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Expecting public companies to do anything except optimize for shareholder value, is pure folly. We can debate morality all day, but there's a more practical rea
by whack 8y ago
Expecting public companies to do anything except optimize for shareholder value, is pure folly. We can debate morality all day, but there's a more practical reason for this: shareholders hold all the power over management. Regardless of how unhappy you as a customer/employee are, you do not have the direct power to fire the directors/executives. You only have the indirect power of pressuring the shareholders, and hoping they will pass it along.
Hence why CEOs and Board of Directors will optimize for shareholders interests above customers/employees/society. Because if they don't, they will get fired and get replaced with someone else who does. This is textbook Evolution and Natural Selection.
If we aren't happy with the way corporations are paying their employees, the solution has to come from outside the corporations. Demand that your government increase the minimum wage, increase the capital gains tax rates, raise tax rates for the 0.1%, and use the proceeds to fund basic income or a better social safety net. he private sector does a great job of generating wealth, but don't ever expect it to distribute it fairly.
- scroot 8y agoTime to also reconsider different kinds of corporations, specifically those that are wholly owned and operated by the people who work for them.
- tjr225 8y agoIt is a pleasure to have the opportunity to work for one.
- scroot 8y agoDo you? If so, which?
- jimbofisher1 8y agoCoops, I'm not familiar with any in the IT space, care to share?
- scroot 8y agoI'm not really familiar with any either. I'm convinced it could work well though. Especially if it starts as a consultancy and then moves into building things.
- rjkennedy98 8y agoRaising wages however should increase shareholder value by helping them lure better talent in a competitive market. It only proves that corporate America is an oligopoly.
- lordxenu 8y agoI agree with you, however it's not easy to force government to act in the common people's interests either. You can say voting, but it's getting harder and harder to find any honest representatives to do work in good faith. Take this example, the people voted that DC tipped workers should get a higher minimum wage, but now it's being repealed by the DC city council: https://www.washingtonpost.com/local/dc-politics/dc-council-members-move-to-overturn-ballot-initiative-affecting-tipped-workers/2018/07/09/26ff95b4-8386-11e8-9e80-403a221946a7_story.html?noredirect=on https://www.washingtonpost.com/local/dc-politics/dc-council-...
- bluGill 8y agoIt isn't that simple. A company that does "good things" for their employees can in turn reap results from those "good things". Better employees, or employees that stay long enough to have experience both have a value that returns back to shareholders. Of course how much so spend on those "good things" is an optimization problem.
- whack 8y ago> Better employees, or employees that stay long enough to have experience both have a value that returns back to shareholders. You're making the argument that companies should be nicer to their employees, because that is in the best interests of their shareholders. The linked article is implying that companies should be nicer to their employees, despite the best interests of their shareholders. These are 2 completely orthogonal arguments. The first is a moral argument, whereas the second is a business-tactics argument. Since you brought it up, I certainly agree with the business-tactics argument to some extent. Companies like Google have certainly done well for their shareholders, by keeping their employees happy. But then again, companies like Walmart have shown that in some markets, employee happiness is barely correlated with shareholder returns.
- bluGill 8y agoActually WalMart is very concerned about employee happiness. The things they do about it are very different from other industries, but they results are employees that are generally happy. Of course outsiders look at it and wonder how their employees can be happy.