4 ms·
Why is it though? In non-obfuscated language, the whole idea is "the job of someone hired to do something is to do the thing". If I own a room full of groceries
by sershe 4y ago
Why is it though? In non-obfuscated language, the whole idea is "the job of someone hired to do something is to do the thing". If I own a room full of groceries, the job of the people I hire to run it /should be/ to run it in whatever legal way I want it to be run. If I want to maximize profits and the workers give the food away to the poor, or if I want to give the food away to the poor and the workers charge them money, I'm going to fire the workers (or in extreme cases, sue them for damages).
Shareholders are simply the owners of the corporation. The difficulty arises when we try to figure out what the shareholders want given the diffuse ownership (especially if you trace funds and pension plans to their ultimate owners/beneficiaries), but "maximize returns" is a reasonable assumption in absence of other expressed preferences.
Moreover, I'm pretty sure if you tried to get the preferences from an average shareholder you would find out they support all the good things and are against all the bad things, as long as it's free. It would end up like the recent poll they had in Western Oregon: "Do you think we should keep Eastern Oregon as part of Oregon?" "Yes!" "Eastern Oregon is net tax subsidized, how much in taxes are you personally prepared to pay to keep Eastern Oregon?" "$0!")
- vannevar 4y agoWhat you're describing is more applicable to an ordinary partnership, where the partners are personally liable for any debts or legal judgments against the partnership. Corporations and LLPs allow shareholders and partners to escape those liabilities, and it's reasonable to expect some duty to act in the public interest in return.
- marcusverus 4y ago> Corporations and LLPs allow shareholders and partners to escape those liabilities, and it's reasonable to expect some duty to act in the public interest in return. The entire concept of limited liability was created with the public interest in mind. Limiting personal liability encourages business creation, which encourages growth, which is in the interest of the public. > It's reasonable to expect some duty to act in the public interest in return. What is it that you're wanting to make these companies do, specifically?
- vannevar 4y agoThe question was whether a corporation is legally obligated to maximize profit. I was pointing out that, as you also note, the actual purpose of the limited liability of a corporation is to promote the public interest. Economic growth is one aspect of that interest, certainly, but it's not the only consideration. So corporations that give up short term profits to improve the environment or the well-being of their employees or the community are not shirking their legal obligation, they are living up to it.