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>question whether it’s fair to ask this of corporations When company A makes the moral choice to do so and B doesn't, 'investors' will favor B in every case. T

>question whether it’s fair to ask this of corporations When company A makes the moral choice to do so and B doesn't, 'investors' will favor B in every case. This is similar to how Costco is criticised for having a 'low' margin and 'good' compensation for all of their staff[]. The tens of millions of people not earning a living wage is a failure of policy that is the result of unfettered greed. [] Costco starting compensation is not a livable wage for the cities most of their stores are in. Their compensation is only good in comparison to the average compensation for jobs with similar requirements.

elcritch 6y ago
Many investors might not value Costco for those reasons but not all. It's notable the Berkshire Hathaway only recently divested their Costco shares but only after holding them for many years and even sharing corporate board members [1]. 1: https://www.forbes.com/sites/gurufocus/2020/11/17/warren-buffett-buys-6-stocks-in-3rd-quarter-dumps-costco/?sh=1c05c1712eb1 https://www.forbes.com/sites/gurufocus/2020/11/17/warren-buf...
refurb 6y ago
You seem to be arguing against yourself. Costco is paying a livable wage, having great sales and their investors are happy. So basically the opposite of your argument.
jessedhillon 6y ago
This is a simplistic analysis of the "duty to the shareholder" principle. The wellbeing and happiness of the operations staff directly impacts competency, efficiency, and retention. And those all directly affect, among other things, the cost of operations. One doesn't need to resort to investor altruism to make the case that paying better leads to better economic outcomes. This is no different than when Nike charges $300+ for shoes that have the same BOM and applied labor as a cheaper shoe. In neither case do you see investors pushing for a race to the bottom, simply because of the existence of lower cost competitors.
wpietri 6y ago
Depends on the investors and the company, really. Moral choices can have financial consequences later on. E.g., I used to be a big Amazon fan. But over the years they've worn me down with their anti-worker behavior and now I only use them as a last resort. And we now see them getting pushback not just from individuals, but from government all around the world. We see a similar story for the social media tech companies. The initial line was that FB, Twitter, YouTube, etc weren't responsible for content; they were just a neutral way for users to connect. That was always a dubious argument, but it did let them save a lot of money and time they instead devoted to growth. Now they are being dragged kicking and screaming into mitigating some of the negative externalities of their very lucrative business models. Negative externalities like enabling hate groups, pogroms, and an attempted overthrow of a major democracy. It's not clear what happens next, but I'm guessing having congress beat up your CEO on national television is not going to help their earnings per share.

elcritch 6y ago

Many investors might not value Costco for those reasons but not all. It's notable the Berkshire Hathaway only recently divested their Costco shares but only after holding them for many years and even sharing corporate board members [1]. 1: https://www.forbes.com/sites/gurufocus/2020/11/17/warren-buffett-buys-6-stocks-in-3rd-quarter-dumps-costco/?sh=1c05c1712eb1 https://www.forbes.com/sites/gurufocus/2020/11/17/warren-buf...

refurb 6y ago

You seem to be arguing against yourself. Costco is paying a livable wage, having great sales and their investors are happy. So basically the opposite of your argument.

jessedhillon 6y ago

This is a simplistic analysis of the "duty to the shareholder" principle. The wellbeing and happiness of the operations staff directly impacts competency, efficiency, and retention. And those all directly affect, among other things, the cost of operations. One doesn't need to resort to investor altruism to make the case that paying better leads to better economic outcomes. This is no different than when Nike charges $300+ for shoes that have the same BOM and applied labor as a cheaper shoe. In neither case do you see investors pushing for a race to the bottom, simply because of the existence of lower cost competitors.

wpietri 6y ago

Depends on the investors and the company, really. Moral choices can have financial consequences later on. E.g., I used to be a big Amazon fan. But over the years they've worn me down with their anti-worker behavior and now I only use them as a last resort. And we now see them getting pushback not just from individuals, but from government all around the world. We see a similar story for the social media tech companies. The initial line was that FB, Twitter, YouTube, etc weren't responsible for content; they were just a neutral way for users to connect. That was always a dubious argument, but it did let them save a lot of money and time they instead devoted to growth. Now they are being dragged kicking and screaming into mitigating some of the negative externalities of their very lucrative business models. Negative externalities like enabling hate groups, pogroms, and an attempted overthrow of a major democracy. It's not clear what happens next, but I'm guessing having congress beat up your CEO on national television is not going to help their earnings per share.