Alternative Capital
Promoted by Brendan
It occurs to me that a great many problems in the business world can be laid squarely at the feet of shareholders. Counterproductive executive compensation for one. A focus on business as a vehicle for share price, rather than for it's actual product for two. Between them those two are the cause of so much of the damage done.
So let's get rid of shareholding.
But how?
The point of stock is Capital, you sell stock in your company as a way to raise money to finance the creation or expansion of your company. Each stock sold is essentially a loan where the repayment comes in the form of increased stock value and dividends. Why not make the whole thing simpler and just make a special form of loan in the first place?
Set up a program whereby the government will make special loans to startups and companies for capital purposes. These loans then would have a number of features:
1) No interest beyond an inflationary adjustment (or maybe inflation plus prime interest)
2) No minimum payment so as to allow startups to get off the ground
3) After a reasonable amount of time (5 years, 10 years) if the company has been unwilling or unable to pay back a small percent of the loan the government has the option of foreclosing on the business and selling off it's assets to recoup expenses.
4) the loan is a contract that requires the business to do certain things:
a) they are required to allow government inspection of all financial records for purposes of auditing
b) they are limited as far as the total compensation given to any single employee
c) they are precluded from selling shares of stock in the company, if they already have outstanding shares then they have to meet a plan to buy back those shares over a period of a decade or so. They are precluded from owning shares of stock in another company.
My guess is that while probably only a small number of companies would be willing at first to agree to the terms, instead favoring traditional stock schemes, that those who do will see such advantages as far as competitive edge that they will slowly but surely come to dominate the marketplace. Why? Simple, when you no longer waste huge sums of cash on executive packages you have ample more cash to actually invest in the company. As executives are usually your least important employees there is simply no excuse in letting them drain company resources significantly. At the same time when you no longer have to legally maximize stockholder profits you are free to actually make smart business decisions (stock price has no connection at all with actually running a business well, in fact usually the opposite).
Let me give you some examples. My company pays its CEO ~$10 million a year in total compensation (i.e. salary plus perks). Now that is nowhere near the worst out there. Look here if you really want to know how bad it gets:
http://online.wsj.com/public/resources/documents/info-payPerks07-sort.ht...
[The top ten CEO's listed there have an average compensation of $44 million dollars. Add in the rest of the CEOs, the CIOs, the CFOs, and so on and you are looking at billions of dollars of money wasted on lavish compensation for the employees who make the least actual difference to the company. These are the employees who do no work to actually support the company but instead spend their time creating the most asinine management objectives that usually make the real work of the company that much harder.]
So my company, in the middle of a time when we are cutting a hell of a lot of corners on things that we should not be is paying our CEO an eight figure salary. Does that make any sense? Does it make sense for office supplies not to stock post it notes because "money is tight" and yet for us to waste this kind of cash on a CEO who frankly hasn't contributed anything to the bottom line? No, it doesn't. But his salary is set by the board, and they don't have any reason to keep it reasonable because their profit (i.e. stock price) is in no way connected to the actual company well being.
How do I know this? Again simple: our company is currently in the best position it has been in since I started working here, and probably for a long time prior to that. We've never lost money since I started here, and hence started paying attention. Our worst quarter we made a measely $600 million dollars of profit. Waaaah! At the same time our stock has dropped by over two thirds of its value. Why? Is it because the company isn't doing well? No, the company is doing fine, in fact would be doing great were it not for all the stupid cutbacks in order to jack up the stock price. No the stock plummeted because we didn't meet expectations.
Yeah.
We make usually about a billion dollars of profit a quarter but wall street expected more so our stock goes down. Stock price has no conection to the health of the company, rather it is a reflection of the stupidity of the market. No matter how bad their predictions are we're the ones who suffer. No matter how strong our business is, or how good our products are, or how well we execute, or how happy our customers are some imbecile at Merril Lynch says "Hrrrm, I thought they'd do better" and doesn't realize the fault is with him, not us.
This is why we should decouple stock and business. It's a case of the lunatics running the asylum. Stockholders are people who value perception over reality. Executive compensation and capitalization are the ways they control businesses. The plan above would, I hope, cut them out of the picture entirely.
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Comments :
economics is not my best subject
but this seems to be written with a very limited and negative understanding of capitalism. A few things:
How would the government determine the worthy startups and companies to loan to?
What if the various venture capitalists better determine the true value of a startup and outbid the government in terms of what perks and capital they could provide?
Why would businesses be interested in full and constant accountability to the government when they can avoid the absurd scrutiny by going to the Private Sector?
Does the contract expire after a business pays off the loan + whatever interest? And if so, what would prevent that business from going public to raise the enormous amounts of cash and provide a whole lot more capital to expand? Without that you are severely limiting business's options.
Basically only morons would take that deal... or swindlers with bogus ideas milking the government for cash and then "legitimately" failing while wasting the investment.
Your hostility to the executives blinds you to the reality of who actually manages the entire company, and no it is not workers and engineers and accounting guys. This is simplistic, unrealistic, and worthy of a failed socialist society but certainly not a successful Capitalist society like our own.
We are a remarkably wealthy country with 4.5% unemployment and enormous tax revenues that dwarf the rest of the world and you want to remake it to some quasi-socialist workers paradise?
Just because you dislike your corporation doesn't mean it's not a successful part of our capitalist system. Don't fix what is not broken. If anything we need to give corporations more leeway to expand and make money.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
Isn't that was his proposal does?
Since it's entirely optional, it doesn't impact companies who are satisfied with the status quo. What it does do is offer businesses an alternative way to "expand and make money" without relying on favorable stock valuation.
If profitable corporations don't have to lay off workers in order to jack up stock prices, doesn't everyone win? This seems to promote a more long-term perspective rather than a slash-and-burn approach geared towards beating next quarter's estimate.
I have reservations as well but I think it's a good starting point for discussion.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
responses.
Probably with a process similar to how venture capitalists do now.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Do you live in the United States?
Darfur has rampant hunger. The US does not have "rampant" hunger by any fair usage of the word. I do not see people starving to death in the US in any numbers. Let's try to kep some perspective.
skymutt: wise and powerful... enlightened...
Examples
Ender, if executives were personally so vital to the success of an organization, why don't companies fold every time one leaves? Look at the gorilla in your neck of the woods: AIG. Greenberg built it, then fell into corruption, yet AIG still stands and is immensely profitable. Greenberg thought it's ongoing success was due only to him (and demanded compensation accordingly), but obviously it was not.
Managment theory often discusses the perils of too many managers. Sears v WalMart is used as the example. Sears has something like 12+ management levels, where the WalMart of Sam Walton's days (when it became the behemoth is it) had something like 4. Too many levels isolates the executives from the realities on the ground and turns a once-successful business (Sears) into something that no longer responds to the marketplace and instead responds to the dissociated whims of bored executives looking for key points on their performance reviews. That's not bias against executives or capitalism: that's reality.
My favorite personal experience with a CEO who had outlived his usefulness:
He's travelling in Europe, and evidently when you cross borders there, you need to turn your cell phone off then back on to reacquire the new country's cell system. This CEO could not be bothered, and immediately contacted his telecommunications SrVP and demanded he fix that.
Another one:
This former CEO brags in management committee: "I got a $40 million budget allocated to this project without having to document a thing." The project ended up costing double that and was such a bad idea and badly executed (due to his choice of contractors and project managers) we lost a $5 billion dollar account because of it -- and by that I mean not that we lost that in income, we had to pay it out in cold hard cash.
I could go on. If you've not yet experienced the joy of incompetent executives, good for you. Some do good, especially in the tough times. The guys who saved Continental Airlines from bankruptcy did deserve every penny they were paid: they were incredible and managed to overcome huge cashflow, employee, and regulatory problems with skill, intelligence, and just plain hard work. But not all executives are like that just by virtue of occupying the corner office.
"Perplexity is the beginning of knowledge" -- Kahlil Gibran
True
My favourite is the new guy who has to prove he's in charge by making wholesale random changes for no particular reason.
Well
If that happens because some idiot analyst says something negative, the market generally corrects it because fund managers and others recognize when a good company is undervalued and swoop in to buy up the stock that other people stupidly dumped.
qui tacet consentire
Hasn't so far...
Again: never lost money.
Worst quarter: $600 million profit.
Stock: in the toilet.
Reason?
None. Nothing rational. Stock prices is based entirely on subjective opinions with no basis in fact.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
If you give me your company
...I'll tell you why your stock price is in the toilet. Even without knowing, I bet your company is in a highly cyclical industry.
skymutt: wise and powerful... enlightened...
It's semiconductors
...which are fairly cyclical. But again- 6+ years straight profit. Unless the cyclical periodicity is at least 12 years (and it isn't) clearly we are profitable even in the bad years.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
I admire the fact that you are "thinking outside the box", but!
...I am also glad you are not running our economy, because your radical plan is unworkable and throws the baby out with the bathwater.
The problems you lay out here are, in the big picture, relatively minor-- Executive pay has gotten out of hand with respect to the wages of workers (I agree), executives are too concerned about share price and not the operation of their business (I tend to think that over the long haul, share price and prudent management of business go hand in hand-- see Warren Buffett) and that stock price does not follow profit directly (they often don't-- stock prices are forward-looking and SHOULD take into account much more than quarter-to-quarter profit... companies, especially those in cyclical businesses, often have stock prices that bear very little relation to their quarter-to-quarter profits, as investors try to gauge long-term prospects)
A word about executive pay-- it's very important that high-level management earn a lot more than entry-level workers... the incentive to get promoted in order to earn more provides a strong motive for workers to work harder and better. And if everybody were prospering, it wouldn't matter that executives were earning 500 times more than the average worker-- good for them.
The problem is that wages of the average worker aren't rising, and that money that could be being used to better compensate workers is, in some cases, going to greedy execs making outrageous sums of money.
The question is, what can government do to correct this?
Well I think the main thing that government can do is to protect the worker's right to organize in unions. Labor unions have served well in the past at various times where the priorities of management have gained the upper hand over the priorities of workers.
If the worker has the protected right to unionize, and he/she chooses not to do in an industry where CEO's are making outrageous amounts of money that rightfully should be going to the worker, then I would submit that the problem has not reached the point where it is of sufficient concern to be the target of draconian reform measures.
One more note-- Shareholders also should be concerned about executive pay-- after all, marginal CEO pay really is subtracted directly from the bottom line-- the shareholder's return on their investment. Think about it-- the shareholders could demand that the excessive pay be paid to themselves in a dividend. Again-- if shareholders aren't 'voting with their feet' by selling the stock, then I can't see how executive pay is enough of a problem for draconian measures.
skymutt: wise and powerful... enlightened...
Disagreement
Naturally I disagree. I think income disparity is one of the top five problems in america right now because it fuels so many other problems. Both the stock market and executive compensation are major factors in income disparity.
Six years of solid profitability with no indications anywhere that we are not going to be profitable in the future. Just how long ranged are these tock predictions? And why on earth does anyone think they can make such predictions with even the tiniest bit of accuracy?
I could not disagree more. What you end up with is situations like my current working group. The guy who got promoted to managing the whole lab is an utterly incompetent manager. he is on the other hand a brilliant engineer. If you want to talk materials analysis the guy is simply amazing with what he knows and can recall. He'll literally remember off the top of his head details from jobs we ran years ago. We do so many different things here that I have trouble remembering what we did a month ago.
But he can't communicate worth a damn and he has no people skills. Every one of his direct reports absolutely dreads meeting with him about anything because invariably he tells you to do between two and six different things all of which are mutually exclusive. I used to report to the guy before he got reported and I got so stressed out during that year that I'd start shaking on sundays because I knew I'd have to go back to work the next day (it wasn't entirely him but he was a big part of that year of absolute hell).
Furthermore the guy, while brilliant, is totally dedicated to his own advancement. He would purposefully go out and solicit more work than his area could actually deliver on so he could pick only the most plum jobs to do and hence artificially make the area seem more important to higher up management.
And it worked, he got promoted. So now he spends all of his time doing the thing he is terrible at and actively hurts the company rather than doing the thing he is good at and thus helping the company.
That's what you get when you view management as above the people who do the work.
What we should have is a system where management is viewed as a logistics service. They aren;t the boss, they are an internal service matching resources to resource needs. The long range planning should be done by people who know what they are doing, not MBAs.
It most certainly would!
That excess pay for the executives is money the company does not have to invest in its future. Furthermore that excess pay reinforces the false idea that what a CEO does is actually highly valuable, when nothing could be further from the truth. A CEO contributes no value to a company, period. Value is always added by the people who do the actual work. Everyone else is there to facilitate them.
I hope we don't have to wait until every problem is so enormous that even shareholders can see it, because if so we are well and truly ^%$#ed. These are the same people who brought us the great depression, remember? These are the same people who act like cattle, stampeding this way and that, acting on herd instincts with no thought as to their actions.
I think we can use our faculties to see approaching danger rather than rely upon the broken metric of the "free market."
I came. I saw. I posted.
Veni, Vidi, Bitchy.
You need to look beyond your own situation
So what you're saying is, since YOUR boss is incompetent in his role, the tradidonal model of promotion from within, working one's way up the ladder, and increasing pay for promotion should be thrown out; and since YOUR CEO is worthless in your eyes, we can deduce that "A CEO contributes no value to a company, period." That sounds more like jealousy than analysis-- especially when you later imply that CEOs do not do work. Simplistic, classist statements like that may have a visceral populist appeal to some, but real solutions to problems aren't going to be found by villifying our most successful entrepreneurs.
Then, the tarring of shareholders as cattle: I traded pretty extensively for a couple of years-- it was never my main line of work, but even at that, I knew a great deal about the companies I held shares in. Those who play around in the market with little thought usually get punished in the long term.
Your plan of complete government control of capital and investment-- no thanks. It's been tried, and hundreds of millions of people have had to endure much misery to prove that it doesn't work. The free market is not broken at all... it just needs a regulation here and a tweak there, a subsidy here and a tax there, and it works fine enough.
skymutt: wise and powerful... enlightened...
So what you're saying is,
It should be thrown out as it is irrational and doesn't work. My boss is simply an example of that fact. One of many many examples we can give. In the last few years alone we've had Enron, Tyco, Worldcom, W.R. Grace and others pointing out just how out of control the current system is. Those are (hopefully) the worst examples but clearly not the only examples. Rather they are the ones so bad as to actually make news. Everyday garden variety corruption and idiocy just isn't worth reporting.
Give me an example of a CEO who does the actual work, that is one who makes the product or personally provides the service that the company sells. Other than tiny little start ups you can't, because the job of a CEO is not to do those things. His job is to facilitate the people who do. but we've gotten this crazy backwards concept that the facilitator is actually the leader. It's like having your soldiers answer to a logistics officer. As if they exist to serve him rather than vice versa.
Entrepreneurs? Are you kidding me? I'm not talking about little mom and pop companies here that are run by the same guys who actually founded them. Those companies aren't giving their CEOs $40 million dollar annual compensation packages. Those guys are entrepeneurs. What I'm talking about are the free agents who float from company to company like professional athletes.
Alright. Tell you what, you tell me how a run on the market is not identical to a stampede of frightened cows and I'll retract the statement.
In other words: it's not broke it just doesn't work. Free markets never worked and that's why we don't bother with them here in the US. We have a highly regulated marketplace which works in a rather cranky fashion. It breaks down often and we have to keep prodding it to get it going again.
The problem here is that the system of shareholding and uncontrolled executive pay is one of the ways it is breaking down. How many depressions/recessions has the country had that were not directly caused by the stock market? None that I can think of. From the Great Depression down to the Dot Com Bubble, wall street has lead the way in creating financial instability and chaos. Economic disparity (partially caused by executive pay) only exacerbates the tensions.
In other words- the cranky market machine is again breaking down. I'm suggesting a way to keep it going. That requires us to break the chains connecting businesses and the market. One of the two is necessary and will survive. The other is an unnecessary burden and will atrophy. It doesn't take much thought to figure out which is which.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
A very good analysis.
There was a book out in 1966 called "Up the Organization" by Robert Townsend that commented along those same lines and a lot more. It was amazing and revolutionary at the time.
The really depressing thing is that it is still amazing and revolutionary. For a starter Townsend got a 30k salary when the average was 200k, long before it got really ridiculous.
The problem is that power, accountability, and benefits, have become totally out of whack, and that fact has made them more so. The average Stockholder is not a person but a "fund" and so accountability is severely diluted at the top, and that make the motives of the board act in more connection with the CEO than the folk who's money it ultimately is.
Likewise a middle manager can make himself a star with upper if he has a scheme to "cut labor costs" by firing people, or negotiating a pay give back, even if he has to use major deceit, and even if quality, real productivity, and morale goes down the tubes.
America is where it is economically because we have been eating our seed corn and borrowing more for many years, the party is actually over but they are trying to have the band play loud enough that no one will notice.
The Self Made Man is just not admitting where he got all the parts.
A more elegant solution to
capitalism's problems here in the states is simply to disempower shareholders. Give them much less power on company boards, give employees (one person one vote) much more power, and add in votes for creditors and the community. And DON'T make it optional.
I would try to recreate the actual balance of power on corporate boards that existed during the more prosperous 1945-1973 era in the U.S., and/or imitate the actual internal corporate power-sharing that had prevailed in Western Europe and Japan during their high growth eras. But hey, that's just me and my economic history approach.
So, your answer is to
disempower the owners of the company.
I suppose that for the right reason, you might also disempower the owners of TVs, forcing them to eschew that program, and forcing them to watch this.
Heck, we have an epidemic of obesity. Surely we should disempower people making eating choices. Perhaps we should force anyone who hasn't reached majority and anyone obese to wear a calorie recorder such that it would be illegal to give or sell them any food if they had reached the government-set maximum for the day.
Hey, it's for a good cause. Can't argue that!
Not bad
I would have been a little nicer :).
No dummy
His idea isn't to disempower the owners...... it is to empower the employees!
The head of a corporation and someone's eating habits are not comparable, duh! That's a stupid comparison and irrelevant.
What is wrong with ethics in business? Nothing!
(BTW, Good to see you have slowed down and put it in granny gear. I'd hate to think what second gear looks like. Also glad you took your PJ's off and are gonna step out on the town. And remember cane's can be classy!)
It is the economy, stupid.
Geesh
OK, if you give power to the workers over the, say, "means of production" (that has a familiar ring to it!), then you are taking power away from the owners.
This had nothing to do with "heads of corporations" or ethics. It had to do with "shareholders," the owners.
It had to do with giving some of the power that owners now have and giving it to non-owners. Sort of like letting the Chinese vote in our elections.
Oddly, you seem to think that workers are inherently ethical!!!
Business faculties have studied this subject, and come to the opposite conclusion. In fact, in one of my favourite findings, quite robust, is that it is cheaper for a company to allow (as in look the other way) petty theft by workers (such as of office supplies) than it is to try to stop it. Obviously it will be cheaper in an enforcement sense, but the biggest savings comes because the cost of the theft is less than the cost of raises to meet the same level of worker satisfaction! That is, workers who can steal pens from work are satisfied with less pay than they would be satisfied with if they could not steal.
To say it yet another way, the workers are willing to give up actual money just for the satisfaction of stealing!
Shareholder power is mostly missing as well
A large part of the problem is that there is nobody controlling the leadership, not shareholders, not Government, and certainly not any of the other stakeholders, like employees or customers.
Because of that we have wild financial deals that are devastating to all but the Pirates at the helm, and in their wake leave cratered businesses, broken towns, and wiped out savings of even the "owners".
If there is actual team spirit, and action, total profitability goes up, pull out the whips and slave mentality sets in and productivity goes to the lowest survivable state, sly sabotage becomes the worker ethic, and the management can't find any competent people to hire.
To turn your theft story on its head, the whips and guard towers around the pencil shelf is sure to promote a huge us/them attitude among employees that even a large raise cannot subvert. Treating people as human beings, allowing their goals to be company goals, and they will push themselves far harder than any whip you can wield on them.
Build a Pirate Ethic in the management, and you will have a pirate ethic on the line, build the company with honor, and genuine concern for others, and the results will astonish, if you doubt it ask Google or 3M. Even WalMart will eventually learn what Sears has found out about abusing folk eventually
The Self Made Man is just not admitting where he got all the parts.
The story of
mortage brokers and the sub-prime lenders fits in here.
No one is in control. No one is accountable. The people making the bad loans made their money.... sold off the loans to another company. If the folks the loaned to (why should they care if they can repay) can't make the payments, they still made their money so who cares? Profitable? In the short term.
Ethical. No.
It is the economy, stupid.
Back when my grandfather
was a banker, there would have been no such loans. But over the years, bleeding hearts have loosened the regulations on loans so that more Americans can reach the
American dream of owning a home.
And if you can selloff your loans to someone else, and they are stupid enough to take it, and get stiffed, why blame anyone else?
What can't be done is put it off on the taxpayer like the banking scandal in the 80s. That one also came about because of loosening of banking regulations, and extending FDIC protection to $100,000.
Believe me, in the old days, when the banking regulators came to your bank, everyone as s--tting their pants.
You should
maybe ask me what i learned while working for Wal-Mart.
You are right about the shareholders not being in control. When my great uncle invested part of his meagre salary--he worked in a refinery for over 35 years--he always made sure to study his proxy list and send in his votes for company officers. He also thought that the goal was not to get ri=ch, nor to maximize quarterly profits, but to let things grow into a nice stock that would pay dividends for your retirement.
That attitude was reflected by the average investor of the time, the ones who really did control the proxies.
Nowadays, the shares are controlled by get rich quick speculators and disinterested pension funds. The former distort away from growth to the quarterly bottom line, something reinforced by government regulation that actually requires quarterly reporting for public companies. Throw in the innovation of officer incentives in stock, an something that many in the 70s would reduce abuses by the officers by giving them the same kind of stake that the shareholders did, and corporations became ripe for manipulation by unscrupulous officers.
The answer, unfortunately, is simething not likely to happen, more bigilance by shareholders, more patience, and a focus on company growth, not immediate rewards. My generation, now doing the investment, is not known for patience. We want it, and we want it now. So long as people want to get rich quick, someone will be willing and able to con them.
If there is actual team spirit, and action, total profitability goes up, pull out the whips and slave mentality sets in and productivity goes to the lowest survivable state,
In my experience, private businesses almost always try to build team spirit. In fact, that was part of the tragedy of ENRON, where many workers put their money in ENRON stock, against all common sense (all eggs in one baskedt--salary, retirement, and investment).
Mostly, thoiugh, I worked at government run facilities where there was often no team spirit, and an absolute contempt for those clients with whom we worked. No one ever got on the overhead like they do at Wal-Mart and remind everyone that it was time for another smile break.
Harvard business teaches team building, and one seews it in one of their graduates, president Bush. The idea is to provide the vision, hire people who can carry it out, and get out of their way, allowing for each worker from the VP on down to exercise their creativity. At MicroSoft, every employee from early on had Bill Gates' e-mail address and was encouraged to send him a letter if he thought he had something important to say.
A lot of the present woes can be traced to what Alan Greenspan called "irrational exuberance." We now have an expectation of constant profit, no need for growth, and scream if we don't get it every quarter. Naturally, lefvel-headed officers are not in demand in this environment.
I would, however, not make generalizations about every corporation being like ENRON, or even Wal-Mart, which is more a legend than known by its critics.
As for the whip, the worst in my lifetime for the whip was the Post Office, which went from a congenial, laid back job with low pay but security and retirement benefits, to a relatively high paying job that was so stressful that "going postal" became a common phrase for someone losing it and killing people.
Life is complicated. Here
is the Wiki on Aaron Feuerstein, (noe links at bottom, including the famous 60 Minutes report)whose concern for his workers bankrupted the company. he eventually lost control, although he did lead the company out of bankruptcy. The question is whether or not it might have been better for his workers to have been laid off at first so that they could retrain or seek other employment, then come back to a sound company when it was rebuilt without the expense of paying all his employees whiule his operation was down. I don't think there are easy answers, but Feuerstein is much admired, but is almost never mentioned on liberal sites. He just doesn't fit the mold of corporate devil. And neither do most corporate heads.
Reasons you might have missed
The reason your great uncle was able to do that was the revolution of FDR. What the Liberals did was create a tax code that punished "get rich quick" schemes that had been the rage in the 'Twenties as well, and forced people to build the businesses that became stable cash cows.
The schemes that later became commonplace, were either illegal or self defeating because such huge surges in money would be taxed at 90% if removed all at once.
My grandfather had bailed out such a steel company in the '30s, and even after being spread among 10 grand kids still paid $1200 a quarter or so for my stock. That company suffered such an early Pirate attack and I got about $2500 for the stock on a take it or GFYS basis.
The Mayfair set, Adam Curtis BBC series focuses on the English Pirates, but gives good detailed understanding of the process and how it wrecked both British and American economies while makeing some folks wildly rich by freshly legalized theft. Very much what happened in my case as well.
this is another very good BBC economic history lesson
The reason Aaron Feuerstein does not show up on Liberal sites is that his case is just another straw dog. Doling out cash for no work while trying to pay others to rebuild a new factory, will clearly create a loss that in this case was not sustainable. This is exactly like the Enron case where the money that was removed was more than could be sustained by the company's income. That Mr Feuerenstein was more honorable than Mr Lay doesn't change the arithmetic.
If he had put his people to work rebuilding the factory, or kept the expenses within capability to survive would have been smarter. If it was a larger company that other factory income could pay the increased expenses. It does not matter if it is the CEO looting the Company, or handing the money to others.
The Self Made Man is just not admitting where he got all the parts.
I guess you've got it all figured out.
Except your FDR bulls--t is just that.
But I must admit, it is rare these days to hear someone praise 90% tax rates. I got to admire you on that one.
Why not just make it 100%?
And Feuersteing just like ENRON. Good one.
I bet you are the most intelligent and ethical person in the world, right?
You certainly have nothing to learn from anyone, that's for sure.
My grandfather saw the era in the twenties which allowed get rich schemes as an error in regulation by the Fed, and agency he loved. but, he tells me, they failed to allow interest rates on stock margins to rise naturally, and so a lot of artificial money was injected into the market. As soon as calls started being made, it was all over. He saw it coming, but my uncle did not. However, my uncle was never a short termer anyway, and always had faith that his blue chips would recover.
Something like what happened in a smaller way that resulted in the Clinton recession. (I hate to call it that, because it was hardly his fault.)
Design a corporate governance regime that works well
All power to the shareholder works very badly. All power to the workers works very badly. Now, are we gonna stay stuck there or move on to a human and complex solution? As I said, the ideal will involve a balance of power among shareholders, employees (all employees, not just 'workers'), creditors and government.
For Example:
Employee power pushes a corporation to distribute wealth to the employees. Great, because a strong economy is in part founded on a strong _demand_ side. But all power to employees and not enough corporate wealth is distributed to one source of capital, shareholders. Too much employee power means corporate wealth may not be managed responsibly and with reasonable caution, and debts to creditors paid off.
Similar cautions could be put on creditor power, shareholder power, and government power in a corporation.
_Governments_ need to design corporate governance so it works best for society. It will necessarily be a trial-and-error effort, they won't get it perfectly balanced the first time they try. Governments are free to do so since in fact shareholders are _not_ owners of corporations, and happily not so, from the fact that corporations are institutions that exist only with a corporate charter provided by a government. Governments are free to modify that corporate charter. Shareholders are free to go along with the new rules, start up their own private firms, and/or to take their money elsewhere and to invest in other business forms such as partnerships.
Snap out of it!
Shareholders are not and do not want to be 'owners' of the corporation they invest in. Ownership would necessarily involve liability for corporate wrongs committed against society. And, since shareholders do not have that liability, (and do not want it) these investors are not 'owners'.
Shareholders have a special relationship with the corporation they invest in, and I would like to modify it so that corporations' brains think in more socially beneficial ways.
I like it.
Especially the part about employees having a say or a vote, or profit sharing that provides incentive for the people that work for a company to actually take pride in it.
I like your screenname.
It is the economy, stupid.
Profit sharing already exists.
And employees can have a say. I'm self employed and get feedback from my employees all the time and ask for it as well.
Trying to make rules out every little thing isn't always the answer....especially when it's an invasion of privacy.
Calm down
Self employed is good. Glad you are a good boss!
Profit sharing does not exist at many companies, so how on earth you can say that I don't know.
Rules vs ethics.
There is something to be said for balance.
Lacking business ethics:
If your business is next door to mine and your are dumping gasoline in the ground everyday, I will be more than happy to invade your 'business' privacy, because you are causing me harm.
It is the economy, stupid.
He would be committing a crime
as well as endangering you. Go for it.
The law, MissL, the law
No libertarian or anyone in his right mind disregards the commons. We have laws for that and they are necessary. Nothing about libertarianism is undermined or contradicted by that.
and profit share does exist. I never said it was eberywhere nor did I intend to.
To those of us who aren't libertarians
it sounds like libertarians are against excessive government intrusion except when they aren't -- for example, to prevent the tragedy of the commons. Which involves legislating regulatory laws, judging their constitutionality, and enforcing their execution, all funded by taxes.
So what's different here from the liberal approach?
Ok, so you can have market-based solutions to jointly-held assets -- a carbon tax, for example, or a fuel tax to pay for road upkeep. But isn't that just sort of abstracting the regulation up one level? The rates are legislated based on how important the issue is deemed to be, the format of the tax is judged to be lawful or not, the fees are collected and distributed for intended use (e.g. road repair), there is oversight and fraud prevention. Still seems like basically a regulatory response.
What's so sexy awesome about how libertarians prevent misuse of the commons?
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
there's nothing sexy about it, Brendan
The environment needs protection. If we don't find ways, good productive and practical ways, to protect it, things will get missed. Of course, HOW you go about it is the key.
keep in mind that many nice sounding ideas that liberals and conservatives may support on this matter can be quite ineffectual and carry no teeth. Passing a law or mandate doesn't mean results have been attained.
Nonetheless, I get the sense that people use the environment as a sort of "gotcha" ploy. And it's a waste of time. Libertarians acknowledge the need to adopt environmental measures and some measures are better than others. The environment isn't an issue is I, personally spend a great deal thinking about. That doesn't mean I don't care, it's just not something I find as interesting as economics or foreign policy. Nonetheless, my lack of detailed ideas on this doesn't mean libertarians aren't crafting ideas to address them.
The overriding point about libertarianism in general is centered on the individual and his rights as well as the government and its responsibilities with respect to those rights. There is huge world of policies and ideas that this can be applied to.
Going past all these policies and ideas to dwell on the environment does a great disservice to all the other ideas concerning the economy, society and the role of government in our daily lives.
I am so thankful that FDR
didn't have this point of view.
One of the beautiful parks and historic areas has been built and preserved because of his efforts. It is a treasure.
How does a libertarian deal with preserving open space, or creating parks?
It is the economy, stupid.
reread the post
I couldn't find
the words public parks.
Did I miss it.
It is the economy, stupid.
No. post transcends that question
read it again. Your intent and line of questioning is why I said what I did.
Still don't get it.
But oh well.
My intent is highlight that I DO NOT SEE where public parks fit into your scheme of things.
I personally value open uncluttered space as having great value in society.
I appreciate FDR's attention to the aesthetic value of nature, while at the same time offering job opportunites to many in need, providing a stimulus to the economy and the delightfully refreshing good that a hike in the park can do for the soul.
If the question is too hard to answer, then nevermind. I will assume public parks are not high on the list of libertarian priorities..... unless they can prove they have some economic value.
It is the economy, stupid.
that's just it.
exactly. I hardly see where looking for something so narrow is important is this discussion. I have no platform that I'm spelling out here. It's not a cop out on my part. It's simply that I don't feel like explaining something so pointless like my views on public parks....as if fleshing that out has anything to do with discussing libertarianism at this level.
I get it.
It is the economy, stupid.
New York's much admired
"Central Park was the first landscaped public park in the United States. Advocates of creating the park--primarily wealthy merchants and landowners--admired the public grounds of London and Paris and urged that New York needed a comparable facility to establish its international reputation. A public park, they argued, would offer their own families an attractive setting for carriage rides and provide working-class New Yorkers with a healthy alternative to the saloon. After three years of debate over the park site and cost, in 1853 the state legislature authorized the City of New York to use the power of eminent domain to acquire more than 700 acres of land in the center of Manhattan.
An irregular terrain of swamps and bluffs, punctuated by rocky outcroppings, made the land between Fifth and Eighth avenues and 59th and 106th streets undesirable for private development. Creating the park, however, required displacing roughly 1,600 poor residents, including Irish pig farmers and German gardeners, who lived in shanties on the site. At Eighth Avenue and 82nd Street, Seneca Village had been one of the city's most stable African-American settlements, with three churches and a school. The extension of the boundaries to 110th Street in 1863 brought the park to its current 843 acres. "
I guess that makes you more like the wealthy than the Irish pig farmers!
Should I generalize that all park land
belonged to pig farmers.
I guess that doesn't make me anything. But you can wish me to be anything you want, and wish for a pony while you are at it.
It is the economy, stupid.
You know
I copy out a part of a history of Central Park, add a little joke line, and you miss the entire significance.
Libertarians and the commons.
They sell them to profiteers
Who will then go build condos on it.
Obviously since condos are more profitable than parks, that is the best use. /snark
The Self Made Man is just not admitting where he got all the parts.
Good comment!
It is the economy, stupid.
Also
libertarians tend to look for practical solutions to practical problems which can be carried out at the lowest level of government with the least hit on individual liberty. The left (many of them, like missliberties, for instance) pooh-pooh the whole idea of individual liberty.
The founding fathers got it wrong at first by creating a government where the federal government was too weak. So they ratcheted it up a notch. For practical reasons.
My conservative grandfather was a member of the board of the "County Home, (otherwise known as the "Poor Farm"), a non-paying position. This was and is a place funded by the County for homeless families (and sometimes individuals) to stay. It fit nicely with his conservatism, as well as his personal ethics; homeless people on the street are bad for business.
States have traditionally been responsible for the care of the mentally ill.
Conservatives and libertarians tend to approach these things close to the problem, at lower levels of governments, and to approach them by asking practical questions. Modern liberals tend to ask idealistic questions, try to impose their ideas on everyone in America by making it a federal government takeover, and to ignore practical issues. "If we can send a man to the moon, why can't we feed everyone in the world?" They tend to ask questions beginning with, "why can't the government...." insdtead of, "What can I do....." When they do ask what they can do, it is usually in reference to the politics of getting the federal government to do something.
I think that idealists often have a "set it and forget it" attitude, as if once it is voted into the federal government, all is well. They then are free to drift on to the next heartthrob, knee-jerk liberal "cause." Libertarians are afraid of power in government. they know that the more power goes to the higher levels of government, the more time must be spent combatting that centralized power. Liberals today are shocked that the president, instinctually right in line with FDR, JFK, Nixon, and the other power-consolidating liberal presidents, seeks in wartime to grab a little power. they seem to be absolutely surprised!
But there was no screaming in 1940 from liberals when FDR reinstituted wiretapping after it was outlawed by Congress, which was upheld in two cases by the Supreme Court in 1938, and his Attorney General shut down the program. He did this after being refused new legisslation to authorize it by Congress. In a memo that you can read online, FDR said that he didn't think that the Supreme Court meant to strip him of his power to combat an enemy, this before we were at war! Even the conservative icon Reagan started out as an FDR liberal.
There is also a difference in how liberals and classical liberals see the role of government, especially the federal government. When my great-grandfather said that someone was "on the dole," he wasn't talking about some federal program. Libertarians do not see the role of the federal government to be social engineering according to someone's vision of aq just society. They do not see the government's role as levelling, or wealth transfer.
The see nothing wrong with people who espouse these ideals, and may even admire them and any non-governmental efforts they make to bring about these goals.
To a libertarian, there is little difference between laws against sodomy and laws requiring a large tax for social programs at the federal level.
Re: liberals
Government is a tool that we like
to use. C'est la vie.
It's really more of an infatuation with the legislative branch than the executive, I think.
We'll trust the libertarians to keep us in line. Used to be we could trust the conservatives to do that, but there's not many limited government conservatives around these days.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
I knew a man
back in the early 70s, as the war was winding down, who formed a company based on the principle that all are equal, no matter what their job, and everyone in the company, from him, the owner-CEO, to the janitor, would be paid the same salary, and receive the same profit sharing. (Ands the company was involved in environmentally friendly food prodeuction businesses.)
I kind of admired this man and those who went to work for him. What do you (all) think happened?
He became President
of Cuba? ..kidding
He went out of business and is now a gutter bum? He owns GE?
It is the economy, stupid.
Something like this?
ParEcon.org -- ParEcon in Theory and Practice
You beat the straw dog, but perhaps something like 3M where people rise on merit with support to do so built in, might be a better (and highly successful) model..
The actual liberals and progressive libertarians here are not about equality of outcome, but basic fairness and equality of opportunity, with built in laws against exploitation of others, balanced accounts etc. And balanced accounts does not mean Arthur Anderson accounting.
And yes the standard model of Libertarianism I am aware of IS all about Arthur Anderson accounting, laying claim to all the the goodies and none of the costs, and wailing crocodile tears that the people who provided the actual work are trying to "steal" what has been pried out of the blood of their employees, and customers, by guile or strong arm robbery.
And yes the hallmark of Libertarians, the thing that put them on the map financially, was that they were the first and only ideology to announce that polluters had the absolute right to pollute, and provided a fig leaf for all the Giant Corporations to hide behind, at a time when there was no other support for foisting the cost off to everyone else.
Many years ago I had long discussions with a man who would not announce his point of view, but dodged all over to force me to support mine. It was only when he assumed that polluters had the right to do so that I was able to pin him. I then discovered he was a retired talk show host who had been promoting Libertarianism. (We were having the conversation aboard his yacht)
It was like discovering you were in a street fight with a professional boxer. rather than converting me, or destroying my abilities, as was his intent, rather he gave them the strength of deep consideration that I have only built upon.
The Self Made Man is just not admitting where he got all the parts.
Such idiocy
There is NO "right to pollute" in Libertarianism. A simple view of the animation will tell you that.
Geesh!
I was going to say more, but I'll be kind. Much kinder than you were putting up this horse shit.