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"Investor value". It's a symptom of western economies, and the US in particular. It's all about the share price and doing whatever you can to boost it, and th

"Investor value". It's a symptom of western economies, and the US in particular. It's all about the share price and doing whatever you can to boost it, and then pay dividends (if the share price isn't doing well). Companies are now seen as financial instruments. If you buy shares now is your first thought about the company, or about share price and how much money you can make? That's it really. MBAs know how to inflate share price and 'add value' in the modern world. And when the CEO is no longer an engineer, he chases the money, because he's usually paid in shares and options.

jmnicolas 6y ago
> "Investor value". It's a symptom of western economies, and the US in particular. I absolutely agree. And pushed to extremes it makes for sociopathic reasoning where nothing else matters. We humans have a hard time finding the middle way : no I don't want communism but I don't want full blown predatory capitalism either.
- DrBazza 6y ago
  Agreed. Just look at Icahn asset stripping TWA in the 80s at the cost of thousands of jobs, just so he and his investors could get rich quick. Here's a good example of a non-technical CEO: Steve Ballmer. From wikipedia "His tenure and legacy as Microsoft CEO has received mixed reception, with the company tripling sales and doubling profits, but losing its market dominance and missing out on 21st-century technology trends.[13][14][15] "
  - jmnicolas 6y ago
    I have another simple but revealing example from a few years ago : we had a biscuit factory where I live that had a financial return of 8% per year but the shareholders wanted 10% minimum so they demanded the factory to be moved in a cheaper country without any thoughts for the local employees that would loose their jobs.
emn13 6y ago
The current stock market in any case is a surprisingly short-term focused beast; which surprising because that's superficially at odds with the fact that the majority of investments are long-term. Something's off there, for sure. In any case, that means it takes considerable discipline to avoid short-term thinking; where short-term could mean "just 5 years ahead" - already an eon in a market-focused company. That's bad for a company's stability. On the other hand, it also makes it really attractive to try and corner the market and keep competitors out by any means necessary, which isn't necessarily very capitalist nor good for society as a whole. Anyhow, I'm not sure engineer CEO's are the answer; if the primary drive for investor gains tends away from dividends, but rather rising stock (and asset) prices - well, that's pretty inexorably going to drive companies to focus on stock-price boosting activities over plain profit. And at the heart there is likely simply that size wins, but conversely is problematic once achieved, for both company and society. We need some kind of mechanic to encourage companies to stay small (or at least weak) and avoid the market-manipulation traps. In essence: economies of scale are a short-term win at a long-term cost. And perhaps we've conflated economies of scale in activities with economies of scale in corporate structure. Some things take physical scale and cooperation, and of course that's easier under a single controlling corporate entity - but we could try harder to disentangle those factors, at least as much as possible. The real problem here is how to get from where we are to some hypothetical better place. The very economies/companies of scale that inhibit growth are also what underpin modern efficiency. How many people are willing to become actively poorer to maybe possibly encourage growth down the line, especially when they see other countries that won't all be making those painful choices? The US in particular has an issue here: it's richness is bound partially to its power over trade and intellectual property, but those are rather artificial constructs that can fall away quite quickly. How much of US wealth is enhanced by being the standard-setter, and by other countries granting US IP and financial laws force in their own territories? My guess is: quite a lot. If that pyramid scheme ever falters, that could be really, really destabilizing (of course not just in the US!) Essentially: network effects transfer wealth gain from network participants to network controllers, specifically: American entities. Even those profiting from the current scheme I think are looking at this way too lackadaisically: sure, you can try and support the current hegemony, but it looks pretty inevitable that it's going to fail. There's too much growth outside of the US, and too much protectionism (ironically supported by the US which must be the most self-destructive policy possible), and too much distrust of major gatekeepers across the political spectrum. If you want to support the status quo, your best bet is to look for a gradual restructuring, instead of the current heels in the sand, waiting for the straw that breaks the camel's back. And frankly, even if you're actively hostile to Facebook, Google and US hegemony in generally: sudden revolution looks pretty unpredictable. Why aim for that? We really, really need to start working on reducing the size (or really power) of corporate behemoths, now, before the system collapsed under it's own momentum. And in the future, we should be more wary of the politically intrinsically destabilizing nature of corporate titans.
dragonwriter 6y ago
> "Investor value". It's a symptom of western economies, and the US in particular. It's kind of the essential nature of capitalism. If you are looking to a system oriented toward value for other than the capital-owning class, look elsewhere.

jmnicolas 6y ago

> "Investor value". It's a symptom of western economies, and the US in particular. I absolutely agree. And pushed to extremes it makes for sociopathic reasoning where nothing else matters. We humans have a hard time finding the middle way : no I don't want communism but I don't want full blown predatory capitalism either.

DrBazza 6y ago
Agreed. Just look at Icahn asset stripping TWA in the 80s at the cost of thousands of jobs, just so he and his investors could get rich quick. Here's a good example of a non-technical CEO: Steve Ballmer. From wikipedia "His tenure and legacy as Microsoft CEO has received mixed reception, with the company tripling sales and doubling profits, but losing its market dominance and missing out on 21st-century technology trends.[13][14][15] "
- jmnicolas 6y ago
  I have another simple but revealing example from a few years ago : we had a biscuit factory where I live that had a financial return of 8% per year but the shareholders wanted 10% minimum so they demanded the factory to be moved in a cheaper country without any thoughts for the local employees that would loose their jobs.

emn13 6y ago

The current stock market in any case is a surprisingly short-term focused beast; which surprising because that's superficially at odds with the fact that the majority of investments are long-term. Something's off there, for sure. In any case, that means it takes considerable discipline to avoid short-term thinking; where short-term could mean "just 5 years ahead" - already an eon in a market-focused company. That's bad for a company's stability. On the other hand, it also makes it really attractive to try and corner the market and keep competitors out by any means necessary, which isn't necessarily very capitalist nor good for society as a whole. Anyhow, I'm not sure engineer CEO's are the answer; if the primary drive for investor gains tends away from dividends, but rather rising stock (and asset) prices - well, that's pretty inexorably going to drive companies to focus on stock-price boosting activities over plain profit. And at the heart there is likely simply that size wins, but conversely is problematic once achieved, for both company and society. We need some kind of mechanic to encourage companies to stay small (or at least weak) and avoid the market-manipulation traps. In essence: economies of scale are a short-term win at a long-term cost. And perhaps we've conflated economies of scale in activities with economies of scale in corporate structure. Some things take physical scale and cooperation, and of course that's easier under a single controlling corporate entity - but we could try harder to disentangle those factors, at least as much as possible. The real problem here is how to get from where we are to some hypothetical better place. The very economies/companies of scale that inhibit growth are also what underpin modern efficiency. How many people are willing to become actively poorer to maybe possibly encourage growth down the line, especially when they see other countries that won't all be making those painful choices? The US in particular has an issue here: it's richness is bound partially to its power over trade and intellectual property, but those are rather artificial constructs that can fall away quite quickly. How much of US wealth is enhanced by being the standard-setter, and by other countries granting US IP and financial laws force in their own territories? My guess is: quite a lot. If that pyramid scheme ever falters, that could be really, really destabilizing (of course not just in the US!) Essentially: network effects transfer wealth gain from network participants to network controllers, specifically: American entities. Even those profiting from the current scheme I think are looking at this way too lackadaisically: sure, you can try and support the current hegemony, but it looks pretty inevitable that it's going to fail. There's too much growth outside of the US, and too much protectionism (ironically supported by the US which must be the most self-destructive policy possible), and too much distrust of major gatekeepers across the political spectrum. If you want to support the status quo, your best bet is to look for a gradual restructuring, instead of the current heels in the sand, waiting for the straw that breaks the camel's back. And frankly, even if you're actively hostile to Facebook, Google and US hegemony in generally: sudden revolution looks pretty unpredictable. Why aim for that? We really, really need to start working on reducing the size (or really power) of corporate behemoths, now, before the system collapsed under it's own momentum. And in the future, we should be more wary of the politically intrinsically destabilizing nature of corporate titans.

dragonwriter 6y ago

> "Investor value". It's a symptom of western economies, and the US in particular. It's kind of the essential nature of capitalism. If you are looking to a system oriented toward value for other than the capital-owning class, look elsewhere.