151–160 of 191 posts
Optimising for long-term benefits could help our civilisation become aware, and actively take steps towards the oncoming ecological disaster (because capitalism says if we're destroying the Earth, the solution isn't to stop "growth" and save Earth... Find another Earth instead!)
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> for example, the Italian government’s property and assets cannot by law by encumbered in such a manner Well, depending on the country the LTSE is based in, and whether that law is honored through some trade agreement signed into law in that country, I imagine what the Italian government thinks about the issue is moot. > what of situations in which collateral shares are foreclosed upon, they are inherited, or other…
I’m going to harp on the Italian case (not because I am Italian and think it is the centre of the world, but because it illustrates just how broad one’s rules need to be to be dependable). I am an Italian citizen. Say I own shares on the LTSE. Say I also owe the Italian government some back taxes, and that the government moves to expropriate my assets to cover my liability. My LTSE shares are now the property of the…
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Your concern is only the tip of the iceberg. Any set of rules will be gamed. The only way I can think of (and it can probably be gamed) that would really put the long term into the executives mind is to have most of their compensation based on the value of the company a few years after they're done. But given the existence of options and shorting stocks and any number of ways to mitigate risk or make money that don't…
> In some cases I think the answer is to strip investors of control. They are the ones allegedly pushing short term profits at the expense of the long term. Hopefully this was a very fleeting thought; when it comes to ideas about changing corporate structure you couldn't really come up with a worse one. It is a complete violation of the skin-in-the-game principle that has so successfully propelled capitalist society…
Even reading this claim in the narrow context of the article it seems too broad. John Cassidy has written an insightful book “How markets fail“ that explains when markets do not generate optimal or desirable outcomes.
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> In some cases I think the answer is to strip investors of control. They are the ones allegedly pushing short term profits at the expense of the long term. Hopefully this was a very fleeting thought; when it comes to ideas about changing corporate structure you couldn't really come up with a worse one. It is a complete violation of the skin-in-the-game principle that has so successfully propelled capitalist society…
But when does 'short-term' become 'long-term'? If i make good (short-term) decisions each quarter, then won't that just add up to be a good decision after 4 quarters? If it turns out that the 'good' decision last quarter turned out to be bad _this_ quarter, then you'd make a change to fix it for _this_ quarter_. Rather than plan out a 10 year plan, which you can't possibly predict in advance what may happen.
E.g. one (of many) factor in Commodores decline and failure was that they at one point made a "brilliant" move of undercutting the competition in a way that drove massive sales while costing them dis-proportionally little in lost revenues from all of the hardware already in their channel.
Unfortunately it did that by cutting the feet under their dealer network by going mass market retailers and cutting the RRP in public, without giving retailers advance warning, and without giving their dealers rebates on product in their channel that had not yet been sold.
As a result their results looked good for a little while, but they bred so much resentment in their dealer network that it still haunted them years later when they suddenly badly needed that dealer network to push out the Amiga, which was released at a price point where the mass market discount retailers weren't suitable.
It took years for the total cost of that stunt to be visible, and even then it's hard to account for the total impact to the company even now, decades later.
It's not an easy problem.
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Your concern is only the tip of the iceberg. Any set of rules will be gamed. The only way I can think of (and it can probably be gamed) that would really put the long term into the executives mind is to have most of their compensation based on the value of the company a few years after they're done. But given the existence of options and shorting stocks and any number of ways to mitigate risk or make money that don't…
> In some cases I think the answer is to strip investors of control. They are the ones allegedly pushing short term profits at the expense of the long term. Hopefully this was a very fleeting thought; when it comes to ideas about changing corporate structure you couldn't really come up with a worse one. It is a complete violation of the skin-in-the-game principle that has so successfully propelled capitalist society…
There is short-term thinking encoded into religion on this planet. Short term thinking in the end even extinguishes your beloved capitalism. If there is one thing we need less, its this. And if there is one thing, build to overcome short term thinking its abstract entity's like cooperation's and goverments. The individual is bound to fail here.
So yes, you have a valid point here, but instead of providing a solution, you just regress and suggest we go back to the drawing board and wing it while there?
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Your concern is only the tip of the iceberg. Any set of rules will be gamed. The only way I can think of (and it can probably be gamed) that would really put the long term into the executives mind is to have most of their compensation based on the value of the company a few years after they're done. But given the existence of options and shorting stocks and any number of ways to mitigate risk or make money that don't…
> In some cases I think the answer is to strip investors of control. They are the ones allegedly pushing short term profits at the expense of the long term. Hopefully this was a very fleeting thought; when it comes to ideas about changing corporate structure you couldn't really come up with a worse one. It is a complete violation of the skin-in-the-game principle that has so successfully propelled capitalist society…
Because it is wishful thinking?
Where would the rational intelligence of stock markets be right now without the trillions of dollars in shares bought up directly by central banks and sovereign wealth funds or by corporations using essentially free money provided by central banks?
Last time I checked none of the economic theories about optimal markets included massive state interventions to help markets find the optimal price.
https://www.wsj.com/articles/silicon-valley-vs-wall-street-c... In the linked WSJ article, that explains this quite a bit better than the medium blogpost. Basically, it appears that the main thing is that the voting power of shares win increase with the time the shares are owen. (Though there's talk of opting in to this process.) There's also going to be a prohibition on companies giving quarterly earnings guidance.…
> it's intended to reward founders and long-term employees of startups by privileging them over the more retail class of investor It will just prioritize investors with the sense to stick their shares in an SPV ( e.g. an LLC or trust) and then sell the SPV with the premium voting rights attached. (Also amplify the benefits of intergenerational wealth transfer.)
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> Another thought I keep coming back to is dividends. A proper investment gives returns without having to sell your stake. Lets provide incentives for companies to share profit rather than pump stock prices, then everyone can get excited about the right things. the psychology behind dividends is not on your side here. dividends are viewed by knowledgeable investors as a company admitting they have run out of good ide…
How many companies keep striving at things outside their actual core competency rather than issue dividends? For example, Facebook could have issued dividends rather than purchase Oculus Rift and I'm not sure that the company or the shareholders would have been worse off.
"Tenured shareholder voting power, meaning that a shareholder’s votes would be proportionately weighted by the length of time the shares have been held" I wonder if we're going to see the rise of holding companies just to get around this rule. "Our holding company owns shares in XYZ, and will never sell those shares ever. Instead of buying/selling XYZ directly, you can instead buy/sell shares in our holding company.…
The "blind" focus on quarterly reports is real. It had me wonder what the opposite would be... Imagine we forged a formula for 1000+ year projects. They would require more money periodically and the availability of new funds would have a strong influance on the value of previous cash injections. One could buy the "failing" project cheap then simply do the new cash injection yourself OR in case of success one could ob…