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Apple and Google embody two alternative models of capitalism

theatlantic.com

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Re: Apple and Google embody two alternative models of capitalism

#111

Post by mwfunk »

rebootthesystem wrote: post #87
mwfunk wrote: post #74

Earlier quoted context omitted.

There's a pretty wide range of corporate behavior that lie in between "maximize shareholder value" taking priority over all other considerations, and shareholders getting ripped off by the company they invested in. There are more than two mutually exclusive options for how a company should prioritize its resources.

A company isn't a charity. It's a business. It's there to make money. It does this by delivering a product that solves a problem for someone (or another business) and, by means of the value it offers, it can generate revenue and a profit. If a company has investors, those investors are there because they want to make money with the business activity they funded. Plain and simple. So, a business is there to solve a pr…

In the abstract I agree, where it gets awkward is in what that actually means. In one sense, "maximize shareholder value" can be interpreted to mean simply, "run this company as well as possible". That's fine, that's basically nothing more than a statement that everyone involved will do the best job they can to support the business.

But in practice, "maximize shareholder value" means, whatever metrics are presented as part of quarterly or annual reports must always be larger than the metrics presented as part of the previous quarterly or annual report. That's where it turns into an antipattern, where it gets reduced to "the metrics from this report must have larger numbers than the metrics from the last report". That sort of reductivism is what I was referring to.

Re: Apple and Google embody two alternative models of capitalism

#112

Post by rebootthesystem »

mwfunk wrote: post #111
rebootthesystem wrote: post #87

Earlier quoted context omitted.

A company isn't a charity. It's a business. It's there to make money. It does this by delivering a product that solves a problem for someone (or another business) and, by means of the value it offers, it can generate revenue and a profit. If a company has investors, those investors are there because they want to make money with the business activity they funded. Plain and simple. So, a business is there to solve a pr…

In the abstract I agree, where it gets awkward is in what that actually means. In one sense, "maximize shareholder value" can be interpreted to mean simply, "run this company as well as possible". That's fine, that's basically nothing more than a statement that everyone involved will do the best job they can to support the business. But in practice, "maximize shareholder value" means, whatever metrics are presented a…

Absolutely. There are plenty of companies out there that fit the profile you described. I guess my point is that this isn't representative of the majority at all. It isn't even representative of the top 500, 1,000 or maybe even 10,000 corporations in the word.

There reason, I propose, is the deviant behavior you describe isn't sustainable. If you do not produce real value for customers in the long run you are not going to produce value for shareholders. You can "cook the books" for a little while. Maybe. But not in the long term.

The title of the this thread names Apple and Google. Both of those companies have produced a huge amount of value for users and customers as well as shareholders.

Maybe I'm being repetitive. If someone invests their money in my business I am going to make it an absolute priority to do well by them. And the only way to do this is to do well by customers. One forces the other. And, BTW, I don't think this is a conscious decision. In other words, I don't think anyone says "Dammit, we need to make shareholder returns a priority...let's focus on customer value". A good company is aware of shareholder value being important yet their focus and driving force is and should be a passion to deliver best in class products and services (understanding that the one will take care of the other).

Are there companies out there who behave badly? Of course. Thankfully they are the exception rather than the rule.

Re: Apple and Google embody two alternative models of capitalism

#113

Post by spectrum1234 »

skywhopper wrote: post #40

I'm disappointed that two other large pieces of the economic puzzle are left out: workers and government. Corporations have more cash than they know what to do with? That means that 1) wages are too low, and 2) taxes are too low. More specific to Apple's case, the hoarding of cash overseas to avoid paying US taxes on it is one of many poisonous symptoms of our international capitalism. The amount of tax Apple would p…

The flaw in your thinking is you are looking at the 0.001% of corporations and think this is why certain rules need to apply to 100% of companies. The 0.001% of companies should always be making more than is fair, even under perfect rules. Do you see why?

Re: Apple and Google embody two alternative models of capitalism

#114

Post by auserperson »

JCzynski wrote: post #79
auserperson wrote: post #3

I don't respect any article about the future of economy that does not take into consideration climate change, sustainability and the anthropocene. Capitalism will have to change dramatically soon, our world is collapsing. But sure. let's talk about apple vs google. I am not a fan of capitalism, but I'm not even criticizing capitalism per se, only that all big companies nowadays are existing in a world and way of prod…

Capitalism won't change. It has no reason to; those changes don't affect the underlying processes of the economy, they just change the circumstances and incentives.

It has to change enough to the point we call it something else. It's agreed by most analysis of Earth System Science that we are going to need to "grow less" from a capitalist/contemporary economics perspective. Our view of production right now is the same since the industrial revolution. So yeah, if we are going to keep on something close to the capitalist framework, it is not enough to change circumstances but the framework and its view of progress itself. So call it what you want, but we need a fundamental change in our economic system to survive climate change without killing half the world population.

Re: Apple and Google embody two alternative models of capitalism

#115

Post by taneq »

briandear wrote: post #93
taneq wrote: post #86

Earlier quoted context omitted.

That's why pensions should be provided by the government, as one of the things paid for by all those taxes you paid over the years. Which is why I get really mad when the current Australian government tries to spin it that retirees are 'bludgers' and are a drain on the system when they draw their (paltry) pensions. No, these people paid 40 years' worth of taxes to the government, and being supported by the government…

How about lowering taxes and let people be adults and plan for their own retirement? With those 40 years of taxes invested in an index mutual fund, I’d be a millionaire many times over rather than hoping for a paltry check each month. Any retirement plan dependent on government means that you will get less value out than you put in. Think about “management fees” on an index fund – a fraction of a percent generally. T…

Sure, if you're starting on that basis. But it's a different thing entirely if you start out with an explicit deal saying "you pay 30% of your income to the government, and you get a pension when you retire" and then after you fulfill your part of the bargain, the government says "oh uh, that money you paid, we spent it."

We now have mandatory superannuation contributions which work pretty much how you're suggesting, and the government is pushing towards getting rid of pensions in future.

Re: Apple and Google embody two alternative models of capitalism

#116

Post by taneq »

ACow_Adonis wrote: post #109
taneq wrote: post #86

Earlier quoted context omitted.

That's why pensions should be provided by the government, as one of the things paid for by all those taxes you paid over the years. Which is why I get really mad when the current Australian government tries to spin it that retirees are 'bludgers' and are a drain on the system when they draw their (paltry) pensions. No, these people paid 40 years' worth of taxes to the government, and being supported by the government…

There's multiple issues there: 1) there's spartan explicit connection between the taxes paid then and the pensions paid now: most governments did not put that money in an explicit infrastructure or investment fund, the revenue from which explicitly pays for pensions. Additionally, we generally do not (in Australia) connect how much you paid in with how much your taking out, so we have no way to even ethically or mate…

Your first two points relate to what the government actually did with those payments, and not with the social contract between taxpayer and government.

I'm not sure I follow your third point. The pension system is far from generous - it's ~72% of after-tax minimum wage. Pensioners generally live in the same house they've lived in for decades, if they haven't downsized, and it's only the primary property that's not means tested so it's not like they're hoarding investment properties.

And they didn't get to 'overconsume by not putting sufficient away' - they did put that amount away, as part of their tax payments. What the government did with the enforced payments is a different matter.

Re: Apple and Google embody two alternative models of capitalism

#117

Post by nisa »

bkohlmann wrote: post #85
gaius wrote: post #76

Neither pay their taxes

If they are violating the law, they will be sued by the government and forced to pay what they owe just as any tax payer who violates the law. As it stands, they are paying what taxes they owe as allowed by our existing tax code. Out of curiosity, what, in your estimation, is the legal amount they have failed to remit?

3.6 billion dollar - https://www.bloomberg.com/news/articles/2016-12-21/google-lo...

but sure - it's somewhat legal or not illegal but don't pretend it's not sketchy.

Re: Apple and Google embody two alternative models of capitalism

#118

Post by emodendroket »

ensignavenger wrote: post #104
emodendroket wrote: post #66

Earlier quoted context omitted.

> Almost every member of "labor" has some form of pension, 401(k), IRA, or personal stock holding Objectively speaking, it does not seem like that is the case for even half of workers. https://www.ebri.org/publications/benfaq/index.cfm?fa=retfaq...

That data is almost 20 years old now. I don't know how much it has changed since then, though. It also only deals with 'private sector' labor, whereas the OP specifically mentioned state employees in the pool of 'labor'. EDIT: Wait... The chart title says 1979-2013, which is what the chart says... but the source citation says it came from 1979-1998... which is why I thought it was 20 years old... not sure where they…

It also doesn't factor in the unemployed, which seems just as relevant a factor in the opposite direction, if you're going to claim everybody's interests are one in the same with business owners'.

Re: Apple and Google embody two alternative models of capitalism

#119

Post by wffurr »

"As companies continue to generate more profits than they need to fund their own growth, the question becomes: Who will decide what to do with all those profits—managers or investors?"

That's not the question that comes to my mind at all. Why limit it to just managers and investors? What about employees? Citizens of the countries that enabled these companies to make all that money in the first place?

That agglomeration of wealth is just absurd and frankly immoral.

Re: Apple and Google embody two alternative models of capitalism

#120

Post by ACow_Adonis »

taneq wrote: post #116
ACow_Adonis wrote: post #109

Earlier quoted context omitted.

There's multiple issues there: 1) there's spartan explicit connection between the taxes paid then and the pensions paid now: most governments did not put that money in an explicit infrastructure or investment fund, the revenue from which explicitly pays for pensions. Additionally, we generally do not (in Australia) connect how much you paid in with how much your taking out, so we have no way to even ethically or mate…

Your first two points relate to what the government actually did with those payments, and not with the social contract between taxpayer and government. I'm not sure I follow your third point. The pension system is far from generous - it's ~72% of after-tax minimum wage. Pensioners generally live in the same house they've lived in for decades, if they haven't downsized, and it's only the primary property that's not me…

Late response: I assume you've done the calculations right regarding the minimum wage, and that you've taken into account the additional payments not included under the label of pension.

To get an accurate view of the value of the pension though, you have to take the dollar face value and apply both pensioner discounts (practically everywhere in Aus, you will get discounts on your rates and utilities at the very least, in practice substantially more such as transport and consumables). In addition most also get to consume their imputed rent.

Don't get me wrong, I'm not saying all pensioners are "living it large". It is miserable to be a pensioner that doesn't own their home. But their true consumption possibilities are several multiples in practice of all our other social security payments, say for the unemployed or people on minimum wage for example, who don't own their own homes.

Given the demographic boom of the boomers, we are effectively paying living wages to the group that statistically hold the most wealth of any age group, and that we don't means test against the primary store of that wealth, I predict this system cannot last.

The government can enter into a defined pension scheme that proclaims it will be summer forever, and people can complain that they were promised that it would be summer forever, but a wise man knows that winter is coming...

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