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The Dumbest Idea In The World: Maximizing Shareholder Value

forbes.com

121–130 of 139 posts

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#121

Another example of a company in addition to J&J and P&G that the article mentions who focuses on customers is Amazon. Bezos recently was punished via a 30% drop in Amazon stock price because he is ploughing all his net income into the Kindle Fire, even though Amazon's revenue growth is exponential and has been for a decade. Shareholders in the public market right now are focused on "value stocks" in the Buffet and Be…

This is slightly off topic, but it's something I really hated about business school.

Sure J&J did a great job with the Tylenol poisoning case. However, they've lost over $1B in revenue in the last year or so because they consistently failed to produce drugs that meet federal guidelines. Not to mention the "unofficial recall" where they paid people to go into stores and buy up all the J&J products so that they wouldn't have to conduct an official recall.

J&J is probably the most messed up company right now.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#122

Earlier quoted context omitted.

It's overly simplistic to say people always worship the powerful. Caesar was assassinated by the entire senate. Democracy in America was created on the basis of the rejection of power-worship. You seem to have your pet way of interpreting history. I'm not arguing that honor and other values were some kind of omnipotent force for good I'm just saying they existed. When you assume that I'm a complete idiot you're faili…

Funny ! When was the last time you observed real court proceedings and saw a laywer dishonored? Many of them act in bad faith every day. You ignore historical examples dismissing them with excuses, your references are (essentially) PR speeches and the conservapedia (this thread http://www.halflife2.net/forums/showthread.php?121000-Conser... ! might enlighten other readers, but it is irrelevant to reality in your own…

Lawyers go to great lengths to maintain honor in the courtroom. They learn in law school. It's just become so embedded in the practice that now its inconsequential.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#123
post #97

Earlier quoted context omitted.

The Bible ("Old Testament") ... in which King David does the most dishonorable thing possible, sends a man to die in war so he can have that man's wife -- and gets endless praise regardless? No wonder. Regardless of the inspiration, reality with its liberal bias favors the successful rather than the honorable. These concepts are not inherently incompatible, but way more often than not are, and always were.

You are wrong but I doubt you see it. At any point in our history that you look you have just cherry picked the outliers that uphold your opinion. Your original argument is largely blanketed statements, without diligence.

I can't help but smile.

Cherry picked or not, every concrete example brought up in this thread (Burr/Hamilton, Cheney, and those I gave) is supporting my point of view. The opposing point of view (which I infer you support from your post) has not brought up a single supporting example, even though it starts at the inferior position (if you claim things were different, the onus is on you to demonstrate the direction, character and rate of change!).

Yet you dismiss those examples as being "outliers" and cherry picks given without diligence. Oh well. I am wrong in trying to arguing with people who care not about the facts. But I have a little time to kill, so it's ok.

I feel sorry for approximately half of the human race, and I sometimes have trouble determining which half that is.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#124
post #74

Earlier quoted context omitted.

I think you may have valid criticisms, but were out of line to call mhartl a man of "no real ethics, a sociopath, dangerous, self-serving, and someone to distance yourself from." I have only exchanged emails briefly, regarding his book, and he is nothing short of an honest, well-intentioned, and generous man. Let's avoid the attacks and keep the conversation civil.

Please note, I did not call mhartl a man of "no real ethics, a sociopath, dangerous, self-serving, and someone to distance yourself from." I did say his ethics are weak, and I stand by this. Assuming he believes what he says, his anti-social position on the obligations of the corporation speak for themselves. And I did note that, when carried to the extreme, blind spots like the one shared by mhartl do, in fact, prod…

In my experience, people who can't accept that others might hold beliefs that differ from theirs for good reasons are giant assholes.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#126
A lot of what the author complains about has been around for years. Short term gains at the expense of long term growth? Yup. Executives manipulating something to make their company look good? Yup.

Read "The Intelligent Investor" or "Common Stocks and Uncommon Profits", which give examples of things companies did 50 and 30 years ago.

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#127
post #41

Earlier quoted context omitted.

It's your type of cynicism that is actually an apologetic for the dishonorable behavior. If you stopped saying "everyone does it" then we could start punishing the dishonorable. It's NOT TRUE that everyone is a liar. Rockefeller and Carnegie were liars, sure, but they had to keep it quiet, they had to buy up newspapers and physically intimate people so their lies would not be exposed, or they would lose face. Our ent…

> If you stopped saying "everyone does it" then we could start punishing the dishonorable. If you stopped putting words in my mouth, we might actually have a two sided discussion. I did not say "everyone is a liar" or anything that could remotely be interpreted to mean the same. > Our entire legal system is based on the concept of honor. What country is that? Is that the US system that a hundred years ago decided tha…

(a note to the HNer who systematically went and downvoted all of my responses in this thread instead of joining the dialog: Thank you. You missed a few. Also, you might want to go downvote me in unrelated threads as well, I'm sure it'll make you feel better)

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#128
post #35
post #21

Earlier quoted context omitted.

Incorporation is a privilege granted by society; and property rights are never absolute. What you state is extremely individualistic, but it is unrealistic and naive for the same reason. I understand your exhortation, but it does not amount to an argument. For example, most large companies with broad shareholder bases have no owner interests that you can easily point to; the shareholder base has collective action pro…

This is a much more civilized response than my initial reaction, which was "go fuck yourself, mhartl". The reason for that indignation was, as you pointed out, the obvious truth that without society's extension of limited legal liability, there would be no business in the first place - or, at least, not one with the scale and structure of a publicly traded company. And no, society does not grant this liability protec…

[deleted]

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#129

Earlier quoted context omitted.

> it was always about worshiping those who succeeded, regardless of how bad they had been, as long as they did some good at some point. This is extremely true! Probably the best example of this is Cecil John Roads ( http://en.wikipedia.org/wiki/Cecil_Rhodes ) who was a ruthless businessman who owned countries, started wars and engaged in unsavory business practices. Yet he is fondly remembered for the Rhodes Scholars…

This revisionist view of Rhodes is overly negative. He was an empire builder but his prime motivation was to modernize the world. Rhodesian policy led to the end of the empire, in fact. This is just overly simplistic character assassination. Rhodes was way more complicated than you make him out to be. I remember reading one of his lectures where he was telling the class that now their duty, as wealthy and cultured mo…

> He was an empire builder

Rhodes was not an Empire Builder. He was a company builder. His company was the British South African Company (http://en.wikipedia.org/wiki/British_South_Africa_Company).

> but his prime motivation was to modernize the world. Rhodesian policy led to the end of the empire, in fact.

His motivation was to make money. You know that he tried to start a war? http://en.wikipedia.org/wiki/Jameson_Raid

Which led to two other wars http://en.wikipedia.org/wiki/Second_Matabele_War http://en.wikipedia.org/wiki/Second_Boer_War

The "British South African Company" that fought in these wars was a paramilitary unit that belonged to his company.

> Rhodes taught altruism and service to the unfortunate and his legacy is many powerful people who worked to better the world, inspired by Rhodes.

Maybe he tried some veneer after he became rich - but he was still a bastard.

(Even his Rhodes scholarship is designed to Anglicise. It is impossible for a person to obtain the Rhodes scholarship unless he studied in English).

Re: The Dumbest Idea In The World: Maximizing Shareholder Value

#130
post #101
post #21

Earlier quoted context omitted.

Incorporation is a privilege granted by society; and property rights are never absolute. What you state is extremely individualistic, but it is unrealistic and naive for the same reason. I understand your exhortation, but it does not amount to an argument. For example, most large companies with broad shareholder bases have no owner interests that you can easily point to; the shareholder base has collective action pro…

I'm really just asserting a tautology: Business owners determine what their businesses should do. Given the current legal status of corporations, the question "What should a company do?" is not ethical in nature ( ought ); it is a matter of fact ( is ): companies can, within the constraints imposed by law, do whatever their owners want them to do. There are certainly salient ethical questions here—"Which laws should…

The people who have executive power in the leadership structure of companies control what companies do. When ownership is diversified, business owners do not determine what their businesses do; your "tautology" is actually false, obviously so with more than a cursory examination of the world as it is. I myself am a part-owner of ARM, for example, but I have zero effective control over them.

And the question as to what should a company do is very definitely an ethical one. Some people try to argue that ethics only apply to companies in so far as they apply to the people that form the company; but others do not. Because the question isn't "what can a company do within the constraints of law", the question is actually what ought a company do.

Companies help match supply and demand where the supply or demand or both are divided and scattered enough that they can't be efficiently matched through individual contracts. But in this formulation, just like free markets, they have no moral content. The mere fact that there is demand for something does not imply that it is good that the demand is satisfied with supply. Lynch mobs frequently have short bursts of popularity, and they demand someone be lynched; irrelevant of whether they are legal or not, it should be clear that the fact of the demand does not amount to an ethical justification.

So when we ask what ought a company do, it is not enough to look at ownership structures; nor is it enough that we look at the operations of the company in providing supply to market demands. Merely following the law is not enough either; many immoral things are permitted by the law (to the point that later, the law changes), and many moral acts are taxed or prohibited by the law, for various formulations of morality. But more importantly, the law is itself informed by the ethical question over what ought companies do.

For example, it may be the case that child labour is legal in country X, and company A employs children in country X to meet supply for products in country Y, where such child labour is illegal and everybody agrees that it is unethical. By your formulation, there is no way to argue that company A is violating ethical norms. At best, you would suggest that shareholders - e.g. people with pensions, ultimately - should be held ethically responsible. You'll forgive me for thinking that that sounds rather ridiculous.

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