The following passage is adapted from an article published in 1993.
Topic
How we should determine penalties for corporate crimes (like when corporations profit from selling harmful products)
Framework
Challenge Position
Main Point
The economist’s idea that penalties for corporate crimes should only be set by ensuring the fine exceeds the profit from the crime is impractical, because it ignores the need to factor in detection rates and moral considerations; in reality, we need to include more than a simple cost/benefit calculation if we want fair and workable punishments. Most Valuable Sentence: (Last paragraph)
P1: Introduces the Economists’ Approach
Some economists say that the only thing that should matter when deciding fines for corporate crimes is math: the fine just needs to be higher than whatever profit the company made from wrongdoing.
P2: Expanding on the Economists’ View
These economists believe that how much society hates a specific crime (like selling tainted food) shouldn’t impact the penalty—just the impact on the company’s finances.
P3: The Author Pushes Back—It’s Not That Simple
The author starts to poke holes in this idea, pointing out you have to consider how often these crimes are actually detected. If companies think they won’t often get caught, a small fine won’t stop them from taking the risk. So, the “just” fine would have to multiply up—maybe needing to be $60 million instead of $7 million if only 1 in 10 get caught.