[CuriouslyC]

That solution is never going to work when black swan events occur on the order of every 5-10 years and executive vision is focused on the next quarter with little concern paid to anything outside the next 2-3 years. Nobody is going to want to give up short term performance to mitigate risks that probably won't manifest until after they've left for a better job.

[kortilla]

That solution is how it already works for the vast majority of companies in the US.

“Too big to fail” is a meme that only applied to a tiny handful of companies during the financial crisis. Take a look at SVB for how fast a stalwart huge bank can implode with zero fucks given by the government.

[collingreen]

By "zero fucks given by the government" do you mean the government got involved, effectively bought the bank, and took responsibility for 100% of deposits (most of which were the balances of startups, ie venture capital investments)?

[kortilla]

Nope, shareholders got wiped out and the bank was done as a bank.

What you’re thinking of is FDIC which is completely the opposite of a bailout for the bank. It’s a bailout for depositors (a huge portion of which were normal people). Arguments for the FDIC protecting people from keeping money in bad banks is a different argument, but it most certainly isn’t a bailout.

If you think going bankrupt and the FDIC seizing your company and wiping out shareholders is a bailout, you don’t know what a bailout is at all. That’s standard bankruptcy with an extra heavy boot on the throat from the government because they are ruthless about maintaining consumer confidence in the banking system.

[collingreen]

I didn't say bailout. You said the government gave zero fucks but I think it actually went way above and beyond the normal FDIC insurance to make sure ALL depositors were made whole not just up to the normal 250k.

[jppope]

Pretty sure Boeing should have failed 3 times by my count.

[kortilla]

On what financial grounds? When did they receive bailout loans or grants?

[wongarsu]

5-10 years is a perfectly normal investment horizon, and in the end investors are the ones electing the CEO and setting goals and rewards for the executive. If betting on the long term is a winning strategy companies absolutely have the means to do that. But right now it usually isn't.

[LorenPechtel]

Yeah, that's the real problem. Too much efficiency in the short term.

My idea on working around this: for any business with actively traded stock there is a salary cap, say $1m/yr *per year*. You want to pay that guy $10m/yr? No, you pay him $1m and he gets 9 sets of shares that are worth $1m now, but they will be delivered one a year. Next year, same thing, you give him $1m, one set of shares from the previous year is delivered to him, he's got 9 new sets coming. So long as you have such shares forthcoming you are not permitted to engage in any trade where you would gain from the stock going down. If you do so inadvertently (say, investing in a fund that shorts the stock) any income from that is taxed at 100%.

The idea is to make your top people care about the long term prospects of the company, not merely the prospects of their area for whatever time they're in charge of it.

[WillPostForFood]

Businesses won't plan long term or for black swan events if they don't have to; it is rational not to if they know a bailout is coming.

[lukeschlather]

Businesses won't plan for black swan events when the people operating them have other sufficient wealth that the death of the company doesn't pose a serious problem for them. When CEOs make enough in a year to retire, there's no need to to worry about a potential catastrophic failure next year.