Happy Systematic Eradication of Labor Day

[CountDeMoney]

It's interesting to me that those who don't own stock, and are therefore the least exposed to the alleged depredations of CEOs, are the quickest to criticize.

I didn't need to own any stock at all to be the most exposed to CEO depredations. 

[Admiral Yi]

Wow, looks like someone didn't read the long, boring article.

Sure didn't.

[CountDeMoney]

Wow, looks like someone didn't read the long, boring article.

It's different in Yi's world, where economics is a foo-foo parlor exercise in amorphous, esoteric theory, a topic fit for only the highest of the high-brow types.  If you had your Wharton MBA, then you'd understand.

[garbon]

Parade was 2.5 hours long with the Shriners making up like a third of it.

[Ideologue]

Wow, looks like someone didn't read the long, boring article.

Sure didn't.

If you did, you'd realize that the point being made is that the commitment to shareholder value is the incorrect focus of a firm, whereas the creation of a customer (I'd prefer "satisfaction of a demand," but either way) is the value it brings to the economy.  This is especially the case when the two goals completely diverge without it being recognized.  Short-term efforts to raise "shareholder value" take the form of unethical/illegal buy-backs, self-dealing, and pandering to institutional "investors," but they extract wealth from a firm at the expense of long-term prospects; pillaging takes the place of reinvestment.  Ultimately, this destroys the external value the firm has to the economy (to customers, to employees, to the People) in exchange for enriching economic criminals (CEOs, hedge fund managers, large shareholders).  The result is wealth inequality and, perhaps, the destruction of long-term economic capacity.  Human capital and physical capital spoil like milk in the hot sun, as each are replaced with cheaper, shittier foreign substitutes, or indeed with nothing at all.

The articles' and thinkers' recommendations are properly conservative and weaksauce and may not offend you--modifying some SEC rules, which would help, plus the always-popular but worthless notion of "changing the culture" which drew an inward, bitter "LOL" from yours truly.

See, I could write business memos summarizing important articles.  I could even leave the class war language out if it were necessary.  Can I come work with you at SPECTRE or whatever evil organization it is you consult for?

[Ideologue]

Wow, looks like someone didn't read the long, boring article.

It's different in Yi's world, where economics is a foo-foo parlor exercise in amorphous, esoteric theory, a topic fit for only the highest of the high-brow types.  If you had your Wharton MBA, then you'd understand.

If I had my Wharton MBA, I'd soothe my conscience with some caviar while my man drove me around town in my stretch Benz, picking up hookers to humiliate for chicken feed.  Maybe literally chicken feed.  That's hot.  Cluck cluck, bitches.

[CountDeMoney]

If I had my Wharton MBA, I'd soothe my conscience with some caviar while my man drove me around town in my stretch Benz, picking up hookers to humiliate for chicken feed.  Maybe literally chicken feed.  That's hot.  Cluck cluck, bitches.

If I had my Wharton or Harvard MBA, I'd walk amongst the groundlings, and pick out which people I'd outsource overseas, like so many lobsters with rubber bands on their claws.  And then I'd have my man Buskers cruise me over to the country club and so I can josh about it over brandies and cigars with Randolph and Mortimer.

[Admiral Yi]

Ide: I read the first article.  I thought you were talking about the 40 page monstrosity.

Re: satisfaction of demand.  That's already captured by the sale price of the goods and services sold by the firm.  Apple is a perfect example of a company that is able to charge a substantial markup because its customers are so in love with its products.

Explain to me what is unethical/illegal about share buy-backs.  Is there some sort of biblical commandment that states how many shares outstanding a given firm must have?  Also please explain how buy backs only benefit evol CEOs, hedge fund managers, and institutional investors (which, of course, are typically pension funds, mutual funds, or insurance companies).

[Ideologue]

Ide: I read the first article.  I thought you were talking about the 40 page monstrosity.

They're both about the same thing, so fair enough.  I thought you meant you didn't read either, but that was my fault.

Re: satisfaction of demand.  That's already captured by the sale price of the goods and services sold by the firm.  Apple is a perfect example of a company that is able to charge a substantial markup because its customers are so in love with its products.

Explain to me what is unethical/illegal about share buy-backs.  Is there some sort of biblical commandment that states how many shares outstanding a given firm must have?  Also please explain how buy backs only benefit evol CEOs, hedge fund managers, and institutional investors (which, of course, are typically pension funds, mutual funds, or insurance companies).

Why, do I get college credit?  Dudes already did, and I already summarized it.  In one sentence: instead of investing in innovation or employees or anything, firms engage in buy-backs, the major effect of which is to manipulate stock price and enrich a few entrenched interests rather than furthering the business of the firm.

That's why it's unethical.  It's potentially illegal because there's, you know, a law against it, unless the author just made it up.

[Admiral Yi]

But *why* is that unethical?  Who are we to tell them how to use their money? 

Buy backs are typically done by companies in mature markets that don't see any return on investment in expansion or acquisition.  So they return the money to its owners, in the form of cash (if they take the offer) or elevated stock price (if they don't).  It's no different in practice than paying a dividend.

Do you consider it unethical to pay dividends?  That's also money that could have been used to invest in human capital blah blah blah.

[Ideologue]

It's unethical to violate one's fiduciary duty to a firm of which they serve as an agent for one's own personal gain, at the expense of the firm's future, yes.   We tell people what to do with other people's money all the time, and this basic notion is hardly my usual commie bullshit at which you might sneer.

Buy backs are typically done by companies in mature markets that don't see any return on investment in expansion or acquisition.  So they return the money to its owners, in the form of cash (if they take the offer) or elevated stock price (if they don't).  It's no different in practice than paying a dividend.

That's a factual assertion, and the (long, boring) article asserts otherwise, quoting ROIs an order of magnitude lower for buy-backs than reinvestment into the company.  There's undoubtedly counter-evidence, but if the article's assertion is generally true, then the conclusion is self-dealing, not investment shrewdness, since executive compensation is tied more strongly to stock price than to long-term profits.

Do you consider it unethical to pay dividends?  That's also money that could have been used to invest in human capital blah blah blah.

It could be, sure.  Not by logical necessity, just like buy-backs aren't unethical by logical necessity.  They seem to be so in practice.

[Admiral Yi]

That's a factual assertion, and the (long, boring) article asserts otherwise, quoting ROIs an order of magnitude lower for buy-backs than reinvestment into the company.

That's in the first article?  I don't see it.

[Eddie Teach]

It's not the buyback itself, it's the conflict of interest when buybacks affect executive pay. Looks highly unethical.

[Ideologue]

That's a factual assertion, and the (long, boring) article asserts otherwise, quoting ROIs an order of magnitude lower for buy-backs than reinvestment into the company.

That's in the first article?  I don't see it.

[Ideologue]

It's not the buyback itself, it's the conflict of interest when buybacks affect executive pay. Looks highly unethical.

Executive pay, as well as institutional investor-gamblers.