4 ms·

why companies are terrible https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co. depressing

mostlysimilar 3y ago
This is unbelievable. Imagine how different the world would be today if this had gone the other way.
- Workaccount2 3y ago
  If it had gone the other way it would have been overturned probably pretty quickly. It doesn't make sense for owners of something to not be in control of it.
  - ClumsyPilot 3y ago
    > It doesn't make sense for owners of something to not be in control of it. When I say this about my phone, I get told that It was my choice to buy it. I would really like to have the same set of principles applied consistently to ownership of end product and ownership of the stock. Currently some people enjoy greater rights for no reason other than privilidge.
- kmlx 3y ago
  i don’t find it at all unbelievable. i think the judgement is pretty spot on: > A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the non-distribution of profits among stockholders in order to devote them to other purposes…
- chongli 3y ago
  You never know, it’s the law of unintended consequences. Maybe it would’ve caused people to walk away from stocks as an investment. Maybe people would’ve put all their money in real estate instead. Kind of staggering if you think about how much worse the whole housing crisis could be.
  - doctorwho42 3y ago
    Devil's advocate; maybe they would invest more into small businesses instead of housing.
    - chongli 3y ago
      Small businesses are hard. I can’t tell you how many restaurants moved in (and then went out of business within a year) to the plaza next to the university during my degree. The landlords who own that plaza have remained the same for decades. They don’t care if any of the businesses survive. They have tenants lined up around the block, just waiting to pay big rents.
      - jancsika 3y ago
        What's the failure rate in small- vs mid- and large-sized companies? Is it really any different?
        chongli 3y ago
        Restaurants have extremely high failure rates! Large sized companies are rock solid by comparison.
      - ClumsyPilot 3y ago
        you would invest in a fund, not individual small companies.
fallingknife 3y ago
So you think that companies would be better if the shareholders were not a check on CEO power? Basically that would make all companies like tech companies with dual class shares that give the CEO perpetual absolute power.
- mistercheph 3y ago
  The problem with shareholders as the ruling class of an organization is that they are prima facie incapable of having a vision, projecting it, and marshalling the resources to make it a reality. Because they act as a crowd, they can only converge on their common interest, which is profit. When the shareholders have their way, a profitable venture and it's customers are min-maxed for share values until the enterprise is left a pile of rubble
  - Terr_ 3y ago
    I sometimes wonder if future civilizations will look back on this as a kind of socio-technological inadequacy: "See, this is what people had to deal with before we invented Zlormian Goal Contracts!" This kinda-relates to other legal theories, such the rule against perpetuities [0], since it's hard to assemble a framework that can survive 50.0001% of the shareholders deciding to loot it. The closest I can think of actually involves legal-statute and tax law, where a company incorporates for an explicitly-charitable or non-profit purpose and then the government enforces that status indefinitely. [0] https://en.wikipedia.org/wiki/Rule_against_perpetuities https://en.wikipedia.org/wiki/Rule_against_perpetuities
  - fallingknife 3y ago
    I feel like having a CEO with a grand vision beyond profitability would be good 5% of the time and an ego driven mess / financial disaster 95% of the time.
- ClumsyPilot 3y ago
  I would agree if shareholders were stuck owning the stock for a while, but currently average stock ownership duration is measures in weeks or days. How much interest do these people have in the future of the company?

mostlysimilar 3y ago

This is unbelievable. Imagine how different the world would be today if this had gone the other way.

Workaccount2 3y ago
If it had gone the other way it would have been overturned probably pretty quickly. It doesn't make sense for owners of something to not be in control of it.
- ClumsyPilot 3y ago
  > It doesn't make sense for owners of something to not be in control of it. When I say this about my phone, I get told that It was my choice to buy it. I would really like to have the same set of principles applied consistently to ownership of end product and ownership of the stock. Currently some people enjoy greater rights for no reason other than privilidge.
kmlx 3y ago
i don’t find it at all unbelievable. i think the judgement is pretty spot on: > A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the non-distribution of profits among stockholders in order to devote them to other purposes…
chongli 3y ago
You never know, it’s the law of unintended consequences. Maybe it would’ve caused people to walk away from stocks as an investment. Maybe people would’ve put all their money in real estate instead. Kind of staggering if you think about how much worse the whole housing crisis could be.
- doctorwho42 3y ago
  Devil's advocate; maybe they would invest more into small businesses instead of housing.
  - chongli 3y ago
    Small businesses are hard. I can’t tell you how many restaurants moved in (and then went out of business within a year) to the plaza next to the university during my degree. The landlords who own that plaza have remained the same for decades. They don’t care if any of the businesses survive. They have tenants lined up around the block, just waiting to pay big rents.
    - jancsika 3y ago
      What's the failure rate in small- vs mid- and large-sized companies? Is it really any different?
      - chongli 3y ago
        Restaurants have extremely high failure rates! Large sized companies are rock solid by comparison.
    - ClumsyPilot 3y ago
      you would invest in a fund, not individual small companies.

fallingknife 3y ago

So you think that companies would be better if the shareholders were not a check on CEO power? Basically that would make all companies like tech companies with dual class shares that give the CEO perpetual absolute power.

mistercheph 3y ago
The problem with shareholders as the ruling class of an organization is that they are prima facie incapable of having a vision, projecting it, and marshalling the resources to make it a reality. Because they act as a crowd, they can only converge on their common interest, which is profit. When the shareholders have their way, a profitable venture and it's customers are min-maxed for share values until the enterprise is left a pile of rubble
- Terr_ 3y ago
  I sometimes wonder if future civilizations will look back on this as a kind of socio-technological inadequacy: "See, this is what people had to deal with before we invented Zlormian Goal Contracts!" This kinda-relates to other legal theories, such the rule against perpetuities [0], since it's hard to assemble a framework that can survive 50.0001% of the shareholders deciding to loot it. The closest I can think of actually involves legal-statute and tax law, where a company incorporates for an explicitly-charitable or non-profit purpose and then the government enforces that status indefinitely. [0] https://en.wikipedia.org/wiki/Rule_against_perpetuities https://en.wikipedia.org/wiki/Rule_against_perpetuities
- fallingknife 3y ago
  I feel like having a CEO with a grand vision beyond profitability would be good 5% of the time and an ego driven mess / financial disaster 95% of the time.
ClumsyPilot 3y ago
I would agree if shareholders were stuck owning the stock for a while, but currently average stock ownership duration is measures in weeks or days. How much interest do these people have in the future of the company?