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View Diary: Stockman: Romney and Bain Were About Stripping Cash Out Of Companies For Themselves, Not About Jobs (179 comments)

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  •  who decides the purpose of business? (5+ / 0-)

    I find those two comments odd, especially here on dKos.

    The old 1960s-70s MBA 'saw' that "the only purpose of business is to maximize shareholder value" went out the window long ago, before Milton Friedman died. Who is to decide what are the (possibly many) purposes of a given business or business person? Privately-held companies can largely act the discretion of their owners. Fiduciary responsibility to shareholders in public companies is certainly one purpose (institutionalized in various laws), as is a responsibility to one's family, one's self, one's god(s) [if one is religious], one's communities, the environment, etc. These require judgment calls, tradeoffs, ad hoc decisions, etc. E.g., Ray Anderson believed that environmental sustainability should be part of his business, Interface Inc., which is publicly traded (IFSIA) He was quite transparent about this, and anyone who invested in his company knew it. Interface has done well -- but this was not at all a sure thing when Ray undertook it.

    •  I don't think most publicly-held businesses ... (2+ / 0-)
      Recommended by:
      Nowhere Man, bluegrass50

      ... believe in the list of things you mention beyond responsibilities to share owners (AND, sub rosa, returns to the top officers). They SAY they do in mission statements and credos, but the only sustaining business principle is return to owners. That trumps all other goals - each one and all combined - in a heartbeat. (That is, assuming businesses are people with hearts that beat.)

      I don't like it. But otherwise, there would be only "social investors" and they aren't sufficient to the needs of publicly held businesses. If they were - and IF there were more of us than the Far and Farther Right, who could raise a LOT of "social capital" - we'd have a different world of business.

      What do you think sent "maximizing share owner value" "out the window"? That goal was central to the very large business enterprise I worked for through the 80's and mid-90's. Since then, do you really think that the big banks believe otherwise? The hedge funds? Most private capital investors? Big law firms and accountancies? GM doesn't exist to employ people. It exists to sell cars. If it doesn't, it can't pay benefits or pensions, much less current employees.

      Obama and strong Democratic majorities in 2012!

      by TRPChicago on Wed May 23, 2012 at 05:07:32 PM PDT

      [ Parent ]

    •  The values that you describe (3+ / 0-)
      Recommended by:
      TRPChicago, Cassandra Waites, fumie

      -- community, environment, etc. -- are high on the wish list of responsibilities that a modern corporation ideally would consider essential. But from a legal standpoint, a public corporation can still be sued by its shareholders if it ever sacrifices shareholder returns for some other, higher purpose.

      (Perhaps laws need to be passed that would shield corporations from shareholder lawsuits if they go so far as to show some sense of public responsibility.)

      Let us all have the strength to see the humanity in our enemies, and the courage to let them see the humanity in ourselves.

      by Nowhere Man on Wed May 23, 2012 at 05:25:58 PM PDT

      [ Parent ]

      •  can also be sued if they don't (0+ / 0-)

        It's not a black or white issue. CEO's have huge leeway in their discretion as to what will maximize shareholder profits. Almost never (ever?) is a firm sued for pursuing some higher purpose of public responsibility. Especially if the Board is supportive, the CEO can easily say it is for public relations purposes, or market positioning, or branding, or image, or to cultivate a niche market, or a loss-leader, or for new product-development, or marketing, or long-term profit, to avoid law-suits, etc.

        Firms can also be sued if they violate public responsibilities (on a wide variety of grounds).

        Again, I'm surprised to see this level of discussion here, I'd assumed this was widely known by the mid-1990s.

    •  Ray Anderson was not representative of the (0+ / 0-)

      average, and he got away with doing great things by making huge profits at the same time.  Carpet tiles were a great idea that sold really well.

      Shareholder primacy out the window?  Don't think so.

    •  that is not the point here (0+ / 0-)

      People like Romney say businesses are 'job creators'

      They are not

      they only create jobs if there is demand

      And if one new company or new industry thrives then other companies and industries decline and LOSE JOBS

      Business is in business for business

      And if you want to add other goals fine.  But there is no business that sets out to create jobs or add jobs unless there is demand or some other goal.

      •  not zero-sum (0+ / 0-)

        That's the crux of economic growth: one can expand the 'economic pie'. This is basic -- and something that Democrats forget more often than Republicans. I sure hope that the average DailyKos contributor doesn't think that all companies are bad -- that'd be a death-knell for the Democratic Party.

        Most jobs are provided by small business, btw, not publicly-traded companies. And everyone agrees that most privately-held companies have no restrictions on double- or triple-bottom line CSR practices. (In practice, even most publicly-traded companies could legally go a lot further in this direction.)

        Imagine saying of IBM in 1982: "if one new computer company thrives then other companies and industries decline and LOSE JOBS."

        That'd be nonsense.

        Also, the point is not the intent of the company, but it's impact. Intent can be a starting point, but it's not ultimately what counts. A company could have 'good intentions' (by our standards) and still mess up royally and have a bad impact. (E.g. maybe it designs a 'green' thermostat that turns out to have bad wiring and causes thousands of house-fires before it is recalled and the company is forced into bankruptcy.) Or a company could be ruthlessly profit-seeking in its development of a new product, that turns out to be environmentally-friendly and provides well-paying American jobs. Usually, behavior is somewhere in between, a grey area.

        Imagine a unionized company selling an improved solar-panel and improved batteries that allows affordable battery-operated cars made in America. Put solar-cells on your roof or balcony, hooked up to a battery by day, that then charges your ZEV car overnight.

        The point is not that all companies do good things; jeez, that's a straw-man that no-one has suggested. But many companies can do good things -- with the right leadership, or if faced with demand for it (I agree wholeheartedly with this!), or if pressured (a form of demand), etc.

        •  with the advent of computers alot of (0+ / 0-)

          people lost their jobs

          That is not to say that computers are bad.

          The point is that business is not in the business of creating jobs.  business is in the business of meeting demand and making money.

          I don't think I said all companies do bad things or that all companies don't do good things.

          My point is limited but I think important.

          The current MSM/Repub frame is that companies and rich people are "job creators'.  they are not.  They hire people to meet consumer demand and make a profit.

          If there is no consumer demand there are no jobs

        •  other points (0+ / 0-)

          Where are alot of the jobs "created"?

          In countries like China with no worker protections, no safety regulations and no pollution controls.

          Look at where Apple builds its products to make staggering profits

          Look at the global clothing industry

          If companies wanted to 'create jobs' they would create them where the company is based

          but their motive is profit so they race to the bottom, even with programmers, engineers, etc.

          That is what business does. that is how capitalism works

          •  definition of "net" (as in 'net job gains'), etc. (0+ / 0-)

            net adj. 1. Business: a. Remaining after all deductions have been made, as for expenses: net profit. From Old Italian netto, remaining after deductions, from Latin nitidus, clean, elegant; see neat.]

            net, nett [adj] 1. (Economics, Accounting & Finance / Accounting & Book-keeping) remaining after all deductions, as for taxes, expenses, losses, etc. net profit Compare gross. 2. (Mathematics & Measurements / Units) (of weight) after deducting tare* 3. ultimate; final; conclusive (esp in the phrase net result)

            3. Net - the excess of revenues over outlays in a given period of time (including depreciation and other non-cash expenses)net - the excess of revenues over outlays in a given period of time (including depreciation and other non-cash expenses) net income, net profit,

            Adj. 1. net - remaining after all deductions; "net profit" nett 2. net - conclusive in a process or progression; "the final answer"; "a last resort"; "the net result"

            Net job gains: job gains minus job losses

            *tare (târ) n. 1. The weight of a container or wrapper that is deducted from the gross weight to obtain net weight.


            See also Joseph Schumpeter, Capitalism, Socialism and Democracy, on "creative destruction". As the economy grows, some older industries will close as new ones emerge, based on new technologies and entrepreneurial innovations (PDP-11, Apple, VisiCalc, WordStar, DOS, Lotus 123, WordPerfect, Windows, WWW, Internet, Mozilla, Firefox, etc. :-) ). It's important to have unemployment insurance, job retraining, affordable re-education, social welfare, etc. for those people caught in these dislocations. But only Luddites want to stop new businesses.

            'Races to the bottom' do occur, but mainly when assets can easily be moved from one country to another. There can also be races to the top, and mixed outcomes. It is not that simple.

            I'm glad to see Chinese workers earning enough not only to live but to fulfill their human potential (rather than facing famines as in centuries of Chinese history). How about you? As economies move above $3,000 GNP/capita, they also tend to improve their environmental record -- this would especially be important in China (with its awful pollution, coal consumption, greenhouse gas emissions, etc.).

            •  and again you make my point (0+ / 0-)

              businesses are not in business to create jobs or give people good wages.

              They are in business to make money

              They may hire people and there may be net job growth but that only happens when there is demand.

              The race to the bottom is in full force and it is destroying the economy.  The recession in the US is caused by weak demand at the same time "job creators" are cutting jobs and benefits and salary, and outsourcing to much lower paying locations.

              The race to the bottom is an unmitigated disaster  

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