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Thinking about long-term profits instead of short ones, and sacrificing profits for some greater moral purpose, are not at all the same thing. It's entirely po
by _bxg1 7y ago
Thinking about long-term profits instead of short ones, and sacrificing profits for some greater moral purpose, are not at all the same thing.
It's entirely possible to do immoral things for the sake of profit while still being prudent about your company's future.
As for sacrificing profits to a moral end: private companies may do this occasionally. Not often, but sometimes. But the CEO of a publicly-traded company expressly does not have the option of sacrificing profits for any higher purpose, unless that directive comes from his shareholders. And in today's world, the shareholders of most major companies are of such a large number and have so many layers of detachment between themselves and the actual company (I don't even know what companies Betterment has me invested in; they can change every day) that the only common goal they can agree on is almost always profits.
An interesting exception to the norm is Facebook: despite being publicly-traded, Zuckerberg maintains both a majority holding and the position of CEO, and is therefore free to go on his crusade of "connecting the world", mostly ignoring what the other shareholders might want.
- phkahler 7y ago>> But the CEO of a publicly-traded company expressly does not have the option of sacrificing profits for any higher purpose, unless that directive comes from his shareholders. This is not true AFAICT. In practice it might be.
- clairity 7y agoto go a little deeper, corporate charters set out the values and goals of the company, as amended by the board from time to time, so it's whatever the (amended) charter says (it doesn't have to be solely profit-seeking). executives are judged by their ability to deliver on the goals of the charter. baords are largely controlled by the various (professional) shareholders, and most, if not all, of them explicity seek profits above all else. that's one way markets get dominated by profit-seeking companies. the other common argument is that in capital-oriented markets, not-primarily-profit-seeking corporations are at a competitive disadvantage over time, as the extra profits of greedy corporations can push them faster/further along the technology adoption/innovation curve (or economies of scale/scope). so it's hard for such companies to survive. i don't think in practice that this is a dominant factor in competitive markets, but it's an argument often made (in business schools, for example).
- _bxg1 7y agoIf the CEO goes against the shareholders' wishes, he or she will simply be fired. The CEO works for shareholders and has no independent authority.