Nortelish Criminals

When Nortel crashed, it took with it a vast array of stock portfolios, from pensions through soon-to-be retirees. The Canadian economy was momentarily stunned, and tens of thousands collectively lost millions of dollars. There has been surprisingly little analysis of what happened. Certainly the dot-com boom contributed, but is it the reason that the multitudes were robbed of their trust, their investments, and in many cases their retirement? Was there some other, fundamental reason?

Someone who takes $20 from your wallet without your permission, or fraudulently uses your credit card for $500 which is typically insured and reimbursed by the credit card corporation, or an assailant who causees you physical harm, is often described as a crimnal. These crimes are prohibited by a strict legal enforcement regime, including police, lawyers, judges, and prisons. Our country pays millions every year preventing these criminal activities that cause mediocre to medium levels of harm. It is a valuable service in prevention, to be sure. But they do little to prevent massive frauds on Society.

The criminal prevention regime does not work so well for the stock market. If it isn't a blatant violation of the principles, it is very difficult to prosecute people who either through negligence and willful blindness, or with intent and knowledge, cause harm to millions. The crimes I cited result in mediocre harm to individuals, but what happens at the stock market level, such as in the case of Nortel, results in harm to millions. Someone can take $20 and go to jail, an adequate deterrent. A corporate executive can pollute rivers, lobby against human rights, and screw shareholders over for personal gain, with virtual legal immunity. Worse, by virtue of the economic value in the executives decisions, he will be monetarily rewarded, giving him access to the best lawyers.

The corporate regime we have created puts harm into a new category, where it is cast upon the multitudes, the deterrence is a fraction of those necessary, and the enforcement is simply incapable of accommodating.