4 ms·

That seems... worse. It'll force companies that are still growing with a powerful CEO to stay private (or possibly just be destroyed, if they're already public

That seems... worse. It'll force companies that are still growing with a powerful CEO to stay private (or possibly just be destroyed, if they're already public) because of CEO churn. The effect of that will be that 'in' parties will get to participate in the growth, while the greater market (eg, retirement funds) get cut out of that. The effect will be that the rich get richer, while the public subsidizes their gains by buying in only at the very tail. (Essentially, just pushed down the line even further than now.) I think America actually is powerful because corporations aren't democratic. It allows the US to function as a macro-democratic republic (where the public controls the rules of the game) but micro-feudalistic society (where you have fiefs implementing those rules). Kings are efficient; republics are stable. So our infrastructure is republican, while our 'features' are feudalistic. If you believe in capitalism, this allows for efficient distribution of resources. What I think the US does wrong is not lubricate the transition between fiefdoms. Social safety nets lubricate transitions so that inefficient (poorly managed, badly conceived, etc) fiefdoms collapse quickly but the people who are involved aren't harmed and can smoothly transition into other ones of their choosing. That's the creative destruction of capitalism, optimized. So from my view, it's not that the problem is how corporations are managed, it's that America won't invest in her ideals -- at a societal level. So of course they don't work. Disclaimer: Work at publicly traded corp; views are mine, not employers.

srtjstjsj 9y ago
Companies aren't public to be nice. They are public because their value is locked up and the early owners want to cash out.
- KGIII 9y ago
  My comment is too long, so I'm going to post it in two parts. First, I want to point out that you're right. It is true when you say, "Companies aren't public to be nice." That's true and I'm not going to argue that. The fact is, they aren't. However, that's not how it has always been. I'm not really able to find any good citations so I'm taking a little time to make something for you. It's important to understand the history of incorporation. To be incorporated (thus traded publicly) confers certain rights to a body of people. I know, people complain about Citizens United and how "corporations are people." But, that's actually pretty much always been true. "Corporations are invariably classified as "legal persons" by all modern systems of law, meaning that like natural persons, they may acquire rights and duties." [1] Because of this notion, once upon a time, the right to incorporate was controlled by the State. "At the Declaration of Independence, corporations had been unlawful without explicit authorization in a Royal Charter or an Act of Parliament of the United Kingdom." [2] In other words, the State controlled the ability to incorporate - in this case it was the monarchy. You needed a royal charter, at the least. (We still use the word charter.) Now, here's the kicker... We wanted to establish the right for a group of individuals to incorporate. We'd already decided that representative groups were a right (the right to peacefully assemble is a good indicator) and so we decided that we wanted to allow more freedom to incorporate. But, we knew that incorporation could lead to some negative consequences. The founders were pretty smart, in some ways. We also knew that the Federal Government was capable of being too large. This is a subject of great depth and we'll not get into it. Suffice to say, people aren't actually always being racists when they assert the importance of State's Rights. One of the earliest concerns about State Rights was actually about incorporation. The Feds had decided that a group of people had a right to incorporate without actually residing in the State they'd chosen to incorporate in. So, this led to many things but we're only concerned with one aspect. (I'm trying to be brief.) Namely, we didn't just want people to have the ability to incorporate without any controls. We still wanted government oversight and we still wanted to ensure that incorporated entities were a benefit to the public. So, back then - and in certain States (I'm unable to find an exact number in the time I've allowed myself to make this post), to incorporate actually required both introduction and vote on the Senate floor. "Prior to the late 19th century, most companies were incorporated by a special bill adopted by legislature." [3] By now, you're probably wondering what the whole point is of this wall of text, seemingly from a mad man. Well, I'm getting to that. So, way back then, we had the legislature approving of each individual group that sought to incorporate. On top of that, they were very willing and able to revoke their charter and to dissolve their corporation. "Early state corporation laws were all restrictive in design, often with the intention of preventing corporations for gaining too much wealth and power." [4] In other words, one of the absolute principles for founding a corporation was that it must be of benefit to the public. A corporation had to start and maintain their good to the public. A corporation had to provide a public good, they had to benefit the public, they had to be good stewards and citizens. That was explicitly what they had to do. So, you're right. Corporations don't have to be "nice." However, they used to have to be "nice." They used to have to be beneficial to the greater society. They had an obligation - because they were conferred rights they'd not normally have. To incorporate absolved the individual, and the shareholder, from many legal responsibilities and, in exchange, we (via our elected representatives) insisted that they provide a benefit to society as a whole. I'd think that qualifies as "nice." Don't you? Anyhow, we maintained this for quite some time. We enforced this with things like the Sherman Antitrust Act [5] and other such legislation. The Sherman Antitrust act is an important indicator of the obligations of corporations. This was better explained in 1993 in Spectrum Sports v. McQuillan [6] which explained it thusly: "The purpose of the [Sherman] Act is not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself." [7] Again, you're right! I'm absolutely not arguing with you. A company isn't public to be nice. However, it doesn't have to be that way - and it hasn't always been that way. There's absolutely no reason why a corporation should be allowed to exist if it is not, in fact, benefiting the public good.
  - KGIII 9y ago
    Continued... Why should we, the citizens, allow corporations those very nice protections from legal liability if we're not getting some benefit from those same corporations? Today, it's very much an automated and inexpensive process to incorporate (it's more difficult to get listed on a stock exchange and to be publicly traded) and there's no actual requirement for the incorporated entity to benefit the public. The whole point is you're right - and that's a bad thing. When the public loses control of the corporations, they cease to become public. The whole point of "public" is that there should be a benefit to the public. When we reduce the obligations to the public, incorporated entities have caused trouble. Here's an excellent example: "Through the 1920s, power concentrated in fewer hands as corporations issued shares with multiple voting rights, while other shares were sold with no votes at all. This practice was halted in 1926 by public pressure and the New York Stock Exchange refusing to list non-voting shares." [8] What did that cause? "It was possible to sell voteless shares in the economic boom of the 1920s, because more and more ordinary people were looking to the stock market to save the new money they were earning, but the law did not guarantee good information or fair terms. New shareholders had no power to bargain against large corporate issuers, but still needed a place to save." [8] "The Wall Street Crash saw the total collapse of stock market values, as shareholders realized that corporations had become overpriced. They sold shares en masse, meaning meant companies found it hard to get finance. The result was that thousands of businesses were forced to close, and they laid off workers. Because workers had less money to spend, businesses received less income, leading to more closures and lay-offs. This downward spiral began the Great Depression." [8] The thing is - it doesn't have to be this way. We, the citizens, have the power to force our elected representatives to actually adhere to the spirit of the regulations. To incorporate and to be a publicly traded venture is a privilege. Doing so, to become incorporated, infers a great many legal protections. To be able to be publicly traded, to be able to be owned by the public, should require a level of responsibility to that same public - not just to the stakeholders but to the general public. Why? Because those people who own the stock are also given legal protections. I own a significant amount of stock in publicly traded companies. Those companies can rape, murder, pillage, and burn - and, no matter what, I'm not even remotely legally accountable for their behavior. All I do is reap the rewards. For that protection, for those privileges, those publicly traded entities should very well have an obligation to be "nice." To be able to have those protections, to be able to profit at the will of the people, should actually involve an obligation to those people. Remember, it's not just the incorporated entity, nor the publicly traded shares, that get benefit - the owner of the shares benefit as well. To have those benefits granted to those entities means those entities very much should have an obligation to the general public. There's absolutely nothing stopping us from making this an issue. There's nothing stopping us from speaking out. There's nothing stopping the legislatures from ensuring that publicly traded companies benefit the public that allows them to have those very rights that enabled them to accumulate their wealth and to operate as a business. Nothing. The system is broken, not working as designed, and it needs to be changed. That said, again... You're right. Companies aren't public because they have to be "nice." However, that's the problem. They should be "nice" because they're allowed to be public. They should be "nice" because they're allowed to incorporate. They should be "nice" because they're afforded rights the average individual does not, in fact, have. When you commit a crime, you go to jail. When an incorporated entity commits a crime, the shareholders are never legally accountable. On top of that, many of the actual executives are never legally accountable. It's a damned shame. It's an absolute problem and this problem has skewed the opinions of the public - the same public who should be benefiting from the corporations and their privilege to be traded publicly. Fix the system because your statement is right - and that's the problem. [1] https://en.wikipedia.org/wiki/United_States_corporate_law#Corporations_and_civil_law https://en.wikipedia.org/wiki/United_States_corporate_law#Co... [2] https://en.wikipedia.org/wiki/United_States_corporate_law#History https://en.wikipedia.org/wiki/United_States_corporate_law#Hi... [3] https://en.wikipedia.org/wiki/History_of_corporate_law_in_the_United_States#Post-independence https://en.wikipedia.org/wiki/History_of_corporate_law_in_th... [4] https://en.wikipedia.org/wiki/History_of_corporate_law_in_the_United_States#General_incorporation_laws https://en.wikipedia.org/wiki/History_of_corporate_law_in_th... [5] https://en.wikipedia.org/wiki/Sherman_Antitrust_Act https://en.wikipedia.org/wiki/Sherman_Antitrust_Act [6] https://en.wikipedia.org/wiki/Spectrum_Sports,_Inc._v._McQuillan https://en.wikipedia.org/wiki/Spectrum_Sports,_Inc._v._McQui... [7] https://en.wikipedia.org/wiki/Sherman_Antitrust_Act#Legislative_intent https://en.wikipedia.org/wiki/Sherman_Antitrust_Act#Legislat... [8] https://en.wikipedia.org/wiki/United_States_corporate_law#History https://en.wikipedia.org/wiki/United_States_corporate_law#Hi... Addendum: I am in no way displeased or mad at you. My post is not indicative of you being a problem. My post attempts to shine a light on the system being the problem. It is, in no way, meant to reflect poorly on you. You are, after all, just a reflection of the system. Your statement was 100% right. That's the problem.
- deleted 9y ago
  [deleted]
- SomeStupidPoint 9y ago
  Yes, and? Deals can be mutually beneficial -- my point is exactly that allowing them to partially cash out while remaining in control leads to stability and earlier cashing out, both of which help the public. The suggestion I replied to was bad for everyone, because it forcibly negates a deal that's good for everyone.

srtjstjsj 9y ago

Companies aren't public to be nice. They are public because their value is locked up and the early owners want to cash out.

KGIII 9y ago
My comment is too long, so I'm going to post it in two parts. First, I want to point out that you're right. It is true when you say, "Companies aren't public to be nice." That's true and I'm not going to argue that. The fact is, they aren't. However, that's not how it has always been. I'm not really able to find any good citations so I'm taking a little time to make something for you. It's important to understand the history of incorporation. To be incorporated (thus traded publicly) confers certain rights to a body of people. I know, people complain about Citizens United and how "corporations are people." But, that's actually pretty much always been true. "Corporations are invariably classified as "legal persons" by all modern systems of law, meaning that like natural persons, they may acquire rights and duties." [1] Because of this notion, once upon a time, the right to incorporate was controlled by the State. "At the Declaration of Independence, corporations had been unlawful without explicit authorization in a Royal Charter or an Act of Parliament of the United Kingdom." [2] In other words, the State controlled the ability to incorporate - in this case it was the monarchy. You needed a royal charter, at the least. (We still use the word charter.) Now, here's the kicker... We wanted to establish the right for a group of individuals to incorporate. We'd already decided that representative groups were a right (the right to peacefully assemble is a good indicator) and so we decided that we wanted to allow more freedom to incorporate. But, we knew that incorporation could lead to some negative consequences. The founders were pretty smart, in some ways. We also knew that the Federal Government was capable of being too large. This is a subject of great depth and we'll not get into it. Suffice to say, people aren't actually always being racists when they assert the importance of State's Rights. One of the earliest concerns about State Rights was actually about incorporation. The Feds had decided that a group of people had a right to incorporate without actually residing in the State they'd chosen to incorporate in. So, this led to many things but we're only concerned with one aspect. (I'm trying to be brief.) Namely, we didn't just want people to have the ability to incorporate without any controls. We still wanted government oversight and we still wanted to ensure that incorporated entities were a benefit to the public. So, back then - and in certain States (I'm unable to find an exact number in the time I've allowed myself to make this post), to incorporate actually required both introduction and vote on the Senate floor. "Prior to the late 19th century, most companies were incorporated by a special bill adopted by legislature." [3] By now, you're probably wondering what the whole point is of this wall of text, seemingly from a mad man. Well, I'm getting to that. So, way back then, we had the legislature approving of each individual group that sought to incorporate. On top of that, they were very willing and able to revoke their charter and to dissolve their corporation. "Early state corporation laws were all restrictive in design, often with the intention of preventing corporations for gaining too much wealth and power." [4] In other words, one of the absolute principles for founding a corporation was that it must be of benefit to the public. A corporation had to start and maintain their good to the public. A corporation had to provide a public good, they had to benefit the public, they had to be good stewards and citizens. That was explicitly what they had to do. So, you're right. Corporations don't have to be "nice." However, they used to have to be "nice." They used to have to be beneficial to the greater society. They had an obligation - because they were conferred rights they'd not normally have. To incorporate absolved the individual, and the shareholder, from many legal responsibilities and, in exchange, we (via our elected representatives) insisted that they provide a benefit to society as a whole. I'd think that qualifies as "nice." Don't you? Anyhow, we maintained this for quite some time. We enforced this with things like the Sherman Antitrust Act [5] and other such legislation. The Sherman Antitrust act is an important indicator of the obligations of corporations. This was better explained in 1993 in Spectrum Sports v. McQuillan [6] which explained it thusly: "The purpose of the [Sherman] Act is not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself." [7] Again, you're right! I'm absolutely not arguing with you. A company isn't public to be nice. However, it doesn't have to be that way - and it hasn't always been that way. There's absolutely no reason why a corporation should be allowed to exist if it is not, in fact, benefiting the public good.
- KGIII 9y ago
  Continued... Why should we, the citizens, allow corporations those very nice protections from legal liability if we're not getting some benefit from those same corporations? Today, it's very much an automated and inexpensive process to incorporate (it's more difficult to get listed on a stock exchange and to be publicly traded) and there's no actual requirement for the incorporated entity to benefit the public. The whole point is you're right - and that's a bad thing. When the public loses control of the corporations, they cease to become public. The whole point of "public" is that there should be a benefit to the public. When we reduce the obligations to the public, incorporated entities have caused trouble. Here's an excellent example: "Through the 1920s, power concentrated in fewer hands as corporations issued shares with multiple voting rights, while other shares were sold with no votes at all. This practice was halted in 1926 by public pressure and the New York Stock Exchange refusing to list non-voting shares." [8] What did that cause? "It was possible to sell voteless shares in the economic boom of the 1920s, because more and more ordinary people were looking to the stock market to save the new money they were earning, but the law did not guarantee good information or fair terms. New shareholders had no power to bargain against large corporate issuers, but still needed a place to save." [8] "The Wall Street Crash saw the total collapse of stock market values, as shareholders realized that corporations had become overpriced. They sold shares en masse, meaning meant companies found it hard to get finance. The result was that thousands of businesses were forced to close, and they laid off workers. Because workers had less money to spend, businesses received less income, leading to more closures and lay-offs. This downward spiral began the Great Depression." [8] The thing is - it doesn't have to be this way. We, the citizens, have the power to force our elected representatives to actually adhere to the spirit of the regulations. To incorporate and to be a publicly traded venture is a privilege. Doing so, to become incorporated, infers a great many legal protections. To be able to be publicly traded, to be able to be owned by the public, should require a level of responsibility to that same public - not just to the stakeholders but to the general public. Why? Because those people who own the stock are also given legal protections. I own a significant amount of stock in publicly traded companies. Those companies can rape, murder, pillage, and burn - and, no matter what, I'm not even remotely legally accountable for their behavior. All I do is reap the rewards. For that protection, for those privileges, those publicly traded entities should very well have an obligation to be "nice." To be able to have those protections, to be able to profit at the will of the people, should actually involve an obligation to those people. Remember, it's not just the incorporated entity, nor the publicly traded shares, that get benefit - the owner of the shares benefit as well. To have those benefits granted to those entities means those entities very much should have an obligation to the general public. There's absolutely nothing stopping us from making this an issue. There's nothing stopping us from speaking out. There's nothing stopping the legislatures from ensuring that publicly traded companies benefit the public that allows them to have those very rights that enabled them to accumulate their wealth and to operate as a business. Nothing. The system is broken, not working as designed, and it needs to be changed. That said, again... You're right. Companies aren't public because they have to be "nice." However, that's the problem. They should be "nice" because they're allowed to be public. They should be "nice" because they're allowed to incorporate. They should be "nice" because they're afforded rights the average individual does not, in fact, have. When you commit a crime, you go to jail. When an incorporated entity commits a crime, the shareholders are never legally accountable. On top of that, many of the actual executives are never legally accountable. It's a damned shame. It's an absolute problem and this problem has skewed the opinions of the public - the same public who should be benefiting from the corporations and their privilege to be traded publicly. Fix the system because your statement is right - and that's the problem. [1] https://en.wikipedia.org/wiki/United_States_corporate_law#Corporations_and_civil_law https://en.wikipedia.org/wiki/United_States_corporate_law#Co... [2] https://en.wikipedia.org/wiki/United_States_corporate_law#History https://en.wikipedia.org/wiki/United_States_corporate_law#Hi... [3] https://en.wikipedia.org/wiki/History_of_corporate_law_in_the_United_States#Post-independence https://en.wikipedia.org/wiki/History_of_corporate_law_in_th... [4] https://en.wikipedia.org/wiki/History_of_corporate_law_in_the_United_States#General_incorporation_laws https://en.wikipedia.org/wiki/History_of_corporate_law_in_th... [5] https://en.wikipedia.org/wiki/Sherman_Antitrust_Act https://en.wikipedia.org/wiki/Sherman_Antitrust_Act [6] https://en.wikipedia.org/wiki/Spectrum_Sports,_Inc._v._McQuillan https://en.wikipedia.org/wiki/Spectrum_Sports,_Inc._v._McQui... [7] https://en.wikipedia.org/wiki/Sherman_Antitrust_Act#Legislative_intent https://en.wikipedia.org/wiki/Sherman_Antitrust_Act#Legislat... [8] https://en.wikipedia.org/wiki/United_States_corporate_law#History https://en.wikipedia.org/wiki/United_States_corporate_law#Hi... Addendum: I am in no way displeased or mad at you. My post is not indicative of you being a problem. My post attempts to shine a light on the system being the problem. It is, in no way, meant to reflect poorly on you. You are, after all, just a reflection of the system. Your statement was 100% right. That's the problem.
deleted 9y ago
[deleted]
SomeStupidPoint 9y ago
Yes, and? Deals can be mutually beneficial -- my point is exactly that allowing them to partially cash out while remaining in control leads to stability and earlier cashing out, both of which help the public. The suggestion I replied to was bad for everyone, because it forcibly negates a deal that's good for everyone.