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The Dumbest Idea In The World: Maximizing Shareholder Value

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

#41
post #20

Earlier quoted context omitted.

> Our society used to be based on concepts like honor. Nostalgia isn't what it used to be. Society was never based on honor; 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. see, e.g. Rockefeller, Carnegie, Mellon & Gates in recent times, and basically all fondly remembered kings and barons in earlier times. Society adapts, in part,…

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 that corporations are people? Can you demonstrate what you mean by "based on the concept of honor".

> but at least back then people hid their skeletons in the closet.

People still try, by and large. They stay there for shorter, due to easier dissemination of information, but that doesn't change dynamics much.

> Now people just blatantly lie, openly engage in what would be called bribery at any other point in history, blatantly and proudly sell out the public good for personal profit, engage in the grossest type of war-profiteering, etc.

They always did, but these things were not as easy to track, as they are now. Can you point to a resource like opensecrets.org-like resource in 1900?

> Remember how war profiteering used to be a bad thing?

No. Do you? I mean, I think it's a bad thing, but I am not aware of any point in the US history where it was socially unacceptable. On the contrary - thanks to the "right to bear arms", weapons manufacturers were always "men of honor", and no one is more of a war profiteer than these guys.

> War-profiteers used to be hanged for treason!

Are we living on the same planet? Earth, 3rd rock from the sun? They would only be hanged by other war profiteers when falling out of favor with the politicians, who were often war profiteers themselves. And they still are, for a modern definition of "hanged". E.g. Rupert Morduch has recently been thrown under the bus after going a bit too far. And it wouldn't have been different at any other time in history.

> There was a time in America where if you committed fraud, no matter how "technically legal", you would be lynched. Until dead. And juries would acquit your murderer.

Do you have examples? Charles Ponzi, for example, was still admired when he went to jail, and wasn't lynched.

On the other hand, in the south they would acquit you for real undisputed murder, as long as the killer was white and the victim was black -- to the point that nowadays mentioning "jury nullification" in court would get you thrown in jail for contempt of court, because of how it was misused 100 years ago.

I'm not sure that how mobs treated people 100 years ago is how what you want to look up to.

forensic, you are incredibly naive, I think. You have an ideal of history, and you somehow assume it is an indisputable, to the point of being enraged that people disagree. Calm down, look around. The world is not dogmatic, and never was.

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

#42
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…

The original argument was against facile generations like "businesses ought to maximise shareholder value" and "businesses ought to aim to create more customers, which the author quite reasonably pointed out didn't apply to his own business ventures. If anything, it's a criticism of "sociopathic" maxims like Milton Friedman's infamous "there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits": the implication is that other objectives like paying himself a higher salary, working less, giving his books away for free on the internet to help everyone learn Rails or aiming for abstract "socially responsible" goals need not be subordinate to supposedly universal business imperatives of growing profits or customer bases.

The ethical implications of limited liability laws (one ought not to take credit one has no expectation of repaying; one ought not to mislead investors) are a tangential issue; a list of things an owner ought not to do with their business (see also: sell crack to kids, sexually harass staff, murder competitors) can happily exist in the absence of some overriding objective business owners ought to follow.

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

#43
post #23
post #11

There is only one valid definition of a business purpose: to create a customer. No. The one valid definition of a business purpose is this: A business should do what the owners want it to do. Otherwise, the notion of ownership loses meaning. If the owners want to create lots of customers, they do that. If they would rather have a smaller number of highly profitable customers, they do that. If they want to create a ni…

The owners can do what they want to do without a business. So why create a business? If the owners just want to have a place to park their money, they can have a trust. If they want to do good in the world they can make a non-profit, or an NGO. The only valid definition of a business purpose - creating customers. If they don't want customers (one, few or many), they shouldn't start a business. http://dictionary.refer…

> If they don't want customers (one, few or many), they shouldn't start a business.

Legally, there is no such a thing as a "business". A corporation or LLP exists to limit liability. That's it. "Business" is not well defined in the real world.

Is an HFT proprietary trading firm, trading its own money on an anonymous exchange, with no customers or clients, not a business?

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

#44
post #11

There is only one valid definition of a business purpose: to create a customer. No. The one valid definition of a business purpose is this: A business should do what the owners want it to do. Otherwise, the notion of ownership loses meaning. If the owners want to create lots of customers, they do that. If they would rather have a smaller number of highly profitable customers, they do that. If they want to create a ni…

Saying your business can do whatever it damn well pleases because you own it is like saying I can drive my car any way I want. Not so. Your actions affect others. You are using public infrastructure and there are rules. Move to an island where you can be all by your lonesome and run a business any way you want there.

First I see that you are new here, so welcome.

That isn't much of an argument you are presenting though -- you could argue against a person being allowed to do anything based on that. The reason I can't drive a car the way I want is that it represents a clear and present danger to the health of third-parties. On the other hand running my business the way I want doesn't present a clear harm to others, so I can't.

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

#46
post #32

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…

First, I'd question what you think "honor" means. There are people who think stoning their daughter over dating someone outside their social group is the honorable thing to do. So concepts of "honor" are wishy-washy at best. Your second sentence sounds like it's suggesting that Rockefeller and Carnegie knew what honor meant & that this is somehow a good thing. They probably had a concept of their image & perhaps even…

There are people who think stoning their daughter over dating someone outside their social group is the honorable thing to do. So concepts of "honor" are wishy-washy at best.

Well, given that we're allowing the statement, "society was never based on honor," to stand, we can assume that we're restricting ourselves to Western or simply American values, since the Japanese provide an obvious counter-example. There aren't many Americans who have ever been into honor killings of family members.

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

#47
Another egghead uni prof who's spent his life getting a paycheck from the gov telling us what's wrong with capitalism that he's never participated in.

If shareholders (ie owners) want short term leadership, that's what they get. No one is forcing you to sell your shares every time the stock price moves. Buy and hold.

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

#48
post #43
post #23

Earlier quoted context omitted.

The owners can do what they want to do without a business. So why create a business? If the owners just want to have a place to park their money, they can have a trust. If they want to do good in the world they can make a non-profit, or an NGO. The only valid definition of a business purpose - creating customers. If they don't want customers (one, few or many), they shouldn't start a business. http://dictionary.refer…

> If they don't want customers (one, few or many), they shouldn't start a business. Legally, there is no such a thing as a "business". A corporation or LLP exists to limit liability. That's it. "Business" is not well defined in the real world. Is an HFT proprietary trading firm, trading its own money on an anonymous exchange, with no customers or clients, not a business?

So you say that the real world is mostly made from legal definitions?

I would wonder what that would mean for string theory.

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

#49
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…

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.

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

#50
Each of the following words opens up the door for semantic debate: "Maximizing" - when? In the short term or long term? "Shareholder" - who? People who own actual shares or the broader definition of stakeholders who have a vested interest in the company (employees, the community around the business, owners, etc.)? "Value" - what? Dollar value? Happiness? Customer satisfaction? Employee satisfaction?
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