10 ms·

Berkshire hires 3G Capital to do the dirty work of layoffs and cost cuttings, because you know, BRK is an ethical business.

by mudil 9y ago

traskjd 9y ago
How is remaining inefficient the ethical outcome? You know what's worse than a few people losing their jobs? Everyone losing their jobs because a competitor is more efficient and drives you out of business.
- HarryHirsch 9y ago
  Mylan and Shkreli are extraordinarily efficient.
  - pg314 9y ago
    No, they aren't. They are just exploiting an (artificial) monopoly. That has nothing to do with efficiency.
    - HarryHirsch 9y ago
      So what?! They are operating within the constraints of the market. Before the vulture capitalists swooped in prices were very reasonable for 30 years, the previous owners chose not to exploit their monopoly, then these two increased their efficiency.
      - forgotmysn 9y ago
        they didn't increase efficiency at all, they just increase the amount they were able to squeeze out of the IP. thats not an efficiency vs inefficiency, its n vs n+1.
        johncip 9y ago
        I think you could make a case that charging the highest price for something that the market will bear corrects an inefficiency in the market. http://www.investopedia.com/terms/i/inefficientmarket.asp http://www.investopedia.com/terms/i/inefficientmarket.asp It's not that they started producing more units, it's that some folks (the ones using the drugs) were taking advantage of a market inefficiency (the insufficiently low price) which when corrected, meant greater returns for Shkreli et al. Just as when a "retail" day trader hits on a system that enables them to make a large amount of money, they're taking advantage of an inefficiency, and, in a way, helping to correct it. It's not pretty, but being ugly doesn't make it inaccurate.
        forgotmysn 9y ago
        but we're talking about a monopoly. a market inefficiency only occurs if there is competition, a more efficient alternative.
      - valuearb 9y ago
        The patent system is not a free market.
- tanderson92 9y ago
  Indeed, here is Charlie Munger w/ Jason Zweig: On firms like Berkshire partner 3G Capital, which takes big companies and streamlines them: I’m sensitive to the issue of cutting costs, which usually means a lot of people losing jobs. Rich people end up getting richer and a lot of people get fired. But ultimately, I think we don’t do the world a favor by employing more people than we need for companies to run efficiently. On the whole we advance civilization when companies run better. http://jasonzweig.com/a-fireside-chat-with-charlie-munger/ http://jasonzweig.com/a-fireside-chat-with-charlie-munger/
  - munificent 9y ago
    > On the whole we advance civilization when companies run better. I understand that's a tenet of capitalism and is almost a religious belief beyond question. But, empirically, how do we know that this is actually true?
    - Pyxl101 9y ago
      Because efficient companies produce goods and services for lower prices than inefficient companies, which, happening at scale throughout the economy, lowers the cost of living and raises the standard of living for everyone. An increase in the amount of goods and services produced per head is the definition of economic growth, which most of us consider to be a good thing. Improvements to our quality of living essentially require economic growth. Take a listen to this NPR Planet Money podcast (and article) called "The History of Light" [1]. It describes how much it cost to light a room, in terms of a typical day's wages, at various points in history until today: > The history of light is the history of economic growth — of things getting faster, cheaper, and more efficient. In Babylonian times, 4,000 years ago, a day's labor would buy very little light. You could buy enough light to illuminate a room but not for very long. Maybe 10 minutes. It was really expensive. Today, a day's worth of wages can afford to light a room for thousands of hours. This affordability has radically changed our society, mostly for the positive. It's now possible to study and be productive in the evening. Many of the improvements to the efficiency of lighting also enabled cheap heating as well. Another related interesting article is "The $3500 Shirt - A History Lesson in Economics" [2]. This one traces the cost of clothing from the middle ages to today. Consider: why did people used to wear clothing until it became rags? Because clothing was extraordinarily labor-intensive and thus expensive. A single shirt back then might cost $3500 in today's money. Now clothing is a negligible cost for most people in the USA, including the poor. Companies (and individuals) and their desire for efficient production have brought these costs down, and the costs of so many other goods. I've heard it said that today the average person in America has a quality of living substantially better than that of a medieval king. I believe it: with our lighting, heating, and potable water delivered to our homes; sanitary food & restrooms; medical and dental care, etc. -- all available to (mostly) everyone due to low prices. Not to mention the luxuries available to us in our homes like television, music, radio, video games, etc. Cheap spices from everywhere in the world. Food from most everywhere is available at low prices and high quality in local supermarkets. Travel is cheap, and many people can afford to travel virtually anywhere urban in the world within 24 to 48 hours by aircraft - amazing by any historical standard. And it's so reliable we take it for granted. All changes that originate from economic growth. During the industrial revolution, a lot of automation replaced human labor in clothing production. This did have the negative effect of putting the spinsters and weavers and so on out of business, but had the positive effect of making clothing vastly cheaper for everyone. People found new jobs and society continued, and was better off overall. Similarly, the development of the automobile largely put the industry supporting the horse-and-buggy out of business. But everyone was better off overall having fast and cheap transportation. So how do we know that it's true? I suppose we don't have any way of saying in a particular case, but we can look to history to see how innovations that made products and services cheaper have benefited society overall. Perhaps 1000 years in the future, they will trace how much computing a day's wages could buy, and how that went on to transform society too. [1] http://www.npr.org/2014/05/02/309040279/in-4-000-years-one-thing-hasnt-changed-it-takes-time-to-buy-light http://www.npr.org/2014/05/02/309040279/in-4-000-years-one-t... [2] http://www.sleuthsayers.org/2013/06/the-3500-shirt-history-lesson-in.html http://www.sleuthsayers.org/2013/06/the-3500-shirt-history-l... - also discussed on HN [3] [3] https://news.ycombinator.com/item?id=8940950 https://news.ycombinator.com/item?id=8940950
- chrisbennet 9y ago
  The choice isn't (always) "lay off some workers or go out of business". Instead it's "It's profitable now but it could be even more profitable if we did something that incurred job losses." For example, Carrier was already very profitable when they decided to outsource to Mexico. http://www.salon.com/2016/03/22/snapshot_of_a_broken_system_how_a_profitable_company_justifies_laying_off_1400_people_moved_their_jobs_to_mexico/ http://www.salon.com/2016/03/22/snapshot_of_a_broken_system_... "A look at United Technologies’ annual report reveals even more good news: Commercial and industrial products, Carrier’s category, make up over half of UTC’s $56 billion in net sales. Climate, Controls & Security had 3 percent growth in 2015, the highest in the company; it was the only division to increase its profit margin year-over-year. “Organic sales growth at UTC Climate, Controls & Security was driven by the U.S. commercial and residential heating, ventilation and air conditioning (HVAC) and transport refrigeration businesses,” according to page 14 of the report. In other words, air conditioners – what the workers are making in Indianapolis – drove the growth of the best-performing facet of United Technologies’ business."
  - icantdrive55 9y ago
    So more money is always the target? Yea--that's fine, but with these profit moves shouldn't come so dam easy to those in charge. The United States provided relatively safe neighborhoods, schools, could leave the house without fear of kidnapping, blah, blah, etc. Then a company decides to make more money where business can do pretty much whatever they want to the enviorment, pay bribes to officials, hire cheap labor, blah, blah, etc.? (I'm not sure if you're for, or against this profit seeking behavior, and I'm not directing this towards you. That said, what bothers me is when they make their "nut" here; and get greedy. I wish their was a federal law stating if you move your company overseas, you need to move your BOD, and all executives right along to whatever chit hole you decided to make more profits. Point being--don't use this country as your first wife/husband. So--call me a liberal, I believe in company ethics. Something we are losing. Something we assume Berkshire Hathaway has nailed down. The reason why we all like Warren Buffet? And what if they arn't a moral company? I don't know? I just read good things about Warren. I don't know all the dirt in everyone's closet.)
  - derefr 9y ago
legitster 9y ago
Your assertion being that layoffs and cost cutting are inherently unethical? That is to say, it is evil and wrong to ever fire anyone. It is also evil and wrong to cut costs?
- chrisbennet 9y ago
  I'm not the OP of the comment you're responding to but... I think it is unethical to take away the livelihood of someone if the only reason you are doing it is to add even more zeros to your already fat bank account.
  - legitster 9y ago
    But the only reason a business hires employees is to make more money. We are not employed out of charity. Can we complain that greed compels them to fire us when it also compels them to hire us in the first place? Also, you are assuming the only one being rewarded by layoffs are executives. As someone dutifully putting away money for retirement in a 401k, I am the primary beneficiary of such layoffs in their stock prices(assuming the company is publicly traded). Should I feel guilty that my greed has caused layoffs?
    - chrisbennet 9y ago
      Of course not, not anymore than you should feel guilty for investing in tobacco companies. If causing others suffering is really so bad, it would be illegal right? /s
  - uiri 9y ago
    Their livelihood is already gone. They have nothing productive to do. It is far more ethical to let them go and secure productive employment elsewhere so that they may have some dignity rather than to pay them to do nothing.
    - metaphorm 9y ago
      in principle yes, but implementation details matter. layoffs when accompanied by humane severance packages is ethical. this rarely happens.
harshreality 9y ago
I would be a lot more concerned about Berkshire's holdings of soft drink and fast food companies. Talk about bad ethics... When someone asks about the ethics of Coke (generally, any sugar/carbonated beverage), and Buffett responds that he still drinks it, or that he eats fast food, that's begging the question. Without the regular/addicted consumers of those products, the companies wouldn't be good investments, and everyone knows regular consumption of soft drinks or fast food is bad for you, statistically speaking. Outliers (like Buffett himself, if he really eats as poorly as he says he does—like avoiding most vegetables) are irrelevant.
- tuna-piano 9y ago
  Do you feel the same about motorcycle manufacturers? I'd guess the mortality risk of a 30 minute motorcycle ride is higher than the risk of a 30 minute Dairy Queen meal.
  - harshreality 9y ago
    I suppose that depends on how strongly the manufacturers market their motorcycles to less-safe use... for instance, marketing higher cc sport motorcycles for regular commuters or illegal motocross rather than taking them to a track. Motorcycles, while less safe for the rider, are more safe for everyone else, and they pollute less, so in general I suppose the ethical situation is less obviously bad for motorcycle companies than for fast food companies. Fast food and soft drinks are specifically engineered to be as enticing as possible, playing on biological cravings that are unhelpful since the advent of mass food production, and offer no other benefits other than satisfying those cravings. It's difficult to be a large-scale for-profit food business of any kind, and still be able to fully justify your company's actions, ethically speaking. However, fast food companies, junk food companies, [carbonated] sugar water companies, and to a moderate extent many prepackaged food brands, drag down the ethics of the whole industry. They're harming public health, it's obvious, and the only defense is a naive (ignoring marketing and network effects, and habitual irrational human tendencies) retort that capitalism, individual choice, etc should always win. You can blame the consumers—the companies are just making what the people "want"—except that's not how capitalism has worked for most of the last century. The marketing/advertising/promotion juggernaut has a life of its own and significantly boosts demand for things that are bad for consumers, bad for the environment, or both. Even if it were pure consumer-driven demand, should free-market capitalism be a suicide pact? Are consumers only hurting themselves with unhealthy food? They're driving up healthcare costs and disability costs, which raises everyone's health insurance costs and taxes. You can argue correctly that it's inefficiency on the part of health insurance companies, but that inefficiency isn't going away until it's cost-effective and accepted to monitor everyone's diets. For the moment, they have to assume that every person they cover is eating or drinking more junk than they should. The cost of Warren Buffett laughing off health ethics concerns and emphasizing that he drinks coke or eats burgers becomes an externality, not so different from pollution. Furthermore, forget the products they make, and forget their marketing. Companies of this sort actively seek to subvert science, funding contrarian studies: that sugar isn't actually bad for you, that more carbs are good (not just for marathon runners, but for the average office worker too), that high-fat dairy and meat are the true causes of health problems, and many others. And what do consumers gain? A little bit of transient happiness—at least, they think the junk food is making them happy, but more likely they're just at a local maximum and they could find healthier food that would still taste good, leading to more overall happiness taking into account the realization that the healthier food isn't killing them (as fast). Buffett's response is an admission that he can't fully justify those companies' products and tactics, so he doesn't even try. It's sad. In one sense, someone's going to hold the stock, so why not him? Does holding stock of a company like that obligate you to campaign for better food standards that will probably harm your investment, in the short term at least? Of course not, and it's difficult to see how such a constraint could be added to securities law, but shouldn't some constraint like that be added if it were possible? This is where capitalism fails. Problems develop when you legally require companies to make money for shareholders and fail to ethically hold shareholders responsible for the consequences of a company's actions. It means consequences for a company's actions are going to lag far behind (decades, at least) scientific realization that the company is making money by externalizing costs. I'm not that down on Buffett or BH for their investments, but this is a systemic problem highlighted by Buffett's public lack of concern for these issues. These are problems that need to be solved at a higher level (government) until low-level solutions are found (profitable food that tastes like fast food but that's also good for you). So far, government has been unable to do much because the people, who are hooked on these products due to habit and all the marketing, use the levers of democracy to prevent government from acting. I'm not optimistic that anything will change soon, but I don't see how that removes the ethical liability from those businesses.
vit05 9y ago
You clearly don't have any idea of who 3G Capital is.[0] They are not a small consulting firm that somebody else hires. If they are investing in a company it is because they want to change the culture of the company. And to do that, they need to be the leader, not to follow. Their philosophy is about use numbers. They use metrics for everything. From the water used in bathrooms to the necessity of pay for first class travel for the executives. And if a job can be done using just one person, use 3 people is almost a crime for them. [1]Buffet: most managers cannot control their lust for hyper-activity, preferring instead to go out and buy something, they are constantly comparing themselves to companies inside and outside of their own industry, making changes to reflect the "new ways of thinking", which are in fact only the old ways with new fads inserted and most managers tend to have an exaggerated sense of their own abilities. That is why he have a partnership with 3g Capital. They like to make things simple, not complex. They never spend money just because they have money. They like to cut and spend less even if everything is alright.[2] Sicupira: “Costs are like fingernails: they always have to be cut.”. BTW They start investing in technology companies using InnovaCapital and invested in SnapChat, Apple and others. [3] [0]http://www.3g-capital.com/about.html http://www.3g-capital.com/about.html https://www.forbes.com/profile/jorge-paulo-lemann/ https://www.forbes.com/profile/jorge-paulo-lemann/ https://www.bloomberg.com/news/articles/2013-08-29/jorge-lemann-he-is-dot-the-worlds-most-interesting-billionaire https://www.bloomberg.com/news/articles/2013-08-29/jorge-lem... https://www.linkedin.com/pulse/case-2-breaking-dna-code-3g-capitals-success-5-genes-how-fernandez https://www.linkedin.com/pulse/case-2-breaking-dna-code-3g-c... [1] http://www.travismorien.com/FAQ/shares/wbinstitutionalimperative.htm http://www.travismorien.com/FAQ/shares/wbinstitutionalimpera... [2] https://www.ft.com/content/268f73e6-31a3-11e7-9555-23ef563ecf9a https://www.ft.com/content/268f73e6-31a3-11e7-9555-23ef563ec... [3]http://www.tradeforce.com/articles/jorge-paulo-lemann.html http://www.tradeforce.com/articles/jorge-paulo-lemann.html https://www.crunchbase.com/organization/innova-capital-brazil#/entity https://www.crunchbase.com/organization/innova-capital-brazi...

Berkshire hires 3G Capital to do the dirty work of layoffs and cost cuttings, because you know, BRK is an ethical business.

by mudil 9y ago

Berkshire hires 3G Capital to do the dirty work of layoffs and cost cuttings, because you know, BRK is an ethical business.

traskjd 9y ago

How is remaining inefficient the ethical outcome? You know what's worse than a few people losing their jobs? Everyone losing their jobs because a competitor is more efficient and drives you out of business.

HarryHirsch 9y ago
Mylan and Shkreli are extraordinarily efficient.
- pg314 9y ago
  No, they aren't. They are just exploiting an (artificial) monopoly. That has nothing to do with efficiency.
  - HarryHirsch 9y ago
    So what?! They are operating within the constraints of the market. Before the vulture capitalists swooped in prices were very reasonable for 30 years, the previous owners chose not to exploit their monopoly, then these two increased their efficiency.
    - forgotmysn 9y ago
      they didn't increase efficiency at all, they just increase the amount they were able to squeeze out of the IP. thats not an efficiency vs inefficiency, its n vs n+1.
      - johncip 9y ago
        I think you could make a case that charging the highest price for something that the market will bear corrects an inefficiency in the market. http://www.investopedia.com/terms/i/inefficientmarket.asp http://www.investopedia.com/terms/i/inefficientmarket.asp It's not that they started producing more units, it's that some folks (the ones using the drugs) were taking advantage of a market inefficiency (the insufficiently low price) which when corrected, meant greater returns for Shkreli et al. Just as when a "retail" day trader hits on a system that enables them to make a large amount of money, they're taking advantage of an inefficiency, and, in a way, helping to correct it. It's not pretty, but being ugly doesn't make it inaccurate.
        forgotmysn 9y ago
        but we're talking about a monopoly. a market inefficiency only occurs if there is competition, a more efficient alternative.
    - valuearb 9y ago
      The patent system is not a free market.
tanderson92 9y ago
Indeed, here is Charlie Munger w/ Jason Zweig: On firms like Berkshire partner 3G Capital, which takes big companies and streamlines them: I’m sensitive to the issue of cutting costs, which usually means a lot of people losing jobs. Rich people end up getting richer and a lot of people get fired. But ultimately, I think we don’t do the world a favor by employing more people than we need for companies to run efficiently. On the whole we advance civilization when companies run better. http://jasonzweig.com/a-fireside-chat-with-charlie-munger/ http://jasonzweig.com/a-fireside-chat-with-charlie-munger/
- munificent 9y ago
  > On the whole we advance civilization when companies run better. I understand that's a tenet of capitalism and is almost a religious belief beyond question. But, empirically, how do we know that this is actually true?
  - Pyxl101 9y ago
    Because efficient companies produce goods and services for lower prices than inefficient companies, which, happening at scale throughout the economy, lowers the cost of living and raises the standard of living for everyone. An increase in the amount of goods and services produced per head is the definition of economic growth, which most of us consider to be a good thing. Improvements to our quality of living essentially require economic growth. Take a listen to this NPR Planet Money podcast (and article) called "The History of Light" [1]. It describes how much it cost to light a room, in terms of a typical day's wages, at various points in history until today: > The history of light is the history of economic growth — of things getting faster, cheaper, and more efficient. In Babylonian times, 4,000 years ago, a day's labor would buy very little light. You could buy enough light to illuminate a room but not for very long. Maybe 10 minutes. It was really expensive. Today, a day's worth of wages can afford to light a room for thousands of hours. This affordability has radically changed our society, mostly for the positive. It's now possible to study and be productive in the evening. Many of the improvements to the efficiency of lighting also enabled cheap heating as well. Another related interesting article is "The $3500 Shirt - A History Lesson in Economics" [2]. This one traces the cost of clothing from the middle ages to today. Consider: why did people used to wear clothing until it became rags? Because clothing was extraordinarily labor-intensive and thus expensive. A single shirt back then might cost $3500 in today's money. Now clothing is a negligible cost for most people in the USA, including the poor. Companies (and individuals) and their desire for efficient production have brought these costs down, and the costs of so many other goods. I've heard it said that today the average person in America has a quality of living substantially better than that of a medieval king. I believe it: with our lighting, heating, and potable water delivered to our homes; sanitary food & restrooms; medical and dental care, etc. -- all available to (mostly) everyone due to low prices. Not to mention the luxuries available to us in our homes like television, music, radio, video games, etc. Cheap spices from everywhere in the world. Food from most everywhere is available at low prices and high quality in local supermarkets. Travel is cheap, and many people can afford to travel virtually anywhere urban in the world within 24 to 48 hours by aircraft - amazing by any historical standard. And it's so reliable we take it for granted. All changes that originate from economic growth. During the industrial revolution, a lot of automation replaced human labor in clothing production. This did have the negative effect of putting the spinsters and weavers and so on out of business, but had the positive effect of making clothing vastly cheaper for everyone. People found new jobs and society continued, and was better off overall. Similarly, the development of the automobile largely put the industry supporting the horse-and-buggy out of business. But everyone was better off overall having fast and cheap transportation. So how do we know that it's true? I suppose we don't have any way of saying in a particular case, but we can look to history to see how innovations that made products and services cheaper have benefited society overall. Perhaps 1000 years in the future, they will trace how much computing a day's wages could buy, and how that went on to transform society too. [1] http://www.npr.org/2014/05/02/309040279/in-4-000-years-one-thing-hasnt-changed-it-takes-time-to-buy-light http://www.npr.org/2014/05/02/309040279/in-4-000-years-one-t... [2] http://www.sleuthsayers.org/2013/06/the-3500-shirt-history-lesson-in.html http://www.sleuthsayers.org/2013/06/the-3500-shirt-history-l... - also discussed on HN [3] [3] https://news.ycombinator.com/item?id=8940950 https://news.ycombinator.com/item?id=8940950
chrisbennet 9y ago
The choice isn't (always) "lay off some workers or go out of business". Instead it's "It's profitable now but it could be even more profitable if we did something that incurred job losses." For example, Carrier was already very profitable when they decided to outsource to Mexico. http://www.salon.com/2016/03/22/snapshot_of_a_broken_system_how_a_profitable_company_justifies_laying_off_1400_people_moved_their_jobs_to_mexico/ http://www.salon.com/2016/03/22/snapshot_of_a_broken_system_... "A look at United Technologies’ annual report reveals even more good news: Commercial and industrial products, Carrier’s category, make up over half of UTC’s $56 billion in net sales. Climate, Controls & Security had 3 percent growth in 2015, the highest in the company; it was the only division to increase its profit margin year-over-year. “Organic sales growth at UTC Climate, Controls & Security was driven by the U.S. commercial and residential heating, ventilation and air conditioning (HVAC) and transport refrigeration businesses,” according to page 14 of the report. In other words, air conditioners – what the workers are making in Indianapolis – drove the growth of the best-performing facet of United Technologies’ business."
- icantdrive55 9y ago
  So more money is always the target? Yea--that's fine, but with these profit moves shouldn't come so dam easy to those in charge. The United States provided relatively safe neighborhoods, schools, could leave the house without fear of kidnapping, blah, blah, etc. Then a company decides to make more money where business can do pretty much whatever they want to the enviorment, pay bribes to officials, hire cheap labor, blah, blah, etc.? (I'm not sure if you're for, or against this profit seeking behavior, and I'm not directing this towards you. That said, what bothers me is when they make their "nut" here; and get greedy. I wish their was a federal law stating if you move your company overseas, you need to move your BOD, and all executives right along to whatever chit hole you decided to make more profits. Point being--don't use this country as your first wife/husband. So--call me a liberal, I believe in company ethics. Something we are losing. Something we assume Berkshire Hathaway has nailed down. The reason why we all like Warren Buffet? And what if they arn't a moral company? I don't know? I just read good things about Warren. I don't know all the dirt in everyone's closet.)
- derefr 9y ago

legitster 9y ago

Your assertion being that layoffs and cost cutting are inherently unethical? That is to say, it is evil and wrong to ever fire anyone. It is also evil and wrong to cut costs?

chrisbennet 9y ago
I'm not the OP of the comment you're responding to but... I think it is unethical to take away the livelihood of someone if the only reason you are doing it is to add even more zeros to your already fat bank account.
- legitster 9y ago
  But the only reason a business hires employees is to make more money. We are not employed out of charity. Can we complain that greed compels them to fire us when it also compels them to hire us in the first place? Also, you are assuming the only one being rewarded by layoffs are executives. As someone dutifully putting away money for retirement in a 401k, I am the primary beneficiary of such layoffs in their stock prices(assuming the company is publicly traded). Should I feel guilty that my greed has caused layoffs?
  - chrisbennet 9y ago
    Of course not, not anymore than you should feel guilty for investing in tobacco companies. If causing others suffering is really so bad, it would be illegal right? /s
- uiri 9y ago
  Their livelihood is already gone. They have nothing productive to do. It is far more ethical to let them go and secure productive employment elsewhere so that they may have some dignity rather than to pay them to do nothing.
  - metaphorm 9y ago
    in principle yes, but implementation details matter. layoffs when accompanied by humane severance packages is ethical. this rarely happens.

harshreality 9y ago

I would be a lot more concerned about Berkshire's holdings of soft drink and fast food companies. Talk about bad ethics... When someone asks about the ethics of Coke (generally, any sugar/carbonated beverage), and Buffett responds that he still drinks it, or that he eats fast food, that's begging the question. Without the regular/addicted consumers of those products, the companies wouldn't be good investments, and everyone knows regular consumption of soft drinks or fast food is bad for you, statistically speaking. Outliers (like Buffett himself, if he really eats as poorly as he says he does—like avoiding most vegetables) are irrelevant.

tuna-piano 9y ago
Do you feel the same about motorcycle manufacturers? I'd guess the mortality risk of a 30 minute motorcycle ride is higher than the risk of a 30 minute Dairy Queen meal.
- harshreality 9y ago
  I suppose that depends on how strongly the manufacturers market their motorcycles to less-safe use... for instance, marketing higher cc sport motorcycles for regular commuters or illegal motocross rather than taking them to a track. Motorcycles, while less safe for the rider, are more safe for everyone else, and they pollute less, so in general I suppose the ethical situation is less obviously bad for motorcycle companies than for fast food companies. Fast food and soft drinks are specifically engineered to be as enticing as possible, playing on biological cravings that are unhelpful since the advent of mass food production, and offer no other benefits other than satisfying those cravings. It's difficult to be a large-scale for-profit food business of any kind, and still be able to fully justify your company's actions, ethically speaking. However, fast food companies, junk food companies, [carbonated] sugar water companies, and to a moderate extent many prepackaged food brands, drag down the ethics of the whole industry. They're harming public health, it's obvious, and the only defense is a naive (ignoring marketing and network effects, and habitual irrational human tendencies) retort that capitalism, individual choice, etc should always win. You can blame the consumers—the companies are just making what the people "want"—except that's not how capitalism has worked for most of the last century. The marketing/advertising/promotion juggernaut has a life of its own and significantly boosts demand for things that are bad for consumers, bad for the environment, or both. Even if it were pure consumer-driven demand, should free-market capitalism be a suicide pact? Are consumers only hurting themselves with unhealthy food? They're driving up healthcare costs and disability costs, which raises everyone's health insurance costs and taxes. You can argue correctly that it's inefficiency on the part of health insurance companies, but that inefficiency isn't going away until it's cost-effective and accepted to monitor everyone's diets. For the moment, they have to assume that every person they cover is eating or drinking more junk than they should. The cost of Warren Buffett laughing off health ethics concerns and emphasizing that he drinks coke or eats burgers becomes an externality, not so different from pollution. Furthermore, forget the products they make, and forget their marketing. Companies of this sort actively seek to subvert science, funding contrarian studies: that sugar isn't actually bad for you, that more carbs are good (not just for marathon runners, but for the average office worker too), that high-fat dairy and meat are the true causes of health problems, and many others. And what do consumers gain? A little bit of transient happiness—at least, they think the junk food is making them happy, but more likely they're just at a local maximum and they could find healthier food that would still taste good, leading to more overall happiness taking into account the realization that the healthier food isn't killing them (as fast). Buffett's response is an admission that he can't fully justify those companies' products and tactics, so he doesn't even try. It's sad. In one sense, someone's going to hold the stock, so why not him? Does holding stock of a company like that obligate you to campaign for better food standards that will probably harm your investment, in the short term at least? Of course not, and it's difficult to see how such a constraint could be added to securities law, but shouldn't some constraint like that be added if it were possible? This is where capitalism fails. Problems develop when you legally require companies to make money for shareholders and fail to ethically hold shareholders responsible for the consequences of a company's actions. It means consequences for a company's actions are going to lag far behind (decades, at least) scientific realization that the company is making money by externalizing costs. I'm not that down on Buffett or BH for their investments, but this is a systemic problem highlighted by Buffett's public lack of concern for these issues. These are problems that need to be solved at a higher level (government) until low-level solutions are found (profitable food that tastes like fast food but that's also good for you). So far, government has been unable to do much because the people, who are hooked on these products due to habit and all the marketing, use the levers of democracy to prevent government from acting. I'm not optimistic that anything will change soon, but I don't see how that removes the ethical liability from those businesses.

vit05 9y ago

You clearly don't have any idea of who 3G Capital is.[0] They are not a small consulting firm that somebody else hires. If they are investing in a company it is because they want to change the culture of the company. And to do that, they need to be the leader, not to follow. Their philosophy is about use numbers. They use metrics for everything. From the water used in bathrooms to the necessity of pay for first class travel for the executives. And if a job can be done using just one person, use 3 people is almost a crime for them. [1]Buffet: most managers cannot control their lust for hyper-activity, preferring instead to go out and buy something, they are constantly comparing themselves to companies inside and outside of their own industry, making changes to reflect the "new ways of thinking", which are in fact only the old ways with new fads inserted and most managers tend to have an exaggerated sense of their own abilities. That is why he have a partnership with 3g Capital. They like to make things simple, not complex. They never spend money just because they have money. They like to cut and spend less even if everything is alright.[2] Sicupira: “Costs are like fingernails: they always have to be cut.”. BTW They start investing in technology companies using InnovaCapital and invested in SnapChat, Apple and others. [3] [0]http://www.3g-capital.com/about.html http://www.3g-capital.com/about.html https://www.forbes.com/profile/jorge-paulo-lemann/ https://www.forbes.com/profile/jorge-paulo-lemann/ https://www.bloomberg.com/news/articles/2013-08-29/jorge-lemann-he-is-dot-the-worlds-most-interesting-billionaire https://www.bloomberg.com/news/articles/2013-08-29/jorge-lem... https://www.linkedin.com/pulse/case-2-breaking-dna-code-3g-capitals-success-5-genes-how-fernandez https://www.linkedin.com/pulse/case-2-breaking-dna-code-3g-c... [1] http://www.travismorien.com/FAQ/shares/wbinstitutionalimperative.htm http://www.travismorien.com/FAQ/shares/wbinstitutionalimpera... [2] https://www.ft.com/content/268f73e6-31a3-11e7-9555-23ef563ecf9a https://www.ft.com/content/268f73e6-31a3-11e7-9555-23ef563ec... [3]http://www.tradeforce.com/articles/jorge-paulo-lemann.html http://www.tradeforce.com/articles/jorge-paulo-lemann.html https://www.crunchbase.com/organization/innova-capital-brazil#/entity https://www.crunchbase.com/organization/innova-capital-brazi...