Why Individual Organizations Not The State Should Cover The Costs of Historic Crimes

10 06 2021

Vancouver Art Gallery community memorial to the 215 buried children discovered at Kamloops Residential School. The main memorial consists of 215 pairs of children’s shoes, along with various accessories including teddy bears, books, images, and flower Image Source.

In recent weeks, a sensational discovery on the grounds of a Canadian residential school has gathered international attention and has raised important questions about where the responsibility should be placed. From the late nineteenth century onwards, the Canadian government had a policy of requiring all Indigenous children to attend school. In Indigenous communities in which there wasn’t a European-style school, that meant that children were forcibly taken from their families and sent to boarding schools that were designed to Christianize the children and to assimilate them into Euro-Canadian culture. In many cases, these state-subsidized schools were run by churches, often the Roman Catholic Church. The Roman Catholic Church, which still has a privileged constitutional status in parts of Canada, enjoyed tremendous political power in Canada in the period in question due to the nature of the political settlement that produced the modern Canadian constitution in 1867.

 Regardless of whether the residential schools were managed by celibate Catholic clerics or by Protestants who were married family men, the entire system was deplorable. Even when the residential schools were well managed by the standards of the time (e.g., well ventilated, adequate food, no sexual abuse, etc) the residential school policy was a deeply illiberal one that is today universally condemned across the Canadian political spectrum. The residential schools policy can be condemned on multiple grounds. The policy violated a number of important principles, including Indigenous rights, parental autonomy, the departure from the principle that the state should be religiously neutral, etc etc. Moreover, the child mortality rate in these schools appears to have been far higher than the baseline rate that would have prevailed in Indigenous communities at that time. Simply put, by taking children away from their families and putting them in institutions, the policy reduced the proportion of Indigenous children who reached adulthood. Regardless of whether someone today regards the residential school policy through either a left-wing perspective or a politically conservative lens, the policy is indefensible. A number of years ago, the Canadian government formally apologized for the residential school policy in a highly public ceremony and offered compensation to those who were victimized by this policy. In connection with this apology, the Canadian government launched a Truth and Reconciliation Commission modelled on that once led by Desmond Tutu in South Africa. This commission heard testimony from many survivors. In an effort to reconstruct the facts of the case and to establish exactly what happened in the residential schools, the government commissioned extensive historical research, some of which was executed by people with PhDs and by respected historical consulting firms such as the excellent Public History Inc of Ottawa.

Apparently, the historical research undertaken using oral historical and archival research methods missed out of some of the horrors of the residential school programme. A few weeks ago, the First Nations government near Kamloops, British Columbia announced that archaeologists they had hired had discovered a large number of human remains in unmarked graves on the site of a residential schools. It is estimated that over 200 children were buried on the site, which strongly suggests that the managers of the school, who recorded far fewer than 200 child deaths in official documents, knew that the death rate was unacceptable high, even by the standards of the time, and tried to cover it up. The discovery has generated outpourings of grief in Canada from both Indigenous and non-Indigenous Canadians and has renewed discussions of abuses by other church-run organizations, such as the infamous Mount Cashel Orphanage in Newfoundland, and has raised profound questions about the relationship between church and state in that country. Canada’s monarch must, by law, be a Protestant, the Canadian Crown and the Catholic church have had an extremely cosy relationship since at least 1774, when a new constitutional order was granted to Canada.

Overseas, the revelations out of Kamloops have renewed ongoing discussions about some of the equally terribly things the Catholic church did locally at roughly the same time. The residential school in Kamloops was run by the Oblates, who recruited teachers from Irish convents. The Kamloops mass grave story has resulted in many comparisons the infamous Bon Secours home for unwed mothers in Ireland. A few years ago, radar imaging discovered a mass grave of malnourished and maltreated children that the nuns had mistreated because they had been born out of wedlock and were thus morally tainted in their eyes. The remains of almost a thousand children were found buried under a septic tank, which further eroded the legitimacy of the Catholic Church in Ireland. These births and deaths were never registered with the civil authorities in Ireland, which is precisely the same modus operandi used in Kamloops. So the Kamloops revelations isn’t just a story about the residential schools or race relations.  For obvious political reasons, successive Canadian governments have tried to steer the conversation about residential schools away from comparisons between the Catholic, Anglican, United Church, and secular schools or between making comparisons between the residential schools run by the different orders of the Roman Catholic Church. (For roughly 80% of the last half century, Canada’s Prime Ministers have been Roman Catholic). The long-overdue discussion of that issue is now taking place.

Another discussion is whether additional compensation for the victims of the worst residential schools should come from the state (i.e., all taxpayers regardless of their religious commitments) or just from the incorporated organizations that managed the schools in question, or both but in a weighted fashion. This issue is one that should interest anyone in anywhere in the world who is interested in corporate responsibility or business ethics issues. [Full disclosure: I’ve published in Journal of Business Ethics twice. One of those articles was about the Hudson’s Bay Company’s present-day responsibility for its historic relationships with Indigenous peoples].

Pretty basic law and economics theory strongly suggests that, as a general rule, the onus to provide compensation for corporate misdeeds should be placed on the responsible organization rather than diffused widely across all of society. If our goal is to incentivize organizations to behave better in the future, we need to use this moment to make it clear that the burden of compensation must fall on the organization in question. When I drive too fast, I don’t share the costs of the speeding ticket with everyone on my street. If we shifted to a system whereby speeding ticket costs were shifted from individual drivers to street populations, average speeds and the highway death toll would go up. Allowing the   incorporated organization that ran the Kamloops school, which happens to be the Canadian subsidiary of the Missionary Oblates of Mary Immaculate, or indeed any other organization to say “society or the government made me do it” would set a dangerous precedent that would be observed by other non-profit and commercial organizations right now.

Ideally, we would also like to hold the individual natural persons who had decision-making power responsible as well, but since they are almost certainly deceased by this point, responsibility needs to go up one level to the corporation rather than being shared between the corporation and the individuals.  

In thinking about corporate responsibility for criminal actions that took place long ago, some people might be inclined to apply “statute of limitations” thinking and say that after so much time has elapsed, individuals and corporations should no longer be held accountable for misdeeds. When I say “held accountable” I am refer to both legally liability and to the informal norms that govern when we are expected to compensate others for our misdeeds, since both are potentially relevant here. I think that it would be a mistake to apply statute of limitations thinking or “time limits” thinking in this case. While there are good reasons for thinking that the existence of the statute of limitations rule produces positive social outcomes, there are strong justifications for the modification of that rule that says that the statute of limitations doesn’t apply in the case when the misdeed in question was very serious and has long-term implications. In laws of both England and Canada, the statute of limitation applies to small crimes not big crimes. It basically applies to shoplifting, not murder and that two-tier approach is probably the most efficient one with the right social outcomes.

 Similarly, the social norms that require people to compensate others for their misdeeds also distinguish between minor misdeeds, where claims for compensation must be presented immediately, and really serious misdeeds. I recall a case of a restaurant where it was revealed that the child of the owners had engaged in paedophilia on that property many decades earlier. (The individual malefactor was dead by the time of the revelations by the restaurant was still owned by relatives of the founder).  Although the owning family and the restaurant corporation escaped any legal liability for what the family member had done, social sanctioning kicked in and the business soon folded, despite desperate efforts to retain customers by slashing prices. As it was witnessed by so many organizations in the community, the the bankruptcy of that restaurant firm was, probably, a positive development because it reinforced the salutary norm that says that an organization will be punished for serious misdeeds no matter how long ago they took place. I would imagine that this example increased the incentives for family members to police the behaviour of family members. If we assume that managers care about both short-term and long-term reputational costs to firms, we want to make it very clear that the time limits/statute of limitations principle doesn’t not apply to the most serious corporate crimes.     

Bottom line, the organization that managed the school should be viewed by both policymakers and by ordinary people as primarily responsible for what happened in Kamloops. This organization should be subject to legal liability and informal social sanctioning similar to that applied to the aforementioned restaurant.  Perhaps the state could contribute to the costs of providing the additional compensation that is now being requested but only once the resources of the organization have been exhausted. Any other arrangement would be both unfair to Canadian taxpayers and likely to reduce the incentives of corporations to behave ethically. How the government acts now will change the incentive structure for many organizations.  I think that asking the Canadian taxpayers to cover these costs would be particularly unfair to those taxpayers who have abandoned the Catholic faith of their ancestors, whose ancestors arrived in Canada after the mandatory residential school programme ended, or whose ancestors at the time went on the record by challenging the idea that the production of Roman Catholicism is a legitimate public good that the state should be in the business of subsidizing. During the period in which this residential school was in operation there were many people who objected to any sort of state support for the Catholic Church. From the 1850s onwards most Canadian Protestants subscribed to the belief that the state should provide a level playing field for religions and that different denominations should compete on a free market basis, a doctrine called Free Trade in Religion or Voluntaryism. During the middle of the nineteenth century, there were eloquent proponents of this view in the Free Presbyterian Church and other denominations. Had that principle been applied consistently after the creation of the new Canadian constitution in 1867, social outcomes would have been superior, in my view.       


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