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In terms of a large profit making company, the company has to make ever increasing profits for the shareholders or else it becomes pretty much illegal. Thus, cu

by chippy 12y ago

In terms of a large profit making company, the company has to make ever increasing profits for the shareholders or else it becomes pretty much illegal. Thus, currently these conditions are necessary, there is nothing to stop them, because to stop them means that a corporation is not operating properly. It is necessary because to not allow it means that a corporation is behaving badly. Like it or not, and in this example most of us hate it, a corporation has to make every effort to increase profit and decrease waste. How do we change it? As consumers we make it clear to these companies that it's not on. We vote with our money. But the tried and tested solution is via our politicians. We have to make it possible for our corporations to improve the conditions of their suppliers and not incur the wrath of their shareholders. edits - wow, please read both paragraphs.

vetler 12y ago
> In terms of a large profit making company, the company has to make ever increasing profits for the shareholders or else it becomes pretty much illegal. Thus, currently these conditions are necessary, there is nothing to stop them, because to stop them means that a corporation is not operating properly. This is just bullshit, for lack of a better word. First of all, increasing profits does not force anyone to do horrible things. Second of all, that a company has to maximize profits all the time, is a myth: http://skeptics.stackexchange.com/q/8146/230 http://skeptics.stackexchange.com/q/8146/230
- chippy 12y ago
  Thanks for the link, I was wrong on the legal point, but it's not all bullshit. From that thread: "They don't get punished for not maximizing shareholder value. But it is true that maximizing value needs to be their goal and they may not be negligent in the pursuit of that goal." It also confirms that a corporation must in general make an effort to maximise profits, if that is what the shareholders want. So, we should make it clear to the corporations and the shareholders that reducing their profits by increasing the quality of life of their suppliers is an acceptable loss and may actually increase value and therefore something that the directors should aim for. That shareholders have to be confident to tell their directors that they will not be negligent if they try to improve sweatshop conditions in their suppliers.
  - vetler 12y ago
    It doesn't have to be the shareholders responsibility to tell directors that, the directors can even just assume that - as they should. Big companies don't all set out to ruin the world just to make money, and I'm not saying that is your opinion, but I get the feeling that this is sometimes implied when discussing how to maximize profits. Companies even donate money to charity, without any concern for short term profits.
    - pizza234 12y ago
      > Companies even donate money to charity, without any concern for short term profits. "Donating money" is not an indicator of "morality" at all, because it has tax and PR advantages. It's not about doing or not doing it, but they fact that business are complex, and this specific choice doesn't tell anything in general. Even a, let's say, a fictional company "Momsanto", which corrupts politicians and violently silences researchers and farmers, surely would have a (again, fictional) foundation for "making difference in someone else's life" [any resemblance to real companies is purely coincidental].
      - ptaipale 12y ago
        > "Donating money" is not an indicator of "morality" at all, because it has tax and PR advantages. Do you imply that tax and PR advantages completely make it impossible that some companies still might want to give money away to good causes for moral reasons? In other words, you think that moral choices are solely based on money?
    - TeMPOraL 12y ago
      Big companies don't all set out to ruin the world just to make money, but companies don't set business practices, Moloch does[0]. Those that don't sufficiently optimize for profit get replaced by ones that do, so in the end you have a drive towards ruining the world. [0] - http://slatestarcodex.com/2014/07/30/meditations-on-moloch/ http://slatestarcodex.com/2014/07/30/meditations-on-moloch/
DanBC 12y ago
I guess you're getting downvoted for repeating the myth that corporations must maximise profit.
- chippy 12y ago
  Yes, fair enough, learnt something new today. I was wrong about it being legal in law not to maximize profits. There is still an obligation of directors to maximise value if that is what the shareholders want (and most of the time, all shareholders want a corporation to increase profit). But it's not illegal for a director to be negligent in the goal of the shareholders. They might lose their job or get a civil lawsuit, at the worst, I guess.
alextgordon 12y ago
I'd argue the Germans have the best solution. Employees must be involved in running the company. https://en.wikipedia.org/wiki/Co-determination https://en.wikipedia.org/wiki/Co-determination
- jsprogrammer 12y ago
  What if companies were scheduled to deliver all shares to the employees and customers over a period of time which was fixed at the time of incorporation?
  - alextgordon 12y ago
    I'm not opposed to it, but the brilliance of the German solution is to notice that full worker control is unnecessary. The workers don't need communism or full cooperatives. You can still have private owners and a profit motive. But the workers have to be equal to the owners, not subordinate.
    - jsprogrammer 12y ago
      How does this eliminate private ownership or profit motive? This model puts the ownership in the hands of those who execute the business and those who provide it with continuous capital (customers) while over time eliminating the rent-collectors.
  - gwys 12y ago
    There actually was this kind of system in Sweden in the 80s. Of course it was very unpopular with the right and was abolished as soon as they got into power. Since then, like in most of the western world, the productivity gains has to a large extent favored owners rather than employees. http://en.wikipedia.org/wiki/Employee_funds http://en.wikipedia.org/wiki/Employee_funds
    - jsprogrammer 12y ago
      It's interesting that the link describes the critics argument as increasing the power of labo[u]r over the company. Why is it a bad thing for the people who are actually doing the work of the company to have control over the company? Why should labo[u]r be controlled by a third party force (neither labor nor the customers).

by chippy 12y ago

vetler 12y ago

> In terms of a large profit making company, the company has to make ever increasing profits for the shareholders or else it becomes pretty much illegal. Thus, currently these conditions are necessary, there is nothing to stop them, because to stop them means that a corporation is not operating properly. This is just bullshit, for lack of a better word. First of all, increasing profits does not force anyone to do horrible things. Second of all, that a company has to maximize profits all the time, is a myth: http://skeptics.stackexchange.com/q/8146/230 http://skeptics.stackexchange.com/q/8146/230

chippy 12y ago
Thanks for the link, I was wrong on the legal point, but it's not all bullshit. From that thread: "They don't get punished for not maximizing shareholder value. But it is true that maximizing value needs to be their goal and they may not be negligent in the pursuit of that goal." It also confirms that a corporation must in general make an effort to maximise profits, if that is what the shareholders want. So, we should make it clear to the corporations and the shareholders that reducing their profits by increasing the quality of life of their suppliers is an acceptable loss and may actually increase value and therefore something that the directors should aim for. That shareholders have to be confident to tell their directors that they will not be negligent if they try to improve sweatshop conditions in their suppliers.
- vetler 12y ago
  It doesn't have to be the shareholders responsibility to tell directors that, the directors can even just assume that - as they should. Big companies don't all set out to ruin the world just to make money, and I'm not saying that is your opinion, but I get the feeling that this is sometimes implied when discussing how to maximize profits. Companies even donate money to charity, without any concern for short term profits.
  - pizza234 12y ago
    > Companies even donate money to charity, without any concern for short term profits. "Donating money" is not an indicator of "morality" at all, because it has tax and PR advantages. It's not about doing or not doing it, but they fact that business are complex, and this specific choice doesn't tell anything in general. Even a, let's say, a fictional company "Momsanto", which corrupts politicians and violently silences researchers and farmers, surely would have a (again, fictional) foundation for "making difference in someone else's life" [any resemblance to real companies is purely coincidental].
    - ptaipale 12y ago
      > "Donating money" is not an indicator of "morality" at all, because it has tax and PR advantages. Do you imply that tax and PR advantages completely make it impossible that some companies still might want to give money away to good causes for moral reasons? In other words, you think that moral choices are solely based on money?
  - TeMPOraL 12y ago
    Big companies don't all set out to ruin the world just to make money, but companies don't set business practices, Moloch does[0]. Those that don't sufficiently optimize for profit get replaced by ones that do, so in the end you have a drive towards ruining the world. [0] - http://slatestarcodex.com/2014/07/30/meditations-on-moloch/ http://slatestarcodex.com/2014/07/30/meditations-on-moloch/

DanBC 12y ago

I guess you're getting downvoted for repeating the myth that corporations must maximise profit.

chippy 12y ago
Yes, fair enough, learnt something new today. I was wrong about it being legal in law not to maximize profits. There is still an obligation of directors to maximise value if that is what the shareholders want (and most of the time, all shareholders want a corporation to increase profit). But it's not illegal for a director to be negligent in the goal of the shareholders. They might lose their job or get a civil lawsuit, at the worst, I guess.

alextgordon 12y ago

I'd argue the Germans have the best solution. Employees must be involved in running the company. https://en.wikipedia.org/wiki/Co-determination https://en.wikipedia.org/wiki/Co-determination

jsprogrammer 12y ago
What if companies were scheduled to deliver all shares to the employees and customers over a period of time which was fixed at the time of incorporation?
- alextgordon 12y ago
  I'm not opposed to it, but the brilliance of the German solution is to notice that full worker control is unnecessary. The workers don't need communism or full cooperatives. You can still have private owners and a profit motive. But the workers have to be equal to the owners, not subordinate.
  - jsprogrammer 12y ago
    How does this eliminate private ownership or profit motive? This model puts the ownership in the hands of those who execute the business and those who provide it with continuous capital (customers) while over time eliminating the rent-collectors.
- gwys 12y ago
  There actually was this kind of system in Sweden in the 80s. Of course it was very unpopular with the right and was abolished as soon as they got into power. Since then, like in most of the western world, the productivity gains has to a large extent favored owners rather than employees. http://en.wikipedia.org/wiki/Employee_funds http://en.wikipedia.org/wiki/Employee_funds
  - jsprogrammer 12y ago
    It's interesting that the link describes the critics argument as increasing the power of labo[u]r over the company. Why is it a bad thing for the people who are actually doing the work of the company to have control over the company? Why should labo[u]r be controlled by a third party force (neither labor nor the customers).