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Although I lean towards seeing killing the company as short-sighted, suppose you then invest that money back into a new venture. You have far more capital than

Although I lean towards seeing killing the company as short-sighted, suppose you then invest that money back into a new venture. You have far more capital than you would have had you let the business remain healthy. This may give you even better value in the long-run (say 200 years) if you let this new venture live. But if you kill this venture too and invest its earnings into yet a third venture...

roughly 6y ago
Right - and I think that's generally what you'd see people doing. I'm not even sure it's necessarily an intrinsically bad pattern - there can be short-term opportunities and circumstances that make a strategy worthwhile for a number of years but not further. I think the issue broadly is twofold. First is the collateral damage - companies forming and dissolving is fine for the investors but murder for the employees, who's livelihoods and health insurance become precarious. Second is that we've applied this to the entire economy in a way that makes us incredibly vulnerable to systemic shocks - see America's toilet paper supply between the months of March and July. Again, on an individual company-wide basis, it might still have been more profitable for Procter & Gamble to do whatever the hell it is they did to make 2-ply an impossible technology to reproduce domestically in 2020, but on an economy-wide basis, the fact that Everyone did it was a goddamn disaster.
- TheCoelacanth 6y ago
  > companies forming and dissolving is fine for the investors but murder for the employees, who's livelihoods and health insurance become precarious That's a problem with the social safety net, not a problem with companies failing. A lot of companies are going to fail even without someone actively trying to drive them out of business. Some industries just have collapses in demand and no longer do something that anyone wants. Some companies are just mismanaged. We need to provide support for the employees who are victims of companies collapsing, not try to prevent any company from ever collapsing.
  - roughly 6y ago
    Completely agree with this.
  - eecc 6y ago
    Yup, but that’s achieved via taxation, currently one of the costs that are being trimmed in the 19M/y example above... It’s a case of having your cake and eating it too
dasudasu 6y ago
What number of companies still operate in the same form for several decades? A company dying isn't necessarily a negative. The assets don't get set on fire; the people working there don't disappear into a black hole. Investors might get fleeced, but overall the assets and people are used to others end, for which investors in these ends benefit. The worst outcome are those zombie companies that only exist for the sake of existing.
stainforth 6y ago
Yes, invest in a mega yacht or juicero or theranos, etc.

roughly 6y ago

Right - and I think that's generally what you'd see people doing. I'm not even sure it's necessarily an intrinsically bad pattern - there can be short-term opportunities and circumstances that make a strategy worthwhile for a number of years but not further. I think the issue broadly is twofold. First is the collateral damage - companies forming and dissolving is fine for the investors but murder for the employees, who's livelihoods and health insurance become precarious. Second is that we've applied this to the entire economy in a way that makes us incredibly vulnerable to systemic shocks - see America's toilet paper supply between the months of March and July. Again, on an individual company-wide basis, it might still have been more profitable for Procter & Gamble to do whatever the hell it is they did to make 2-ply an impossible technology to reproduce domestically in 2020, but on an economy-wide basis, the fact that Everyone did it was a goddamn disaster.

TheCoelacanth 6y ago
> companies forming and dissolving is fine for the investors but murder for the employees, who's livelihoods and health insurance become precarious That's a problem with the social safety net, not a problem with companies failing. A lot of companies are going to fail even without someone actively trying to drive them out of business. Some industries just have collapses in demand and no longer do something that anyone wants. Some companies are just mismanaged. We need to provide support for the employees who are victims of companies collapsing, not try to prevent any company from ever collapsing.
- roughly 6y ago
  Completely agree with this.
- eecc 6y ago
  Yup, but that’s achieved via taxation, currently one of the costs that are being trimmed in the 19M/y example above... It’s a case of having your cake and eating it too

dasudasu 6y ago

What number of companies still operate in the same form for several decades? A company dying isn't necessarily a negative. The assets don't get set on fire; the people working there don't disappear into a black hole. Investors might get fleeced, but overall the assets and people are used to others end, for which investors in these ends benefit. The worst outcome are those zombie companies that only exist for the sake of existing.

stainforth 6y ago

Yes, invest in a mega yacht or juicero or theranos, etc.