4 ms·

How exactly is extracting the maximum possible revenue from people for giving them something that saves their lives NOT evil?

by brazzy 14y ago

gambiting 14y ago
As far as I know, companies are supposed to make profit,they are not charities. Especially if you are so large that you sell shares in company, then you have a LEGAL obligation to the shareholders to always take decisions that maximise profit over everything else(unless you can show that selling your product cheaper is going to bring more money to the company in the long run). This is not "evil" - this is just how these companies work. It's like what Steve Jobs said,when he was asked by Obama what would it take to bring his business back to US, out of China. And Steve said very correctly, that there is nothing he can do - if the production is cheaper in China, they have to go that route,since they have legal obligations to work in the best interest of their shareholders. (and I am not saying this is a good thing. This is just how this entire system works, and if you opened your own company, you would have to play by the same rules,no matter how noble you were. If you want this situation to change, change the system) The only way to combat this is to have a national health care system,that sets their own prices for drugs it buys from companies. If my country says that the maximum it can pay per box of Glivec is $3000, then Novartis can't do anything about it. Well, they could decide to not sell the drug at all, but they would rather have some money than none.
- brazzy 14y ago
  > a LEGAL obligation to the shareholders to always take decisions that maximise profit over everything else [..] This is not "evil" - this is just how these companies work. Yes, it is very much evil. > The only way to combat this is to have a national health care system,that sets their own prices for drugs it buys from companies. No. All it takes is a different patent system that reduces the (artificial, granted by society) monopoly awarded to patent holders. Or, as a more radical change, eliminate monopolies for drugs entirely and fund research publically.
  - gambiting 14y ago
    If you opened your own company you would have to play by the same rules. Even if you wanted to sell your product cheaper, you would not be able to due to obligations to your shareholders,which have a legal binding. Is the system evil? Yes. Are you evil for following the rules? No. And as for the patents - how would you deal with a problem that after spending millions on research somebody could copy you and sell the same product for the 1/100 of the price? I know that the US patent system is broken, but this problem is very real. As for the publicly funded research - this is the best option, but some countries like US oppose this so strongly that I don't think it would work.
    - brazzy 14y ago
      > And as for the patents - how would you deal with a problem that after spending millions on research somebody could copy you and sell the same product for the 1/100 of the price? I know that the US patent system is broken, but this problem is very real. note that I said "reduce" the monopoly, not eliminate it. Perhaps a limit on the markup or some sort of mandatory licensing scheme.
    - Retric 14y ago
      There is no legal requirement to maximize profits, just avoid doing anything stupid. Aka they can donate 5% of total annual profits to charity but not 50%. Drug companies often donate large quantities of medicine to 3rd world countries because it's vary cheap for them to do so and the management team is not evil.
      - gambiting 14y ago
        There is a legal requirement that you can never take a decision that's bad for the company. If there is an official analysis made that shows that you could make more money by selling your product at 3x the price and people would still buy it, and you ignore such a report, then it's a very good reason to get you kicked out of the management board. And yes, companies donate money/products to charity, but only when they have "spare" money, so money they have no current use for, no ongoing investment plans and so on. And most of the time, giving money to charity is written off as a PR expense, improving the company image by donating to the poor. So yes, there are ways to spend money for noble causes if you want to, but you can't knowingly make a decision that would make the company make less money.
- mikestew 14y ago
  Especially if you are so large that you sell shares in company, then you have a LEGAL obligation to the shareholders to always take decisions that maximise profit over everything else I wish people would quit saying that. IANAL, but I never have found anything that definitively says that. It would seem that in the case of company sale or takeover, yes, the board has to "maximize shareholder value". But in day-to-day operations there is nothing stopping a company from saying, "we're not going to be assholes" at the expense of maximizing shareholder value. Shareholders don't like it? Sell your shares. As one example, I refer you to Costco, with profits capped at 15%, to the chagrin of some on Wall Street. As for the Jobs/Apple example, I sure hate to play the [citation needed] card, but I don't think he exactly said that Apple legally had its hands tied. EDIT: found my own citation. Jobs said nothing of the sort. http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html http://www.nytimes.com/2012/01/22/business/apple-america-and... The article even quotes someone from the Labor Department as saying that companies used to use US workers at the expense of "maximizing shareholder value", without anyone going to jail, but they don't now.
  - melvinmt 14y ago
    Simply put: if the board doesn't maximize the interests of the shareholders, the board will be replaced by a board who does. Because of this control mechanism a public company will always take care of the shareholders first before anything else.
    - brazzy 14y ago
      It's not a given that the interestes of the shareholders are to "maximise profit over everything else".

How exactly is extracting the maximum possible revenue from people for giving them something that saves their lives NOT evil?

by brazzy 14y ago

How exactly is extracting the maximum possible revenue from people for giving them something that saves their lives NOT evil?

gambiting 14y ago

As far as I know, companies are supposed to make profit,they are not charities. Especially if you are so large that you sell shares in company, then you have a LEGAL obligation to the shareholders to always take decisions that maximise profit over everything else(unless you can show that selling your product cheaper is going to bring more money to the company in the long run). This is not "evil" - this is just how these companies work. It's like what Steve Jobs said,when he was asked by Obama what would it take to bring his business back to US, out of China. And Steve said very correctly, that there is nothing he can do - if the production is cheaper in China, they have to go that route,since they have legal obligations to work in the best interest of their shareholders. (and I am not saying this is a good thing. This is just how this entire system works, and if you opened your own company, you would have to play by the same rules,no matter how noble you were. If you want this situation to change, change the system) The only way to combat this is to have a national health care system,that sets their own prices for drugs it buys from companies. If my country says that the maximum it can pay per box of Glivec is $3000, then Novartis can't do anything about it. Well, they could decide to not sell the drug at all, but they would rather have some money than none.

brazzy 14y ago
> a LEGAL obligation to the shareholders to always take decisions that maximise profit over everything else [..] This is not "evil" - this is just how these companies work. Yes, it is very much evil. > The only way to combat this is to have a national health care system,that sets their own prices for drugs it buys from companies. No. All it takes is a different patent system that reduces the (artificial, granted by society) monopoly awarded to patent holders. Or, as a more radical change, eliminate monopolies for drugs entirely and fund research publically.
- gambiting 14y ago
  If you opened your own company you would have to play by the same rules. Even if you wanted to sell your product cheaper, you would not be able to due to obligations to your shareholders,which have a legal binding. Is the system evil? Yes. Are you evil for following the rules? No. And as for the patents - how would you deal with a problem that after spending millions on research somebody could copy you and sell the same product for the 1/100 of the price? I know that the US patent system is broken, but this problem is very real. As for the publicly funded research - this is the best option, but some countries like US oppose this so strongly that I don't think it would work.
  - brazzy 14y ago
    > And as for the patents - how would you deal with a problem that after spending millions on research somebody could copy you and sell the same product for the 1/100 of the price? I know that the US patent system is broken, but this problem is very real. note that I said "reduce" the monopoly, not eliminate it. Perhaps a limit on the markup or some sort of mandatory licensing scheme.
  - Retric 14y ago
    There is no legal requirement to maximize profits, just avoid doing anything stupid. Aka they can donate 5% of total annual profits to charity but not 50%. Drug companies often donate large quantities of medicine to 3rd world countries because it's vary cheap for them to do so and the management team is not evil.
    - gambiting 14y ago
      There is a legal requirement that you can never take a decision that's bad for the company. If there is an official analysis made that shows that you could make more money by selling your product at 3x the price and people would still buy it, and you ignore such a report, then it's a very good reason to get you kicked out of the management board. And yes, companies donate money/products to charity, but only when they have "spare" money, so money they have no current use for, no ongoing investment plans and so on. And most of the time, giving money to charity is written off as a PR expense, improving the company image by donating to the poor. So yes, there are ways to spend money for noble causes if you want to, but you can't knowingly make a decision that would make the company make less money.
mikestew 14y ago
Especially if you are so large that you sell shares in company, then you have a LEGAL obligation to the shareholders to always take decisions that maximise profit over everything else I wish people would quit saying that. IANAL, but I never have found anything that definitively says that. It would seem that in the case of company sale or takeover, yes, the board has to "maximize shareholder value". But in day-to-day operations there is nothing stopping a company from saying, "we're not going to be assholes" at the expense of maximizing shareholder value. Shareholders don't like it? Sell your shares. As one example, I refer you to Costco, with profits capped at 15%, to the chagrin of some on Wall Street. As for the Jobs/Apple example, I sure hate to play the [citation needed] card, but I don't think he exactly said that Apple legally had its hands tied. EDIT: found my own citation. Jobs said nothing of the sort. http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html http://www.nytimes.com/2012/01/22/business/apple-america-and... The article even quotes someone from the Labor Department as saying that companies used to use US workers at the expense of "maximizing shareholder value", without anyone going to jail, but they don't now.
- melvinmt 14y ago
  Simply put: if the board doesn't maximize the interests of the shareholders, the board will be replaced by a board who does. Because of this control mechanism a public company will always take care of the shareholders first before anything else.
  - brazzy 14y ago
    It's not a given that the interestes of the shareholders are to "maximise profit over everything else".