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If investors don’t like the dual stock structure, they don’t have to invest. What am I missing? Why should congress step in to ban something that by virtue of t

If investors don’t like the dual stock structure, they don’t have to invest. What am I missing? Why should congress step in to ban something that by virtue of these existing investors, some people are fine with?

greenyoda 8y ago
A lot of people invest their retirement accounts in S&P 500 index funds that include Facebook and Alphabet (another company with a two-class stock structure). They haven't really made a conscious choice to invest in Facebook and are probably unaware of the corporate governance issues. (I looked at an S&P 500 index fund and saw that FB and GOOG comprise 4.5% of the total holdings, not an insignificant amount.)
- paulddraper 8y ago
  No, because they don't want to worry about the details. They've delegated that to trusted decision makers, etc. And those don't have to invest.
  - harry8 8y ago
    They're investing in the entire economy. If you believe that super voting rights for minority owners is a systemic weakness in the economy then this is absolutely a problem for S&P500 index fund investors. Likewise it a relevant concern if you're only relying on the economy for you (and your dependents) to obtain food and shelter. If on the other hand you believe the minority with special rights are actually superior managers of the assets and totally deserving of super voting rights to keep the assets out of the hands of others e.g. management consultants and bankers who've got no frigging clue then you'll take the opposite point of view. Both points of view are reasonable and need to be supported with evidence by those arguing for them. The idea that you can't have a point of view by any means other than exercise of the decision to invest in facebrick or not is a little simplistic. Systemic issues are a thing to consider carefully. The global financial crisis did happen, banks did have to be bailed out. (The decision to pursue prosecution and to exempt ratings companies and such from ramifications /may/ have been moral hazard and adverse selection but whatever). Total de-regulation of the financial system has a history of ponzis, tulips, south sea, etc. etc. that caused vast misery well beyond those who were direct victims of the frauds. It's worth remembering that if the financial system genuinely collapses millions will starve to death. The decision to regulate to protect against systemic collapse has been hard won. Now should super voting rights be regulated away? I'm kind of less interested in a power struggle between funds managers and Zuck, seems we should treat that as noise on making a good policy decision. But just what is that good policy decision?
harry8 8y ago
Why have laws in business at all? You don't like it don't do business. Perhaps because we don't like the idea that the strongest should always get his way? Although I totally take your point that it is utterly fatuous to suggest shareholders are going to hold management to account on the general theme of being ethical. Total deregulation is every bit the same silly extreme as a command economy and should be treated with the same withering contempt. The question should always be "Is this regulation effective in making things better for more people over the long term." If that answer is now, we have a regulation that should go. Deregulation extremists somehow take the exact opposite point of view when it comes to property rights, regulations that protect them. And of course every single large company shouting de-regulation is really engaged in a massive amount of regulatory capture. Those regulations need to go and we need to fight back in a big way on that. Variations on that theme are why Bernie and Donald are so much more popular than Hilary and Jeb. Still no progress. Anyway are these tech billionaires able to command super-voting rights with their stakes because they're so great and wise and wonderful? Or is it because they've secured a beachhead that commands a lot of economic rent and that beachhead gives them the power and strength to get their way. I don't find Zuck super impressive as a person, strategist or engineer. But hey he fought off google trying to muscle into his beach head so he must be amazing unless he, um, "has the high ground" OB1 stye. Did Rupert Murdoch push the super voting rights regulations through so he could keep total family control of news ltd & fox?
- SamReidHughes 8y ago
  > The question should always be "Is this regulation effective in making things better for more people over the long term." That's the Communist worldview. Complete utilitarian totalitarian morality.
  - PavlovsCat 8y ago
    > If you care about other people, that’s now a very dangerous idea. If you care about other people, you might try to organize to undermine power and authority. That’s not going to happen if you care only about yourself. Maybe you can become rich, but you don’t care whether other people’s kids can go to school, or can afford food to eat, or things like that. In the United States, that’s called “libertarian” for some wild reason. I mean, it’s actually highly authoritarian, but that doctrine is extremely important for power systems as a way of atomizing and undermining the public. -- Noam Chomsky
thenanyu 8y ago
From a shareholder perspective Facebook and Google have done pretty great. In fact, as an investor I hope the dual class structure continues. I’d much rather leave it to the founders and not have activist investors pushing their own agenda.
- PavlovsCat 8y ago
  But it's totally fine for corporations to meddle with the democratic process to push their own agendas, right? Being and operating as a corporation is not some kind of natural right. It's a privilege, granted by citizens, via the the proxy of governments and their regulations.
  - paulddraper 8y ago
    > Being and operating as a corporation is not some kind of natural right. Isn't it? Isn't being able to make decisions as a group "right to assembly" sort of stuff.
    - PavlovsCat 8y ago
      > the individual right or ability of people to come together and collectively express, promote, pursue, and defend their ideas That's something entirely different than, say https://en.wikipedia.org/wiki/Articles_of_incorporation https://en.wikipedia.org/wiki/Articles_of_incorporation > the duration (perpetual by default) Natural rights aren't granted nor can they be subject to limited duration. Even if the natural rights of someone else might mean that, say, someone "has to get locked up", that doesn't revoke any right, it's just overruled by the likewise unrevokable rights of others. Nothing is stopping people from working together without creating a corporation etc., as the people they already are with the rights they have, but then you also don't have limited liability and all those other things.
    - harry8 8y ago
      edit: (I may have missed that Pavlov's Cat had covered this, sorry). Corporation is different from a group of folks in so far as a corporation limits liability. The group of folk can take money out of the corporation while the going is good. When the going goes bad the obligations of the corporation do not confer the right to go after the "group of folk" and their assets. Limited liability. It's been a crucially important thing in the funding of risky investments. I'd say on balance it's been amazingly good for the world but you could make the opposite case. No reason you couldn't end limited liability while retaining right to assembly and so on. It's an extremely radical policy to pursue in my opinion and would have very dramatic consequences.

greenyoda 8y ago

A lot of people invest their retirement accounts in S&P 500 index funds that include Facebook and Alphabet (another company with a two-class stock structure). They haven't really made a conscious choice to invest in Facebook and are probably unaware of the corporate governance issues. (I looked at an S&P 500 index fund and saw that FB and GOOG comprise 4.5% of the total holdings, not an insignificant amount.)

paulddraper 8y ago
No, because they don't want to worry about the details. They've delegated that to trusted decision makers, etc. And those don't have to invest.
- harry8 8y ago
  They're investing in the entire economy. If you believe that super voting rights for minority owners is a systemic weakness in the economy then this is absolutely a problem for S&P500 index fund investors. Likewise it a relevant concern if you're only relying on the economy for you (and your dependents) to obtain food and shelter. If on the other hand you believe the minority with special rights are actually superior managers of the assets and totally deserving of super voting rights to keep the assets out of the hands of others e.g. management consultants and bankers who've got no frigging clue then you'll take the opposite point of view. Both points of view are reasonable and need to be supported with evidence by those arguing for them. The idea that you can't have a point of view by any means other than exercise of the decision to invest in facebrick or not is a little simplistic. Systemic issues are a thing to consider carefully. The global financial crisis did happen, banks did have to be bailed out. (The decision to pursue prosecution and to exempt ratings companies and such from ramifications /may/ have been moral hazard and adverse selection but whatever). Total de-regulation of the financial system has a history of ponzis, tulips, south sea, etc. etc. that caused vast misery well beyond those who were direct victims of the frauds. It's worth remembering that if the financial system genuinely collapses millions will starve to death. The decision to regulate to protect against systemic collapse has been hard won. Now should super voting rights be regulated away? I'm kind of less interested in a power struggle between funds managers and Zuck, seems we should treat that as noise on making a good policy decision. But just what is that good policy decision?

harry8 8y ago

Why have laws in business at all? You don't like it don't do business. Perhaps because we don't like the idea that the strongest should always get his way? Although I totally take your point that it is utterly fatuous to suggest shareholders are going to hold management to account on the general theme of being ethical. Total deregulation is every bit the same silly extreme as a command economy and should be treated with the same withering contempt. The question should always be "Is this regulation effective in making things better for more people over the long term." If that answer is now, we have a regulation that should go. Deregulation extremists somehow take the exact opposite point of view when it comes to property rights, regulations that protect them. And of course every single large company shouting de-regulation is really engaged in a massive amount of regulatory capture. Those regulations need to go and we need to fight back in a big way on that. Variations on that theme are why Bernie and Donald are so much more popular than Hilary and Jeb. Still no progress. Anyway are these tech billionaires able to command super-voting rights with their stakes because they're so great and wise and wonderful? Or is it because they've secured a beachhead that commands a lot of economic rent and that beachhead gives them the power and strength to get their way. I don't find Zuck super impressive as a person, strategist or engineer. But hey he fought off google trying to muscle into his beach head so he must be amazing unless he, um, "has the high ground" OB1 stye. Did Rupert Murdoch push the super voting rights regulations through so he could keep total family control of news ltd & fox?

SamReidHughes 8y ago
> The question should always be "Is this regulation effective in making things better for more people over the long term." That's the Communist worldview. Complete utilitarian totalitarian morality.
- PavlovsCat 8y ago
  > If you care about other people, that’s now a very dangerous idea. If you care about other people, you might try to organize to undermine power and authority. That’s not going to happen if you care only about yourself. Maybe you can become rich, but you don’t care whether other people’s kids can go to school, or can afford food to eat, or things like that. In the United States, that’s called “libertarian” for some wild reason. I mean, it’s actually highly authoritarian, but that doctrine is extremely important for power systems as a way of atomizing and undermining the public. -- Noam Chomsky

thenanyu 8y ago

From a shareholder perspective Facebook and Google have done pretty great. In fact, as an investor I hope the dual class structure continues. I’d much rather leave it to the founders and not have activist investors pushing their own agenda.

PavlovsCat 8y ago
But it's totally fine for corporations to meddle with the democratic process to push their own agendas, right? Being and operating as a corporation is not some kind of natural right. It's a privilege, granted by citizens, via the the proxy of governments and their regulations.
- paulddraper 8y ago
  > Being and operating as a corporation is not some kind of natural right. Isn't it? Isn't being able to make decisions as a group "right to assembly" sort of stuff.
  - PavlovsCat 8y ago
    > the individual right or ability of people to come together and collectively express, promote, pursue, and defend their ideas That's something entirely different than, say https://en.wikipedia.org/wiki/Articles_of_incorporation https://en.wikipedia.org/wiki/Articles_of_incorporation > the duration (perpetual by default) Natural rights aren't granted nor can they be subject to limited duration. Even if the natural rights of someone else might mean that, say, someone "has to get locked up", that doesn't revoke any right, it's just overruled by the likewise unrevokable rights of others. Nothing is stopping people from working together without creating a corporation etc., as the people they already are with the rights they have, but then you also don't have limited liability and all those other things.
  - harry8 8y ago
    edit: (I may have missed that Pavlov's Cat had covered this, sorry). Corporation is different from a group of folks in so far as a corporation limits liability. The group of folk can take money out of the corporation while the going is good. When the going goes bad the obligations of the corporation do not confer the right to go after the "group of folk" and their assets. Limited liability. It's been a crucially important thing in the funding of risky investments. I'd say on balance it's been amazingly good for the world but you could make the opposite case. No reason you couldn't end limited liability while retaining right to assembly and so on. It's an extremely radical policy to pursue in my opinion and would have very dramatic consequences.