This is an explanation for passage 2 of LSAT preptest 77, the December 2015 LSAT. This passage is about how to set penalties for corporate crimes. Some economists say penalties should only be set on a cost-benefit basis. The author argues that the economists’ way of determining penalties for corporate crimes is impractical. He suggests assigning a moral weight to corporate crimes instead.
This section has paragraph summaries and an analysis of the passage, links to the explanations for the questions are below.
- Some economists say that penalties for corporate crimes are correct as long as the penalty exceeds profits.
- The economists say that community concerns about the severity of crimes shouldn’t be relevant to the penalty.
- The economists’ approach isn’t practical. Not all crimes are detected. If detection rates are low enough, corporations may find it profitable to commit crime, unless penalties are set very high.
- Actual detection ratios are very low, so penalties would have to be set high to deter crime. But if penalties are set very high, then many corporations could go out of business. This would be bad; jobs would be lost. So instead of high penalties, we should assign moral weight to crimes.
I think this passage is fairly straightforward. The bits I summarized in the paragraph summaries are the core of the passage.
However, it’s probably clearer to illustrate the passage with an example.
Let’s say a company can make $10 million dollars a year selling a product. But they have to pay $5 million in waste treatment costs. So their actual profit is only $5 million.
However, if they dump the waste in the river, they get to keep the full ten million. Only 10% of river dumpings are detected on an annual basis.
What penalty should we use?
- Economists: $5 million dollars and one cent is just.
- Author’s view of what the economists should believe: The corporation has a 1/10 chance of getting caught. So if they do this for ten years, they will earn $50 million dollars. Therefore, we should fine them $50 million dollars and one cent.
- Author’s view: A $50 million dollar + 1 cent fine is very large. It may put many companies out of business and cost jobs. Therefore, we should use some other moral factor in setting the penalty.
That’s about it. Note that the author is making two points:
- The economists aren’t properly considering their own method. Under their proposed system, penalties should be much higher to account for detection ratios. (See lines 34-39)
- But these high penalties would be bad. Therefore, we should use “moral weight” instead (see lines 49-50).
Author’s Potential Inconsistency
This passage has an inconsistency. You don’t need to know this to answer the questions, it’s just interesting to think about.
The author is saying that if penalties aren’t high enough to account for detection ratios, then corporations will find it profitable to commit crimes. The author thinks this is bad.
But then in the final paragraph the author suggests that high penalties might put some corporations out of business. So they don’t think we should have high penalties.
So this means the author thinks penalties should be lowered to the point where corporate crime is profitable! Surely this can’t be the result the author intended to argue for.
They counter this by saying we should attach a moral weight to crimes. But unless this moral weight makes the penalties high enough, corporate crime will still be profitable.
Note that, if the author is suggesting that corporate penalties should be something like “money + jail time for executives”, then that’s a workable solution. However, in the passage, they only mention money. It’s unclear what “assigning a moral weight” means.
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