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The Myth of Shareholder Capitalism.
- mseebach 17y agoIt seems the research focuses solely on untimely unseating of directors, while completely discounting the everyday role of shareholders: determining the value of the company and the election of directors at the annual general meeting. Both are pretty important functions. The fact that directors usually aren't fired mid-term is a symbol of the system working, not the opposite. At a certain size, being public is almost always the best way to capture the feedback of the market in the long run. It's like democracy: we get to have a small, orderly revolution every few years. In return we don't randomly go around killing our rulers. The result is almost never exactly what anybody wanted, but in the long run, it's consistently better than the alternative.
- jerf 17y agoIt's virtually my mantra on economic issues, but: Second-order effects, second-order effects, second-order effects. The fact that I am not now currently in jail does not mean the law has no effect on my life, and when you put it that way the logical error being promoted here comes out starkly. (I often find myself thinking this is why capitalism attracts so much enmity, as it is a major economy system that only makes sense when you consider second-order effects, perhaps the only such major system. Socialism and communism all have soothing first-order stories ("Is somebody richer than you? Take it from them, and they'll be less rich and you'll be more rich! And let's not worry about the second-order effects of such actions! Everything will always stay the same! Wheee!") and the problems don't arise until you consider the second-order effects.)
- pw0ncakes 17y agoI often find myself thinking this is why capitalism attracts so much enmity, as it is a major economy system that only makes sense when you consider second-order effects, perhaps the only such major system. Socialism and communism all have soothing first-order stories Most intelligent socialists know about the "second-order effects", to use your terminology. Some of the effects of redistribution are good (better-educated populace, social stability) and some are bad, depending on the extent of it and how it is done.
- jerf 17y agoI don't meet too many intelligent $ECONOMIC_MODEL proponents on the internet. Yes, I freely include my preferred economic model there. I have much more respect for people who hold opinions which disagree with mine and have actually thought them out, rather than just coming to the opinions they have because it seems... nice.
- CWuestefeld 17y agoShort summary: it appears that courts do not treat corporate shareholders as the ultimate authority of a corporation, deferring to the authority of the Directors. The OP wonders why, then, the Directors behave as if they do answer to the shareholders. This is interesting, I think, because the question of fiduciary responsibility comes up here on HN from time to time. It seems to me that the author is starting out with the assumption that corporations are evil, or at best amoral. If one drops this assumption, the explanation is easy: even without courts forcing them to do so, corporate Directors tend to want to do what's best for their shareholders.
- Tycho 17y agoAlso the only consequence of ignoring shareholder wishes mentioned was that occasionally a court battle ensues to oust the director - surely the aftermath involves more than just that.
- duncanj 17y agoI think it's a pseudo-explanation for why someone doesn't live up to his public morality. "Honestly, I really wanted not to close this plant, but we have a responsibility to our shareholders." Sometimes even that play fails, such as when shareholders actually wanted Stanley to stay in Connecticut, but management wanted more profit. In that case, they disobeyed the shareholders for their own supposed fiduciary own good.