It is tempting to see all the problems of the world as being caused by myopic greed or a failure to consider the common good. In economics this could be an argument for Nationalization of everything. In politics it could be an argument for Dynastic rule (so that the ruler has an interest preserving the inheritance of his distant descendants) supported by an elite collegium of technocratic administrators. Sadly, such 'Enlightened Despotisms' could not compete with greedy, individualistic, myopic enterprises or regimes.
Reviewing a book by Colin Meyer for Project Syndicate, Jean-Baptiste Wautier writes-
For example, he argues that equity ownership should be transformed from a bundle of rights into a set of obligations and responsibilities to uphold the delivery of a higher company purpose.
One can go on piling taxes and various sorts of obligations and compliance costs on an enterprise- till it goes bankrupt. But what do you do after that happens? There may be large external benefits associated with its existence. The collapse of a big firm could cause the collapse of large sections of the economy. Also, as tax revenue falls, entitlements will have to be curtailed.
If shareholders can be held to account for the actions of companies, why do politicians have sovereign immunity for intra vires actions when they held office? Why is there a doctrine of political question?
Shareholding would no longer be simply about owning a stream of cash flows and some say in governance; rather, one would own the problem the business is trying to solve.
In which case there would have to be laws about who can own shares because, in effect, the shareholder would be a partner in an unlimited liability enterprise. Only people capable of understanding their social obligations can be shareholders. This is cool. The Govt. can take away shares from your pension pot and give it to their cronies who are highly socially responsible.
In other words, a board would mainly focus on the higher purpose of the company it looks after, tracking how effective it is at solving specific issues and what negative externalities it generates along the way.
Why not pass a law saying only Bishops and Members of the Cabinet can be on the board of public companies? Shareholders must belong to the Established Church and the Ruling Party. That way, we can be sure they have a proper sense of social responsibility.
In a financial world dominated by exchange-traded funds and index tracking, this change alone would be a Copernican revolution.
It could certainly take us back to the days of Tycho Brahe. Bishops and Dukes should be on the board of every Enterprise. The Inquisition should deal with Jews and other such undesirable elements.
I have long advocated the kinds of changes Mayer recommends,
the dude is French- i.e. fucked in the head. Sad that Marshall Petain was not able to make French industry as socially responsible as that of Hitler's Germany. Still, where he failed maybe Jordan Bardella can succeed where Vichy failed.
especially when it comes to publicly traded companies.
In which case they will de-list and go private
It takes many years, if not decades, to devise new corporate strategies, solve complex problems, and address negative externalities.
This is even more true of government policies. Why are we permitting an administration to do what it likes for four or five years and then letting those who ran it enjoy sovereign immunity for whatever they did when in office?
But these kinds of time horizons are completely at odds with the short-termism prevailing among owners and managers.
Not to mention the short-termism among trade unions and consumers. Why are we allowing people to spend their own money on things which, in ten years time, we might realize were associated with negative externalities? Also, how come people are allowed to scratch their own arse? It is totes selfish behavior. Nobody should be allowed to scratch their own arse till they have tenderly and solicitously scratched every other arse in the vicinity.
Under the current share-price dictatorship, quarterly earnings are all that matter.
Under the current consumerist dictatorship, people can order a pizza and have it delivered in quarter of an hour. How is this right? Before you order a pizza should you not do an Cost Benefit study based on considerations of environmental sustainability and the principles of Diversity, Inclusivity and Equity? Is that not elementary common sense? But then is it not the case that it is reckless to breathe in and then breathe out without performing a proper evaluation of impact on all relevant public policy parameters?
There is an urgent need for a new approach.
No. There is an urgent need for French nutters to chop off their own heads and shove it up their poopers.
Boards could be required to ensure that every part of the organization is contributing to the pursuit of long-term goals relating to its core business purpose (as opposed to generating short-term profits for the sake of profits).
Great. More forms to fill out. We'll have to get in more MBAs or ENA grads to churn out that shite out. Fuck that. Just get the intern to do it.
Decentralized sources of funding – such as equity investors
I suppose that's what this cunt is
or financial institutions – can be given a greater say, thereby facilitating
their getting very fucking rich while the economy turns to shit
accurate measurement,
arbitrary measurement. It's odd how you think the numbers are just fine if you get paid to think they are just fine.
which aggregation at a global level renders impossible.
Aggregation is always arbitrary. Still, if consistently done, it can be useful.
And the standard time horizon for measuring performance could be significantly expanded through, for example, incentive plans relying on fundamental performance indicators that only get measured after five years or more.
So this guy sets the 'performance indicators' for his pals and then they do the same for him. How very cozy!
Mayer’s book is
stupid shit
an essential contribution to the debate about contemporary capitalism and its descent into dysfunction. Fixing the system, and changing how we think about it, is critical to preserving democracy, free markets, and capitalism itself.
But if 'shareholders' should have unlimited liability so should voters. Did you vote for the wrong guy last time around? You must be punished for you failure to live up to your social responsibilities.
Mayer offers a persuasive argument for why higher purpose must replace profit as the primary objective driving companies and markets.
Highest purpose is God's purpose. Did you know that God talks to me? You'd all better do what I tell you God wants to do otherwise you will burn in Hell or, if we can reform Capitalism and Democracy, sooner than that in a nice auto da fe.
Even if it is not yet clear how to do this in practice, it is obvious that this should be our task.
It is obvious that French intellectuals are as stupid as shit even if they don't marry their High School Drama teacher.
We will need to explore the use of longer time horizons,
By reintroducing the hereditary principle. That way the guy doing a particular job today has an incentive to ensure it is done in a sustainable manner because his distant descendants will have to do the very same job.
more decentralized models of corporate governance,
Which is what happens when an enterprise no longer 'internalizes externalities'. Instead of a chain of command, you have bribes and evanescent coalitions and alliances. Welcome to anarchy.
and public-private partnerships.
i.e. crony capitalism and jobs for the boys
Mayer’s core principles will serve us well as we try to save our current form of capitalism from itself.
Fortunately, these nutters won't get the chance. If a particular country destroys its private sector, other countries will eat their lunch. You can always stop yourself from doing sensible things. You can't stop other people doing sensible things and thus ending up taking away resources from you.
Consider the following sample of Meyer's historical wisdom-
Mistrust in business is profound, pervasive and persistent.
No. The more business you transact the less you mistrust the counterparty.
Why? I suggest that the answer is this, the free man doctrine, that there is one and only one social purpose of business, to increase profits so long as it stays within the rules of the game.
Unless you go beyond the rules of the game and provide an additional benefit (because you have economies of scope and scale, including risk economies) which in turn generates a reputational benefit which leads to even higher turnover and thus greater economies. This is a virtuous circle very different from Meyer's Manichaean belief that self-interest is greed and greed is always wicked and vicious.
And that idea has been the basis of business practice, business policy, and business education around the world ever since.
No. Capital gains- including those made from 'goodwill' which is marked to market- are as or more important as profits. This man is a cretin.
And virtually, every business school course starts with a proposition that the purpose of business is to maximize shareholder value and everything else, strategy operations, management follows from that.
No. By the time you get do an MBA you know that it is almost always better to have Capital Gains rather than Profits- if only for tax reasons. Anyway, if you get a job as CEO, it is likely that your bonus will be tied to share value appreciation. This is one reason why big Companies exit 'repugnancy' markets'- or pretend to.
But it wasn’t always there. Indeed, the corporation was established with a very different purpose under Roman law 2,000 years ago to undertake public functions, collecting taxes, melting coins, building and looking after public buildings.
Those were public bodies. Private enterprises were called 'societa' or, for guilds, 'collegia'. The 'societa publicanorum' could function like a limited liability company and often did take over a lot of public services. The 'publican' might be a tax farmer or military contractor. The Empire could be suspicious of over large or mighty guilds or trading enterprises.
And for nearly all of its 2000-year history is this combined public purpose with its commercial activities.
Nonsense! No such enterprise survived the dark ages. I may mention that Knightly Orders- e.g. the Templars, could engage in commercial activities. This was also true of monasteries. It should be said that it wasn't till the nineteenth century that public servants did not buy and sell their offices or deduct a percentage from the money that passed through their hands. In other words, the business of government was done in the manner of greedy businessmen- if it was done at all.
It’s only over the last 60 years that this notion that business has only one purpose, to make money,
Rubbish! Eighteenth and Nineteenth century Europe and India and China and so forth all had celebrated individuals or business dynasties who were renowned for their skill at making huge profits. But even in the middle ages there were people like Jacque de Coeur and the Fuggers. But such people existed in other countries and in other ages. The third Caliph of Islam was a very wealthy businessman. Crassus, the colleague of Caesar, was as rich as Croesus- an ancient Lydian King. There is nothing new under the Sun.
histories, and it’s that which lies at the heart of the problems of inequality, environmental degradation, and mistrust.
Inequality reflects differences in endowments and productivity. Where both are low, there may be more, not less, environmental degradation. Also, if people keep trying to kill you in order to steal your sandwich, you will soon become very mistrustful indeed.
And it’s going to get worse because technological opportunities offer tremendous opportunities for advancing humanity and contributing to our welfare, it also poses serious risks.
More particularly, if the Chinese have it and we don't.
And as technology accelerates, soon too does the lag of policy behind business innovation and the response of government and regulators becomes increasingly inappropriate.
That's already happened. But don't forget if Government can't take over Business, Business can take over Government or a modus vivendi can be reached. Thus has it always been. Deal with it.
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