What's Wrong With American Business Culture And The Economy?

[CountDeMoney]

???

Not paying dividends seems the exception, not the rule.

Maybe in 1950, but only until recently would companies rather extend stock dividends than cash dividend payouts;  and the only reason cash dividends have shot up recently is because there's no real value in holding on to all that cash companies have accumulated since 2008.

[DGuller]

That's clearly why Henry Ford was such a huge failure, I guess.

God, you're an intolerable idiot.

Or maybe that wasn't really his specific goal, or maybe he was right for the wrong reason?  Efficiency wage explanation makes much more sense than giving workers money to buy his cars as a profit-boosting strategy.

[fhdz]

That's clearly why Henry Ford was such a huge failure, I guess.

God, you're an intolerable idiot.

Or maybe that wasn't really his specific goal, or maybe he was right for the wrong reason?  Efficiency wage explanation makes much more sense than giving workers money to buy his cars as a profit-boosting strategy.

I think you're misinterpreting his goals, or the way he defined success.

[DGuller]

I think you're misinterpreting his goals, or the way he defined success.

Whatever his goals were, or however he defined success, giving people money so that they could (maybe) buy your products is not a transferable lesson.  I don't argue that money in common people's pockets may be more beneficial to society and economy than money in corporate vaults, but it would not be more beneficial to the corporation owning that vault. 

You can't structure society by expecting entities to act against their self-interest;  you instead have to align the incentives for the entities and the entire society.  The fact that some entities did choose to act against their self-interest in the past, out of ignorance or out of lack of competition, does not change that pretty basic conclusion in economics.

[fhdz]

 

[DGuller]

Care to expound on that?

[Zanza]

Whatever his goals were, or however he defined success, giving people money so that they could (maybe) buy your products is not a transferable lesson.  I don't argue that money in common people's pockets may be more beneficial to society and economy than money in corporate vaults, but it would not be more beneficial to the corporation owning that vault. 

You can't structure society by expecting entities to act against their self-interest;  you instead have to align the incentives for the entities and the entire society.  The fact that some entities did choose to act against their self-interest in the past, out of ignorance or out of lack of competition, does not change that pretty basic conclusion in economics.

Corporations have self-interest now? I thought they are just legal constructs.

[DGuller]

Whatever his goals were, or however he defined success, giving people money so that they could (maybe) buy your products is not a transferable lesson.  I don't argue that money in common people's pockets may be more beneficial to society and economy than money in corporate vaults, but it would not be more beneficial to the corporation owning that vault. 

You can't structure society by expecting entities to act against their self-interest;  you instead have to align the incentives for the entities and the entire society.  The fact that some entities did choose to act against their self-interest in the past, out of ignorance or out of lack of competition, does not change that pretty basic conclusion in economics.

Corporations have self-interest now? I thought they are just legal constructs.

Its owners do.

[Zanza]

The owners are just one of multiple stakeholders of a corporation. Why is their self-interest identical with the self-interest of the corporation?

[Barrister]

The owners are just one of multiple stakeholders of a corporation. Why is their self-interest identical with the self-interest of the corporation?

Because Henry Ford's name was on every vehicle he sold.  He also had a controlling interest in the company at the time.

[DGuller]

The owners are just one of multiple stakeholders of a corporation. Why is their self-interest identical with the self-interest of the corporation?

I'm not sure I understand the question.  Shareholders are the owners.

[Maximus]

Whatever his goals were, or however he defined success, giving people money so that they could (maybe) buy your products is not a transferable lesson.  I don't argue that money in common people's pockets may be more beneficial to society and economy than money in corporate vaults, but it would not be more beneficial to the corporation owning that vault. 

You can't structure society by expecting entities to act against their self-interest;  you instead have to align the incentives for the entities and the entire society.  The fact that some entities did choose to act against their self-interest in the past, out of ignorance or out of lack of competition, does not change that pretty basic conclusion in economics.

This strikes me as short-term thinking. It may be true Ford was not going to get rich directly through some of his employees spending some of their surplus earnings on his cars. However if he can create the idea that the common working man has the ability to own a car that idea will spread beyond his employees and that will definitely profit in the long run.

[frunk]

Care to expound on that?

I think Ford wasn't looking at it as a one sided affair, as if he could pay his employees enough that they could buy an at that time very expensive luxury item (the car).  He was also driving down the cost to make cars so that more people could afford one, effectively expanding his customer base to include his workers. 

[DGuller]

This strikes me as short-term thinking. It may be true Ford was not going to get rich directly through some of his employees spending some of their surplus earnings on his cars. However if he can create the idea that the common working man has the ability to own a car that idea will spread beyond his employees and that will definitely profit in the long run.

Somehow I doubt that the only thing keeping the floodgates of workers owning cars from busting open was the lack of examples.  In any case, if you want to prime the pump by putting cars into the hands of poor people in a subsidized manner, there are much more efficient ways to do that.  After all, the workers could spend that extra $5 an hour of "car money" on something else entirely.

[Zanza]

The owners are just one of multiple stakeholders of a corporation. Why is their self-interest identical with the self-interest of the corporation?

I'm not sure I understand the question.  Shareholders are the owners.

Yes. But the corporation is more than just the capital. It is also e.g. the knowledge and skills and time of the employees. Why is giving a corporation your capital in return for a dividend somehow making you only the only relevant stakeholder in corporate decisions? Why is giving a corporation your time in return for a salary not making you a relevant stakeholder in corporate decisions? The owners are affected by corporate decisions, but so are the employees. Why don't they have a say in corporate governance?