The myth of gdp and stock market returns

One of my pet peeves is the degree to which the notion that corporations exist only to serve the interests of shareholders is accepted as dogma and recited uncritically by the business press.

Corporations are a legal structure and are subject to a number of government and contractual obligations and financial claims. Equity holders are the lowest level of financial claim. As we wrote last year:. And there is a good reason for that. Directors and officers, broadly speaking, have a duty of care and duty of loyalty to the corporation. From that flow more specific obligations under Federal and state law.

They get their piece only after everyone else is satisfied. In other words, this idea did not come out of legal analysis, changes in regulation, or court decisions. It was simply an academic theory that went mainstream. And to add insult to injury, the version of the Jensen formula that became popular was its worst possible embodiment. Deregulation, high inflation, and a lax attitude towards anti-trust enforcment stoked a hostile takeover boom.

Economists celebrated this development as disciplining chief executives and moving assets into the hands of managers who could operate them more productively. In reality, the success of these early deals depended mainly on asset sales, both of non-core operations and of hidden sources of value, like corporate real estate, as well as leverage and slashing bloated head office staffs the across-the-company headcount efforts became more prominent in the s.

And even its asides are rigorous. Appelbaum and Batt trace the origins of the managerial model of capitalist enterprise to the New Deal securities laws.

They helped institutionalize dispersed shareholding, and with it, a separation of ownership and management. From the s onward, there was an active debate between two schools of thought. Adolf Berle and Gardiner Means were concerned that this new approach neglected shareholder interests. By contrast, Harvard law professor Merrick Dodd contended that large-scale corporations had broader social aims, including providing employment and useful goods.

By the early s, the Dodd view had clearly prevailed. Although the writers of that era would never have used this framing, large corporations created reasonably efficient internal markets. Both employers and their workers benefitted from investing in a workforce that was also their main source for supervisors and managers of all levels.

This was also the era when unions had clout. That assured that productivity gains were shared among workers, management, and investors. The fact that labor participated in these improvements helped propel a robust consumer economy, fueling more business growth.

These enterprises typically took a long-term view, and used retained earnings to fund investments and research. This model prevailed until the s. Appelbaum and Batt describe the rise of the diversified corporation as one of the biggest culprits.

Companies like Teledyne and ITT, that looked like high-fliers and commanded lofty PE multiples, would buy sleepy unrelated businesses with their highly-valued stock. Bizarrely, the stock market would valve the earnings of the companies they acquired at the same elevated PE multiples.

You can see how easy it would be to build an empire that way. But these sprawling conglomerates had lots of managerial downside. They became more dependent on finance staff to impose metrics across businesses to have a handle on what was going on. The formerly virtuous internal labor markets became balkanized and less salutary.

And at a higher level, the various businesses were more likely to operate like fiefdoms competing for corporate resources. Finally, because the top executives treated these units as portfolio holdings that could be sold at any time, they were less certain of the necessity and value of investing in them. So who was the first to insist that the old managerial model needed to be turned upside down and shareholders interests should be paramount?

It turns out it was Milton Friedman, in a widely-cited New York Times op-ed. And Friedman being Friedman, he advocated an extreme form of his thesis. Only people can have responsibilities. The first step toward clarity in examining the doctrine of the social responsibility of business is to ask precisely what it implies for whom…. You can see how incoherent this is.

Shareholder are not bosses of corporate executives. Moreover, Friedman simply dismisses the corporate form, when that is precisely what is operative here. A share in a public company is a very weak and ambiguous legal claim. You get dividends when the company has enough profits and is in the mood to pay them, and you have a vote on some limited matters, but the company has the right and ability to dilute that too.

So Friedman has to utterly misrepresent the fundamental nature of ownership in public corporations to wage his war against big busseses serving broader social aims along with Mammon. The choice depends on the predetermined conclusion that is sought to be proved…. The article goes on: Apparently, it can be any of those possibilities, depending on which argument the article is trying to make.

But dissatisfaction with large companies was high and only continued to rise as they floundered in a more globalized, less stable world. And it became self-reinforcing as executives learned to use it to line their wallets.

The long-lived, difficult to displace but not lavishly paid corporate chieftan was over time supplanted by wildly overpaid straight-from-central-casting CEOs. Why worry overmuch about longevity if you can rake it in a 3 to 5 year tenure? And even really disastrous CEOs like Robert Nardelli and Mike Zafirovski find a happy home at private equity firms.

So again, repeat after me: And like many ideas that came out of the Chicago School, the public as large has suffered from treating a soundbite like a serious policy proposal. I would think William Black would have a good laugh at a re-read of that Times op-ed.

What a magical imaginary world it must have been in with all of those benevolent corporations laying the groundwork for what would later become some of the most elaborate control frauds the world has ever seen.

I remember it well. My father in law was a VP at Swift which then took on new executives from the big business schools and within about 5 years Swift was no more. Back then, the world was in shambles. It was a golden period because with Mao and the Soviets, those areas were toast, and Germany and Japan were ruined. The UK was badly damaged. So, only the US could meet US and global demand.

The result was that business was great, and US corporations needed workers. Now, with global competition, the game has changed. Maximizing shareholder value has taken root in the most insidious ways.

Corporate heads have been beating the term into their employees ad nauseam. What the execs fail to tell their employees is maximizing shareholder value is a backdoor frontdoor?! This has created a corporate culture for people up and down the chain to do whatever is necessary to get the sales numbers.

Sometimes this means cutting corners. Once good people now turn a blind eye to company malfeasance. Bad behavior becomes accepted practice. Greed, crappy products and service, and shortsightedness are the outcomes of maximizing shareholder value.

Also, of course, ensuring the CEO has a golden parachute. Thanks to stock option compensation of the C-suite company officers the focus on shareholder value is in reality limited to a tiny subset of shareholders.

The old idea of corporations and being chartered for both the public good and profit in that order is now ancient history and probably cannot be revived. The point here is that the system works for those in it and there is, at the moment, no vital alternative.

The issues you bring up here is precisely the reason capitalism cannot reform—it is stuck in this position. People have adjusted to this system and, on the whole, are ok with this model. There is very little dissatisfaction, except among leftist intellectuals, with the capitalist system because, as a practical matter, no one seems to be offering any alternatives. Of course, this system is not sustainable and will evolve into full-fledged neo-feudalism unless alternative visions are articulated and the mainstream media forget the politicians can be persuaded, through agitation to examine alternatives.

But… it is a culture, the arguments Friedman used have been repeated endlessly by a set of people who have a shared interest — a class if you will. That class has CREATED the current monoculture since and it can and probably will be recreated differently, probably by collapse and the need to rethink everything in a world with neither oil nor arctic ice. Because if they are that powerful, we could get some of them to see the counterproductive aspects of their actions and maybe get them to change course.

If they do, then they are allowed to behave in any fashion they like. We tend to want a specific agent to blame for these ills, but the feedbacks, opportunity costs, false signaling and overall breakdown in the concept of public integrity create a dynamic where different agents feed off of and pressure each other to act in perverse ways.

This is why taxation or focusing on some monetary reform is not going to cut it today. Public governance at all levels is dysfunctional and cannot be repaired without a comprehensive plan of attack to reverse the dynamic and chase out the undesired bad behavior.

That plan needs to start at the corporate and regulatory level from where it can then propagate into the greater system. Friedman also twisted the red herring. But Friedman, as Denning so amusingly puts it whose money is it? The Europeans held off eating their seed corn until more recently. So how does PE continue to survive in a world that will soon be unable to subsidize all those private interests?

Friedman uses a red herring with socialism, and you quote Marx? When do the socialists admit defeat? Look at the great socialist experiments and how they ended up. Friedman believed socialism was nothing but coercion. Some of us believe that hanging on to more of the money that we make is our right. Any social program, any, some of them good mind you, relies on the opposite view. Ellison, the congressman from Minnesota recently showed his cards. In looking for funding for something, healthcare, global warming, whatever, he stated: We just need the money.

Jackson on the Rise! JXNRising on twitter for more. Thank you for this one, in particular, among your consistently excellent body of work. It is wonderful, as far as it goes. Or are the Banksters, in various forms and ways, also part of the problem? Who are the puppet-masters behind these artificial corporate people?

And if governments are not to hold them accountable a la the TPPwho is? In the context of its time, Friedman was challenging self serving corporate bureaucracies, generally described as bloated. Perversely, maximizing shareholder value has become a rational for excessive management compensation. Drucker in fact celebrated American-style managerial capitalism. Not everyone agreed with the shareholder value theory, even in the early years.

InPeter Drucker made a sustained argument against shareholder value in his classic book, Management. It is the customer who determines what a business is. It is the customer alone whose willingness to pay for a good or for a service converts economic resources into wealth, things into goods. The customer is the foundation of a business and keeps it in existence. Interesting quote from Drucker about customers. Of course, almost none of the people who revere Smith have ever read him.

Starting with Reagan, his name became an incantation, not an argument or body of thought. Obtaining and keeping customers is key. Growing a business, or more specifically, net worth per share aka equity is the key.

And he owns GEICO. They are complimentary, not mutually exclusive. He employs all those people, profitably, and serves his customers well enough to have those businesses grow.

But his real mission is maximizing value in his businesses. Make no mistake about that. Shareholders and employees benefit from his acumen in doing so.

Ultra High Net Worth Individuals always have been the driving force behind the brainwashing of any society! We are FUBAR and few know it! Although this is interesting, and it is probable that Milton Friedman is the origin of the concept of maximizing shareholder value, I think it ignores the real reason for all the focus on shareholder value.

Why do i get the feeling that Friedman would be considered a troll had he tried to bring this kind of reasoning to the internet? Everything proceeds from first principles and those principles, as Krugman and others truly believe, are ipso facto correct and beyond reconsideration.

Faith cannot be in error; reality must be faulty. And I got a Ph. Easy to detect with modern science, but back then it was likely a case of observing a group getting ill after eating pork and so declaring it taboo. This sounds like a must-read book! Two years into PE 2 I was standing with the two top engineering managers president and VP at the front door where a huge glass award sits atop the reception desk congratulating the company for receiving the bank debt used for the PE 2 acquisition.

I was very surprised to discover that the award was gone the next time I walked by the front door. But bizarrely, the publication date looks to have been pushed back. Equity owners are the OWNERS of the corporation. How difficult a concept is that? You make it sound like a corporation is some sort of free-floating entity when in principle it is just a jointly owned company. Limited liability could apply to a company owned by a single individual so that is not necessarily a defining concept of a corporation.

Can you hire or fire any of the managers? Do you control the product pricing? Do you have any say in important matters of strategy? Do you have access to confidential information, like internal profit and loss statements for each product or office? Do you have any say over litigation strategy, or whether the company obeys regulations fastidiously or cheats at the margin or cheats a lot?

The rights of a shareholder in a public company do NOT correspond very much to the rights of a sole owner of a private company. It does not mean that you have any meaningful say over what management does.

And why is that? Because the government-backed credit cartel allows companies to avoid issuing new shares and instead legally steal the purchasing power of the workers and general population.

This is from John Kay in the Financial Times in Experience has shown that too much effort devoted to fire extinction is counterproductive. Time demonstrates, but only slowly, whether policy has gone too far in one direction, or the other. Forest management illustrates obliquity: Forests are not the only systems structured in this way.

Obliquity is equally relevant to our businesses and our bodies, to the management of our lives and our national economies. We do not maximise shareholder value or the length of our lives, our happiness or the gross national product, for the simple but fundamental reason that we do not know how to and never will. Not just because it is a less than inspiring objective, but because even with hindsight there is no way of recognising whether the objective has been achieved.

InICI described its business purpose thus: ICI recruited a team of able, young, academic scientists but the team was slow to bring returns. The pharmaceutical division was a drain hack stock market game ICI resources until, in the s, the discovery of beta-blockers gave the company the first effective drug for controlling hypertension.

Money order or cashiers check safe discoveries followed and, by the s, pharmaceuticals had become instaforex binary options growth engine of the company.

InHanson, the predatory UK conglomerate that had successfully acquired and reorganised sluggish British manufacturing businesses such as Ever Ready and Imperial Tobacco, bought a modest stake in ICI. ICI restructured its operations and floated the pharmaceutical division as a separate business, Zeneca. The rump business of ICI declared a new mission statement: While the National Parks Service had moved from a narrow, focused objective to a broader holistic view of forest management. ICI made the opposite shift — from a grand vision of the responsible application of chemistry to a narrow concentration on established, successful is there video calling in sony xperia j. The aim of bringing benefit to a wide range of stakeholders was replaced by the specific objective of creating shareholder value from narrowly focused operations.

ICI, once the main supplier of chemical products to one third public bank berhad - foreign exchange rates (forex) the world, was reinvented as a smells hdfc forex branch delhi. The outcome was not cme currency trading hours in any terms, including those of creating shareholder value.

The share price peaked insoon after the new strategy was announced. The decline firm forex trading then has been relentless. After two successive dividend cuts the company was ejected in early from the FTSE index, the transition from industrial giant to mid-cap corporation had taken only 12 years.

ICI is not the only company for whom greater emphasis on corporate financial goals led to less success in achieving them. Bill Allen was chief executive from toas the company created its dominant position. He said that his spirit and how to make money from football coaching of his colleagues was to eat, breathe, and sleep the world of aeronautics.

When a non-executive director asked about the expected return on investment, he was brushed off: It took only 10 years for Boeing to prove me wrong in asserting that its market position in civil aviation was impregnable. The decisive shift in corporate culture followed the acquisition of its principal US rival, McDonnell Douglas, in The transformation was exemplified by the CEO, Phil Condit.

More importantly, the more focused business reviewed risky investments in new civil projects with much greater scepticism. The strategic decision was to redirect resources towards projects for the US military that involved low financial risk.

Chicago had the advantage of being nearer to Washington, where government funds were dispensed. And the strategy of getting close to advantages of binary options video tutorial Pentagon proved counter- productive: In Yellowstone National Park, at ICI and at Boeing, the attempt to focus on simple, well defined objectives proved forex trading course forecasting forex online currency11 successful than management with a broader, more comprehensive conception of objectives.

The 20th century saw the rise and fall of modernist rationalism in many activities. Nowhere was the change more visible, or the results more disastrous, than in architecture and town planning. In the modernist vision, technology emancipated builders from tradition and accumulated knowledge. Twentieth- century planners could redesign our environment from first principles.

Charles Jencks, the architectural commentator, announced that modernism ended at 3. Less than two decades earlier, the scheme had won awards for its pioneering, visionary architecture. But a house is not simply a machine double bollinger bands download living in.

There is a difference terminal operator job in stock market a house and a home. The functions of a home are complex and the utility of a building depends not only on its design but on the reactions of those who live in it.

The occupants of the Pruitt-Igoe city bank euro rate, like those of similar buildings, were alienated by the isolation of a living environment that saw no need for accidental, unplanned social interactions. They showed no respect for its public spaces. The functionality of the blocks proved, in the end, not to be functional.

Communities are stock market 4/10/15 organisms, imperfectly understood, and their functioning depends on their social relations.

Great architects implicitly understand obliquity, but obliquity is so important to the design of towns that the most successful towns have no designer at all. The planned city was conceived in the late 19th century. Baron Hausmann swept away the jumble of Paris streets that had developed over the centuries to create grand boulevards. From the s tothe powerful, autocratic Robert Moses controlled the physical environment of New York, driving expressways through apartments, offices and factories.

The zenith of these ideas was reached in planned cities such as the designed forex rmb hkd of Learning the philippine stock market, Canberra and Chandigarh.

But all these cities are dull. They lack the vitality of real communities. As with tower blocks, their very functionality is dysfunctional. The National Park officials who thought they could eliminate fire; the managers who thought they could reinvent ICI and Boeing; the architects who believed they could discard thousands of years of experience and redesign buildings on purely functional lines; the planners who attempted to rationalise the patchwork evolution of historic cities: And the answer to their problem is not better analysis and more sophisticated modelling, but more humility.

Such humility is not commonly found term paper on stock market in bangladesh the business world. Re-engineering the Corporation by Michael Hammer and James Champy became a New York Times bestseller in Hammer and Champy are as radical in aspiration as Le Corbusier: It involves going back to the beginning and inventing a better way of doing work. Obliquity gives rise to the profit-seeking paradox: ICI and Boeing illustrate how a greater focus on shareholder cashmere early learning centre nz was self-defeating in its own narrow terms.

Comparisons of the same companies over time are mirrored in contrasts between different companies in the same industries. In their book, Built to Last: Successful Habits of Visionary Companies, Jim Collins and Jerry Porras compared outstanding companies with adequate but less remarkable companies with similar operations.

Merck and Pfizer was one such comparison. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. Boeing developed problems due to its aggressive anti-union stance. They moved headquarters half the country away from manufacturing, to keep executives and workers from knowing each other. The issue you overlook is that the corporation is an artificial construct. It is not like the traditional business that you have as an image in your head.

It operates by rules that have nothing to do with a single proprietor or partnership before limited liability.

Since the government rights the charter and makes the laws that apply to the corporation, they can give it any set of objectives the government wants and, in the 19th century, governments did set those rules and guidelines. They are subject to SEC requirements and considerable state law requirements, and those in turn reflect a considerable body of case law. For instance you could seasonal futures trading strategies set up a corporation to make snuff movies where the women actors were killed or that would hire only athletic blond men or set out to earn better profits by violating labor laws.

You have to be blind! Recent history has clearly proven the BANKS are running the government! All politicians are owned by this CARTEL and they know it. We are a Nation of fools for allowing their society corrupting GREED to rule the Nation and the World!

Citizens have none of those powers. Our entire system of governance is based upon representatives acting on behalf of a much larger group of people, from prisons to potholes to patents, and the only real choice a citizen has on a day to day basis is to comply, resist, or leave. I agree with Yves wholeheartedly. Here is an example of his best work.

Here, the problem comes down the difference between ownership and control. The control of the company resides with the elected board of directors and the managers. The board hires the CEO who in turn hires the managers.

The CEO and managers run the operations of the company. Here, I think, we see the genesis of the control fraud, since the Board and management are compensated for a different reality from that of the shareholders.

Why would Friedman do such a thing? Various commentators point out how the philosophy of the economics department and law millennium money makers were heavily dominated by Midwestern industrialists who abhorred the New Deal as the corrosion of the American and Interactive brokers short stock availability tool work ethic.

So, average euro to usd exchange rate 2010 of what Friedman did reflects a virulent dissent from the New Deal among the wealthy and powerful. That would make the difference explicit. Minority shareholders have strong protections against the actions of a simple majority. Pretty much all boards have staggered terms, so it would take three years for your majority owner to get control of the board and get rid of current tax deduction for non-qualified stock options although activists with lower ownership stakes can usually rattle boards and managements to buying nyse shares in australia specific actions to get rid of them, like issue special dividends or sell an underperforming businesses.

And poison pills are necessitated by the unlimited ability of the banking cartel to finance hostile takeovers, no? But such legislation seems harmless at worst so why not? Until we have a truly free market some scaffolding seems reasonable though it might eventually be redundant. So I did what you suggested and found this forex daily volume overview.

Even our friends at CalPers have in their Principles: As someone once said: In my older post, I link to some of the most widely cited board guides, and they uniformly describe binary options robot uk reviews role of directors in terms of duties to the corporation. Shareholders are one constituency that boards should be mindful of, but they are far from the only one.

CalPERS is a government agency of the state of California. Whoever wrote those principles has rocks in his head. CalPERS is overseen by a member Board of Administration whose members are elected, appointed, or ex officio: Six are elected from CalPERS members two by all CalPERS members, one by active State members, one by active CalPERS school members, one by active CalPERS public agency members, and one by retired members of CalPERS.

Three are appointed two by the Governor, one by specified leaders of the Legislature Four are ex officio California State Treasurer, California State Controller, Director of the Department of Personnel Administration, and designee of the State Personnel Board.

CalPERS ignores this principle. It invests in index funds. Yet with no thought of MSV cost-cutting hits one hard in the face once you see real accounts. Kudos to the two authors of the book you mentioned. Let us treat it as what it is, a Theory. Once their eyes were opened, recognition of the crappiness of the work environment proceeded apace.

If we fall back into the days of Samizdat, so be it. There will always be an underground for dissidents. Directors have a duty to the corporation. I know this has been a pet peeve of yours Yves, but I think we can give this formula too much power. Most of the practical problems in corporate governance are caused by management not doing what it is in the interest of the ownership.

Maximizing shareholder value is a useful shorthand for the reminder that incorporation is supposed to be for the benefit of the owners, not the managers. The costs of bargaining are quite similar when talking about ownership vs. And as issues like unions show, the drive for mismanagement comes from our political leadership.

Workers that are able to cooperate and assert a decision-making role in an institution are a direct threat to the desired authoritarianism of our Fearless Leaders in DC. The Friedman quote contains the distinction between the corporation and the business.

It notes that a corporation is a legal fiction legal structure, more properly while the business is real. Yet, the shareholders have a connection only through the corporation.

Are they ridealongs or the chosen few? Union-busting is a earn money internet survey tactic for short-term profit maximization.

I would offer a different perspective here. Friedman says in pretty clear language he thinks the general way a company should be run is for management to carry out the wishes of ownership. Because it makes us grapple with why so many the myth of gdp and stock market returns leftist-leaning intellectuals supported the bailouts of the very companies figuratively and even literally polluting our society? One can critique the existence of property rights, but within a system where we recognize private property, that is a fairly non-radical position where people can legitimately take both sides of the argument.

To argue that widely disbursed ownership is incapable of acting collectively is an important logistical challenge to explore, but it is hardly unique to large, publicly traded, for profit corporations. If this line of reasoning really cuts to the heart of the system, then what is flawed is the US Constitution itself, whose fundamental governing binary options how to determine the trends is one of representation.

We are a republic guided by individual rights and checks and balances, not a true democracy where citizens directly make decisions.

As far as the pols cara mendapatkan no deposit bonus instaforex silent, I find that to be exactly backwards. The political leadership earnest money contract in texas form been setting the tone, pushing the business world to be more authoritarian and unconstitutional, from the air traffic controllers strike to FISAAA.

Friedman I think dow jones premarket stock trading be quite happy with much of the looting going on today, but he is not the common denominator here.

Companies cannot make information that is critical to assessing the company and its management public because much of it is competitively sensitive. Moreover, transient, arms-length investors cannot readily judge the temperament and acumen of management. Private meetings of powerful investors with management such as the one investors had with Lloyd Blankfein, IIRC in also had no effect.

Bhide says publicly traded stock is an inherently flawed investment vehicle.

icamaveyi.web.fc2.com: The GDP myth: For better equity returns, focus on valuations - not economic growth

He has repeatedly urged that it how to make money from football coaching eliminated. I lay the blame like almost everything else at the feet of the government backed credit cartel, which is based on usury for stolen purchasing power.

Otherwise, companies would be MUCH more dependent on the sale of their common stock to finance new operations and thus MUCH more likely to be honest and open with potential stock buyers out of NECESSITY. Yet our money supply is based on BOTH! But please inform what vehicle should be used instead of corporations for small investors to consolidate capital for economies of scale in a democratic manner?

I wholeheartedly agree that governance is at the heart of our challenges today. The great development of the 20th century was the scale at which bureaucracy could organize resources both public and private.

If we conclude with Bhide that such scale is ungovernable, then the logical conclusion is that our task in the 21st century is to shrink that bureaucracy. There are basically two ways to do that. Kill a lot of people or split the large countries up into much smaller independent states. If we split the US into 60 countries, that would give each one about the population of Switzerland.

Companies cannot make information that is critical to assessing the company and its management public because much of it is competitively sensitive Yves Smith. Abolish government-backing for credit creation and then companies will have a huge incentive to please actual and potential share owners since bypassing new share issue would not be the option it currently is.

The analysis in this paper suggests that the governance problem lies in inadequate incentives for internal monitoring…. I would contend that this is precisely what the authoritarians want. The place where whistleblowers are most fervently persecuted and fraud allowed to blossom most freely is the United States Federal Government itself.

I had a short stint at financial market and am still a investor in selected stocks with long view. I generally invest in fundamentally strong stocks that have performed well consistently in the last five years or more than that.

Though the prospect of stock is extremely poor in the coming years and may be declared bankrupt in a span of two years or so, it is trading at high premium only because it is showing profit to the stake holders currently. This is baffling but true. This can only be true because stocks are now casino chits and not, as some people maintain here, primarily or even significantly ownership stakes in a permanent venture. Perhaps as I read my history years ago in Britain perhaps even here people bought stocks to provide steady, long-term income from the dividends.

This is hardly ever true today. The purpose of a corporation is quite simple. No, none of that happened. Otherwisethey are simply lawless trespassers. The society has a foundation that promotes irresponsibility both in defending rights, knowledge of rights and performance of obligations and duties. I noted in another context, Holder has expanded the immunity from civil liability to criminal liability.

I can not explain your use of Modern Society doing something you later claim can only be done by people as individuals, and not by various institutions.

Stock market returns vs economic growth | Pragmatic Capitalism

Modern Society is also made up of individuals and could not be have the systemic effect on the state or its corporations, if that is what you are saying. The socialization and acculturation of people who learn how to behave in any society and any sub-culture or formal organization such as the military, a commercial company or a bureaucracy of government at any level from local to national explains the widespread experience that Walmart ripped me off.

Modern Society is the antithesis of traditional society, where you knew who you were and what you were expected to do. The distance from birth to death was not an unknown journey of discovery, but a well worn path that your father and his father and now you will tread. Modern society set you free from formal roles set at birth. The bureaucracy, if anything, creates regularity and uniformity in the absence of the structured experience from unwavering adherence to tradition. The people who work at Walmart are interchangeable instruments of company policy, written by the interchangeable cogs of management.

Improv is done at comic clubs and experimental theaters, people at work accept their roles and learn the behavior that the company expects from them, they do not as individuals make things up on their own. If they do, and it goes to far from policy, they are soon enough gone.

You just did it too. The bottom line is John Whoever and Sally Whatever wrote the company policy. Management like government is a function not an entity legal or otherwise.

But look the government could allow no corporations to get a corporate charter unless they were forced to compete on a triple bottom line — not just profits, but society and environment. It is the CEOs who run the companies, and most generally into the ground all to maximize short term profits.

As I have written often in the past, in kleptocracy, it is imperative to split all things economic off from their social purposes. Great wealth becomes an object in and of itself needing to justify itself to no one. He was a knowing, willing participant in the looting of our country and our society.

That he believed the shit he was selling in no way lessens the criminality of his actions. We would have no difficulty proving his guilty knowledge. Where is the line? They have found ways to enjoy the distant misery and killing. The corporation is simply the most effective contemporary method to steal the most from the most [although government, as always, does the criminal community quite proud].

Maybe it is just my interpretation, but the above passage along with everything else I have read from Friedman is intellectually lazy, and that is putting it mildly. His writings lack vigor and necessary description. Anyone wanting to know Peter Drucker should not waste any money and perhaps scan this: Typically, they appear erudite by citing philosophers and participative methods.

John Kay was the guy who said economics had a lot of difficulties, but deserved real argument. Management theory was only fit for ridicule. I have no time at all for any of this management prattle. It all assumes a vital, privileged role for management. The easy and probably best answer is no one believes these management futurologists anyway. There are alternatives to thinking about any of this in terms of management or economic text. All of it is barking wuckfittery to me, and gets worse the more familiar you get with it all.

The stuff defies rational argument by excluding what matters. Go and see Billy Graham and Tom Peters on the same day. They distance us from the real issues, even if they preach Marxism. Old Milton influenced nothing.

The crooks were already running the show. USUK had never really been competitive nations. Manufacturing profits were already screwed down and had to be re-fixed by trade agreements.

Competitive advantage BS burgeoned, but none of it was ever true. It was all rubbish. He was a front for that is all.

There is no arguing with these crooks in their language. We need to flush them into the open and deal with them in the ordinary language of the people. Friedman and his buddies should have been given up to the Chilean people long ago.

None of the above apply and argument has been around for 2, years without fixing an egalitarian society default in our system. We either do argument very badly or it is irrelevant in power games other than to reinforce power. Maximising shareholder return started when a few crooks realised that a few tricks let them steal tax, employee pensions, wages and dignity they are libidinal perverts remember.

This spread like monkeys copying the first one to wash food in the sea. He was co-opted as PR by the thieves of Wall Street and the City. Read the Drucker stuff I linked to if you get chance. Nip over to Wiki on BRaj and then wonder why the Harvard Business Review would give space to such rubbish. What does this say about HBR?

Abboud himself was in the video, carefully examining a suit for stitching quality and fabric quality. I think I have one of his suits, although I always cut the labels out at the tailor and then I forget where the suit came from.

Abboud, if it was your suit. But anyway, back to Mr. They just want the money. I guess I should just bite the bullet and buy one that fits my fat gut. The jacket and pants can later be taken in, no? She traces it back to the mid-nineteenth century, through a growing body of common law—decisions made by judges, rather than statutes. A short excerpt, from p. Board members believe their only choice is to follow the prime directive, which is to maximize the returns to shareholders. The genesis of this directive is worth exploring a bit.

It may have a feeling to it of long-settled and inviolable law, but it does not arise from either federal or state constitutions, nor is it in any solid sense found in state statutes.

Shareholder primacy emerged from the ether in the midnineteenth century, when it was articulated by the courts. Chapter 9 discusses these issues in depth. The basis of shareholder primacy is thus primarily common law, judge-made law. In state statutes, directors have a duty of loyalty to the corporation. But in common law, this is interpreted as a loyalty to shareholders alone. You are missing that those common-law decisions were for closely-held corporations.

Those are like venture capital investments, where the investors know management personally and are actively involved in its affairs. That was a hotbed of speculation and NOT investment, and pretty much all of them went bust. That model was tamed by the securities laws of the s. They apply to a different legal arrangement between owners and investor. Publicly traded companies bear no resemblance to equity ownership in the s. The irony of MSV is that the public shareholders whom it holds up as the only risk bearers typically never invest in the value-creating capabilities of the company at all.

Rather they invest in outstanding shares in the hope that they will rise in price on the market. Most of us who have dawdled here will have read many of the points through Yves. Power simply strips away other rights in a value extraction, whilst paying bailiffs, stewards and judges to authorise and execute land grabs and replacing people with more economic sheep etc.

MSV is essentially the current form of charismatic leadership. I found it an excellent book—well written, readable, well referenced. The author is also an excellent speaker. I heard her once on radio and once in person. Just ordered a secondhand copy. He died after lugging the last sack round to the palace.

Thanks to this exchange, I just discovered M. Black ceaselessly highlights to us all, publicly listed corporations — be they banks or other institutions — now exist to be plundered by their C-Suit executives and Board of Directors — shareholders come a poor second in all this theft and personal greed. Soon they will leave no orifice untouched Christopher. Public spending is set to fall at 1. We need a new plan. That they also cater to their shareholders equity value is natural — after all, ownership obtains a Return on Capital Investment ROCI.

That is obviously not the whole story. Since time immemorial mankind learned how to multiply individual output by means of the Division of Labor. Which is the fundamental reason that corporations exist. That is, in order to achieve the output necessary to satisfy Demand, the Labor Input must be multiplied and the skill-sets broad. What is mine is mine, and the law recognizes and protects that idea. Corporations were founded based upon it — and in order to multiply output, it hired manpower.

By extension of the notion of property rights, manpower had no right to share the benefits of the Return On Capital Input RoCI. Of course, what happened is that the Total Return on both capital and labor accrued marvelously well — for the shareholders. And, by means of offering stock-options to TopManagement, they became preferred share-holders.

All that was arranged nicely amongst the cronies running the BoD. It is called a Salary. The only one to ever challenge that notion was Karl Marx, and his solution, called Communism, proved to be intrinsically faulty. Pass laws that somehow maintain a reasonable cap on corporate salaries. Peter Drucker suggested the cap at 20 times the average salary. Also, Net After Tax Revenues that are shared-out in terms of bonuses, should be company-wide — as should be granted stock-options.

These are all rewards for achievement to a select group that was most certainly not alone in achieving corporate objectives. A preferred stock-option given out not equally but equitably for purposes of rewarding achievement would have two benefits: In turn, by moderating costs, such preferred stock dividends also help to support Sales and therefore Profits and therefore shared dividends on preferred employee stocks. Meanwhile the buyback payout ratio went from miniscule to massive, with buybacks surpassing dividends as a mode of distributions to shareholders in Much more than this financialisation was taking place.

The firms became worse places to work in in terms of wages, security, training, industrial democracy and worker dignity. And we did very little, if anything to shift to green projects, energy and to sensible quality of life growth.

The key block to fixing this is the globalisation of money, against which no country, even the US, can stand alone. May I suggest some reading: Clearly, in the short-term, quarterly earnings ADHD world we find ourselves in, that is what is rewarded, but you have to wonder hope?

I guess everything is working just fine, after all. I totally agree that the idea of corporations only being run for profit is disgusting. Unfortunately, you a taking on the wrong villain here.

Ford Motor Company established that managers owe a duty to the shareholders of the Ford Motor Company to operate his business to profit his shareholders, rather than the community as a whole or employees. It might help to represent the fact in Wikipedia more accurately and grasp their implications before opining so confidently.

First, the Ford decision was a Michigan state court decision. Most corps are incorporated in Delaware or else the state in which they do business.

The decision has no relevance save to Michigan corps. The court said Ford could not run the business like a charity. Perhaps even more important in this decision was that Ford was private, so the Dodge brothers were hostages. As a result, the Dodge decision has effectively been superceded by the and securities acts. It might help if you read this article: Corporate Malfeasance and the Myth of Shareholder Value: Fearless commentary on finance, economics, politics and power Follow yvessmith on Twitter Feedburner RSS Feed RSS Feed for Comments Subscribe via Email SUBSCRIBE.

Home About Archives Bloggers Policies Documents Limited Partnership Agreements Contact. Posted on May 5, by Yves Smith One of my pet peeves is the degree to which the notion that corporations exist only to serve the interests of shareholders is accepted as dogma and recited uncritically by the business press. As we wrote last year: Subscribe to Post Comments. Tip Jar Please Donate or Subscribe! The answer to your