4 ms·

Pre-1970 or so. Before Milton Friedman, there was a general sense that companies existed to fulfill some mission, with profit as a means. The CEO of Kellogg c

Pre-1970 or so. Before Milton Friedman, there was a general sense that companies existed to fulfill some mission, with profit as a means. The CEO of Kellogg commented on this in an interview ca. 1980, that money for a business is like a gasoline for a road trip. You need it to get where you're going, but the point of a road trip is not to accumulate as much gasoline as possible.

snowwrestler 6y ago
Is this a joke? The bulk of the labor movement happened before 1970, and it was not because workers were so well-treated and well-compensated that they had a lot of free time on their hands. I'm a big fan of business and entrepreneurship, but let's be clear here: there is a reason we invented government. There was never a time when we could 100% count on the beneficence of business leaders to advance social goals. Edit to add: I'm not trying to demonize all business leaders here. There are some bad actors, but even business leaders who desire to do well have to succeed in the marketplace--even against bad actors. Unfortunately, doing bad things in business often confers the benefit of lowering costs, which is a competitive advantage. This is a known structural issue with a marketplace economy and why we need more than just business to have a good society.
- rabidrat 6y ago
  Of course, there have always been bad businesses. The difference between pre-1970 and now, is that we've not only socially legitimized the maximization of profit, we've also all but legally mandated it. Now even "decent" business leaders like the CEO of Costco have to continually answer to their shareholders as to why they're not lowering wages and reducing benefit--and in Costco's case, the shareholders may try to take legal action to force them to lower costs, even though Costco the business is already quite profitable. Due to lack of labor regulation and the mantra that "business are required to maximize shareholder value", Costco's decency is fully dependent on its CEO's (unusual) fortitude to fend off those shareholder demands. When its leadership changes, its ability to care for its employees will likely revert to the mean, which as we see in today's environment is abysmal. So really, it's not that "there are some bad actors", but that "the system strongly encourages businesses to install these so-called bad actors as their leaders". I agree with you, that we need strong government labor regulations to counter this mentality, but this mentality is why these regulations have deteriorated over the past 50 years.
  - snowwrestler 6y ago
    > The difference between pre-1970 and now, is that we've not only socially legitimized the maximization of profit, we've also all but legally mandated it. I'm sorry, but this is just not true. If it was legally mandated, then the Costco CEO would not have been able to resist such shareholder demands. Your example proves the opposite of what you think it does. Nothing has changed in the legal structure of corporate governance since 1970. Do you think that investors never demanded greater returns from business leaders prior to 1970? They can still demand all they want, but the law remains clear today that corporate directors and managers have the power to run the business as they see fit, and shareholders' sole remedy for their disappointment, in the absence of outright fraud or gross negligence, is to sell their stock. In February 2014, Tim Cook was the CEO of one of the most valuable companies in the world. At Apple's shareholder meeting, he directly told his shareholders that he does not even consider ROI in some of his decisions. Legal consequences to Apple and Tim Cook for this statement? Zero. He's still CEO. Because there is no legal mandate to maximize corporate profits. Honestly, by buying into this myth that the law changed in the 1970s, you're lending power to a fake idea that you seem to be opposed to. There is a group of people who wish such a mandate existed, and by acting like they're right, you're kind of helping them. Business leaders might make anti-social decisions because they feel competitive pressure to succeed in a marketplace where customers are free to choose and are price-sensitive. That's not nearly the same thing as saying that corporate governance law forces them to make such decisions. It doesn't.
    - rabidrat 6y ago
      The expression "all but" means "almost but not quite".
      - snowwrestler 6y ago
        I know, that's what I'm trying to say: it's not true that CEOs are "almost but not quite" legally mandated to maximize profit or shareholder value. The law says plainly that they are not. "All but" is handy phrasing if you're trying to create the impression that something you prefer is true. If you don't prefer it, I think that using that phrase is like shooting yourself in the foot rhetorically. I think it's more constructive to point out that such a mandate does not exist (regardless of what some shareholders seem to believe), and there are good reasons it doesn't.
nickik 6y ago
This a perfect example of how mythical history of the left totally distorts peoples view of history. Kellogg also burned girls clitoris away because he was against masturbation. Other then he had incredibly toxic fights about the right to the IP and broke his relation with his brother. Clearly he didn't care about profits. Also a single example doesn't prove that things were structurally different. There are tons of companies now that exist with different goals.

snowwrestler 6y ago

Is this a joke? The bulk of the labor movement happened before 1970, and it was not because workers were so well-treated and well-compensated that they had a lot of free time on their hands. I'm a big fan of business and entrepreneurship, but let's be clear here: there is a reason we invented government. There was never a time when we could 100% count on the beneficence of business leaders to advance social goals. Edit to add: I'm not trying to demonize all business leaders here. There are some bad actors, but even business leaders who desire to do well have to succeed in the marketplace--even against bad actors. Unfortunately, doing bad things in business often confers the benefit of lowering costs, which is a competitive advantage. This is a known structural issue with a marketplace economy and why we need more than just business to have a good society.

rabidrat 6y ago
Of course, there have always been bad businesses. The difference between pre-1970 and now, is that we've not only socially legitimized the maximization of profit, we've also all but legally mandated it. Now even "decent" business leaders like the CEO of Costco have to continually answer to their shareholders as to why they're not lowering wages and reducing benefit--and in Costco's case, the shareholders may try to take legal action to force them to lower costs, even though Costco the business is already quite profitable. Due to lack of labor regulation and the mantra that "business are required to maximize shareholder value", Costco's decency is fully dependent on its CEO's (unusual) fortitude to fend off those shareholder demands. When its leadership changes, its ability to care for its employees will likely revert to the mean, which as we see in today's environment is abysmal. So really, it's not that "there are some bad actors", but that "the system strongly encourages businesses to install these so-called bad actors as their leaders". I agree with you, that we need strong government labor regulations to counter this mentality, but this mentality is why these regulations have deteriorated over the past 50 years.
- snowwrestler 6y ago
  > The difference between pre-1970 and now, is that we've not only socially legitimized the maximization of profit, we've also all but legally mandated it. I'm sorry, but this is just not true. If it was legally mandated, then the Costco CEO would not have been able to resist such shareholder demands. Your example proves the opposite of what you think it does. Nothing has changed in the legal structure of corporate governance since 1970. Do you think that investors never demanded greater returns from business leaders prior to 1970? They can still demand all they want, but the law remains clear today that corporate directors and managers have the power to run the business as they see fit, and shareholders' sole remedy for their disappointment, in the absence of outright fraud or gross negligence, is to sell their stock. In February 2014, Tim Cook was the CEO of one of the most valuable companies in the world. At Apple's shareholder meeting, he directly told his shareholders that he does not even consider ROI in some of his decisions. Legal consequences to Apple and Tim Cook for this statement? Zero. He's still CEO. Because there is no legal mandate to maximize corporate profits. Honestly, by buying into this myth that the law changed in the 1970s, you're lending power to a fake idea that you seem to be opposed to. There is a group of people who wish such a mandate existed, and by acting like they're right, you're kind of helping them. Business leaders might make anti-social decisions because they feel competitive pressure to succeed in a marketplace where customers are free to choose and are price-sensitive. That's not nearly the same thing as saying that corporate governance law forces them to make such decisions. It doesn't.
  - rabidrat 6y ago
    The expression "all but" means "almost but not quite".
    - snowwrestler 6y ago
      I know, that's what I'm trying to say: it's not true that CEOs are "almost but not quite" legally mandated to maximize profit or shareholder value. The law says plainly that they are not. "All but" is handy phrasing if you're trying to create the impression that something you prefer is true. If you don't prefer it, I think that using that phrase is like shooting yourself in the foot rhetorically. I think it's more constructive to point out that such a mandate does not exist (regardless of what some shareholders seem to believe), and there are good reasons it doesn't.

nickik 6y ago

This a perfect example of how mythical history of the left totally distorts peoples view of history. Kellogg also burned girls clitoris away because he was against masturbation. Other then he had incredibly toxic fights about the right to the IP and broke his relation with his brother. Clearly he didn't care about profits. Also a single example doesn't prove that things were structurally different. There are tons of companies now that exist with different goals.