Why are corporate fines for shady or illegal business practices so often less than the amount they made by doing those illegal practices? At that point, don’t the fines just become a cost of doing business?
Specifically thinking about Perdue Pharma. PBS article says they made $35billion pushing opioids, but the current court case is only seeking $6billion on fines. Ignoring the Sackler’s immunity request, this is still a net win.
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Okay, imagine you have some toys, and you really like playing with them. Sometimes, if you don’t follow the rules while playing, your grown-ups might say, “Oops! You did something you shouldn’t have.” And they might take away one of your toys for a little while.
Now, imagine there are big companies that make a lot of money by selling things to people. Sometimes, these companies also don’t follow the rules, and they might do things that are not okay, like selling things in a way that could hurt people. When they do these bad things, the grown-ups in charge might tell them, “Oops! You did something you shouldn’t have.” But instead of taking away their toys, they might give them a “fine,” which is like a special kind of grown-up punishment.
But here’s the tricky part: Sometimes the fine is not as big as the money the companies made by doing those bad things. So it’s a bit like if you got to keep most of your toys even after doing something wrong. This doesn’t seem fair, right? Some people think the companies might not be learning their lesson if they just have to pay a small fine. They might keep doing bad things because they know the fine is not too big. And that’s why some people talk about the fines just being a part of their “business cost,” like how you might lose a toy sometimes but still get to play with the rest of them.
One company called Perdue Pharma made a lot of money by selling medicine, but they didn’t follow the rules when selling it. They hurt people by accident, and now the grown-ups are trying to make them pay a fine to say sorry. But some people think the fine should be even bigger because they made a lot more money than the fine. It’s a bit like if you had to give away more toys to make up for what you did. It can be confusing, but the grown-ups are trying to figure out the best way to make things fair.
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