[grecy]

> If all of those subsidies were to vanish, the standard of living for most lower to middle class people would drop substantially

I see so many discussions in US politics that go around and around and bend over backwards to never, ever propose the extremely simple and obvious solution....

(...drum roll...)

Companies simply lower profits.

Conditions for the workers go up with better conditions & higher pay. The prices of products and services need not change, so consumers are not worse off.

It appears that what I'm saying is tantamount to blasphemy in the US, nobody is even willing to suggest lowering corporate profits as one possible option with associated pros and cons.

[logfromblammo]

Raise corporate income taxes, but deduct all employee compensation from taxable income? Tax capital gains at the same rate as ordinary income? Penalize companies that spend less than X% or their revenues on employee compensation, where X% is the median labor expense fraction in that industry?

[LitFan]

Lowering profits means reduced shareholder value and a lower market capitalization. Every company is interested in providing as much value to shareholders as possible.

I don't know all the ins and outs, but I believe public trading and shareholders are to blame here.

And again - the middle to upper middle class people who rely on returns from their investments in companies to support their standard of living think the company-shareholder relationship is entirely healthy.

A shareholder provides no value to the good or service being delivered, they exist only to make profit off a transaction they have no stake in.

My views here could be totally off. I welcome discussion on the topic.

[snarfy]

It's not that they are interested in providing as much value possible - they are legally mandated. [1]

[1] - https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

[jcranmer]

That case doesn't mean what most people who bring it up want it to mean, particularly as has been interpreted by 100 years of intervening case law. In that case, Henry Ford had more or less admitted that he was attempting to screw over specific shareholders.

As it is applied in modern practice, a corporate officer merely has to articulate a rationale of why his/her actions benefit the shareholders. For example, deciding to double every worker's salary, on the basis that it would improve morale and productivity, could be seen as ultimately benefiting shareholders, even if it tanks profits and dividends in the short-term.

Pretty much the only way you could actually get the Dodge v Ford case invoked in precedent is to have someone on the stand admit that he/she was trying to screw over shareholders (which is basically what Henry Ford did, and why he lost the case), which should be impossible if that person has competent representation.

[falcolas]

Other court cases have shown that shareholder value is not solely profits. Shareholder value is also obtained by creating a company that will survive and thrive over time - it's why Target and Costco can both survive while paying reasonable wages to their employees.

[aerotwelve]

Dodge v. Ford is only precedent in Michigan. Even within Michigan, it's my understanding that the decision is outweighed by the business judgement rule[1], which contradicts any mandate of shareholder primacy.

[1] https://en.m.wikipedia.org/wiki/Business_judgment_rule

[394549]

> Lowering profits means reduced shareholder value and a lower market capitalization. Every company is interested in providing as much value to shareholders as possible.

Ultimately, it's pro-business elite politics that have created that situation. IIRC, corporations, like copyrights, exist to serve the public good. If rapacious exploitation to achieve maximum profit is against the public good, the corporations that engage in such behavior should be either reigned in or destroyed using the legal system.

Unfortunately, like copyrights, corporate law has been twisted an corrupted into something that doesn't serve the public good anymore.

[vezycash]

>Every company is interested in providing as much value to shareholders as possible.

To short sellers of Tesla stock, maximum value would be?

[tzmudzin]

Short sellers by definition are not shareholders.