I don't disagree with the spirit of what you're saying, but people and businesses are naturally inclined to game whatever rules and regulations are in place if it means maximizing revenue.
While jail time may not be the answer, I do think a stick might be more effective than a carrot.
As someone who would otherwise be classified as "pro-business", I have found myself more and more dismayed by the bad behaviour of the largest corporations and their influence on the government.
A corporation is a legal entity with rights equal to a human, but in an Animal Farm kind of way. Their influence over governments and lawmaking make them "more equal" than Joe Q. Public. I would like to see checks and balance to keep the most flagrant corporate/financial bad behaviour under control.
Me too. That's not the issue. The issue is why anyone would suggest jail. There is a large range of actions that could be pursued to modify the incentives that lead people to make reckless gambles with credit. Why not pursue those other actions first? Why not change the financial incentives? Why resort to jail?
However, I do see this: "We fine them, and what is the big lesson?" said Stiglitz. "Behave badly, and the government might take 5% or 10% of what you got in your ill-gotten gains, but you're still sitting home pretty with your several hundred million dollars that you have left over after paying fines that look very large by ordinary standards, but look small compared to the amount that you've been able to cash in."
Taken together, Stigliz said, this system of widespread fraud, lax regulation and non-deterrent enforcement, created a system of skewed incentives that rewarded criminality, gambling and other bad behavior, and left American workers, investors and homeowners holding the bill.
So please, why do you think jail time should be off the table for a white collar criminal who destroys the wealth of millions and of shareholders, but that jail time for say someone who steals a car is fine? That makes no rational sense. One is obviously more harmful, although a little less tangible than say stealing a car or a diamond, but it's still real value/wealth that they are effectively destroying/stealing.
You're acting like there is more innovation when there is less regulation, but that obviously isn't the case otherwise companies would be fleeing America for Africa.
>Killing off innovation in the USA could be easy, just introduce jail time into a conversation about what incentives might motivate the business community to be socially responsible.
This makes no sense, if they commit a crime, they should go to jail, end of story. We don't need to legalize crime to incentivize innovation.
And think about this:
"They were optimizing not on producing mortgages that were good for the American families but in maximizing fees."
I can think of a lot of incentives that might be put in place to help align the interests of those writing the mortgages and those who are receiving the mortgages, however, jail time would not be on my list. We can have a rich and interesting conversation about what incentives might be effective. We can have a rich and interesting conversation about what incentives set up skewed motives that lead to anti-social behavior. But jail time should never come into the conversation.
Killing off innovation in the USA could be easy, just introduce jail time into a conversation about what incentives might motivate the business community to be socially responsible.