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It goes deeper than that. All publicly traded corporations are morally obligated by the Friedman Doctrine [0] to do stuff like this. If something returns value
by dimal 1y ago
It goes deeper than that. All publicly traded corporations are morally obligated by the Friedman Doctrine [0] to do stuff like this. If something returns value for shareholders (and monopolies do) then a CEO must do it. This is how the whole system is supposed to work. Of course, there's no reason that capitalism must to work this way, but this is the toxic form of capitalism that we've unwittingly chosen. Thiel just gave a playbook for implementing this in the tech space.
[0] https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine
- closewith 1y agoIt may be an obligation, but it's certainly not a moral one.
- p_l 1y agoIt's something untrue that people are told to believe - but it's in no way a real obligation, and isn't part of any fiduciary duty - it's just Friedman philosophying and selling it
- dazed_confused 1y agoExactly! Unfortunately people lap it up as some ground truth when it is a dude providing a theory and as you said “selling it”
- deleted 1y ago[deleted]
- jampekka 1y ago> Of course, there's no reason that capitalism must to work this way There kinda is. Capital is allocated to where it makes most profits, and most profits go to companies maximizing shareholder value. In aggregate this makes the profit maximizing companies more likely to survive. Sure this can be perhaps mitigated by e.g. legislating other duties to companies, but I'd say it's very hard even in theory, let alone in practice, to have capitalism without lopsided profit maximization.
- realo 1y agoSo... Capitalism is bad for the people , communism is bad for the people. What _is_ good for the people? Canada?
- deeThrow94 1y agoMan, more people should read Schumpeter. Capitalism is really good for rapid growth. The second the profit motive negatively affects the quality of the product or efficiency of its production a company should be nationalized to prevent the profit motive from destroying part of our economy (the actually-useful part, that is, not investors or shareholders or dividends).
- Juliate 1y agoBut rapid growth is not necessarily _good_. Cancer is rapid growth.
- lud_lite 1y agoTechnology ironically. The stuff Peter talks about where Y=0. The covid vaccine inventors for example. Other Y=0 things are people giving their lives for the greater good and basic rights. Geneva convention. Rights for black people, rights for women. Infact the world runs on Y=0 stuff.
- sgc 1y ago
- JKCalhoun 1y ago> All publicly traded corporations are morally obligated by the Friedman Doctrine to do stuff like this. That's a strange way to put it. As though it is the Right and Good way to run a company — and also as though the Board's/CEO's hands are somehow tied.
- nailer 1y agoBut they are. You may consider it be terrible. There’s a good argument for that, the original Ford versus Dodge case we started by allegations from Dodge that Ford paying its workers more was not in the interest of Ford’s shareholders. But there is no rational reason to pretend the obligation doesn’t exist.
- JKCalhoun 1y agoIf I'm reading this correct, there is no law that says they have to do this, but they have to do this.
- nailer 1y agoThe law says they have to do this. See https://en.m.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co https://en.m.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
- JKCalhoun 1y agoApparently, from my research, it's not the law. There's fiduciary "duty", but not law. Judge's apparently give wide berth to management to decide what, perhaps long term, is going to be profitable.
- nailer 1y agoFair enough that makes good sense. What bothers me is that Ford’s actions probably were in a good long-term interests of Ford. It seems the ruling was very much focused on the short-term interests.
- deleted 1y ago[deleted]
- mattbuilds 1y agoThat is not a moral obligation, it is in fact the opposite. It is a lie that people tell themselves and the world to allow themselves to make immoral decisions for their own benefit. I’m not saying running a company is easy and I know that many gray areas exist in the decision making. I do think companies can exist, profit, and be a net good for the world. However, we need to remove the notion that the duty to shareholder profits is a moral duty. It’s a cowards way out of having to make actual difficult choices. It’s one of those things that sounds great exactly because it allows you do horrible things with no responsibility. It creates a system where you offload the effort and weight of your decisions. As long as you’re are acting in the interest of shareholders, you are in the clear. That’s a dangerous concept and the opposite of morality.
- shoeb00m 1y agoIt is the fiduciary duty of the CEO to do what’s in the best interest of shareholders. In a working system it should be the governments responsibility to limit what a company can do
- hgomersall 1y agoIn the best interest of the shareholders might reasonably interpreted as, say, not destroying the biosphere. Fiduciary duty is certainly not "maximise profits whatever the consequences".
- mattbuilds 1y agoAccording to your logic, a CEO should attempt to destabilize and influence the government's responsibility so they can maximize shareholder value. And guess what, that is exactly what happens in reality. You can't just simplify reality into rules like this because it leads to people using those rules as an excuse to skirt responsibility and make actual difficult decisions.
- AndrewKemendo 1y agoCorrect and this is why regulatory capture is the phase after market capture, to transition into legal monopoly.
- hobs 1y agoNobody is obligated to do this, its just that they say they are so they can extract the most amount of money from any situation and blame some vague principal. Plenty of companies leave money on the table because its terrible for everyone.
- Juliate 1y ago> If something returns value for shareholders (and monopolies do) then a CEO must do it. This is how the whole system is supposed to work. Disagree. Shareholders are not the all and everything of a company. Neither they, neither the company exist in a void. > Of course, there's no reason that capitalism must to work this way, but How is that not a contradiction with the above?
- dimal 1y ago> Shareholders are not the all and everything of a company. I agree with you. But what you or I think doesn't matter. > This is how the whole system is supposed to work. My point is that our current form of capitalism is designed to work this way, but there's no requirement that capitalism must work this way. This is just the toxic form of market economy that we ended up with.
- Juliate 1y ago> But what you or I think doesn't matter. 1/ It does (because, it's false to say that "a CEO must do this or that" - or that's not a chief, a CEO, just an algorithm). 2/ it's less a matter of opinion than a matter of observing facts: shareholders are not the all and everything of a company. But my perspective may be that, being French, we have a history of having demonstrated the reality of this in actual actions, that USAmericans haven't yet.
- p_l 1y agoPeople are gaslighted to think Friedman's Doctrine is a legal or moral obligation, because it makes money for capitalists. But in fact, in USA there's even a SCOTUS ruling that says it is a bogus idea
- mk_chan 1y agoNot sure why OP is getting downvoted. Going the premise of the cited doctrine, it follows precisely that even doing illegal things are acceptable as long as there is net gain until the expected future. OP doesn’t even claim this is the one true doctrine or anything of the sort.