5 ms·

Yes, I agree, I meant "profit" not "self-interest".

randomdata 3y ago
Is there any difference at the end of the day? Profit is sought so that one has control over their self-interest. In the example, someone wanted to see a business tradition carry on even after they were no longer involved in the business. To achieve that, they accepted a lower offer for the business to sell it to someone who also wants to carry on the tradition. But that is exactly the same, as far as the money goes, as selling the business to the highest bidder and then spending those proceeds in some way to see the tradition carry on. The net profitability is the same in both cases.
- kdmccormick 3y ago
  > In the example, someone wanted to see a tradition carry on even after they were no longer involved. To achieve that, they accepted a lower offer for the business to sell it to someone who also wants to carry on the tradition. But that is exactly the same, far as the money goes.. It's not exactly the same. People have emotional attachments to things, like restaurants. This hypothetical owner may have made the sale they did because it made them happy to think about someone running their restaurant well after they die. That is to say, we both took "carrying on the tradition" to mean different things, because it's inherently a squishy and emotional goal, not one you can apply a cold econimic calculus to. "If I sell to Bob for $1MM then I achieve 200 tradition points, but if I sell to BigCorp for $1.2MM then I can use that money to achieve 300 tradition points" is not necessarily how this would be thought about. > That said, there is a bit of disconnect here as the original comment was talking about businesses, while this has turned to talking about the benefactors of the business. They are not completely analogous. True, and perhaps that's near the crux of my argument. Private company owners who are involed in their businesses' operation are more likely to make bad-for-profit but good-for-other-reasons decisions, whereas distant public shareholders are likely to chase profit as the end-all-be-all.
  - randomdata 3y ago
    > It's not exactly the same. I don't see the difference. Let's say, for the sake of discussion, that the highest bidder offers $1,000,000. The party who sees the tradition vision tops out at $750,000. You can accept the $750,000 offer and see the tradition carry on. Or you can accept $1,000,000 and spend $250,000 of it in some other way to see the tradition carry on. Theoretically the outcome is the same either way. In both cases the business sought a gross return of $1,000,000. In both cases your realized net return is $750,000. In both cases you are spending $250,000 to see your dream of the tradition carrying on playing out. If you don't care about the tradition then you can just take the $1,000,000 and go on a vacation, or buy a car, or whatever it is that you actually want to do with the money. But in this case the tradition is what the person is said to actually want above all else, and thus that is where the money is being spent. That is, after all, why businesses seek profit – so that the benefactors can spend it on what is aligned with their self-interest, and the example here is no exception.
    - kdmccormick 3y ago
      Your argument here boils down to "all decision making can be viewed in terms of expected net economic gain/loss", and while I don't disagree with you, it isn't a very salient or novel point. My whole argument is this: Public shareholders compel their businesses to treat market capitalization and/or dividends as the principal goals. Private owners, though, may have goals other than the business's value or profit, such as "tradition". Whether those other goals can be thought of in terms of monetary value seems orthogonal.
      - randomdata 3y ago
        > Whether those other goals can be thought of in terms of monetary value seems orthogonal. The original comment which set the context and of which we are talking to was specifically about the monetary accounting. It cannot possibly be orthogonal. Perhaps what you are trying to say, as has been hinted at before, is that said comment, while perhaps technically true in a vacuum, doesn't really mean anything in practice? To which I would agree.

Is there any difference at the end of the day? Profit is sought so that one has control over their self-interest. In the example, someone wanted to see a business tradition carry on even after they were no longer involved in the business. To achieve that, they accepted a lower offer for the business to sell it to someone who also wants to carry on the tradition. But that is exactly the same, as far as the money goes, as selling the business to the highest bidder and then spending those proceeds in some way to see the tradition carry on. The net profitability is the same in both cases.

kdmccormick 3y ago
> In the example, someone wanted to see a tradition carry on even after they were no longer involved. To achieve that, they accepted a lower offer for the business to sell it to someone who also wants to carry on the tradition. But that is exactly the same, far as the money goes.. It's not exactly the same. People have emotional attachments to things, like restaurants. This hypothetical owner may have made the sale they did because it made them happy to think about someone running their restaurant well after they die. That is to say, we both took "carrying on the tradition" to mean different things, because it's inherently a squishy and emotional goal, not one you can apply a cold econimic calculus to. "If I sell to Bob for $1MM then I achieve 200 tradition points, but if I sell to BigCorp for $1.2MM then I can use that money to achieve 300 tradition points" is not necessarily how this would be thought about. > That said, there is a bit of disconnect here as the original comment was talking about businesses, while this has turned to talking about the benefactors of the business. They are not completely analogous. True, and perhaps that's near the crux of my argument. Private company owners who are involed in their businesses' operation are more likely to make bad-for-profit but good-for-other-reasons decisions, whereas distant public shareholders are likely to chase profit as the end-all-be-all.
- randomdata 3y ago
  > It's not exactly the same. I don't see the difference. Let's say, for the sake of discussion, that the highest bidder offers $1,000,000. The party who sees the tradition vision tops out at $750,000. You can accept the $750,000 offer and see the tradition carry on. Or you can accept $1,000,000 and spend $250,000 of it in some other way to see the tradition carry on. Theoretically the outcome is the same either way. In both cases the business sought a gross return of $1,000,000. In both cases your realized net return is $750,000. In both cases you are spending $250,000 to see your dream of the tradition carrying on playing out. If you don't care about the tradition then you can just take the $1,000,000 and go on a vacation, or buy a car, or whatever it is that you actually want to do with the money. But in this case the tradition is what the person is said to actually want above all else, and thus that is where the money is being spent. That is, after all, why businesses seek profit – so that the benefactors can spend it on what is aligned with their self-interest, and the example here is no exception.
  - kdmccormick 3y ago
    Your argument here boils down to "all decision making can be viewed in terms of expected net economic gain/loss", and while I don't disagree with you, it isn't a very salient or novel point. My whole argument is this: Public shareholders compel their businesses to treat market capitalization and/or dividends as the principal goals. Private owners, though, may have goals other than the business's value or profit, such as "tradition". Whether those other goals can be thought of in terms of monetary value seems orthogonal.
    - randomdata 3y ago
      > Whether those other goals can be thought of in terms of monetary value seems orthogonal. The original comment which set the context and of which we are talking to was specifically about the monetary accounting. It cannot possibly be orthogonal. Perhaps what you are trying to say, as has been hinted at before, is that said comment, while perhaps technically true in a vacuum, doesn't really mean anything in practice? To which I would agree.