Corporate Governance Regulation: How Poor Management Is Destroying the Global Economy

Chapter 8

The Argument for Accountability

Introduction

It has been duly noted by at least one comic book superhero that “with great power comes great responsibility.”¹ Generally speaking, American jurisprudence tends to reflect this fact, with a conspicuous exception for policymakers—individuals who, though virtually untouchable under the law, wield enormous influence over nearly every facet of modern-day America.

One example is Sarbanes-Oxley, for which an organized and strategic campaign was required to produce its legislative enactment. Despite the enormous chasm between the lofty ambitions and the widely documented outcomes²—for example, extensive, potentially irreversible, damages to the U.S. economy, affecting the individual welfare of untold millions of Americans and many more throughout the world—no one, to date, has been asked to shoulder even a hint of responsibility.

The contrast between the complete absence of any accountability whatsoever for policymakers and the treatment afforded corporate executives under current U.S. law is not only apparent but questionable. To explore the rational justification³ for this apparent disparity in treatment, consider the following. Under current law, malfeasant behaviors as committed by policymakers are not punishable. In contrast, Sarbanes-Oxley made it possible, for the first time in U.S. history, for corporate executives to be held criminally liable for outcomes they never intended.⁴

This constitutes a real and serious threat for ...