4 ms·

The issue with abandoning the maximizing the shareholders profit mentality is that it has to be replaced with something else, and unless we change the way inves

The issue with abandoning the maximizing the shareholders profit mentality is that it has to be replaced with something else, and unless we change the way investment works, then it will still be serving the shareholders. The shareholders should be the one with power to make decisions, as they own the company. Additionally, not all companies serve greedy shareholders. Believe it or not, shareholders are people too who have multi faceted interests besides making money.

frgtpsswrdlame 9y ago
>The shareholders should be the one with power to make decisions, as they own the company. They don't actually, see: Consider first Friedman’s erroneous belief that shareholders “own” corporations. Although laymen sometimes have difficulty understanding the point, corporations are legal entities that own themselves, just as human entities own themselves. What shareholders own are shares, a type of contact between the shareholder and the legal entity that gives shareholders limited legal rights. In this regard, shareholders stand on equal footing with the corporation’s bondholders, suppliers, and employees, all of whom also enter contracts with the firm that give them limited legal rights. http://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=2311&context=facpub http://scholarship.law.cornell.edu/cgi/viewcontent.cgi?artic... [pdf] >The issue with abandoning the maximizing the shareholders profit mentality is that it has to be replaced with something else, and unless we change the way investment works, then it will still be serving the shareholders. But this is relatively easy! Instead of top level management being rewarded for stock price only, they should also be rewarded for other metrics, like customer satisfaction or how much they lowered the spread between median and mean wages. Hell, we could even allow it to be determined only by share price, but only the share price on a long time horizon, no sales within five years.
rrivers 9y ago
This is a good point; but perhaps we need to think a little more "meta" about the situation. In our era of late stage capitalism Finance dictates production - this is an inherently cannibalistic model of economics and it's not surprise that the U.S. labor market continues to degrade into a more "gig" (Considering a "tour of duty" a gig for arguments sake) economy that hurts the laborers the most. We should question if this is the system we want to continue to perpetuate, or on the flip side do we want more regulations and restructuring of our market economy? The question is not "More or less market?" but rather "What kind of market?"
notfromhere 9y ago
Companies used to also focus on their local communities, rather than a pure bottom-line focus.
- icebraining 9y ago
  When?
tradesmanhelix 9y ago
The problem with the "shareholder value only" model is its focus on generating short-term returns vs. creating long-term value. How is this sustainable? I don't think we should abandon shareholder profit completely (after all, companies do need to make money in order to stay in business). However, I do think the philosophy needs to be balanced with other aims like investment in employees, giving back to the community, environmental stewardship, and thinking about the long-term future of the company. Importantly, these things shouldn't be after-thoughts - they should be cornerstones of the corporate philosophy.
- deleted 9y ago
  [deleted]

frgtpsswrdlame 9y ago

>The shareholders should be the one with power to make decisions, as they own the company. They don't actually, see: Consider first Friedman’s erroneous belief that shareholders “own” corporations. Although laymen sometimes have difficulty understanding the point, corporations are legal entities that own themselves, just as human entities own themselves. What shareholders own are shares, a type of contact between the shareholder and the legal entity that gives shareholders limited legal rights. In this regard, shareholders stand on equal footing with the corporation’s bondholders, suppliers, and employees, all of whom also enter contracts with the firm that give them limited legal rights. http://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=2311&context=facpub http://scholarship.law.cornell.edu/cgi/viewcontent.cgi?artic... [pdf] >The issue with abandoning the maximizing the shareholders profit mentality is that it has to be replaced with something else, and unless we change the way investment works, then it will still be serving the shareholders. But this is relatively easy! Instead of top level management being rewarded for stock price only, they should also be rewarded for other metrics, like customer satisfaction or how much they lowered the spread between median and mean wages. Hell, we could even allow it to be determined only by share price, but only the share price on a long time horizon, no sales within five years.

rrivers 9y ago

This is a good point; but perhaps we need to think a little more "meta" about the situation. In our era of late stage capitalism Finance dictates production - this is an inherently cannibalistic model of economics and it's not surprise that the U.S. labor market continues to degrade into a more "gig" (Considering a "tour of duty" a gig for arguments sake) economy that hurts the laborers the most. We should question if this is the system we want to continue to perpetuate, or on the flip side do we want more regulations and restructuring of our market economy? The question is not "More or less market?" but rather "What kind of market?"

notfromhere 9y ago

Companies used to also focus on their local communities, rather than a pure bottom-line focus.

icebraining 9y ago
When?

tradesmanhelix 9y ago

The problem with the "shareholder value only" model is its focus on generating short-term returns vs. creating long-term value. How is this sustainable? I don't think we should abandon shareholder profit completely (after all, companies do need to make money in order to stay in business). However, I do think the philosophy needs to be balanced with other aims like investment in employees, giving back to the community, environmental stewardship, and thinking about the long-term future of the company. Importantly, these things shouldn't be after-thoughts - they should be cornerstones of the corporate philosophy.

deleted 9y ago
[deleted]