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It's also worth noting, though, that the fall-out of this cost Porsche dearly: In its efforts to acquire a majority holding in Volkswagen AG, Porsche built up
by eftpotrm 15y ago
It's also worth noting, though, that the fall-out of this cost Porsche dearly:
In its efforts to acquire a majority holding in Volkswagen AG, Porsche built up a large debt burden, aggravated by taxes due on very large paper profits from Volkswagen AG options. By July 2009, Porsche was faced with debts exceeding 10 billion euros. The supervisory board of Porsche finally agreed to a number of arrangements whereby the Qatar Investment Authority would inject a large amount of capital, and Porsche would be merged with Volkswagen Group. On 23 July 2009, Michael Macht was appointed CEO, to replace Wendelin Wiedeking, who is expected to receive a compensation package of 50 million euros.
http://en.wikipedia.org/wiki/Porsche#Corporate_restructuring http://en.wikipedia.org/wiki/Porsche#Corporate_restructuring
- j_m_f 15y agoAlso, this is less of a clever hack of the financial system and more of an example of plain market manipulation.
- Estragon 15y agoEverybody loses! A paragon of free-market efficiency!
- Robin_Message 15y agoExcept the Qatari royal family. Remember, capitalism leads to freedom!
- VMG 15y agoNo, freedom is a requirement for capitalism.
- jarek 15y agoThat must be why the Qatari royal family is so good at it.
- Robin_Message 15y agoI thought Friedman argued they were intertwined, and that capitalism created freedom in many cases, but I haven't actually read his book.
- burgerbrain 15y agoHe may be partially correct, however I suspect that Friedman doesn't really care all that much about the rights most reasonable people appreciate. I can reasonably see it producing some limited sorts of freedom, but (as an example) how would it produce equal rights for homosexuals?
- baq 15y agosentence that china holds very near its heart.
- maxxxxx 15y agoAnother counter example is Singapore.
- burgerbrain 15y agoCapitalism without the presence of (a set of) freedoms is not really capitalism, no matter who calls it that. Now mind, you don't need several of the freedoms people in the civilized world generally like to enjoy for capitalism to exist. Freedom of religion is largely irrelevant to capitalism (so far as the state religion doesn't become a dominate market force...). Basically all you need is some form of property rights, the right to enter and exit markets, and some subset of freedom of expression (basically the right to say "[Product] sucks.")
- toyg 15y agoNot many True Scotsmen around here either, dang.
- burgerbrain 15y agoIt's not a true Scotsmen fallacy to have a tight definition. 'Capitalism' proper may very well be the thing of fairy tales, similar to Socialism proper. It's a philosophical concept, it need not be obtainable.
- Volpe 15y agoI think there are a number countries that defy what you are saying here. Sounds like a True Scotsman.
- burgerbrain 15y agoI don't know of a single jurisdiction that I would call a capitalism. Even the US has socialism mixed in. And for the record, I consider this to be a good thing.don't think I would want to live in a purely capitalist area. I I've heard Hong Kong was or is a pure capitalist society, but I don't know enough about Hong Kong to evaluate that.
- MarkPNeyer 15y agocapitalism and freedom both arise from an egalitarian cultural mindset. when people believe in the notion of a hierarchy, that some people are better, more deserving, more noble, or more worthy than others, neither capitalism nor freedom can exist for long. when people believe that all men are equals, that we all have hopes and fears, needs and wants, strengths and weaknesses, authoritarian institutions of all forms will crumble.
- notahacker 15y agoCapitalism (in the purist laissez faire sense) functions just fine when people believe that capital is controlled by those who are more deserving (or better at managing it), even if the people controlling the capital happen to be a monarchical dynasty whose inherited land happened to sit on an oil well. When people start to believe in others' needs and wants you get all the products of an egalitarian mindset allegedly incompatible with capitalism, like taxes and government borrowing.
- MarkPNeyer 15y agocapitalism "in the purist laissez faire sense" becomes meaningless - you can't have a market without some mechanism of enforcing private contracts and securing property. believing in others' needs and wants only needs to oppressive governments IF those beliefs come from a place of condescension (i.e. that poor bastard is too dumb to take care of himself, we should try to run his life for him) rather than compassion and understanding (i.e. he doesn't save money because he sees no point in planning for a future he has little hope of enjoying, let's give him the support he needs to function better). condescension is not egalitarianism.
- jerf 15y agoWould you prefer a system where stupid decisions and bad risks are instead rewarded? Free markets are about giving feedback like that. They aren't magical ways of making people never make bad decisions. And neither is your preferred $ECONOMIC_SYSTEM, whatever it may. If it's claiming to be one, it's lying.
- maxxxxx 15y agoThe people who made the stupid decisions were rewarded pretty well. Weideking still sits on a few hundred million euros. This seems to be the new "free market".
- deleted 15y ago[deleted]
- sambe 15y agoWhy is are these debates run only on terms of envy and retribution? The company made a bad decision, and they were absolutely not rewarded, they lost big. Weideking was hugely influential, but his contract with the company was already agreed at that point. You could say it was reward for his negotiating skills and existing reputation. Misaligned incentives is the fault of the company who, as we said, suffered for it. If the next guy to hire him makes the same mistake, maybe they will lose too.
- eftpotrm 15y agoThe company authorised Weideking to take the ultimately unsuccessful strategy of turning Porsche primarily into a stock trading fund investing in VW shares, yes, and paid off his contract as agreed when it failed and brought the company to its knees. The problem is that oversight and accountability is too weak. As CEO he was authorised to take actions which should've set alarm bells ringing with others, without apparent limit, and his contract (much like many others; Fred Goodwin would be a prime UK example) was poorly drafted so as to provide him with limited personal accountability for failure. UBS 'rogue trader' Kweku Adoboli is currently in custody awaiting trial for inflicting a serious loss on his company; Wendling Weideking was paid off handsomely for far worse. Boards need to take their role of executive oversight more seriously.