there was a story in the news about the disaster in a fertility clinic caused by not maintaining proper temperatures, resulting in a devastating outcome for many parents-to-be. The comments voiced at the time were that the industry had not been properly regulated. I believe your assessment will be predictive of how fertility clinics are going to be regulated in the future – it will be reactionary, stablished as a response to a public outcry. To your point, the harm has been done, but not only it will be good to hold corporations accountable, but also to prevent future disasters from happening.
That's a great timely example - and one I would not have even thought to explore. It's funny how the market, as a general entity, wants deregulation and less government intervention but the people who constitute the market demand action when corporations act in such a manner whereas the people are forced to remember that corporations are looking out for profits and the bottom line more so than doing what is "right" and "responsible".
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