[catchnear4321]

Publicly traded companies only have one allegiance. Shareholders.

Congress passed the act.

Congress allied with Intel and the other companies. As representatives of the American people, of course.

Congress has exceptional results with investing.

If Americans considered Congress an ally…

With representation like this, who needs a ruling class?

[gumby]

> Publicly traded companies only have one allegiance. Shareholders.

That's not a law, just a moderately recent convention: Milton Friedman in the 70s claimed that a company existed only for the good of its shareholders. And of course we've seen examples of this attitude from time immemorial.

But remember the famous 1950s quote from the then CEO of GM: "what was good for our country was good for General Motors, and vice versa.” People usually twist it around the other way and claim that the company was saying it was more important than the country, but that's not what Wilson said. He made that statement as part of a speech (congressional testimony IIRC) saying that business needed to serve society.

[catchnear4321]

So a quote from 70 years ago, shortly after WWII. Important time for returning to something like normalcy after the war. Put our boys to work.

But every publicly available statement made by a CEO is PR. Like it or not. Not always done with that intent, but usually with it in mind.

Sure, the impact to employees has been felt more recently. But the attitude has been there before they were companies and employees. Kingdoms and subjects, plantations and slaves, whatever the case may be. Very old. This is just the latest skin. There’s always those parties that go against the current.

So to respond to your CEO reference, I’ll throw out a more modern one. I’m having to go on what little I’ve gathered from the media, but Dan Price seems like the real deal. Even with what I said above. Can’t know, but the look is good. I buy it. I want to believe, even after learning I shouldn’t.

Good companies can exist. Good people exist, and can lead companies. All of which can serve society, and benefit all individuals.

“Can” isn’t enough. And there are far too few that ARE.

[gumby]

That is a very famous, widely discussed (and widely distorted quote) not some random comment.

And your example reinforces my point. There is a sickness that spread from the Reagan era, but recognizing it is crucial to treating it.

[catchnear4321]

The quote was contextual to the time.

But the problem did not start in the Reagan era. It simply evolved. And it still does. Recognizing the problem is critical. I don’t believe you have. Not that I’m claiming any different of myself. I’m ok with that personally.

I keep scratching my head on the insistence of many that we should look backwards for the advice on how to go forwards. Look backwards to see mistakes, sure, but this seeming obsession with the words of powerful men, typically long dead ones, a quote from a CEO, a political book, a religious one, the medium doesn’t matter nor does the subject.

But there’s always a wise dead guy that needs consideration. If not more.

It is puzzling to me.

[colinmhayes]

No. Companies being beholden to shareholders is absolutely a law. The shareholders own the company after all, they can fire anyone at the company they want.

[rightbyte]

> Publicly traded companies only have one allegiance. Shareholders.

That is the nominal one. But I feel more ofent than not the real alligience is to the board and lower manager class.

[catchnear4321]

The company can be co-opted by greedy upper management. (See DataRobot recently for an example). But that’s more like a company getting conned from inside the house. The company’s allegiance was sabotaged or subverted.

Beyond that? Loyalty is to the biggest investors. Other companies. The CEO answers to the board, and the board tends to answer or connect to those companies. Sure, they profit, but that’s a pittance compared to the real money. Managers below that get their fraction of a fraction. And everyone else drools because that’s still real money to an individual.

[AinderS]

> Publicly traded companies only have one allegiance. Shareholders.

We have to either change this, or rely on a different kind of entity for economic activity. Because abandoning companies to be cannibalized by the financial class, or colonized from abroad, does not lead to prosperity.

[arghwhat]

Allegiance to shareholders does not mean that companies get cannibalized.

"Abandoning a company to be cannibalized" means stunting growth which is useless to greedy shareholders. If the shareholder was okay with not having growth they wouldn't be invested in the first place.

The main problem with allegiance to shareholders is the craving for financial growth at any cost, including deviation from the company's goals or disregard for users in profitable ways. A paper-clip maximizer.

[catchnear4321]

Allegiance to shareholders is also not created equally. Harming all shareholders is bad. Employees own shares in many cases, RSUs or otherwise.

But companies aren’t thinking about context. Money for shareholder means satisfied shareholder. The end.

Companies have to make sure most shareholders are happy. Or more accurately, that those holding the most shares are happy.

That won’t be employees. It won’t be individuals. It will be other companies.

Companies are allied with the companies that hold most of their shares.

But companies are basically people so companies basically care about people. Really companies just care about companies.

Save for the super elite, individuals aren’t on the radar. They get dividends incidentally.

This all becomes an even bigger mess because companies can’t keep other companies (and politicians) happy if people aren’t supporting the companies, through purchases.

But if the politicians can just provide a little support, by way of taxpayers…

[hakfoo]

I think it's less the problem of "shareholders" and more "short term shareholders."

If you're holding for 10 or 20 years, you may well be considering things like "If we spend a dollar in R&D today, we get back twenty later", but the guy who's bailing after the next earnings report wants that dollar on today's books. We do a questionable job serving tha long-term investor.

On a long enough term, most of the social-ethical-envrironmental investment strategies that are seen as niche can also be seen as prudent-- are you sacrificing the value of investors in 2050 by keeping a cavalier attitude on climate change today, or paying your contractors so poorly that they'll be unable to buy your future products?

We have the short/long term capital gains tax divide, but there's no reason we couldn't tax short term gains at a much higher rate than conventional income, explicitly to force people to demand long-term corporate perspective.