Yes incorporation protects you from the fiscal results of your actions - the loss of your company should be enough of a punishment for 99% of business owners who fuck up through negligence or greed. However, when you're purposefully embezzling, tax evading and outright breaking moral, ethical and legal codes, then there should be a nice concrete cell waiting for you.
If you think fiscal immunity equates to legal and moral immunity, then you have a very distorted view of the world.
You'll go away for years for a non-violent mugging, but when you embezzle millions into offshore accounts you're given a slap on the wrist and allowed to leave the country to live in the Bahamas and not even attempt to pay your debt to the people you robbed blind.
"the financial industry was engaged in predatory lending practices, deceptive practices. They were optimizing not on producing mortgages that were good for the American families but in maximizing fees." "Meanwhile, stock-based compensation created further skewed incentives by encouraging executives to pursue short-term stock gains at the expense of long-term corporate sustainablity, Stiglitz said, and in some cases encouraged them to deceive their own shareholders."
We're not talking about punishing failure, we're talking about punishing crime, note the word deception, in other words fraud or lying.
In Australia, when you say the word entrepreneur, people think of corporate crooks (Bond, Skase, Adler).
Legitimate entrepreneurs who failed, like Jodee Rich with One.Tel, get labelled as crooks.
So failure gets stigmatized. So startups become the insanity option. And the entire country gets held back and relies on digging dirt out of the ground and flogging it to China with no added value. Because only big established industries with government sponsored franchises and monopolies are "respectable".
Disaster. Don't let a few minority cases pervert America's strength. You don't want to take on a risk averse, "entrepreneurs and company directors are scam artists" culture.