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Every company should be owned by its employees

elysian.press

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Re: Every company should be owned by its employees

#881

Post by bruce511 »

parpfish wrote: post #818
bognition wrote: post #796

Earlier quoted context omitted.

The vast majority of small businesses have no "exit" in sight. Instead they want to rely on solid business fundamentals. Sell a product/service for a profit. Typically the owners of the business get access to the profits proportional to their ownership stake. By enabling employees to be owners you grant them access to those profits and to participate in discussions around how to spend/re-invest profits.

In small businesses like that, how often do profits actually appear? It seems like big public companies often decide to increase spending to chase growth that would increase revenue and be profit-neutral. Do smaller companies think about it in the same way?

Obviously I can't speak for all small businesses.

We spend our profits in different ways. Some of it goes to future planning (bigger stock piles, larger cash reserves, growing headcount etc). Technically all our working capital, all our assets, all our stock, has been funded by "retained income".

That said we also pay bonuses (13th check) in profitable years , and we issue dividends to owners. The dividends can be significant. Or 0. Or less than 0 (salary deferred in bad years.)

We want long-term sustainability , but also returns for being owners (otherwise we might as well go get a job somewhere. )

Organic growth is fine, sales going up is good, but we're not looking for hyper growth.

There us no "exit" (for the business) on the cards. An IPO is out of the question, and having seen the destruction caused by corporate acquisitions that's not a route we like either.

It's not glamorous being a small business churning out regular profits. But it pays well.

Re: Every company should be owned by its employees

#882

Post by seanmcdirmid »

Murky3515 wrote: post #10
seanmcdirmid wrote: post #7

Earlier quoted context omitted.

People are lazy. You can always sell your grant as you get it, they can’t make holding stock mandatory, but a lot of people (including me) just hold the stock in a really undiversified portfolio.

So they're too lazy to buy stock when they get paid, but not too lazy to sell stock when they get paid?

Huh? The opposite, they don’t sell the stock they are granted to buy other stock instead to diversify their portfolio.

Re: Every company should be owned by its employees

#884

Post by bruce511 »

whoknowsidont wrote: post #812
yibg wrote: post #762

Earlier quoted context omitted.

This model also puts a lot of risk on the employees. It’s basically forcing investment in the same company that pays your salary. An investment that has less liquidity than standard investments. It’s like putting all your retirement fund into your company’s stock.

>It’s like putting all your retirement fund into your company’s stock. As opposed to putting your retirement fund into other company's stocks, which everyone does at the same time, making those companies too big too fail without unraveling several threads of social fabric. I think your statement actually proves why employees should have stock in the company. If we really were worried about issues such as this we'd ha…

I agree with you on Healthcare and retirement. And there are non-financial benefits to owning shares where you work.

But any investment manager will recommend that your savings are diversified. That helps to insulate you from individual events thus making your savings more resistant to failure.

So you might invest in public shares, or property, or personal energy (residential solar) and so on. You might mix different kinds of shares. Etc.

By contrast owning shares where you work offers few financial upsides. It may or may not out perform the market. It may or may not be liquid. And so on.

It does however come with substantial financial risk. With one point of failure, one event, you can lose your income and savings.

Only you can decide if the risk is worth the upside. For most people, it's not.

Re: Every company should be owned by its employees

#885

Post by bruce511 »

Alupis wrote: post #803
Draiken wrote: post #712

Earlier quoted context omitted.

I don't think this holds to scrutiny. This breaks down as soon as you get out of the idea phase. Everyone has visions, and most great achievements today are the results of an amalgamation of them. The really big achievements are almost always the result of groups, not individuals. People that idolize others have to turn a blind eye to everything surrounding that individual's achievement. It's simply easier to simplif…

> This breaks down as soon as you get out of the idea phase. No, it does not. Most ideas fail, and a significant amount of "off the ground" projects fail. To be successful long term, it requires vision and commitment. You can find people to grind on your vision, but you cannot make them see what you see. The overwhelming majority of massive successful projects and companies have a key figure that drove them to succes…

If you've got 30 people on a committee, or 30 people on your board, well, good luck with that (in any context.)

My business has always had 3 or 4 people as owners, and hence as the "executive committee". I've found that to be helpful. If you can't convince your fellow owners then it's likely a bad idea.

(We've also turned away good ideas, and executed on bad ideas, the group approach is not infallible.)

But it really helps to develop a vision beyond just "my idea this morning" before diving into implementation.

Re: Every company should be owned by its employees

#886

Post by 55555 »

On the scale of a society, it would actually be better if this extra compensation was simply given as cash and the employee invested the cash in the S&P500. The story here isn’t that the company gave out some stock but that the company grew to be worth billions of dollars. We can’t rely on that happening to every company.

Re: Every company should be owned by its employees

#887

Post by AnthonyMouse »

alan-hn wrote: post #601
AnthonyMouse wrote: post #132

Earlier quoted context omitted.

More to the point, Boeing's revenue is over $16 billion. Some tens of millions are a rounding error when it's only being paid to one person, and that is the real source of the disparity. Paying one CEO $32 million is two tenths of a percent of their revenue. If they tried to pay each of their 170,000 employees even 1% of that, it wouldn't be 0.2% of their revenue, it would be >300% of their revenue and they'd be out…

Why on earth would you pay each person 16 million per year? That's 1% You can still make everyone's wages better without paying millions to each person and definitely not to the CEO

1% of 32 million, i.e. what you would need for the typical worker to not be making less than 1% of the CEO, is $320,000. $320,000 times 170,000 workers is $54.4 billion, i.e. more than three times total revenue (not even including costs other than labor), which would obviously bankrupt the company.

> You can still make everyone's wages better without paying millions to each person and definitely not to the CEO

The point is that the CEO's pay typically scales with the size of the company more than the media wage. Moreover, the latter is set by supply and demand in the labor market, so if you want it to go up you either need less labor or more demand for labor.

Unless you want to get into anti-immigrant and protectionist measures, the first one looks like instituting a UBI or increasing the child tax credit so people are less compelled to take bad jobs for low pay. The second one is "make the economy stronger" (e.g. reduce corruption/waste or lower taxes) and "make the market more competitive" (e.g. make companies smaller so there are more of them and they have to outbid each other for labor and customers, so labor receives the gains as either higher wages or lower prices).

There is no point at which "expect publicly traded for-profit companies to spontaneously become charitable with wages" is a viable strategy, and they do not respond to shame.

Re: Every company should be owned by its employees

#888

Post by AnthonyMouse »

jltsiren wrote: post #310
AnthonyMouse wrote: post #100

Earlier quoted context omitted.

> Free markets almost never can survive longterm without (sometimes extensive) regulation. There is no such thing as "without regulation". Nobody is suggesting a system in which murder is legal and the most powerful warlord gets a monopoly. But there is a difference between "the government enforces contracts and anti-trust laws and prices major externalities" and "the government micromanages the economy and is captur…

"The government" is a fictional entity. In reality, it's just a bunch of people. I think the real issue is that free markets and free speech are not really compatible. If people are allowed to express political opinions, some opinions will inevitably become popular. Sometimes that happens because people don't like the outcomes of the market. Then they try to change things by regulating the market. Repeat that often e…

> If people are allowed to express political opinions, some opinions will inevitably become popular. Sometimes that happens because people don't like the outcomes of the market. Then they try to change things by regulating the market. Repeat that often enough, and you get more and more regulations over time.

This is not caused by free speech, it's caused by an error in the way our system was designed.

The premise was that something should not become law unless it has widespread buy-in. So the federal government had limited, specifically enumerated powers and passing a law required a majority of the House, a majority (or filibuster-proof majority) in the Senate (which was meant to represent the states) and the signature of the President (or a veto-proof majority in the legislature).

But we de facto interpreted out the enumerated powers by reading the commerce clause so expansively, and Senators are no longer appointed by state legislators so the states have no representation at the federal level anymore, which took the brakes off what legislation could be passed. Which severely exacerbated the main defect:

We made it just as hard to repeal a law as to pass it. So we keep accumulating laws there is no longer widespread consensus to keep, because the corrupt influences who want the law only need to control all three bodies once and then the law is stuck for as long as they can maintain control of even one.

It should be easier to repeal a law than to pass it.

Re: Every company should be owned by its employees

#889

Post by throwaway2037 »

dheera wrote: post #672
throwaway2037 wrote: post #233

Earlier quoted context omitted.

Wow, 60-75% savings rate is incredible. > I can't afford rental properties or any of that Why not? Combine a 10% down payment and a bank loan. You can definitely afford it.

In my book, borrowing money to buy something I don't have the cash for does NOT mean I can afford it. Back in the days when I didn't have money to buy a car with cash, I just didn't buy a car and used a bike and public transit to get everywhere. I mean, maybe that's why I have a high savings rate.

Do you also plan to buy your home with cash only? You will need to save for a long time. To me, loans can be used to judiciously add leverage to your financial profile. If 90% LTV (loan-to-value) is too high for your personal risk profile, then you can increase the down payment from 10% to 20 or 30%.

Re: Every company should be owned by its employees

#890

Post by nayuki »

Aerroon wrote: post #737
bccdee wrote: post #466

Earlier quoted context omitted.

> We forcibly allocate capital less efficiently Efficiency with regard to what goal? The current allocation of capital in the US is quite inefficient if we're interested in the welfare of the public. Billionaires have far more capital than they know what to do with, and since they're unaccountable for their investment choices, they strongly tend to steer the economy toward vanity projects. Meanwhile, many families ca…

> The current allocation of capital in the US is quite inefficient if we're interested in the welfare of the public. The welfare of the public today is not the same as the welfare of the public for all time. The Soviet Union couldn't compete on the development of computers, because the USSR was trying to optimize towards what could computers be used for then and there. It turned out that computers could be used for a…

> The Soviet Union couldn't compete on the development of computers, because the USSR was trying to optimize towards what could computers be used for then and there.

There was a great video on this: https://www.youtube.com/watch?v=dnHdqPBrtH8 Asianometry - "Why the Soviet Computer Failed" (18m56s) [2022-07-07]

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