[minikites]

And then the shareholders punish them:

https://www.vox.com/new-money/2017/4/29/15471634/american-ai...

>American Airlines agreed this week to do something nice for its employees and arguably foresighted for its business by giving flight attendants and pilots a preemptive raise, in order to close a gap that had opened up between their compensation and the compensation paid by rival airlines Delta and United.

>Wall Street freaked out, sending American shares plummeting. After all, this is capitalism and the capital owners are supposed to reap the rewards of business success.

>“This is frustrating. Labor is being paid first again,” wrote Citi analyst Kevin Crissey in a widely circulated note. “Shareholders get leftovers.”

[toiletfuneral]

Can anyone explain why they're downvoting this?

I know anecdotally My employer constantly gets in trouble during earnings calls from shareholders for doing anything remotely environmentally responsible because it impacts margins. It's pretty clear capital has no intention of being ethical at the cost of profit

[big_chungus]

Because it's being phrased as "punishment", which implies some kind of punitive action. "Oh the greenies are putting trees over green, we'll show them! Watch your share price tank!" That's not what happens. It's a bunch of quants sitting and running the numbers forward a few years to estimate numbers and price accordingly, not a conscious decision to punish. The big traders don't really have a particular attachment to a given company and just buy and sell accordingly. A big chunk of it's algorithmic anyways. If it decreases profit, a company can expect to see a decrease in share price because the company will likely be worth less in a few years. The phrasing of the parent implies it's an intended or targeted action, but that's not how markets work.

[goliatone]

I understand your reasoning and appreciate you explaining the downvotes. I still think it could be argued that GP’s comment could be better understood in terms of “what” rather than “how”. It’s easy for humans to interpret the outcome of the algorithmic pressure as punitive. And I would say is also understandable that is interpreted that way generally and specifically in GP context with that quote about leftovers. As to the how, would it be possible NY hat humans/quants make algos that encode that believe?

[Iolaum]

It is how markets work. Your description just makes it an emergent property of how the markets function.