4 ms·

Because corporations are legally obligated to operate in their shareholders best interest. Not to be Captain America.

gphil 16y ago
Yes, but what about when the shareholders are also mostly Americans? Big corporations tend to operate in their stock's best interest, and this can still cause serious problems for their shareholders.
- chadmalik 16y ago
  Your thesis is contradicted by a massive amount of real world data.
  - gphil 16y ago
    What I meant by my initial comment is in no way contradictory on its face, nor contradicted by any amount of real world data. Allow me to clarify with a simple example: Consider the case of a shareholder invested in a company behaving in anti-competitive behavior that negatively effects the market as a whole. Now suppose the same shareholder owns many stocks across the market. This is clearly a loss for the shareholder, and a win for the company only. That's what I was trying to express.
- Nwallins 16y ago
  > Big corporations tend to operate in their stock's best interest, and this can still cause serious problems for their shareholders. Erm, what? This seems contradictory on its face. The shareholder's only interest in a company is its stock performance, be it stock price or dividend payments. What sort of tendencies are you thinking of, here?
  - steveklabnik 16y ago
    > The shareholder's only interest in a company is its stock performance, I think this is where you and he differ. For instance, I'm a Microsoft shareholder. (2 shares, but still...) Many Microsoft decisions since the mid-90s (when I first started holding MSFT) have made life overall worse for me, even if they may have increased the value of the stock I held.
    - Nwallins 16y ago
      > Many Microsoft decisions since the mid-90s (when I first started holding MSFT) have made life overall worse for me That has nothing to do with your being a shareholder.
      - steveklabnik 16y ago
        You're right. There's no causation there... but that doesn't mean it still doesn't affect me.
nanairo 16y ago
Which is why you need government regulations: it would be about time people wake up from their faith for the free market. Even Adam Smith talked of regulation in his work!
ratsbane 16y ago
Long-term best interest and short-term best interest aren't always the same. If they go back on "don't be evil" they're going to lose a lot of the good will they've built up and that will hurt them a lot in the long term.
- leot 16y ago
  Yes, though sticking to their maxim would make for some dreadfully awkward meetings at Davos.
gamble 16y ago
Fortunately for China, Chinese corporations don't believe that.
- Ardit20 16y ago
  Didn't. Aren't they becoming capitalists also?
  - gamble 16y ago
    Not in a way Wall Street would recognize. China is following the Japanese development model - firm state control of key firms and financing, with protectionist regulation and capital controls to ensure that foreign companies have little access to the domestic market and are unable to pull out what investments they're allowed to make.
neurotech1 16y ago
Yes, however, sometimes a corporations best interest is to co-operate. This is a classic application of the Nash Equilibrium. If Google refuses to compromise or negotiate, and acts against the telcos, they are in effect acting against their own interest. If they co-operate with the telcos, everyone wins. My interpretation of the "deal" with Verizon, is that Verizon can't discriminate against one companies traffic over another, of a similar type.
Unseelie 16y ago
Rather, they are obligated to maximise their shareholder's funds, which says nothing about any externality to that market...like, for example, whether producing open software will make their shareholders (and others) more wealthy. The only obligation a corporation has to its shareholders is to maximize the funds it is given.

gphil 16y ago

Yes, but what about when the shareholders are also mostly Americans? Big corporations tend to operate in their stock's best interest, and this can still cause serious problems for their shareholders.

chadmalik 16y ago
Your thesis is contradicted by a massive amount of real world data.
- gphil 16y ago
  What I meant by my initial comment is in no way contradictory on its face, nor contradicted by any amount of real world data. Allow me to clarify with a simple example: Consider the case of a shareholder invested in a company behaving in anti-competitive behavior that negatively effects the market as a whole. Now suppose the same shareholder owns many stocks across the market. This is clearly a loss for the shareholder, and a win for the company only. That's what I was trying to express.
Nwallins 16y ago
> Big corporations tend to operate in their stock's best interest, and this can still cause serious problems for their shareholders. Erm, what? This seems contradictory on its face. The shareholder's only interest in a company is its stock performance, be it stock price or dividend payments. What sort of tendencies are you thinking of, here?
- steveklabnik 16y ago
  > The shareholder's only interest in a company is its stock performance, I think this is where you and he differ. For instance, I'm a Microsoft shareholder. (2 shares, but still...) Many Microsoft decisions since the mid-90s (when I first started holding MSFT) have made life overall worse for me, even if they may have increased the value of the stock I held.
  - Nwallins 16y ago
    > Many Microsoft decisions since the mid-90s (when I first started holding MSFT) have made life overall worse for me That has nothing to do with your being a shareholder.
    - steveklabnik 16y ago
      You're right. There's no causation there... but that doesn't mean it still doesn't affect me.

nanairo 16y ago

Which is why you need government regulations: it would be about time people wake up from their faith for the free market. Even Adam Smith talked of regulation in his work!

ratsbane 16y ago

Long-term best interest and short-term best interest aren't always the same. If they go back on "don't be evil" they're going to lose a lot of the good will they've built up and that will hurt them a lot in the long term.

leot 16y ago
Yes, though sticking to their maxim would make for some dreadfully awkward meetings at Davos.

gamble 16y ago

Fortunately for China, Chinese corporations don't believe that.

Ardit20 16y ago
Didn't. Aren't they becoming capitalists also?
- gamble 16y ago
  Not in a way Wall Street would recognize. China is following the Japanese development model - firm state control of key firms and financing, with protectionist regulation and capital controls to ensure that foreign companies have little access to the domestic market and are unable to pull out what investments they're allowed to make.

neurotech1 16y ago

Yes, however, sometimes a corporations best interest is to co-operate. This is a classic application of the Nash Equilibrium. If Google refuses to compromise or negotiate, and acts against the telcos, they are in effect acting against their own interest. If they co-operate with the telcos, everyone wins. My interpretation of the "deal" with Verizon, is that Verizon can't discriminate against one companies traffic over another, of a similar type.

Unseelie 16y ago

Rather, they are obligated to maximise their shareholder's funds, which says nothing about any externality to that market...like, for example, whether producing open software will make their shareholders (and others) more wealthy. The only obligation a corporation has to its shareholders is to maximize the funds it is given.