5 ms·

I think this is a very important point. Usually, taxes incentivize companies to spend their profit on making the company better - buy new machines, pay the wor

I think this is a very important point. Usually, taxes incentivize companies to spend their profit on making the company better - buy new machines, pay the workers more, invest in r&d. This way, they reduced their taxable profit by spending the money on themselves. The companies profited from getting better, the state (or society) profited from growth and innovation. Now with reduced taxes, but even more importantly tax evasion and offshoring, this incentive is gone, companies hoard money and pay out to the shareholders. And that is just lazy. Giving money to the shareholders is like telling your investor that their money is better spent elsewhere.

p_l 6y ago
Tax incentives are also responsible for the return of open office plan since 1960s, as depreciation rules regarding buildings and furniture changed. In addition, you have people believing that Milton Friedman's biggest lie is a law, namely that maximising shareholder value (which is often interpreted to include dividends) is fiduciary duty for the corporation. (It's not)
- tome 6y ago
  > Tax incentives are also responsible for the return of open office plan since 1960s, as depreciation rules regarding buildings and furniture changed. Strange. How does that work?
  - p_l 6y ago
    By making it so that furnishing a building is much cheaper than other aspects, so cost structure started to "disincentive" making smaller offices vs. plopping big halls.
- opo 6y ago
  >...Milton Friedman's biggest lie is a law, You are misrepresenting what is called the Friedman doctrine. He didn't claim it was the law of the land. As the wikipedia article states: >...The Friedman doctrine, also called shareholder theory or stockholder theory, is a normative theory of business ethics advanced by economist Milton Friedman which holds that a firm's main responsibility is to its shareholders. This shareholder primacy approach views shareholders as the economic engine of the organization and the only group to which the firm is socially responsible. As such, the goal of the firm is to maximize returns to shareholders.[1] Friedman argues that the shareholders can then decide for themselves what social initiatives to take part in, rather than have an executive whom the shareholders appointed explicitly for business purposes decide such matters for them https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine
  - p_l 6y ago
    I'm not saying he claimed it law. I'm saying that his claim of it being fiduciary duty is taken as law by many, when it's not.
    - opo 6y ago
      Thanks for the clarification. When you wrote "Milton Friedman's biggest lie" the implication to the reader is that Friedman is deliberately saying something is true when it is not. As the wikipedia article says, Friedman did not say it is recognized that maximizing returns to shareholders as a fiduciary duty simply saying he thought it should be. As a normative theory of business ethics, people can agree or disagree with the idea. (Just as in a different context, if someone argues prisons should focus on rehabilitation and someone disagrees, that doesn't mean the first person lied.)
_trampeltier 6y ago
Also for r&d you need often a long time. I guess thats also a reason. I my company (~300 people) we have a project that runs 10 years or so, and we have almost but still not a product yet. You really have to want make this investment in r&d and your shareholders too. In our case, we have no shareholders. I guess it would be pretty difficult a such project present to the shareholders for so many years.
smabie 6y ago
I mean, giving money back to investors is the foundation on which the entire stock market is built on. The whole original point of investing in a public company was to get dividends. After all, if you're not entitled to a share of the profits, what's the point? Of course this has all changed, with many companies not paying dividends. But saying that a company shouldn't return money to the investors through either buybacks or dividends is kind of ridiculous.

p_l 6y ago

Tax incentives are also responsible for the return of open office plan since 1960s, as depreciation rules regarding buildings and furniture changed. In addition, you have people believing that Milton Friedman's biggest lie is a law, namely that maximising shareholder value (which is often interpreted to include dividends) is fiduciary duty for the corporation. (It's not)

tome 6y ago
> Tax incentives are also responsible for the return of open office plan since 1960s, as depreciation rules regarding buildings and furniture changed. Strange. How does that work?
- p_l 6y ago
  By making it so that furnishing a building is much cheaper than other aspects, so cost structure started to "disincentive" making smaller offices vs. plopping big halls.
opo 6y ago
>...Milton Friedman's biggest lie is a law, You are misrepresenting what is called the Friedman doctrine. He didn't claim it was the law of the land. As the wikipedia article states: >...The Friedman doctrine, also called shareholder theory or stockholder theory, is a normative theory of business ethics advanced by economist Milton Friedman which holds that a firm's main responsibility is to its shareholders. This shareholder primacy approach views shareholders as the economic engine of the organization and the only group to which the firm is socially responsible. As such, the goal of the firm is to maximize returns to shareholders.[1] Friedman argues that the shareholders can then decide for themselves what social initiatives to take part in, rather than have an executive whom the shareholders appointed explicitly for business purposes decide such matters for them https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine
- p_l 6y ago
  I'm not saying he claimed it law. I'm saying that his claim of it being fiduciary duty is taken as law by many, when it's not.
  - opo 6y ago
    Thanks for the clarification. When you wrote "Milton Friedman's biggest lie" the implication to the reader is that Friedman is deliberately saying something is true when it is not. As the wikipedia article says, Friedman did not say it is recognized that maximizing returns to shareholders as a fiduciary duty simply saying he thought it should be. As a normative theory of business ethics, people can agree or disagree with the idea. (Just as in a different context, if someone argues prisons should focus on rehabilitation and someone disagrees, that doesn't mean the first person lied.)

_trampeltier 6y ago

Also for r&d you need often a long time. I guess thats also a reason. I my company (~300 people) we have a project that runs 10 years or so, and we have almost but still not a product yet. You really have to want make this investment in r&d and your shareholders too. In our case, we have no shareholders. I guess it would be pretty difficult a such project present to the shareholders for so many years.

smabie 6y ago

I mean, giving money back to investors is the foundation on which the entire stock market is built on. The whole original point of investing in a public company was to get dividends. After all, if you're not entitled to a share of the profits, what's the point? Of course this has all changed, with many companies not paying dividends. But saying that a company shouldn't return money to the investors through either buybacks or dividends is kind of ridiculous.