Every company should be owned by its employees
elysian.press
elysian.press
If the story is "every company should offer stock options to its employees", then sure, that's often a good business plan. The reason not every company does it to all its employees is probably that for those employees, it wouldn't affect incentives much and it would make payment subject to the vagaries of the stock market. Your barista at Starbucks is not going to increase the stock price no matter how well he fills your order; at the same time, maybe he wants to know how much he takes home every day.
If the story is "it should be the law that every company offers stock options", then that would be a dumb law for the reasons above.
If the story is "all companies must be fully employee-owned workers' cooperatives", then first, note that you are calling for a restriction on workers' rights: they have to be given part of their pay as stocks, and they can't sell them freely. Second, that will probably make markets work worse. There's a large economics literature on this: worker-owned cooperatives have not taken over the market, although they are an available institutional form, because (a) they find it hard to raise capital (b) they tend to make decisions that maximize worker welfare rather than profit, e.g. they won't sack underperforming divisions or expand in ways that dilute existing workers' stake.
But 400k barista all doing it well might.
The vast majority of people in companies are workers. Let's stop optimizing for owner wealth and start optimizing for worker happiness instead.
Maybe, you want to rethink that.
Should teachers be judged on how a pleasant life they live, or how good they teach?
Focusing on children is the more pro-social preference, but children who attend schools famously don't have jobs in functioning societies.
More importantly, the teaching system is basically un-incentivized by incentives - teachers in the US (focusing just on the US for a sec) are incredibly underpaid, and basically rely on masters-degree teachers putting in effort completely disproportionate to the pay. Everyone accepts this state of affairs specifically because we're all ignoring market incentives in favor of the good of society (i.e. the quality of childrens' education).
So, let's suppose we judge teachers based on how well they appease politicians and parents who support their funding: they pass all students, regardless of how poorly they do on tests and how badly the children need to just repeat the year. This is a terrible outcome, and yet you're implicitly endorsing it.
Nobody gets into teaching for the money—and, for that matter, there’s not a clear connection between doing it well and any kind of rewards at all, as it stands.
However, if you're really good at teaching you can teach at a private school and reap a lot more rewards. Better pay, better recognition, a better work environment this list goes on and on.
/wife is a teacher and has taught in both public and private highschool
As a bonus, private schools are usually way more willing that public schools to tell annoying parents to get bent. Which is a pretty big perk on its own.
....sounds better when you elaborate on the categories you selected.
Given that, if you could make everyone's jobs more fullfilling and increase people's salaries at the cost of things costing a bit more, you would definitely increase overall wellbeing. People would afford a small amount less, but that would not impact them significantly, or maybe at all.
The problem I see is that in global competition, you may be put out of business by countries that give much less shit about worker's wellbeing because people will still spend almost all their money on the cheapest available option (even more so if they can afford less!), and that IMHO explains why American companies have taken over so many markets overseas (and now, China seems to be doing it even more). When that happens, everyone in the country loses. So there needs to be a balance, which I think Europe is doing more or less well: people still have great working conditions but can afford less than in the USA, where people have very near the worst possible working conditions (nearly no vacation mandated by law, no parental leave, no healthcare except for the best jobs), but can buy more useless stuff.
That seems hard to judge in the short term - if in 50 years some economically-critical ecosystem collapses like the north atlantic fisheries did, they will have been absolutely necessary in retrospect.
Speak for yourself, not everyone is in debt all the time, and some never in debt whatsoever even when they have no unusually above-average earnings.
But as part of a vast majority, you are as correct as possible.
Then again capital is just plain Other Peoples' Money, and you can't be a capitalist without capital, no matter how much you wish it was true.
One problem with housing is that real estate has investment potential but for decades it has been too expensive for average people. Debt is crafted to barely make it possible to get into a property, and you may do well if values increase but there is an entire system in place so that others profit more from the same piece of property than you. Vehicles are another high-dollar item where debt is usually incurred, but these almost always depreciate fast. You can draw the line there and be pretty realistic, but there are plenty of people who are at the extreme where everything that costs money is borrowed.
So that's about as close to capitalist as most people get. That's about all of OPM they have at their disposal, and the only thing invested in that has upside potential is the home. For those fortunate enough to have gotten in when it was more within reach. And there can still be a gradual spiral downward which is too slow to notice until it's too late.
Sometimes it helps to do the math and not be afraid to admit how far from capitalist you actually are compared to how capitalist everbody thinks they are.
Disclaimer: this article was DOA & flagged instantly with zero comments, but it seemed OK to me and I vouched and now look at it. Nobody's fault but mine.
Excepting for the cases where people have no other choice.
I mean, do you know how any of your food is produced? If you wanted to verify that the ingredients are what they say they are, can you? If you're buying a car how confident are you the transmission is reliable? Do you actually understand how the transmission is designed OR... is it just brand name? It's brand name, right.
Ultimately companies don't need to, and are better off not, producing high quality and safe goods. It makes much more sense to produce lower quality goods and reinvest the savings into advertising. The consumer won't know the difference, and they couldn't find out even if they wanted to.
And no, we cannot just outlaw competition. Having an efficient economy is important and valuable because it allows us to have a higher standard of living while putting in less work.
But, many companies (especially those really competitive ones!) just... don't make money. It's easy to be a big disrupter like Uber when you make -500 million dollars a year for 15 years. Naturally that wouldn't when you aren't on capital welfare.
What's the actual plan?
For instance, even public companies might increase the percentage of employee ownership over time.
But capital needs could still be met, as the public or private non-employee stock class would still exist.
Why would an investor invest in a company that, if it fails, they lose their money, and if it succeeds, their ownership is taken away?
Owners are bought out. For a public company that just means buying back shares.
A company whose employees care very much about share price sounds good to me. It is not much different from companies who let employees “take” options.
That could be financially mismanaged too.
There would need to be a rational structure.
But in practice, what does it mean? Do you want to make illegal a shareholder selling when they want to? They have to sell at whatever the price is when the company needs their shares?
It would be straight forward to require companies over a certain size to issue and distribute some number of shares based on current pay to employees. Existing shareholders will have their stake diluted but are welcome to buy more shares on the market while employees are welcome to sell or hold. If the investors are actually good at allocating capital, they should have plenty of profits from previous investments to maintain their % ownership despite the share inflation. If they aren't, then they should find a different job.
Under this scheme, Bezos would still have become a billionaire, and we know this because Amazon and tech companies already do this exact thing by offering stock options!
And the neat thing is, when a company does a stock-buyback, this is literally the same giving a dividend of the profits to employees.
I know you said "literally", so all bets are off in how you'll parse a reply, but yes, I do know about share dilution. You're describing practically the same thing. You want people to risk all their capital, and if the business does well you auto-dilute them. That's fine if it's what they signed up for, but it will have a chilling effect on investment.
> Under this scheme, Bezos would still have become a billionaire, and we know this because Amazon and tech companies already do this exact thing by offering stock options!
Again, the "literally" made it clear that this wasn't going to be great, but you're committing the apex fallacy. If you only consider the highest of high performing companies in how your instincts guide you, you're going to commit some very obvious errors.
We can lower interest rates for CapEx business loans to encourage investment. Do we really believe that if Bezos could have only become a single-digits billionaire that that wouldn't have been enough motivation?
> Again, the "literally" made it clear that this wasn't going to be great, but you're committing the apex fallacy. If you only consider the highest of high performing companies in how your instincts guide you, you're going to commit some very obvious errors.
Are we to believe that if Amazon hadn't formed, the hole in market would remain unfilled? I find this very unlikely. Someone was going to be Bezos. And we don't have to begin diluting their share in the first year of the company. And lets be real here, they're going to be paid the highest salaries at the top. They can buy shares that their employees sell on the market like everyone else. I mean, if you're a CEO of a company, you should want to buy shares right? Because you believe in your leadership? So they can pay themselves a large salary and reinvest as much of it as they want.
But this framework exists, and is used by a huge number of firms.
There seems to be a lot of sour grapes that pro employee arrangements are inherently scammy. For no good reason. None of the ESOP companies were mandated!
Thee is a legal framework for those.
There is a legal framework for changing an S-corp to C-core
There is a legal framework for going public
There is a legal framework for declaring bancruptcy
They have NOTHING to do with mandates.
Frameworks are developed over time to handle complex and not always obvious issues in a rational way.
The benefit of a legal framework is its accumulated wisdom developed by law and courts. And the fact that it becomes a recognizable thing for all parties to consider, and makes that path easier to take if that is the decision.
But any transition would (by any reasonable process) be at the agreement of current shareholders. So issues of compensation, and other issues should be dealt with sensibly.
The most sensible way for this to be an easier option, that works out well, is to develop a well thought out framework.
—-
Open source is a very valuable recognized legal framework. Between evolved OS licenses, supportive court cases and the general law, we are better for this framework.
It makes it easy for small actors to take advantage of that approach to publishing software with little legal risk (if they handle known issues, such as not including non-OS work, etc.)
Nobody is forced to be open source.
People and organizations who talk about social welfare (e.g. unions) should put their money where their mouth is, and do the seed investments.
You haven't said why worker cooperatives optimizing the benefit of their own workers wouldn't add up to more welfare if the entire economy was based around worker cooperatives.
in my opinion worker ownership of the means of production is just socialism, and that doesn't have a good historical track record.
Please cite some sources that are not communist countries. You know, “just socialism.”
You way want to also ignore the existence of Norway, much of Europe, and popular US federal programs too when you're doing this exercise.
It’s not socialist in any sense. It’s a diehard capitalist country with a lot of public services and welfare (funded by taxes generated under a capitalist system).
https://en.wikipedia.org/wiki/Market_socialism
Specifically this is market socialism.
Our world is being destroyed by capitalism, maybe its time to try something else.
Well.. same could be said about "democracy". Despite its many inherent flaws (and even a more non inherent ones) free market capitalism has been the main driving force behind human progress for hundreds of years.
Personally I strong believe that (free) competition was the actual real "force" behind it. It just happened that capitalism (however flawed) provided the best environment for incentivizing individual and groups to compete in a "productive" way, accumulating capital in a reasonably regulated and fair way, instead of treating the world a zero sum game (i.e. in premodern societies usually the only real option you had if you wanted to gain significant wealth besides inheriting it was taking it from other people through force or coercion). Stable legal, societal, economic environments (also things like patents, copyright etc.) created ways to reward innovation and other societally productive enterprises.
When I say "fair" I of course mean it in relative terms (and even then that limited "fairness" was almost exclusive restricted only to members of your own society). But it was a huge improvement over arbitrary despotism, societal and economic, instability and various misaligned incentives that preceded it (e.g. possibly why the Roman empire didn't really progress past the "proto-capitalist" stage).
IMHO Socialism and similar systems have a major flaw (besides the fact than they can't really exists without excessive coercion) in that they stifle competition and don't tend to incentive/reward behaviors leading to growth and innovation.
Not that monopolistic-corporations etc. are any more likely to behave any differently without strong incentives, or that non-profit/government funded/etc. organizations can't produce anything innovative or societally beneficial or are somehow inherently worse at that than profit seeking companies (often the opposite). However again they need incentives to not consume/waste all the resources they get without providing anything in return and the need to compete (or lose funding/end up privatized) with the private sector often (again in relative terms, compared to any alternative systems I can think off) provides those incentives.
People claiming that https://en.wikipedia.org/wiki/Social_market_economy is "socialism" are not any less silly.
If this was a startup trying to make worker owned co-ops more attractive I'd see a blog post explaining how they fixed the problems everyone else was having. That, and explanations of how this scales to an entire society.
That's the standard of discussion for everything else on this site and it shouldn't disappear because the subject is socialism.
> existence of Norway
Which is certainly not a "socialist" countries, unless you define socialism in extremely broad and ambiguous terms at which point the word losses any meaning.
https://en.wikipedia.org/wiki/Social_market_economy isn't socialism by any reasonable definition. Unless you think Bismarck was a socialist...
That's a wild statement that is going to need some strong proof
A perfect market is one where
- alternatives can be created for little to no money so they can easily exist
- consumers have an infinity of time, money and energy to analyze products
- consumers have total agency over their decision
- picking an alternative has no cost, no drawback
- it is possible to buy nothing and still be content
There are 0 markets that fall under those conditions. The measure of how good your product is is not in its sales figures it is in... reviews.
No, it doesn't. We live in a stochastic world, not a deterministic one, and nothing perfectly fits any speculative model. There are always outliers and edge cases, and that's fine -- the world doesn't need to perfectly adhere to any model in order for the model to be more accurate than not in the general case.
And the proposition that business profits are largely aligned with consumer interests in the general case, even despite outliers to the contrary, is very obviously true.
But that's my point: the world is so different from that model that it becomes inaccurate. You might be privileged enough to have a good enough approximation of a perfect market, leading you to believe that the model stands, but you are not representative of the population. Not even close to the median.
> And the proposition that business profits are largely aligned with consumer interests in the general case, even despite outliers to the contrary, is very obviously true.
I don't know why I'm debating this in the hyper-capitalistic forum that Hacker News is, but no, business profits are not. If they were, no advertising would be necessary, because products would naturally be sold. If they were, every consumer would have access to everything. If they were, no lobbying by any company to soften laws seen as too restrictive would be necessary. If they were, companies would not emit a single gram of CO2.
The whole point of business profit is to profit. Aligning with consumer interests is lucky happenstance, not a necessity. A fringe outlier, as you say. You cannot say "it is true because I see it". It needs to be backed by strong analysis.
Look at something like Dark Patterns. These make a business more money by making a product worse.
Do you mean there are myriads of example of companies who say that they are optimizing for profit, but don't actually follow through in their actions? Humans do, indeed, have a penchant for saying one thing and then doing another. But if they are truly optimized for profit, how could they possibly go bust?
Of course not. The constraints are exactly what you optimizing against. Choosing to operate in a market that is not capable of supporting profitability is not optimizing for profitability, though. One may claim to be optimizing for profitability, but actions speak louder than words.
"Just existing in the world, providing a service to customers and a wage to employees" is a fine and stable way for a company to exist.
One could similarly say that the company goes kaput if you over-optimize for profit extraction.
The goal should be to some-how optimize for the sweet spot where the well-being of the company, the employees, investors, the economy and the environment are sufficiently in balance.
I think the customer has a good bit of influence by voting with their wallet but we don't see it in action very often. One could underoptimize for that too!
If only some companies are coops, then those have to compete with companies that aren't and consequently they have to work efficiently or fail. The idea behind making them all be coops seems to be removing this pressure to perform. Bad idea.
Again, this is a culture thing, where I'm saying "I don't care about being productive, as long as I'm happy", and you're coming from a Protestant work ethic place of "but how can you be happy if you aren't productive?".
As for me being some sort of Christian; I'm not and I take that as an insult. Kindly go fuck yourself.
Also productivity is complicated because humans are complicated. You may assume that, say, 50 hours of work is more productive than 40. But I doubt it - from what I've seen, it might be less productive. Even though more time is spent.
As for 'the change from serfdom', if you're referring to the improved working conditions following the peasants revolt, remember it took the Black Death to wipe out 50% of the population in England, consumption went down, but the potential productivity of survivors would not have changed much, so landowners had to pay more for laborers to attract manpower for farming.
A decrease in productivity relative to consumption is not good, as it just causes low-supply driven inflation and makes everybody poorer. That being said, I believe the quality of productivity / consumption also need to be considered, not just aggregates. It's entirely possible a lot of productivity is just garbage products and irrational consumers are happy to consume or are tricked/bamboozled. ZIRP and excess monetary expansion facilitates these distortions, giving investors cheap money to stimulate production in dubious industries, and giving consumers cheaper credit to purchase products of dubious value.
I think sometime in the future working will be completely optional. Would this be infinite productivity, or zero?
And you're free to work part time or switch to a lower-paying job that you enjoy more. I did the latter recently; it's great, and I'm thankful that our economy is so productive that I can still afford everything I need.
Coops don’t want to beat the competition, they want to be a useful structure for A) their clients and B) their workers.
If they manage to do A+B, they have already won. They don’t need or want to beat out competition.
They don’t play the capitalists game, they play the real game of "in a working society, workers want to be useful and customers wants a good service". There is nothing more to happiness of a society. Everything else is just about making rich people more rich.
There are lot of countries out there in the occident where you can’t "excise unproductive divisions" and where firing a worker without a solid reason is hard and dangerous for the employer.
And guess what, they have a cost of living that is comparable to the US (except for housing which is currently shitty all over the occidental world).
Ok, you may say that the US is the first worldwide economy or whatever. And what ? A good economy is just a tool to help societies flourish. If you have a powerful economy but your citizens are sad and depressed, you are loosing the society game anyway.
Being efficient at getting shit done is probably important for global happiness, but that’s up to a point.
If people in US are sad, it’s not because schools are too long to construct or because roads are too long to fix, it’s because nobody even decides to build/fix them because it benefits "only" to the community.
Humans don’t inherently hate working, that’s even probably ingrained in their genes, they just hate being exploited.
Sure, you're free to optimize for anything you like. As am I and everyone else. I don't think there are any legal hurdles to set up a company that is fully owned by its workers.
Monopolies are still bad either way, but I doubt that the failure modes at employee owned monoploes is the same as at outside investor owned monopolies.
There are a multitude of ways that employee ownership can be encouraged, required, or ownership can be limited to employees.
Uplifting the entire global financial system to make a COOP more attractive through regulation wouldn't change this.
But actually to have any employees companies need to optimize for workers lives anyway. And it seems that cooperatives are not any better in this area - otherwise everybody would work for cooperatives.
Quantity of people benefitted isn't the only measure: magnitude of benefit is also relevant. The customer at a 7Eleven benefits in that they get to... what, buy snacks conveniently? Versus the worker who receives their entire livelihood and benefits, it becomes obvious that workers are the primary beneficiaries of a company.
> But actually to have any employees companies need to optimize for workers lives anyway.
This is quite obviously false. All companies have to do is present a united front on keeping pay low and benefits nonexistent to prevent workers from having better options. I.e. USA 2024.
> And it seems that cooperatives are not any better in this area - otherwise everybody would work for cooperatives.
Why is that exactly?
Can we leave the cynical antiwork comments out? They aren't helpful. This is obviously not the case for a majority of companies and anecdotes don't help.
Everyone is for the highest pay possible until they run their own company and have to provide payroll.
Major companies are regularly prosecuted for conspiracy to suppress wages. It if weren't for government intervention your wages would be much lower and there wouldn't be anything you can do about it.
This blind faith that billion dollar corporations would behave ethically is highly inappropriate
https://www.latimes.com/business/technology/la-fi-tn-tech-jo...
The social democracies, a middle path, as the Nordic countries have experimented with, seem to have done quite well. And there's now strong evidence that our system (neoliberalism) has stunted economic growth.
Regardless...
I support simple social reforms, like sovereign wealth funds (Alaska, Norway) and universal healthcare, greatly reducing the tension between labor and capital. Then these labor, employment, and ownership reforms wouldn't be so fraught.
Early form of capitalism didn't have limited liability companies. Just because you have to use Unlimited Liability Partnerships, for example, that does not mean it's not capitalism.
Once we move beyond capitalism, there are other words too, like mercantilism, imperialism, Neo-feudalism (arguably what we are getting to), schumpeterianism, etc. Expand your vocabulary.
Huh? You seem to know absolutely nothing about how the Soviet Union worked. They certainly did have money and companies. (And don't give me that BS about the CCCP not being "true communists" -- No True Scotsman fallacy)
In real communist societies like the Soviet Union (which are more accurately labeled "authoritarian socialism"), they need money to control allocation of goods, just like any other modern society. How exactly do you decide how many rolls of toilet paper to give to people? Some people need more than others, so either you have a giant government bureaucracy just to police how much toilet paper people use, how much of every possible type of food to eat, etc., or you just give people money and set prices for stuff, and let them figure it out themselves. These societies were centrally planned, but at some point it's simply impractical to plan everything.
I think it’s you who doesn’t. Notice USSR stands for Union of Soviet Socialist Republics. It was not a Union of Communist Republics. Have you stopped to think, why is that?
Leaders of USSR were communists, as in they believed in Communism. However, according to them, the country was socialist and they were working towards the goal of achieving Communism. That goal would be achieved eventually, when society or economy or technology was ready. But no official or leader of the Soviet Union would claim that they have already achieved communism.
So you can use USSR to claim that putting communist leaders in charge is a bad idea, but you cannot claim that USSR was an example of communism because not even people running it at the time claimed that it was.
And yes, the eventual goal was to get rid of the concept of money. You can read any of the soviet sci-fi, like Bull's Hour, and see how they imagined it would work.
This is so obviously, trivially false, I doubt even you believe it.
Should we remove the prohibition on murder?
Does regulation only shift murder, not stop or prevent it?
[0]: https://www.politico.com/news/2022/11/30/feds-powell-inflati...
And even then, there are lots of companies who want to provide the highest pay possible. I have always strived for this in my companies, anyway.
That isn't obvious at all. The US has the one of the highest pay gaps of any developed nation. Our largest companies with the richest executives have employees on food stamps. I'm not being cynical, I'm talking about reality, and I'm not going to shut up about it just so you can maintain your comfortable naivete on this issue.
> Everyone is for the highest pay possible until they run their own company and have to provide payroll.
If you can't pay your workers a living wage your business has failed in the only way I care about.
This doesn't contradict your point, but fwiw the pay gap of quite a few other nations come before the US. In terms of RP, the US ranks about 35th, behind many African and Asian nations.
https://en.wikipedia.org/wiki/List_of_countries_by_income_eq...
There's much more at play than just "cooperatives are not any better". Cooperatives don't get as much funding from investors because investors won't be owning a larger share of them, and taking their returns, they instead invest in a traditional company because then they can extract as much as possible from their investments.
That by itself already puts small scale cooperatives at a competitive disadvantage, you can't raise as much capital as the non-cooperative startup, even if their product could be better and their employers could be happier the lavishly monied startup will try to outcompete them by throwing money away until they get a larger share of the market.
If somehow this situation was improved where cooperatives are not immediately disadvantaged from an earlier stage we could see more of them popping up, right now there's not nearly enough cooperatives for this comparison to be possible, simply because they get extinguished by others with more capital.
Unions should put their money where their mouth is and invest in cooperatives.
Unions aren't structured for investing, and that's not their reason to exist.
I don't know where you are from so I can't comment on how unions function in your society, where I live they're definitely not in the same realm as a potential investor for cooperatives.
You are also asking for unions to compete against VCs, and banks, let's be realistic that even a large and wealthy union is not even close in terms of wealth management as a small to mid-size bank/investor. On top of that the union has responsibilities to provide benefits to all members, a bank or investor has none of that, tilting the scale even more in disfavor of an union assuming the role of investment.
It's a good thought though, another entity such as a credit union supported by workers in an industry which also takes the role on investing in cooperatives to foment them, would still be an uphill battle but if some good cooperatives came out of it maybe it could be another viable (albeit smaller) model to start companies.
A bank has responsibilities to its shareholders.
Depends on the union. A credit union is structured for investing and is literally their reason to exist.
[1] Although definitely not necessarily. A group of labour unions in these parts collectively own one of the largest hedge funds out there.
As in Labor Union.
Pedantry and HN - name a more iconic duo.
A "Labor Union" is colloquially a Union. A marriage is also called a "Union". And so is the mathematical operation joining two sets.
Not sure why you think we’d randomly change the topic all of a sudden for no reason…
Neither does the Union of European Football Associations, otherwise known as UEFA. They make up for it with a dope anthem.
Neither the Kalmar Union, nor any other personal union of monarchs, ever invested in a cooperative. Although some may have invested in joint stock companies, such as the various East India companies.
Maybe the Soviet Union was into worker cooperatives? Not sure.
And finally, the union of the set of workers at cooperatives and the empty set invests in cooperatives. Hey look, we found one type of union that definitely invests in cooperatives!
(I was just having fun making this as absurd as possible. Sorry, no malice intended).
Is that because most marriages exist in urban centres where cooperatives are uncommon to non-existent? Out here in rural country, where cooperatives are the norm, most married people invest in cooperatives as most of the cooperatives are customer owned. You don't have much choice but to invest, assuming you want to be a customer – and no doubt you want to be, given that they provide basic services for the region.
I'm certainly an investor in several co-ops, and not because I went out of my way to do so. That is, with the exception of one co-op, which I provided additional investment to. That particular co-op runs a very successful operation and provides healthy returns in what is a comparatively stable environment to those who provide an over-and-above investment. They attract quite a lot of investment dollars as a result.
Which says something about unions that aren't investing. Why aren't they investing? Simple: The companies they see in front of them aren't worth investing in.
Think CalPERS, CalSTRS, Teacher Retirement System of Texas, Ontario Teachers Pension Plan, and many others.
They seem to have plenty of extra money to fund political candidates.
Top hit from my casual search is a report containing case studies, two of which are SEIU.
A Union Toolkit for Cooperative Solutions [2021]
https://unioncoops.wordpress.com/wp-content/uploads/2022/02/...
Also, Richard Wolff has been advocating worker directed social enterprises (WSDE, aka coops?) for a while. Sadly, his now dated arm wavy book doesn't is more advocacy than HOWTO.
Democracy at Work: A Cure for Capitalism [2012] https://www.amazon.com/Democracy-at-Work-Cure-Capitalism/dp/...
And his website is not very focused.
https://www.democracyatwork.info/
I'm fine with polemics (about marxism, socialism, capitalism). But I'm already convinced.
Now I just want concrete action steps.
Please share any other (better) resources and links.
We forcibly allocate capital less efficiently; make markets less efficient and less responsive to innovation; with the sole aim of achieving a utopian worker-cooperative owned world?
Hrmmm, where have I heard that before...
I wish we didn't force capital to do things like that. Then it can run wild with Mandatory arbitration which bars access to the justice system, algorithmic manipulation of prices for rents / real-estate (1) and installing spyware on the customer's computers (2) and MITM attacks of your communication (3). They are all free market innovations. Very efficient at doing the wrong thing.
1 - https://rentalhousingjournal.com/fbi-searches-property-manag...
2 - https://www.pcmag.com/news/hp-accused-of-quietly-installing-...
3 - https://techcrunch.com/2024/03/26/facebook-secret-project-sn...
I call this the "Jr. developer fallacy." Start a job, encounter some bugs, suggest rewriting the entire codebase from scratch on [insert-trendy-framework].
The many systemic market failure modes of capitalism are well documented and written about at great lengths.
That "by any metric" is just plain wrong. There's several metrics by which the US healthcare system is among the best--in general, if the metric you are tracking is largely covering the success rates of medical procedures (sibling comment mentions 5-year cancer survival rates, for example), then the US generally scores high. If the metric you are tracking is instead covering general population health or things easily caught with preventative medicine, then the US scores abysmally in those metrics.
In other words, the US healthcare system actually turns out to be very good (if perhaps not on a per-cost metric)... but access to the good healthcare system is extremely poor. And that's kind of what you'd expect for a market-driven system: good healthcare if you can afford it, shit healthcare if you can't.
US Healthcare is expensive, but the quality is better than most other countries.
The American pharma companies also don't do the research, a lot of it comes from scientific institutions funded by public money.
What pharma companies do is provide capital for drug trials which are absurdly expensive, they are more alike investment companies than actual research institutes...
That's certainly not true. Of course compared to pretty much every highly developed country if we factor in relative spending per capita you'd be right.
But yeah, purely market/profit driven systems (with extremely poor and inefficient regulation) certainly don't work in certain sectors like healthcare.
Also it depends on what do you mean by 'socialized medicine', if you're specifically talking about single payer, your point is only valid if you ignore all other countries which don't have single payer besides the US. The Swiss and (as far as I can tell) to a lesser Dutch healthcare systems are 'privatized' to a much higher degree than the one in US i.e. effectively fully, there are no Medicare/Medicaid equivalents there. Instead they are very strictly and relatively efficiently regulated. They pretty much have Obama/Romneycare++.
If you mean something else than single-payer then the US system is arguably heavily 'socialized', both through insurance polling (just like in the countries I mentioned) and because the US government itself spends more on healthcare than most industrialized countries even relative to GDP. e.g. if we exclude all private spending (both individual and insurance) government health spending per capita in the US is significantly higher than in Britain and more than 2x higher than in Spain (and still significantly higher if adjusted by PPP GDP per capita)
https://data.worldbank.org/indicator/SH.XPD.GHED.PP.CD?locat...
I feel that the USA's education system has indoctrinated students so deeply into the red scare that real terms have become meaningless to discuss political and economical systems with the larger American audience, the words simply don't mean the same, they mean what you've been indoctrinated to believe they mean.
What other forms of semi-stable functional "socialism" are there?
> have become meaningless to discuss political and economical systems with the
Discussing hypothetical pseudo-utopian systems like "socialism" or "communism" isn't particularly meaningful either (from the economics perspective, not philosophical).
IMHO the problem with socialism is that it will pretty always be outcompeted by private ("capitalist") enterprises which can provide goods and services which are both higher quality and cheaper (yes by "underpaying" their workers but also they tend to be much more efficient). Therefore you can't really allow both in the system/country.
So realistically "socialism" can only exist if the state suppresses any alternatives using various degrees of coercion and force. Since no real competition and by extension dissent can exist (i.e. nobody has enough resources to challenge the state without significantly damaging their career/status/wellbeing) the state ends up becoming more and more oppressive/controlling and unavoidable corrupt. I'd love to see any empirical evidence disproving this but as far as I can tell historically that's what always ended up happening.
Cooperatives. This article we're discussing here is advocating for socialism, it's just not using that word.
However I'm not sure cooperatives are strictly a "form" of socialism, they have been a part of capitalist societies since pretty much the very beginning. I guess it depends where we draw the lines between partnerships etc. and cooperatives, I guess hiring additional workers who don't have an equal stake/share in the enterprise or subcontracting any sort of labor (let's say on a significantly meaningful scale, but still very hard to avoid) would be it.
Never mind the heavy leftward tilt of teachers, students, and universities.
The ones that were overcharging consumers?
Yeah it is great for customers when prices go down.
That's a benefit, not a drawback.
Those cabbies should have offer better service at a lower price if they wanted to compete.
Consumers are the judge of what's best. And they vote with their wallet and feet.
Efficiency with regard to what goal? The current allocation of capital in the US is quite inefficient if we're interested in the welfare of the public. Billionaires have far more capital than they know what to do with, and since they're unaccountable for their investment choices, they strongly tend to steer the economy toward vanity projects. Meanwhile, many families can't put food on the table, and infrastructure is falling apart.
Whatever it is about this system that you find "efficient," I don't find it valuable. The Chinese state takes a rather strong hand in allocating capital, and that has treated it fairly well over the past few decades. A mixed economy where private capitalists are not solely responsible for investment choices, and where ownership of that capital is more evenly distributed among the public, could fix a lot of problems.
The Chinese government has spent massive amounts on vanity projects. A lot of government funds have also been looted by CCP honchos.
Thanks but no. I’ll take American capital allocators over the Chinese any day.
Most importantly, I don’t want to live in a dictatorship.
Billionaires get to invest however they want because it's their property. What you see as a vanity project actually employs workers, feds families, and generates tax revenue. They are massively contributing to the economy.
I think it'd be good, is why. Non-intervention with private property is extremely low on my list of moral priorities. If someone's starving, I don't think you really have a right to keep food away from them.
> What you see as a vanity project actually employs workers, feds families, and generates tax revenue.
…and are they actually making anything useful? Or are they wasting everyone's time? Workers could be employed doing any number of things. For a rich person to "creating jobs" means nothing if those jobs are pointless. We could easily take that money away and create jobs doing something more important.
I believe in private charity, which would solve this. But I do not believe the state gets to steal from some people to give to others. The only reason for taxiation is to fund public goods.
> …and are they actually making anything useful? Or are they wasting everyone's time? Workers could be employed doing any number of things. For a rich person to "creating jobs" means nothing if those jobs are pointless. We could easily take that money away and create jobs doing something more important.
Who gets to define importance? This argument always devolves into state controlled economies which are charactetized by deadweight loss, corruption, and poor incentives. I'll take my access to private property every time.
As an aside, do you also believe in private knocking-you-on-the-head-to-take your-food-you-don't-think-they-deserve?
As an exercise, I invite you to trade without money: barter your goods or services with others. It's more work but completely doable. But remember the state is still expecting taxes on that transaction. And then ponder upon whether state-issued money is truly the source of private sector asset accumulation.
The public sector produces plenty of wealth - security, public goods, law and order, environmental protections, public health measures...
Nobody is obliged to accumulate state pegged money, yet most people do. Feel free to accumulate cheese if you wish.
Yeah, because they're corrupt and undemocratic. I certainly don't endorse China. But they do put to rest the idea that the freer the market, the stronger the economy.
Unfortunately Xi is now focused on saber-rattling about national security and bullying neighbors. He has cracked down on free markets, and China’s economy is suffering due to his incompetence.
China is strong because of its massive population combined with an economy that performs better than the only other country with a similarly massive population.
The thing is, people who pile up capital don’t have to be efficient with it. They can basically do whatever they want with their money. They can build giant vanity estates, which you could certainly call inefficient — who needs 20,000 square feet for a family of 3? But… we also care about freedom, so we let people do inefficient things. The only difference between rich people and poor people is they have more money so their inefficiencies are louder. But everybody spends money on senseless wants and vanity. Who needs manicures and hair extensions? Arguably nobody. The “poor” spend on vanity too. And we let them because we care about freedom.
If you wanted to implement a perfectly-efficient system, would that mean banning the fulfillment of any desire that wasn’t strictly a need? I don’t think anyone would want to live in such a system.
What you see as vanity, such as hair extensions, may be a high utility item for others. Consider the hair extensions make them a more attractive mate and provide them the opportunity to breed with a better stock, for example.
Similarly, consider that 20k ft sq mansion in context: all the prior owner(s) of that property were traded revenue for the land. And the construction workers were paid. And now the gov gets taxes.
At every step, each contributor to the end product voluntarily participated and maximized their outcomes. That is maximally efficient, economically speaking.
It is not. The resources which went towards that mansion would be (by your definition) much more efficiently spent elsewhere. The utility which one wealthy person gets from a 20k sqft mansion is much smaller than the total utility which 20 homeless people would get from a 1k sqft apartment.
My answer is economically efficient. Yours is utilitarian. I believe in private property.
Holy mother of slippery slopes x) Do you think $current_economic_system can be improved? Ah so you want to ban fulfillment of any desire? Sheesh
Yes. Their inefficiencies are deafeningly loud and have a massive impact on the rest of us. This is why I am suggesting that we intervene to get rid of the ultrawealthy as a class.
> If you wanted to implement a perfectly-efficient system
Stop right there. Don't pretend that "what if we got rid of billionaires" is a slippery slope towards a society of perfect clones where all individuality is suppressed. You don't really believe that—you're just fishing for gotchas, and it's beneath you.
YCombinator is billionaires investing in startups.
> Billionaires tend to steer the economy toward vanity projects.
Musk's only meaningful contribution to SpaceX was money. We could just have raised NASA's budget instead, but we didn't. There are lots of things that we need to spend money on. Space is not our top priority.
Musk, however, is independently wealthy and can spend his money on whatever he wants. So he spent it on rockets, as a vanity project. Yes, some useful innovations came out of that. But what was the opportunity cost? Was this where the money was best spent? I have no reason to believe so.
It was a heck of a lot more than that. See "Elon Musk" by Vance.
> We could just have raised NASA's budget instead
He did it for a tiny fraction of NASA's budget.
> So he spent it on rockets, as a vanity project
He's reached cash flow positive.
> Was this where the money was best spent? I have no reason to believe so.
Becoming the richest man in the world through his investing is a whopper of a reason that it was well spent.
NASA does a lot of things. If they'd been given SpaceX's capital and a mandate to build reusable rockets, I'm sure they could. They're world-class engineers.
> It was a heck of a lot more than that. See "Elon Musk" by Vance.
I'm not going to read his biography for the sake of your post. Rich people like to act as if they're uniquely good leaders, but it's easy to take credit from a room full of people when they're all on your payroll. If Musk had something to contribute other than fame and cash, name it.
> Becoming the richest man in the world through his investing is a whopper of a reason that it was well spent.
Not at all. Him becoming rich benefits nobody but himself. Funnelling money toward one individual's personal wealth is an extremely poor allocation of resources.
> He's reached cash flow positive.
Barely. And so what? Pet rocks were profitable. Did we actually need SpaceX? Is this really best the direction that so many billions of dollars worth of economic activity could have been directed? Is Elon Musk, the buffoon who ruined Twitter, really the person who should be making that choice?
The welfare of the public today is not the same as the welfare of the public for all time. The Soviet Union couldn't compete on the development of computers, because the USSR was trying to optimize towards what could computers be used for then and there. It turned out that computers could be used for a lot more than what people thought of at the time.
Drug R&D and patents lead to enormous profits for companies, because they can charge outrageous prices for the drugs. But the benefit to the public is that now those drugs and the knowledge about them exist. That's going to have a cumulative positive effect for hundreds of years in the future.
So you see, I'm actually radically in favour of R&D.
Without the possibility of this outrageous profit we would just get less drug research done. That money would then be invested in something else. Drug prices wouldn't be so outrageous (probably), but we probably also wouldn't have as many treatment options. They might be too expensive now, but there's a chance they won't be in 50 years.
A massive amount of research is funded by public grants. iPhones are a famous example of a private-sector product almost entirely created off the back of public research. It is absolutely not true that private investment is required for pharmaceutical R&D.
There was a great video on this: https://www.youtube.com/watch?v=dnHdqPBrtH8 Asianometry - "Why the Soviet Computer Failed" (18m56s) [2022-07-07]
Innovation is also becoming a meaningless word to defend the system, the innovations have their foundations fostered with public money, through funding of scientific research which is then later captured by the industries to develop products. The innovation is productionalising another innovation, the foundation is built mostly on public funding. Very few companies actually do ground-breaking research that innovates, they're pretty risk-averse in this sense, the productionalisation of those discoveries has its own value, not questionign that, but it only gets traction afterwards when the brunt of the work of discovery was done.
Efficiency of markets is a hypothesis of financial economics with much better written criticism than I can write here, Warren Buffet doesn't believe in it, for example. It's not a given whatsoever, nor proven empirically.
At no point I advocated for a command economy, once more you reply to a strawman to one of my comments, Walter.
The government funded Langley with $60,000 to build a working airplane. It fell into the Potomac "like a sack of wet cement".
The Wrights spent $3,000 and build a working, flying airplane.
The jet engine was invented and developed with private funds. The US government told Lockheed to stop working on jet engines and develop better piston engines instead.
AI, the biggest tech revolution in a couple decades, seems to have been privately funded.
Compilers, which you work with your whole life, came from research done by public funds.
Most medical research has been done with public funds.
Radios, modems, every single piece of networking we currently use was first researched by public funds.
We can keep cherry-picking examples if you wish go down this road, it doesn't foster much of a deeper discussion though if you are going to keep your dogma.
Public funding is necessary, private funding is necessary, what kind of system we can create that enables the best out of both worlds to evolve and be better? That's a discussion I'd like to see, this end of history bullshit is too boring, and tiring to discuss.
Capitalism as it is has empirically shown it's not the best system humanity should rely on, it has its advantages, it has major flaws, admitting that is a pretty good first step into trying to look what's next, how do we go from here. It's destructive, it's inhumane, it's simplistic, it will become a relic just like any other system that came before.
Being dogmatic about it doesn't take us anywhere, it just conserves a status quo which is not the best we can achieve.
As usual, I think you are a bright person, Walter, you've done tons and achieved a lot more than most, but keeping this dogmatic narrow-view of the world certainly pains me, exactly because you are the kind of mind that should be able to see through the bullshit...
It was an incremental step, followed by other incremental steps. There have also been many, many internets along the way: AOL, Prodigy, BYTEnet, MCI, Gopher, RBBS, etc. Every organization that had more than one computer soon figured out how to connect them. Even I did that.
BTW, Ethernet was invented by Xerox. I use it every day.
Compilers appeared shortly after computers that were capable enough to run them appeared. This suggests an inevitability, not a discontinuous invention. Jet engines were a discontinuity, too.
What I see is that if invention X is derived from inventions A,B,C,D,E,F, and D was funded by the government, the government gets all the credit.
> Capitalism as it is has empirically shown it's not the best system humanity should rely on,
How has that been shown?
> it has its advantages, it has major flaws, admitting that is a pretty good first step into trying to look what's next, how do we go from here. It's destructive, it's inhumane, it's simplistic, it will become a relic just like any other system that came before.
Show an example of any system working better.
Free markets are a chaotic system of creative destruction. There have been endless attempts at "fixing" that. None have worked better.
I tend to take a step back and keep in mind that Free Enterprise is not inherently a part of Capitalism and vice-versa. They've gone together pretty well but each might do better with a different partner or different arrangement altogether.
This post is precisely about a free market economy where the (imo unnatural) disconnect between working in an enterprise and owning the products of that enterprise doesn't exist. That's all.
Not sure what "command economy" has to do with it.
If you hire a landscaper to redo the landscaping of your property, is he thereby entitled to own a share of your property? How about the guy you hired to fix your water heater? Does he get a share, too? Is that natural?
And if so it could be considered a (very) generous decision more often than not.
Hiring a worker to help your business is employment
I'm sure I don't have to explain the differences between a transaction and employment?
Investors don't need to own part of a company to buy a Bond, they just want to see good credit rating and yield.
*VC is also part of capital markets but mostly private and such a small % of global investment.
Even if it did, would it not makes sense that investor priorities would change if their only options beyond cooperative businesses were some very small startups and mom & pops?
A system of public banks could handle investment based on the priorities set by all citizens. Everyone would effectively become a shareholder. Successful businesses could be taxed based off what the public invested in those new cooperatives, and those taxes would be used at least partially be used to fund more startups.
Coops have been vulnerable to "hostile takeovers" (I don't know what to call it), transmuting from benefitting members yet another rent seeking enterprise that remains a "coop" in name only.
I was a long time member of PCC and REI. As I understand it, both experienced juntas. Histories I'd love to understand better.
I've read that most farmer coops also fell prey, becoming profiteers, from helping to harming their members. IIRC, there was even a personal account here on HN by a dairy farmer.
In conclusion, I'd LOVE for coops to be the norm. My biggest concern is how to structure coops to remain true to their mission and resilient to enemy action.
Unless you go to where capital isn't concentrated (i.e. rural areas), then co-ops are everywhere. It is not uncommon to be able to get your groceries at a coop, your gas, your phone/internet services, you name it.
Sure. And workers extract as much as possible from their employers. And customers go for the lowest price possible, and sell their stuff for the highest price possible.
That's how people are.
In the 50s, my dad was in Italy watching the news on TV. A man had just won the lottery. The reporter asked him what he was gonna do with the money. Before he could reply, another man stepped in front of him, saying "he's a loyal member of the Communist Party, and he's going to give it to the Party!" The winner pushed him aside, announcing "Oh no, I'm not a Communist anymore!"
Companies need to sell the *idea* of making lives better. They don't actually have to make a customer's life better and many don't despite selling lots of product. Profitability is not a strict function of quality. If it were, we'd not give the slightest fuck about monopolies. It takes a great amount of effort to get companies to compete on "making lives better." If bettering lives is not the most profitable it is very often eclipsed by what is.
It's much more complicated than the simple lie that "you get what you pay for."
One tactic that some people find helpful when they want to buy a discretionary item is to wait a few days/weeks, and make sure that it's not just a whim that they'd regret.
Political campaigns also get more sophisticated. Scott Adams has an interesting podcast where he breaks down the latest manipulative persuasion techniques used.
https://www.nytimes.com/2009/10/21/business/21auto.html
Answers to your question are nuanced, and fortunes are exchanged in purchases like cars even if customers aren't loyal next purchase(s)
Unfortunately, yes :-(
Of course, at the time I bought it, I wanted it. TBH, it happened more often when I was young, not so much the last 2 decades of my life.
https://www.forbes.com/sites/fotschcase/2017/04/17/uniteds-t...
Nobody is saying that employee ownership is a magic bullet that fixes organization disfunction but data from that first year does show that it can have a positive impact of performance and customer satisfaction.
> The vast majority of people in companies are workers. Let's stop optimizing for owner wealth and start optimizing for worker happiness instead.
All these workers could set up cooperatives and work for / own them instead. The fact that this hasn’t happened suggests that in reality, the for-profit companies are better at optimising workers happiness than cooperatives (maybe they pay better? Maybe they enable more job hopping?)
But there are so few cooperatives that the chance of you joining one is very slim anyways.
Or everyone is too exhausted from their daily grind to even consider doing so, which is honestly not very surprising.
And some people do that (modulo creating coops), just not middle-class people. No-one without a decent cushion would be able to risk it. Especially with health care being tied to employment.
Setting up a coop versus setting up a company aren't on equal ground. One has clear legal roads, and the other is perceived as communism by 50% of Americans. Sorry, it just doesn't work that way.
It's a similar argument I hear against unions - "well go work somewhere else!" The problem is that it's just not equal. Companies have infinitely more power and leverage than laborers. The labor market is EXTREMELY skewed in favor of companies.
If we want the labor market to not be skewed like this, we will need to allow (and even force) laborers to unionize. That's just not gonna happen. In practice union busting is not only allowed, its perceived as a good thing.
We already allow workers to unionize; a practice with which I don't agree. If we were to force workers to unionize, then we take away worker atonomy. I fail to see that as a benefit.
I don't have anything against unions generally and am happy for companies to decide they will exclusively deal with unions to reduce their costs of negotiations, but I absolutely do have a problem with laws saying employees can decide to take away atonomy from their employer and force their employer to negotiate only with a union.
The reality is that employers should not have such autonomy. What you're arguing is the right for an employer to necessarily hold more leverage in negotiation as opposed to workers. Which... isn't a right. It's an anti-right. As in, you want less rights for workers.
Unions only work if they're enforced. Just like a right to life implies an anti-right to kill, a right to fair negotiations implies an anti-right for employers to choose not to negotiate with unions.
No. My argument is that forcing companies to only negotiate with unions if that isn't want the company wants to do is an anti-right. It violates free trade. You disallow entity A from negotiating with entity B because entity C doesn't like it.
> Just like a right to life implies an anti-right to kill, a right to fair negotiations implies an anti-right for employers to choose not to negotiate with unions.
My point above is illustrated here. Person A being alive doesn't impact person B being alive, or person C being alive.
Disallowing entity A from negotiating with entity B as entity C means that you are now infringing on entity A and entity B as an external third party.
As entity C, you would be perfectly within reason to inform entity A you will not trade with them if they do not negotiate through entity D or if they negotiate with any of your peers through any channel other than entity D. Entity A would get to decide if you offer more value. But to be entities X, Y, Z and disallow entities A and B from trade is anti-rights.
If an employee wants to work without a hard hat, and the employer also wants the employee to work without a hard hat, but OSHA says no, is that more or less rights?
The naive answer is less rights - well the employee wants to! In practice, this manifests as pressure. Soon no employees wear hard hats. And they're denied the right to a safe working environment.
I argue its MORE rights. Because we give the employee, and employer, the right to a safe working environment.
Meaning, if we want employees to have the right to fair negotiations, we have to restrict employers.
Edit: OSHA would truly be a third party here. A union is a first party. Also: I believe OSHA is unconstitutional.
The minute you start optimizing for employees instead of customers, you’re delivering less value to customers (the world) and asking to be disrupted. This is good.
In the US a vast majority of adults now own index funds (either via their personal retirement or public pensions). In fact, the largest shareholder in almost all public companies is some index fund.
So workers do own the companies, in proportion to how much value they deliver to the world due to market cap weighting.
The system we have now has evolved out of thousands of years of humans battle-testing various other systems. The current form has taken pretty much the entire world out of devastating poverty at breakneck speed. Seems like we shouldn’t redesign it based on the whims of armchair internet commenters.
Who says? What if we said the point of a company was to make its employees' lives better?
> In the US a vast majority of adults now own index funds
in proportion to their wealth. That's the problem - ownership is distributed unevenly, and the inequality causes social problems.
Good news. The world spent the entire last century experimenting with that idea. It did not work out well. I’ve already explained why.
But, you are of course free to start a company doing that. If it turns out to produce better outcomes for customers (the world), you will win and society will win!
I’m guessing you won’t test your ideas though, and will instead vote for authoritarian central planners who will deploy this straight to production via laws. Then your country will cease growing, and will be forced to slowly dismantle this worker-optimized system as a result. See Europe over the next 50 years for more info.
Where are these so called experiments? I only see employee conditions getting progressively worse. If you go back long enough, we did get a few wins like weekends and some limits on hours after a lot of people died for it, but that's about it.
The last change we had was probably WFH which only affects a small portion of people and, realistically, is only being accepted because it's cheaper for companies.
>But, you are of course free to start a company doing that.
I argue nothing different than the status quo can ever succeed without deep structural change.
It's like trying to be a pacifist in the middle of a war zone. You will be killed. It doesn't mean there's anything wrong with being a pacifist, but it simply cannot work under those conditions.
The part that people seem to forget is that we chose to value profits above all else. We can also choose to change that. Even if it's extremely hard to imagine this with all the propaganda we've been bombarded with in the past century, it's possible.
They're repeating propaganda about communism and socialism.
It's tiresome, really, the degree to which Americans have bought the propaganda that countries like the Soviet Union themselves spread, that they were communist, when in fact they were authoritarian dictatorships with a few very-badly-thought-out planned-economy features.
Please then, what was it? Capitalist? Feudal? Democratic socialism? I need a clear answer..
It's obvious that "communist" policies don't entail that you have the same government as the USSR, so I think it's fair to call arguments that suggest so propaganda. It's probably meaningless to argue about whether the USSR had "true communism".
That's the problem with this type of topic. As much as I like to talk about it, there never seems to be any real talk. People pick a side and arguments be damned.
The extent of their knowledge generally extends to "communism bad" and there's no good faith in actually talking about the shitty situation we're in today.
My original answer was not even citing communism at all. I was specifically talking about worker conditions, but people seem to be unable or unwilling to have a conversation and instead degrade it and down vote.
I'm saying communism is bad.
> in proportion to their wealth. That's the problem - ownership is distributed unevenly, and the inequality causes social problems.
Maybe we should work on helping people to manage their tendency towards jealousy. One way is to have a culture of personal responsibility so that if you're poor, you believe (rightly or wrongly) that it's your own fault so you're not filled with hate for people who have more money than you.
You’re describing a race to the bottom for quality of jobs. But in this system we all have to have jobs, so you’re describing a race to the bottom for quality of life for most people. I think it is reasonable to question and discuss how we can better optimize our goals so that people’s material needs are met but jobs also don’t suck.
> So workers do own the companies, in proportion to how much value they deliver to the world due to market cap weighting.
This claim hides a great deal of assumptions about economics that are highly contested. For example the idea that how many shares you buy is proportional to the value you deliver assumes that workers with zero shares deliver zero value, which is obviously false. This also assumes that wealthier people, who own more of the shares in index funds, and delivering proportionally more value. Lending does have value, but it has limits. Imagine in the extreme case a company with 100 employees where 100% of the shares are owned by one person. Does that person provide 100% of the value?
My point more directly is that worker’s labor has value unrelated to ownership in shares, and simply offering stock options is not the same as a worker owned company, in practice.
I think workers should have a seat on every board; workers should have a right to first refusal - with a preferential price - on companies that are going through an exit; and that the state should provide an investment fund to allow for this to happen on the condition that the business be ran as a worker co-op.
I think policy such as this would bring stability, long-term thinking, and more genuine customer empathy that isn't solely profit-driven, while reducing costs and driving up baseline wages.
Democracy is important in our politics, but we spend more time at work than anything else. Therefore democracy should be part of our workplaces too.
It's worth adding that none of this prohibits businesses from starting up and reaching the point where they exit with a handsome reward.
No, no one is more important or less important than anyone else. Every role has to be played order for anyone to benefit. Someone has to bear the risk and pay the upfront costs; someone has to do the operational work in order to deliver value to the market and someone has to be willing to pay for the resulting product in order to generate net positive value for all participants. If any one of these items is missing, the entire initiative fails.
So the participants negotiate arrangements that mutually incentivize each other to pay their parts satisfactorily. Whether those arrangements meet the speculative standards of uninvolved strangers' dogmatic ideologies is not and should not be relevant.
> So the participants negotiate arrangements that mutually incentivize each other to pay their parts satisfactorily.
I don't think this is accurate. Stakeholders in a founding business certainly do this in order to set the pace of initial growth and retain key staff. Organisations which are in the last stages of an exit do not act in the interests of the workers or the customer - they act in the interest of the party that is set to buy them and the major stakeholders set to profit the most. And whether it's by destroying terms and conditions, laying off staff, or by slashing pensions, all of this serves the owners and major stakeholders at the expense of everyone else. Having a better distribution of ownership disincentivises these malicious activities.
Studies show that cooperatives produce more stable, sustainable businesses which are not designed for short-term speculation.
• Worker co-operatives are larger than conventional businesses and not necessarily less capital intensive
• Worker co-operatives survive at least as long as other businesses and have more stable employment
• Worker cooperatives are more productive than conventional businesses, with staff working “better and smarter” and production organised more efficiently
• Worker co-operatives retain a larger share of their profits than other business models
• Executive and non-executive pay differentials are much narrower in worker co-operatives than other firms
Source: https://www.uk.coop/sites/default/files/2020-10/worker_co-op...
I'm afraid that this is not true. Owners are not just the ones who enable the business to be initiated in the first place, but are the ones who bear risk on an ongoing basis in order to keep the business up and running. Firms that need ongoing capital infusions to expand operations, or that incur debt in order to get past short-term financial bottlenecks, absolutely need someone to be responsible for the inherent risks associated with doing so.
Eliminating the business owner as the risk-bearer, and setting up a business in which "workers" are the responsible parties makes workers themselves bear all the risk. In the status quo, the worst risk exposure that workers face if the firm faces financial difficulty is that they will just lose their jobs -- i.e. that the customer that has to that point been purchasing their services will simply cease making further purchases. But in a situation in which these service providers were the owners, and therefore responsible for the firm's obligations, they would not only lose their jobs but would also be on the hook to repay its debts and/or will suffer the loss of whatever funds they put into it to ensure it had sufficient capital to operate.
Workers generally don't want to do this, and usually prefer to just receive an agreed upon rate for services rendered for as long as the relationship persists.
You may note that the industries in which worker-owned co-ops are relatively common are the ones that have low risk inherent in the business model -- markets with predictable demand, long product life cycles, and relatively inelastic price sensitivity, e.g. grocery stores. Industries with high volatility, rapid technological change, short product life cycles, high need for capital, and elastic demand simply don't work well under a co-op model.
> Organisations which are in the last stages of an exit do not act in the interests of the workers or the customer - they act in the interest of the party that is set to buy them and the major stakeholders set to profit the most.
Ultimately, everything is just a proxy for consumer utility. A business that is acting in the interest of a potential buyer needs to ensure that the firm is performing viably, since the buyer usually aims to operate it (or, if they aim to liquidate it, the current operators need to maximize the liquidation value).
In either case, the only way to do that is still to satisfy market demand -- we may frown at the tactics they use to do so, but ultimately, they will only use tactics that are effective in terms of encouraging customers to actually purchase their goods or services. At the end of the day, it's still customers assigning more value to the product than to the money they are exchanging for it that enables the form to earn a profit.
> Studies show that cooperatives produce more stable, sustainable businesses which are not designed for short-term speculation.
Per my point above, I believe you have the causality inverted. Co-ops are only suitable for stable, sustainable businesses that have low risk exposure and low capital requirements. The correlation you are seeing is because co-ops generally don't participate in more volatile markets in the first place.
False comparison bc today's companies balance customer value with shareholder value. Collectives can do the same thing.
The fatal scenario of companies optimizing for owner's benefit is in fact the scenario we have today where investor-owned companies benefits themselves more than customers, eg pollution, disposable plastic products that can't be repaired or maintained, like the millions of apple tvs that just become landfill overnight, fake shortages to raise prices, stock buy backs, low quality processed foods manufactured in at bliss point.
Um, what? The point of a company is to make profit for its investors, and making a useful product for the customer is only a byproduct of doing that. This is why corporations are making record profits, instead of investing it all into R&D or rainy day funds.
https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...
By the virtue of your argument we should optimize owners wealth because there are more owners than employees.
World is much much more complicated to be throwing simple arguments like that :)
While not a perfect measurement, there is more innovation and economic generation that happens in the US compared to Europe. Time will prove which culture of business wins.
Are we just asking rhetorical questions that pick out one data point that we think supports our presupposed notions?
2. A business-first, citizens-second approach to society.
3. Wealthier, and less risk-averse investors (ties back to point 2.).
Simply put, very different societies (even more considering Europe is not at all a homogeneous block), with different priorities, both extremely wealthy by global standards.
The question is more: which model is more sustainable as a society in the long-run, that play is still ongoing and we might not have a clear answer for the next 30-50 years.
This is meaningless. Businesses are activities undertaken by people. Everything resolves back to the people -- the same aggregation of the same individual people in all cases. Reifying the abstraction of "business" to treat it like some separate entity that's at odds with the very people who are engaging in the actual activity that term describes is a monumental confusion of ideas.
Businesses are activities undertaken by people but they are also legal entities which have no need to abide by ethical or moral standards, shielding the underlying people from liabilities incurred by such entity. People can't do that.
Citizens need to abide to cultural norms, societal expectations, etc.
Of course everything resolves back to people, in a reductive sense, but those entities (citizens, and businesses) don't have the same standards: morally, ethically, nor legally. Neither do they share the same needs, businesses can by eventuality support the needs of citizens to sell stuff but their only motive is profit-motive, not what's best for citizens.
Business-first is a prerogative of how the USA approaches regulations, it's left first to businesses to regulate themselves until issues mount up to the point where regulations are needed, at that point the businesses have had time to amass power and fight against those. Even in the cases where regulation would be beneficial to society, even in cases where the current regulations which are business-friendly are damaging to society (US's healthcare is a clear example).
It's only meaningless if you don't want to see what it means, citizens needs are considered below the needs of businesses as entities, it's a cultural trait of the USA to let businesses roam more-or-less freely (again, with the exception of some industries) until they cause enough damage to generate popular calls for them to be restrained, at that point is not clear if the government will be able to reign in them. Businesses in the USA have much more power than the people, they make policies, they donate enormous amounts to political campaigns, etc. Citizens can't play in the same field.
There are many cases from the past decades: the global financial meltdown of 2008, the dysfunctional healthcare system, the opioid crisis fueled by a single pharma company, the nosedive of Boeing, etc.
You can attack my point in many ways but not by saying "it's meaningless", businesses interests are, in many cases, not citizens' interests. A very clear example: if a business could they would not hire any Americans, simply because the workforce is expensive, shipping this labour outside of American borders would be great for any business' bottomline, it would not help at all society as a whole. They would do that even if it meant killing their own businesses, since there wouldn't be consumers to buy their products, it wouldn't matter until the issue was extreme enough to require them to actually create a consumer market by employing people in the country.
I don't understand the concept of assigning moral agency to a pattern of activity. The legal entity is itself just a conceptual framework under which actual people operate, and not a concrete entity capable of autonomous action.
The individuals who own and operate the business are the moral agents, and I don't see how they are shielded from the consequences of their own actions. Limited liability just creates a distinction between personal and business assets for the purpose of financial liability, and does not have anything to do with ethical or moral standards.
> their only motive is profit-motive,
"Profit" is just a quantification of net gain in subjective utility experienced by people, in whatever form that takes. Fundamentally, "profit motive" is a redundant phrase, because "profit" refers to the fulfillment of whatever motivation you had in the first place. Whether that's good or bad overall isn't a function of the pursuit of profit -- profit consists of fulfilling the pursuit of anything -- but rather what was being pursued, and what moral boundaries were crossed its pursuit.
Some people seem to bend over backwards to create conceptual frameworks aimed at externalizing the causality of human behavior. Perhaps those who want to create utopia need to find the fault in our stars, not in ourselves, in order to hold out hope that all the world's problems can be someday solved, so they blame abstractions like "capitalism" or fictional characters like the devil for the unethical behavior of human beings. But none of that is really valid -- all of the problems of society are rooted in the fallibility of human nature, and there's no way around that. Unscrupulous, ambitious people don't go away simply because you've altered the form of some abstract system -- they will find ways to benefit at the expense of others no mater what system you cook up.
>Unscrupulous
>-- they will find ways to benefit at the expense of others no mater what system you cook up.
A more sophisticated chef with a dish completely unfamiliar but irresistible can still be disruptive. Whether or not it's a brand new concoction or a rehash of something so out-of-style that it's simply long forgotten.
Mission-critical companies were not supposed to degenerate to having any outstanding leadership risks that can leave room for such tragic nosedives :/
Firms that are optimized for turning market demand into revenue streams will naturally outcompete firms that are optimized for other goals, regardless of what ideals or preferences anyone bears. This isn't something that anyone can decide upon, so a call to action based on one's own "ought" preferences isn't really meaningful.
If reality works one way, but aspirational idealists are trying to "ensure" that it works in some other way, then their attempts will falter. Many regulatory interventions are at best performative rituals that measure their success in terms of creating the appearance that something is being done, with the question of whether what is being done actually resolves the actual problem (if there is one) barely being considered. In the worst case, these performative interventions create harmful unintended consequences at the same time, leading to them being a net negative.
It's worth noting, also, that nothing other than "actual humans" are involved in any aspect of this. There are no non-human "entities" in existence that have autonomous agency and participate in economic exchange. Every question here is about interactions among humans, and the organizational models that humans use to coordinate their activities are not separate "entities" with independent intentions.
Since we see that a majority of customers consistently go with the cheaper option, we know how they feel. So the "better" firm gets outcompeted.
So regulation, you say. But those regulations are set by governments voted in by the same consumers. Their preference for lower prices is clear, and government follows their preference.
Is your suggestion that the government go against the will of the people and apply those pro-worker-coop regulations anyway?
This litmus test is absurd. If more consumers buy products manufactured with child labour, is it "going against the will of the people" to ban child labour? Not in any meaningful way, certainly.
Instead, in the US the DOT or the CPSC (can't be arsed to look up which) says: "every helmet sold must meet this standard of safety", and then backs that up with guns. Now you're free to price-compare, with the assurance that your head won't explode. (Yah: I keep doing it! Sorry. I like injecting levity into serious subjects. Try not to get distracted.)
Consumers, acting as individuals, have negligible influence over corporate behavior, and are easily misled.
People, acting collectively (in this case as a "government", but as other collective organizations, too - including "corporations"), can stand up to other collectives and force them to adjust their behavior in pro-social ways.
> There's a large economics literature on this: worker-owned cooperatives have not taken over the market, although they are an available institutional form, because (a) they find it hard to raise capital
There are any number of ways of making it easier for co-ops to raise captital.
> (b) they tend to make decisions that maximize worker welfare rather than profit, e.g. they won't sack underperforming divisions or expand in ways that dilute existing workers' stake.
You could make a similar case that making decisions solely around stock price leads to underperformance as well, if we quantify "performance" in terms of value provided to the broader economy. Mass layoffs are great for stock price, but they deal serious damage to your institutional knowledge base. Rather than simply shuttering an underperforming division, if you buy out the ownership stakes of the people working there, they'll have cash to re-train with. If we find that co-ops have a tendency to avoid doing that when necessary, we can tweak the incentives and subsidize a portion of the buyout, under certain circumstaces. Subsidies to tweak incentives are nothing new.
> This isn't something that anyone can decide upon
Yes, it is. Policy can change which strategies predominate in the market, by shifting incentives, by controlling streams of investment, and simply by regulating undesirable strategies out of existence. Mixed economies can be very effective. The notion that the market is a force which out to go untampered with is ideological, and it doesn't serve us well.
I asked my Greek teacher what they biggest change she experienced moving to the US was, and she said that in Greece, her community prioritized happiness above all else, but everyone she met in the US prioritized making money.
I also asked her what the financial crisis was like in Greece, and she said that you couldn’t find an empty seat at a taverna in her village on the weekends. They barely had any money, and few around her were employed, but they had certain priorities.
Meanwhile in the US, I had a teacher condescendingly tell me that the Greeks were lazy (ignorant of the history that led to 2008). It can be hard to see through certain cultural biases. Particularly when the primary goals are so different.
That's cool, if you have a family nearby or you're a in a good relationship with yours. Sucks for those who do not, which is why social safety nets are more important. You pay taxes but in case you fall down, the safety net should catch you make sure you don't end up on the streets if you don't have a family nearby.
Not it isn't, I'm European from a European centric thinking. What you're talking about applies if young people choose to continue living in the same village where they were born and their family still lives, but that hasn't been the case in a long time. Young people (in Europe) move to big metro areas for university or jobs, and often, especially in Greece, they move to other EU countries.
Your family from some Greek village, won't be able to come take care of you in Amsterdam, and most likely they won't have the money to support your NL living expenses from their Greek pensions to help you out, nor will you moving from Amsterdam back to some Greek village help you out too much since there's no jobs in your niche there, or maybe even no jobs at all so now you're broke in Greece instead of broke in Amsterdam but with less job options.
Your PoV scenario is just unrealistic in the world of today and only applies in the traditionalistic tribal village lifestyle that's more or less dead nowadays and few live it. Sure, some lucked out and were born in afluent big metro areas with universities and jobs meaning they always have their family close by, but that's more the exception rather than the rule. If you look at international cities like Munich or Berlin, most people living there weren't actually born there or have family there, they just moved there for study/work. How can family help them then?
I know plenty of people who emigrated to the Netherlands, I don't know anyone who was poor and emigrated there (they don't speak enough foreign languages to have a hope) or that lived there for more than a few months while unable to get a job
Who are these people who go be unemployed in a high CoL country?
Anyway, that's my opinion, and trying to correct people from other cultures that tell me my opinions on my culture cannot be right is tiring, so I'll leave it here.
I wasn't lecturing, I was using Greece as an example that would be familiar to you, but feel free to use any other country where people emigrate from to go to a high CoL country: Portugal, Spain, Italy, Romania, Bulgaria, etc.
>I don't know anyone who was poor and emigrated there (they don't speak enough foreign languages to have a hope) or that lived there for more than a few months while unable to get a job
I do. Plenty of Eastern Europeans moved to high CoL countries without knowing the language or having credentials and many found jobs, not the best jobs, but being on minimum wage in Sweden or Austria is better than being broke in Romania or Bulgaria (again, assuming you don't have a well off family to help you out and many who are in the situation of taking minimum wage jobs abroad don't, since they also come from poor or broken families unable to support them, which is why social safety nets are important to catch and help such people and prevent them from perpetuating this cycle).
>Who are these people who go be unemployed in a high CoL country?
You don't "go to be unemployed in a high CoL country", I never said that, but unemployment can find you there when you get laid off, which is why safety nets are more important than a far away family from a low CoL country who has no way of helping you out.
>Anyway, that's my opinion, and trying to correct people from other cultures that tell me my opinions on my culture cannot be right is tiring, so I'll leave it here.
Regardless of your "culture", people not having parents to help out (orphans do exist you know) or family too poor to help out, is not really something that goes against the "culture" you keep harping here. Not everyone's family, Greek culture or not, will be able to help out, hence my point of tax funded welfare social nets being important. None of what you wrote so far is an argument against that.
You should have asked her why she came to the US
Plenty of Greeks have no interest in going back because they want the "American" life, but there's no question you ate better in the village, had more community, or had a sense of history - what you didn't have was more than ~35k euros a year, if you were lucky.
Maybe the relative poverty fosters that kind of culture, and a high earning society necessarily becomes atomized, or perhaps atomized societies fosters high earning.
Everyone knows everyone in a ghetto. Gated communities often don't know their next door neighbors.
People sometimes have rose-colored glasses about emigrating to the US.
Eventually, they were rotated to Germany. As soon as they arrived, she was off to England. 6 weeks later, she was back, and did not complain about the US again.
She said that the people of her community prioritized happiness, not that the people prioritized community happiness. That might, for example, mean working less to enjoy more free time at the cost of maximizing profit. And, indeed, we can see in the data that the average worker in Greece takes 9 more vacation days each year as compared to their American counterparts.
[1] https://en.wikipedia.org/wiki/List_of_countries_by_average_a...
Not to mention the unrelenting psychic toll of working low wage jobs in a country with a weak social safety net.
Which may suggest that the "American way" is to work fewer hours per day, and then try to cram in some fun after work, whereas the Greeks allow themselves to delve into more fun over the span of entire days instead of short spurts. It is possible that more happiness is derived when one is able to enjoy themselves in larger blocks of time, even if the total quantity on a time-unit basis ends up being the same as anyone else. That would support both scenarios in the comments, even if they seem contradictory on the surface.
But, as with earlier comments, this is all based on hypotheticals for the sake of illustration. There is no indication of what the speaker from the greater thread was actually talking about.
Why? Because I am the most happy when working at a high paying job with loots of interesting problems to solve.
I would be the least happy working at a high paying job with nothing to do.
Happiness is a comparator, not a number. Money on the other hand can be counted, and thus can be measured. I am 100% sure every Greek ever would be more happy with more money given nothing else changed. Only somebody who found happiness through suffering would ask for less, and be more happy with less.
Money means even less.
>Why? Because I am the most happy when working at a high paying job with loots of interesting problems to solve.
Yes, people have been conditioned to be working.
Money is a way to transfer resources. Resources make people happy. Somebody with no food for 3 days is happy when they finally get food. Money buys food, therefor money can buy happiness. People like to say the opposite, but they forget money can also buy unhappiness, or when talking bout the extreme cases where somebody has 20 billion, would 1 more billion have any affect on their happiness? Oh shit, we are back to WTF is even happiness. For all we know 1B more to the 20B guy might make them more happy because they are now richer than their enemy or some other happiness driven from the count of money.
We can break this down in other ways too. Some people say family is what makes them happy. I can tell you that a family of 12 with no money is less happy than a family of 12 with enough money. Its the difference between having shoes, or eating in may cases. Its clear that happiness is a compactor, and money can change the outcome.
Not really. "1 money" is just a promise to deliver 1 unit of value in the future. But what characterizes the unit? What is the difference between one unit of value and two units of value?
In reality, we don't really know. It's a continual quest to try and figure that out and it changes on a whim.
BTW there must be some interesting story that your Greek teacher had to move to US and deprioritize happiness.
Both are more or less factual statements.
This argument of
Conclusion: $RichPerson doesn't get to do what they want.
Premise: They're under constant obligation to $MoneyMachine
The premise is wrong: at that levels of wealth, the obligation is not real, it's opt-in and you can opt-out at any time.
The conclusion is wrong too: At that levels of wealth, the person can do everything anyone else can do in their off-time, and they have much more off-time than the person making the argument anyway.
It's a poor argument and should not be made.
A random billionaire nobody knows might walk around the Colosseum undetected, but try doing that with a profile like Zuckerberg's.
Also, there is the personal security concern. If you are rich, you have a lot of ability to pay kidnappers of you and your family.
There is the story that shortly after Pichai became Google CEO, he walked around a conference and he barely got recognized, but if you stay in the limelight for long enough, people recognize you.
https://www.buzzfeednews.com/article/mathonan/searching-for-...
I strongly disagree[1]; I think it is incorrect to equivocate a non-living thing that needs no care from a particular person to a child's objective need for their parent.
If we reduce all arguments to "well, of course that person cares about $FOO, because parents care about their kids", then any $FOO is then as equally valid to kill oneself over[2].
You created a well-loved piece of art? Well then it's okay to jump in front of a n oncoming train to save it because that's what parents do for their kids!
You wrote a research paper on good UI guidelines? Well then it's okay to jump into a burning building to get the only copy because that's what a parent would do for a child.
I guess I'm just trying to demonstrate that there are few, maybe even none, "I created this thing" comparisons with the parent->child and child->parent relationships.
[1] But I see your point, so upvoted you anyway. I just think that your point is not at all comparable to a parent/child relationship.
[2] Parents will not hesitate to put their life in danger to save their child.
Having money helps a lot in making yourself comfortable when life makes you uncomfortable.
I'd bet that she was wealthy relative to the average Greek, but was perceived as "regular" because they are middle class relative to the rest of the west. The wealthy in the the US can prioritize happiness above all else. On average, Greeks works the longest hours in Europe, which is more than the average American.
https://www.nytimes.com/2024/07/04/world/europe/greece-six-d...
can you share your version please?
Like all history, it’s tricky to pick a starting point, but an easy one is the end of 400 years of Ottoman Turk occupation leading into the 20th century with the Balkan Wars, WWI, and then WWII.
Greece successfully fought off Italy in WWII but then was quickly occupied by Nazi Germany for four years. During this time, the Nazis successfully exterminated every Greek Jew. This period created extremely radical political parties that persist to this day. Following WWII, Greece then transitioned into a dictatorship lasting until 1974. Greece presently has the youngest democracy in the EU (50 years old).
The past 500 years have been hard on Greece, and the past century was no exception. Modern Greece is a young country with tons of recent scars that have led to corruption and bribery that a healthier nation may not have developed as intensely. My grandfather fled the region with his father in the early twentieth century when the Italian army began regularly hanging people in their town square. It really traumatized him.
Anyway, 2008 wasn’t some event that happened in a vacuum. There were many events that shaped the country leading up to it. To simply claim it happened because the Greeks were lazy is itself a lazy take.
A very good book on the topic is Inside Hitler’s Greece[0].
People in Greece certainly don't prioritize happiness instead of making money. There was a clear shift where Greeks became more and more unhappy after the (still ongoing) crisis. No1 problem is financial insecurity; as a resident (MD) I work 70-80hrs/week, for less than 7€/hour. Prices are comparable with rich EU countries.
In general, what an individual is doing with his free time, is no one's business.
Source ?
I highly, highly doubt that this is true.
I am talking very about small nukes, cheap, minimal and for personal use as a self defense. Two grams of gold cheap, 1 km evaporation range and 5 km blast.
Very minimal, but as soon as millions of people have one, gather a lot of them in one place and you do some serious damage.
This lady seriously suggests that millions of Thai's will have their personal nukes, millions of Mongolians or Brazilians will have small nuclear weapons each, but Greeks will not, because Greeks are lazy somehow. I don't know where she reads that stuff, probably some comic series.
You haven't thought through any of this.
Either they were a liar or an idiot.
Greece is the worst example as it is highly optimised for money and not social happiness/success. There is a reason that fraud is rampant and no one pays taxes unless they have to.
Some people are happy focusing on their family. Some people are happy working hard in their career. Some people just want a job to pay the bills and plenty of time to play video games. These are all fine and valid choices and no company is going to optimize for all of them.
If employment were more isolated this argument would still only be superficially reasonable, because we also live in a society with structural sexism and racism and other bigotries. Plenty of people have fewer employment options because of the circumstances of their birth.
Then look at me, I am professional contractor and not the obvious target of any of those bigotries. 16 contracts (often 6 or 12 mo), in the past 20 years. of that maybe 3 weren't complete shitholes. How long is one person supposed to keep making major life changes to search for a job that doesn't abuse them? Because a 1 in 5 hit rate implies some things.
Setting a floor on how shitty companies can be to their employees would a boon to everyone and likely make the whole economy more productive simply by reducing depression by a double digit percentage.
Yes, we do that. It's called "labor laws". There are many of them.
It's a question of agency. If you assign responsibility for your well-being to others, then you're always going to be at their mercy. Sure, there's structural whatevers and bigots and all sorts of things. Some people won't hire you because you remind them of the kid that bullied them in 3rd grade. Whatever. It's still up to you take control of your life. Nobody else is going to do it for you. Every time you try and demand that someone else do it for you, you are going to end up disappointed.
No one person can be an expert in everything, we live in a society and should act like it. Needing to be an expert in healthcare, hiring processes, finances, and a dozen other topics just to switch jobs is a major barrier to the just switch mentality you are presenting. And I know first hand, I am just switching constantly because it is what I wanted. We should have reasonable baselines and minimums for treatment, and those should shift and get better as we improve society.
> Every time you try and demand that someone else do it for you, you are going to end up disappointed.
Yet there are countries that have better situations for labor than the US?!
Even something as simple as universal healthcare would fix a ton for millions of US people. It would empower worker to switch jobs and employers to lure top talent held by it. Only a hundred or so other countries figured it out, there is no way we could do it here we would only end up disappointed, right?
I pick that as an example, but we could go over many possible topics that aren't blanket assignments of "responsibility for your well-being to others". Consider non-compete clauses, IP transfers, minimum wage and tons of other topics that if they had a minimum floor of decency could allow more freedom the the worker and employer.
Nobody is saying you need to be an expert in all of these things to switch jobs. Consider the fact that very few people, if any, are actually experts in all of these things and yet people do in fact switch jobs all the time. Empirically, it is not required.
> Yet there are countries that have better situations for labor than the US?!
Better in some ways. Many of those countries are significantly less productive and have moribund, declining economies and low pay compared to the US.
> Consider non-compete clauses, IP transfers, minimum wage and tons of other topics that if they had a minimum floor of decency could allow more freedom the the worker and employer.
non-compete clauses: don't sign them. I've never encountered one. Negotiate terms that you feel are adequate to compensate you for not competing. If you don't have sufficient leverage to negotiate, work on that.
IP transfers: again, don't sign it, or negotiate. Most workers will never generate any significant IP so this is rarely an issue. If you are going to generate valuable IP that is 100% due to you, then start your own company.
Minimum wage: less than 1% of workers make minimum wage. Anyone with a pulse and half a brain can quickly become more valuable and qualify for higher paying jobs. Just be organized and responsible enough to be an assistant manager at a fast food place and you're already making more than minimum wage. There are store managers at Wal-Mart and Buc-ees making $250k.
You vacillate between personal responsibility and skipping requirements, which is it? Should we take you seriously or not?
You do understand that when I say people need to be "Experts" I don't mean hold Phds, I mean they need to be far more well read and have a much deeper understanding outside of core competencies than our contemporaries elsewhere in the world. They get to focus on family or work, and I need to understand 50 pages of contract nonsense to sort out how screwed I am on this interstate tax law and why my health insurance won't pay.
> declining economies and low pay compared to the US
You looking at the median income or the mean income? Because if you cut out a few billionaires the US Mean drops by like 20%. If you look at median we are in line with Countries like Canada and Western Europe who have better worker protections and are doing fine economically. (And they have healthcare so insurance doesn't pin them to one job for fear of literally dying)
> non-compete clauses: don't sign them. I've never encountered one.
You are arguing specifics (and doing it incorrectly) while I am showing you a forest of problems and you go after each tree with an axe ignoring that there is a whole forest.
On this specific tree. Some states banned non-competes. Some people do run into them. Some people do. Some people have no real options without them. Some people signed them in the past not fully understanding them (because they weren't IP law experts). I am not saying these should go away I am saying there should be a floor for how hard employers can screw workers so that someone who isn't a legal expert isn't forced out of their profession in a moment of desperation.
Fundamentally, in the forest of problems you are arguing "I have leverage so this works for me" and ignoring all the people who must say "I have no leverage except for my labor and I am willing to work hard, but I sure hope the system doesn't screw out of these hard earned pennies".
You misunderstand. These things you claim are requirements are not requirements. You do not need to be an "expert" in health insurance or interstate tax law. Mostly you just need to read and follow the basic instructions for those things that the experts already wrote out for you. You think countries in Europe don't have bureaucracy? I live outside the US in a country with public health care. It's nice, but it doesn't mean you never have to spend time navigating a bureaucracy, I promise you that.
> You are arguing specifics (and doing it incorrectly) while I am showing you a forest of problems and you go after each tree with an axe ignoring that there is a whole forest.
Yes, because this is actually how you solve problems. You look at each individual problem and say "Hmm, what can I do about this?" Then you think up a solution and do it. Vague hand-waving at a group of problems while saying "Gee, someone should do something about all this mess!" doesn't actually accomplish anything.
Workers keep more of the profits but there's less produced so there's less to buy? That doesn't actually make workers' lives better.
Companies should not deliberately make workers lives bad. But, optimizing for the worker seems fundamentally unworkable as this would essentially mean financial independence at the time of hiring followed by bankruptcy.
It's possible companies with lower profits don't survive when they can be outcompeted by the higher earning companies. This sort of competition has killed plenty of companies.
In the US, you are free to set up a company any way you like.
No matter the mental gymnastics, that’s how it already works in big tech. You can view the stock grant as “incentive”, but you can’t refuse it and take cash upfront.
Oh no
That this a "con", says something worrying about the values that, as society, we have decided are more important
at the end a company needs to be financially successful and for this it needs to provide competitive products and services. Otherwise, they'll just be replaced.
There of course may be a chance they'll get replaced by another employee owned company, but the odds of a free-capital owned company replacing them are probably bigger as they have more freedom to make the right decisions to become successful.
Also imagine your pension would just depend on the odds of the company you have been working for a live long, because you just cannot invest into other companies because they are only owned by employees.
It really has not been proven, that there is a more effective organisational form for this competition better than capital allocation using markets with a lot of freedom.
For your case or "cross-generational" pensions where the young pay for the pensions of the old: That worked well while the baby boomers were working. This may go sour when the baby boomers retire and the numbers of their first and second generation of offspring decline... Even worse: if they have made the economy, tax and debt burden for those offspring so bad, they can barely buy their own home.
Co-determination was born as a compromise in Germany (between the capitalist occupiers and the communist occupiers trying to find common ground for decades) that has done well, essentially its that the Employee Union has at least one board seat, by law
employee representation on the board in combination with US stock ownership concepts would be very novel and very attractive
I think both classes of stakeholders typically have some common ground and can find a way to make austerity and growth measures economically practical with more sustainment of employee consideration
Equally, I wouldn't want to judge Rhineland capitalism on a few bad years, or claim that the US "open the casino" approach dominates it on every dimension.
I think it’s quite disingenuous to blame Germany’s slow moving industry sector on “worker’s control”.
I think ultimately a company creates and maintains a culture, regardless of the legal structure. Maintaining a good culture requires effort and especially a sensible, trusting image of humanity.
When we talk about the crass gap in compensation and power between workers and owners or executives, then we often hear the excuse that much of the compensation at the top is from stocks (even though that is a very incomplete picture). The big bosses can't just sell their stock to increase wages is the narrative, but they _could_ pay some of that stock as additional compensation.
A single worker doesn't move the statistical needle in a very large corporation? For one, the same fallacy comes up with voting. Secondly: This notion that people are rational robots who only optimize their profits and then also calculate the statistical impact of every of their actions is not just too theoretical, it's just wrong. Loyalty, trust and engagement are things you earn and maintain. A generous compensation (including stocks) can be a part of that.
An additional approach is to decentralize and enable partial ownership of franchises. Now suddenly the needle can be moved, day by day and year by year.
But again, the legal structure is just part of it all. I think it starts with the image of humanity, the culture and a long term strategy that incorporates all participants of a company. The details fall into place after that.
Sure, I believe that. Do they do it enough though? Co-operatives were big in 19th century Britain; now they make up a small part of the market for most things. In particular the Co-op supermarket, though it's cute, is now small (6% market share).
> A single worker doesn't move the statistical needle in a very large corporation? For one, the same fallacy comes up with voting. Secondly: This notion that people are rational robots who only optimize their profits and then also calculate the statistical impact of every of their actions is not just too theoretical, it's just wrong. Loyalty, trust and engagement are things you earn and maintain. A generous compensation (including stocks) can be a part of that.
It's really true that your vote won't decide the next election! I'm sorry :-)
You're right that generous compensation can maintain loyalty and I agree people aren't robots. But for that to save the argument you need more - stocks have to be better at maintaining loyalty than just straightforward pay. Is that true? Maybe: stocks are a "stake" in the company. Is it so true that many companies could improve efficiency by paying in stocks not cash? I'll believe it when I see evidence. Is it so true that we should force companies to do it? I find it highly unlikely and the evidence is clearly inadequate.
>An additional approach is to decentralize and enable partial ownership of franchises. Now suddenly the needle can be moved, day by day and year by year.
Sounds like McDonalds is your ideal of corporate structure :-) Maybe! It's certainly successful.
EDIT: In the UK, the most prominent retail workers coop of sorts is the John Lewis Partnership. It has more employees than Co-op, at ~80k (in addition to John Lewis and Peter Jones it owns Waitrose), and it could be argued that in some senses it may not strictly be a workers coop - it's owned by a trust for the benefit of the workers of the business so its employees does not have the same direct say in the operation as a pure workers coop - but the terms of the trust makes it somewhat close.
The history of the mutual/building societies is interesting - customer owned financial institutions. The stock market offered them a huge amount of money to sell up in the 90s, which almost all of the customers took (after all, free money). Then 2008 hit and a lot of them had to be bailed out by taxpayer loans.
There are more possibilities which open up, if we drop the 'fully' criterion, both for decision making power and share of the profits.
If employees had, say, a 30% share in board decisions (not share of profits), then the CEO would have to be more mindful of how their decisions affect employees, just like they have to constantly track the markets today. Or a more local version of this, where decisions/appointments in each unit of the company are partially handled by employees of that unit. Not enough for a badly performing group of employees to have a veto, but also not something ignorable by management.
Regarding share of profits, there were high tax regimes in Western countries in the 1950-70's. For instance, top bracket of income tax could sometimes reach 90% and corporate tax 50%. In effect, this is saying that the public has a non-voting share(sometimes even a majority share) of the profits of the company. Of course, a large organization like the government is itself often corrupt/inefficient and fails to represent the public, so the taxation could happen at a more local level.
'Market socialism' proposals sometimes involve public ownership of the stocks of privately run companies, but a high tax regime can have a lot of the same effect.
Similarly, my estimate of the value of my life (infinite) differs from how society would broadly estimate it actuarily.
Such is the nature of things.
Also remember Bezos and Gates had to hand over a chunk of their wealth on divorce. That didn't happen without the nature of things changing.
House wives are often very well compensated. They have a home they don't pay for. They often have a bank account they can use to cover expenses (effectively direct deposite). The entire reason alimony exists is an acknowledgement that she has effectively been getting that benefit from the marriage and is not prepared to abruptly lose it in a divorce even after splitting the assets. Assets? Right, that's also part of the compensation package.
The circus lion is bred and trained from birth not ask too many questions.
But once you give the circus lion access to the internet, sooner or later the lion is going to ask why am I jumping through hoops?
It just take one of them to find a better answer and a better purpose in life to walk off the circus, for all the others to see what options they have to totally disrupt the foundations of the circus.
The circus managers and the circus have elements of domination and exploitation that have been swept under the carpet. Its good to recognize them. Otherwise surprises and shocks are on the road ahead.
Your analogies are all over the place, like a dog's life is similar to a circus tiger?
A lot of women find that they've been sold this lie that getting a corporate 9-5 is more empowering than caring for their children or even having children at all and are going back to traditional roles for a reason.
Truth is few people men or women find a way to support themselves that is meaningful and most men or women if given the choice of not working at all and just spending time with family while financially well off would take that in an instant
The status quo is working mothers, are you a chatbot that thinks this is the fifties?
I'd say you are being too imaginative. You are framing a traditional family as this abusive thing, master and slave except it's 2024. Marriage, at least in the US is extremely dangerous to men, if their wives divorce them, men could be forced to support them or else go to jail so who really has the power in the relationship since the govt has given all the power to women?
1. https://www.pewresearch.org/short-reads/2023/08/03/almost-1-...
There is no great benefit to sitting and spending your whole life dependent financially on someone else especially if you don't have anything in common. This is the same reason men change jobs. Once globalization provides multiple paths for workers to exist corporate environments they do so. Thanks to the internet Women get to see on their feeds what options they have, in ways their mothers and grandmothers never did.
The only problem with people who hang out on HN is they don't know any sociology or why the womens movements emerged in history. All just completely delusional about success coming on the backs of exploiting free or unpaid work of others.
Not all women. It is there job of men to figure out this kind of woman and not marry them
> There is no great benefit to sitting and spending your whole life dependent financially on someone else especially if you don't have anything in common.
Sure, why the hell would you marry someone that you have nothing in common with though?
> people who hang out on HN is they don't know any sociology
I actually went to university to try and study sociology and lasted about a month. My opinion of it is that it is more a propaganda and indoctrination tool than a science. Sociology school is just a woke factory. When I got into an argument with a professor and was winning with logic and science on my side I got told to be careful what I say because I hold "dangerous beliefs" which might stop me from being someone important one day, so warning me I might get canceled in the future for those "beliefs" which were merely common sense facts. That's when I decided I got better things to do with my time
Perhaps partly. But there’s also the loss of professional work experience if she has been a full-time housewife.
There's this myth of the idle housewife which was true, but only for the aristocracy and in the last few decades, the upper middle class (who are tooootally separate from the aristocracy, yes sirree). Most housewives, for most of history, have worked full-time.
But that means employees cannot sell their stock, either. So if one of those millionaire employees retires and the company goes bankrupt one year later, the million is worthless all of a sudden.
Employees that can sell shares at any time have the same financial interests as with any other corporation. As much reinvestment as grows value faster than the overall market is how much is best to reinvest.
Distribute the rest to owners to use/invest elsewhere.
It sounds like this is a much healthier concept overall?
Dividends don't have to be sustainable. There are companies that are gutted and liquidated to pay out dividends too.
That's in the second paragraph. I don't know what the fixation is in finding problems with paying more the people who produce what the company sells.
Right, so everyone is interested in the long term health of the company.
It's a different model, one that may well be better than what most are doing. Of course most CEOs, private equity, and folks on Wall Street want you to think otherwise.
If this happens, people who have worked at the company for 15 years and have most of their "retirement" in the form of ESOP shares will a) lose their jobs and b) lose most of their retirement savings. On the same day.
Libertarians sometimes fantasize about how if we didn't have the FDA, people would be incentivized to do their own research on food and drug safety. Sure, sometimes dumb people would get it wrong and kill themselves! But that's just the price we (well, they) need to pay for everyone to have good incentives. This seems like the same category.
In the contrary, I expect the owners of an ESOP are very much in favor of having a well managed separate employee retirement fund. More so than in a publicly owned company.
But of course you are right that the risks factors of losing your income and losing your investment are pretty much 100% correlated for an ESOP. Some investment diversification is always a good idea.
Pleast don't be so naive. The reason not every company does that is that giving ownership gives power and dilutes your own, reduces the chances at doing humongus profits that can be hoarded by a minority. Business owners are not operating out of sympathy for the workers, they are operating for themselves, by design
My answer to that question is that organizing people is much more difficult than everybody thinks and politics is the biggest source of inefficiencies on any human organisation bigger than a few persons. And cooperatives introduce additional political layer.
Easily: there are far more non-employee owned companies than employee owned. Thus this isn’t a preference at all, it’s merely the availability of the market.
Now you could say that entrepreneurs who start companies have a preference for non-employee owned, thus explaining the aforementioned market allotment. Again that’s pretty easy to explain, because of course such an entrepreneur would give up ownership in an employee-owned arrangement. It’s also just the de facto paradigm most are aware of in news cycles and business schools, and is easier to setup and support.
Seriously though, most people cannot afford to just quit. You at least need savings for that, and you need to be fine with burning through them and still failing, cause that's a very real possibility.
Maybe in a decade when the market and my debt recovers? But I'm planing to work for myself anyway. I have no issues with a co-op if I ever make enough to bring someone else on.
Equity is great when your base salary covers your comfortable life.
Equity is not great when your salary or hourly doesn't afford you much, and having inaccessible capital that very well may be worthless in the future is not desirable.
When people talk about this topic they hyper focus on success cases. But HN should be intimately familiar with how well start-up equity offers usually pan out.
And large stable companies usually do offer equity to employees, but that slow stable growth equity is not going to make you rich.
Early on when we were just starting out (context as a founder), I used to think that the only types of people who would take on this kind of risk were young 20-something’s who had time and space and no significant other. Then we hired 2 early engineers in succession who were older.
One was just made for startups. He could never work for a large company, and he was ok with the risk and lower pay because it was still quite high relative to his cost of living in Europe.
The other already had kids who were older and independent. He always wanted to take a swing at a “Silicon Valley” startup, and he just cared deeply about that experience and could do so without having to worry about his kids financially relying on him.
They were 2 of the best engineers we had ever hired and stuck with us through thick and thin from a team of < 5 engineers through us scaling to 80+. When we got bigger, one left because we were once again too big for him (process, minor politics popping up, spending more and more time teaching newcomers how to own and operate a bigger codebase safely, etc.). The other left because of similar reasons but at a later scale.
I started the journey starry-eyed/overly-optimistic in both directions. Hiring people early on who obviously did not have the risk tolerance or an understanding of how much work was needed early. Holding on to people for too long who weren’t enjoying the new environment. Now I’m much more even about this - there is a right place and time based on what the individual wants, and being open and honest and kind about it is always the best path. Equity is simply a lever to compensate risk, but the appetite to take on the right amount of risk is the most important thing given the company’s scale.
Employment is already a pretty bullish position on the employer. Adding equity is doubling down. If the company goes under, you lose your future wages and the investment in the equity.
Really? Or are there simply far more non-coop job openings available? Is there data on the applications per listing that directly compares ownership structures to normalize for workforce size?
This is simply not true. Many workers' coops issue one share per worker (there may not even be stock), which affords them one vote in company matters. In such a scenario the share may not be bought or sold, as it is a case of one share if and only if a member. It is not correct to represent proportional democratic control of a workplace as somehow a restriction on workers rights.
At the most bloody-minded level a food-service worker must wash their hands after going to the toilet and this is a restriction on their rights, but at the same time this infringes upon the rights of customers to not get sick eating food. Denying employees democratic control of their workplaces is a much greater restriction of their rights. And as a matter of practice, employees get the short end of the stick when they have a boss.
But my comment really was about restricting the choice of a potential employee - someone who has not yet decided what company to join.
The real power disparity between capital and labor is that capital is concentrated and labor is diffuse. Every worker negotiates with the corporation as an individual over compensation and worker rights. When you have a union negotiating the contract, then both labor and capital are concentrated and on a more equal footing, producing more equitable outcomes. Giving employees a tiny ownership stake doesn't really change the power disparity at all.
Speculation based on a shortage of info and, I assume (speculation), a feeling that at least some workers would rather do a different job, which would, from my POV (speculation) fit with
> Your barista at Starbucks is not going to increase the stock price no matter how well he fills your order; at the same time, maybe he wants to know how much he takes home every day.
Yes, your barista is increasing the stock price by doing his job well because customers will return for the enjoyable process and outcome. Given the positive feedback and proper operation procedures in quality assurance, workplace development and operations improvement your barista will also "design" & submit ideas to improve/change/expand certain things which can benefit process and outcome for the customers. Your barista is only one link in the supply chain to customer and daily income, which means that every decision will run through a feedback loop that creates the evolution of the company.
But that's rarely the main driver of stock prices, which are currently mostly artificial constructs based on shareholder bullshit, networked manipulation and whale circle jerks. If a company "does bad", though, these main influences are dropped and increases are reversed until company behavior serves the kinks of the shareholders financial orgy again. "Imagine" a company creating free value that can not be monetized by whales but only by the rest of the world. "Free" energy, for example, a perfectly adaptable mix of energy sources maintained by sustainable procedures the negative side effects of which are compensated by gracefully handling resulting trash, upcycling or, out of imminent necessity, the creation of industries that R&D adequate solutions. All of this happens but always based on game theory methods, and that happens only, exclusively, because leadership falsely believes they are compensating their workers based on market evaluations of their work, which, entirely ignore that consumer prices are inflated by whale circle jerk behavior. It's pathetic and deserves nothing but disrespect. But people in circle jerks are manic and obsessed.
Stocks, in their current form and with the current laws, are bullshit and serve a future world where AI will do most jobs and people in companies will only exist so that people higher up in the chain will feel pseudo-dominant, which is already the case, but too many journalists and politicians are part of the circle jerks and thus manic and obsessed as well.
> (a) they find it hard to raise capital
Because circle jerks. There's not even a game theoretical argument to justify this behavior as the giving those companies capital will either increase market and profits directly or by ways of added value as in "learning lessons" and "process of elimination". The reason it's done anyway because the circle jerks base their decision on fear of the evolution of the game so they'd rather keep the game as it is, balancing their decisions which requires totalitarianism, dictatorship.
> (b) they tend to make decisions that maximize worker welfare rather than profit, e.g. they won't sack underperforming divisions or expand in ways that dilute existing workers' stake.
Speculation/misinterpretation. They would sack underperforming divisions if they had to, but there rarely are cases where such divisions can't be improved and made more useful or cases where underperformance has exclusively negative outcomes. Again, the problem is whale circle jerk thinking. Underperformance is a matter of the right metrics, which do not serve the shareholders but company and consumer (the _correct_ metrics, that is). Now, when it comes to expanding while diluting the workers stake, you have the same problem, because the base income won't change. Only the stock increase will, which comes on top of the base revenue and makes everybody rich. But even in the rare cases where everybody does make less money, it's always temporary and sometimes necessary. This is not closed system after all.
This is completely dishonest. You're not arguing against this because you're concerned for workers.
> they have to be given part of their pay as stocks,
This is nonsense: the stock given to workers would normally be distributed to other places, so when it's given to workers instead, it's generally in addition to what they would normally be paid.
> and they can't sell them freely.
Also nonsense: this is a rule at some companies, but doesn't have to be.
> Second, that will probably make markets work worse. There's a large economics literature on this: worker-owned cooperatives have not taken over the market, although they are an available institutional form, because (a) they find it hard to raise capital (b) they tend to make decisions that maximize worker welfare rather than profit, e.g. they won't sack underperforming divisions or expand in ways that dilute existing workers' stake.
Ah, the real reason you care about this issue: "it will probably make markets worse". Screw workers, can't make markets worse!
As a society, is it our goal to have companies that "take over the market"? Or is our goal to have an economy that meets the needs of our people?
Not sure it'd be a bad thing to have more of the one and less of the other.
Whether it’s a bad thing to improve employee welfare over profits… I don’t think it’s that bad. It’s perhaps more efficient than hoping that the state will. And it’s probably temporary and tactical: profits still matter when you own stock.
Herb Kelleher famously setup Southwest Airlines with very similar principles and stock options for everyone, with pretty amazing results for decades.
[1] https://www.starbucksbenefits.com/en-us/home/stock-savings/b...
Not sure I agree. If all the baristas did a better job then I think that would positively affect company value.
It would be cool if I could live partially off of welfare and have my job be an unprofitable charity making free software, where even if I had stock it would be worthless. Such a public good cannot exist under capitalism alone, not even for-the-workers-colored capitalism.
Personally, I consider stock options to be a bit like lottery tickets. All things being equal, it doesn't hurt to have them, but I'm not going to count them as compensation and that I have them isn't going to make me work any differently.
All that said, as a customer, I tend to prefer to patronize businesses that are "employee-owned" to a significant degree.
Getting stock or pay are not an either/or. Employee actual wages have been effectively flat for the last 30 years, whereas corporate profits have continued to increase. Companies can do both. The money is there. Most of us are not getting it. Corporate organizing hasn't worked for everyone over the last 40 years. The mantra that corporations should only deliver value to shareholders has lead to laser sharp focus on quarterly profits in exclusion to everything else. Financial engineering like stock buybacks and leveraged buy-outs only concentrate wealth and destroy value. While declaring the end of neoliberalism and ESG have been attempts at turning that around, they have not been effective at influencing change. Being smart about how to align incentives is what is going to lead to more value in our economy and lead to more equitable outcomes for all.
If society would be a better place than short term growth be damned.
There are some fundamental compromises in freedom. If I have a right not to be stabbed you have a lost a right to stab me. Clearly, there are some things where this is an obviously good trade, like in not being stabbed.
I suspect this person fears they will lose some freedoms if they choose to run a company or have their options reduced in the job market if companies are regulated to be less shitty. There may be some of that, but I suspect we can take the worst offences off the table and make the market more robust creating a total increase in freedom and options for everyone.
This is why I went with a child in the mines example. Getting kids out of the mines and into schools was a complete gain for everyone beneficial to society. Employers got more educated employees. Kid got out of the mines. Coal production went up.
Yet you proceed to build a strawman.
I want the freedom to exchange my services for money without having to care about all the bullshit ownership ensues.
It takes a sociopath to conclude that idea is somehow equivalent to being stabbed or sending children to mines.
Then sell immediately, no one here is proposing forcing ownership onto employees. For nearly all Americans owning something significant that is likely to grow in value distinct from the output of their labor is an exceptional opportunity.
Just like how when children were given the opportunity to leave the mines for good there wasn't a massive popular resurgence to make abusive child labor legal again. Most people wanted kids out of mines and into other opportunities.
Most people want wealth. Most people want better opportunity than coal mines. If you want to sell your ownership you can. If you want to mine coal you can when you reach the age of majority.
Rather than view de-facto employee ownership as a burden it is an opportunity to leave a metaphorical coal mine, if you want. You could choose either way if society made de-facto ownership for labor a thing. Right most of us don't have choice.
Maybe this is the good way of running a business, and the gigantic corporations who grow like cancer and try to control governments are a bad thing?
I imagine the goal would not be to get rich off of the work, just have a democratic say in how the work is done and what work is to be done.
Isn't this just a circular argument then? The economic system based on tradable joint-stock companies is not conducive to other forms of economic organisation. Huge surprise! :)
Of course they can't raise money in an economic system where money creation is privatised, that's exactly the problem!
Perhaps capital owned companies have the distance to be a bit more ruthless in driving change - however while that may mean you get better short term allocation of capital, it doesn't take into account the other costs.
Everytime a company lays off workers it relies on the state to ensure that those people and their dependents don't starve, potentially retrained and available to be successfully deployed elsewhere. Or to stop them, in their desperation, to gain the materials to live, start breaking the law.
ie there is an element of free-riding of private capital on the State to ensure a stable society that private enterprise existence relies on, while they employ 'creative destruction'.
Good companies - whether employee owned or not, don't free-load, they invest in their own staff through training, they pay good redundancy etc.
You could argue the above is more likely in employee owned companies.
However as I said at the start, in the end it's the leadership that matters.
It’s a silly statement that the efforts of Starbucks baristas wouldn’t have a massive impact on the company’s business.
How would a business like this get started? Usually the owner is the one who invests a lot of their own time and/or money into the business to get it off the ground in the first place. Would we be asking workers to pony up in those early years when failure is likely? With Central States, the story picks up AFTER all that, when the business is already large and successful, and the owner just wants to retire.
And what happens when the business struggles or fails later? In the case of Central States, the workers were asked to buy shares from the owner, probably using a portion of the salary they'd otherwise get. IOW, they're being underpaid relative to market, in exchange for ownership, expecting to get more later when they sell the shares. So far so good, but how does this look when the business has a rough patch, even one that's not their fault?
Having said that no man is island of itself. Current incentive structure works great to motivate individuals to start companies
That's the second time i'm hearing that quote today from completely unrelated sources.
The quote is from David Ogilvy, in case anyone is wondering.
"Search all the parks in all your cities; you'll find no statues of committees."
----
Edit, I was mistaken in my earlier post, so I will just leave this here as a correction https://en.m.wikipedia.org/wiki/The_Burghers_of_Calais
Everyone has visions, and most great achievements today are the results of an amalgamation of them. The really big achievements are almost always the result of groups, not individuals.
People that idolize others have to turn a blind eye to everything surrounding that individual's achievement. It's simply easier to simplify big achievements as "this person was great". In reality though, it's a culmination of everything that came before that individual, the support around them, some of their decisions and much more.
In other words: monuments are a bad argument to evaluate if something is good or not. Especially in today's individualistic society.
It's a shallow Instagram motivational phrase.
No, it does not. Most ideas fail, and a significant amount of "off the ground" projects fail.
To be successful long term, it requires vision and commitment. You can find people to grind on your vision, but you cannot make them see what you see.
The overwhelming majority of massive successful projects and companies have a key figure that drove them to success.
I'd wager there are very few examples (if any) of a massive and successful companies that began life as a startup with a 30+ person board, for example.
My business has always had 3 or 4 people as owners, and hence as the "executive committee". I've found that to be helpful. If you can't convince your fellow owners then it's likely a bad idea.
(We've also turned away good ideas, and executed on bad ideas, the group approach is not infallible.)
But it really helps to develop a vision beyond just "my idea this morning" before diving into implementation.
I call bullshit. If you can't explain your vision you're a shitty leader. Good leaders can share their vision and get people to buy into them, adding their visions on top of it.
This is an oversimplification of very complex human interactions. Humans seek the simple explanation, even when there isn't one.
>The overwhelming majority of massive successful projects and companies have a key figure that drove them to success.
s/a key figure/key figures/g
>I'd wager there are very few examples (if any) of a massive and successful companies that began life as a startup with a 30+ person board, for example.
That's moving the goalpost. Nobody's saying you need 30 people for things to happen. Anything greater than 1 is, by definition, no longer an individual effort.
Take one of the most known examples: Apple. It took both Steve Jobs and Steve Wozniak to make it happen. After their initial success, it wouldn't have grown to today's behemoth without the thousands of others that came after and worked on each and every product to make them successful. It's always a group effort. We can simplify and say "Jobs did it" but it's absolutely inaccurate.
I don't understand why smart people need idols. I get why the masses need their figures, but once you think about it for 5 seconds it's obvious they are mostly myths.
It actually would not be. We got to witness Apple with Jobs, without and with-again... the track record unambiguously demonstrates how impactful a single visionary, highly motivated leader can be within an organization.
We're now seeing Apple without Jobs yet again, and while the stock price has coasted upwards under Cook, Apple has not been the "bold" "think different" Apple ever since. Present-day Apple largely relies on it's existing products and small iterations. Apple, under Cook, has produced nothing market-changing or revolutionary, like they consistently delivered under Jobs.
As for how these get started, it's the same as any tech startup. The founding team owns the whole company at formation, and then they progressively give it away to increase the overall valuation of the company. You can do that through giving away stock in exchange for funding from a VC that you can use to pay employees, or you can give away stock directly in exchange for services rendered.
And yes, this looks bad during a down year. Tech companies have this problem all the time - employees are demotivated when the stock price goes down, which can have further negative effects on the stock price.
To clarify, the gp was asking a rhetorical question that he already knew the answer to when he stated, "How would a business [that already looks attractive for ESOP] like this get started? [... his recap similar to your recap ...]"
To put it differently, the scenario he's trying to explain is something like this given that ~9 out 10 businesses fail :
- you can't look at just a single company's successful timeline to judge the ESOP for society; you also have to consider all the failed companies and how ESOPs would play out in those timelines as well. Since ~90% of businesses fail, you have to play out the financial dynamics of employees buying into ownership of all those failed companies. And in contradiction of employee-ownership, a lot of employees would prefer getting a bigger paycheck from a dying company rather than having money deducted to buy worthless equity shares.
- e.g. of course employees would love to be significant workers-cooperative owners of Amazon Inc and Apple Inc. But the analysis also must include employees owning worthless shares of Pets.com (bankrupt 2000 and shutdown) and Commodore Computer (bankrupt 1994). Some workers got employee-ownership shares of Commodore Inc instead of Apple Inc?!? Well, it sucks to be those workers.
Note that if you run the math on the company in the article, they're considerably less generous than that. They say they have 1500 employees, $1B in revenue, and the average employee makes about 8-26% of their earnings. Figure that's maybe $20K/employee * 1500 employees = $30M in stock compensation on $1B in revenue, so they spend 3% of their revenue on stock compensation. If you figure the company is valued at $4B, they're giving away like 0.75% of the company per year, a bit less than Google and way less than a tech startup.
This is probably a PR hit for Central States Manufacturing anyway, to help their recruitment efforts.
Now, many people probably sell that stock as soon as they can, so the employee ownership isn't cumulative over the years. But it would be quite hostile to employees to stop them from doing this in an effort to make the company more employee-owned.
[1] https://abc.xyz/assets/52/88/5de1d06943cebc569ee3aa3a6ded/go...
This seems entirely rational to me - I've bet a significant part of my career on the success of the company I work for, why should I also bet my savings? Diversification has real value, and going all-in on one company is just a bad bet.
And lots of people would rather just be that supplier, who gets paid a specified amount of money for a specified provision of service, and not be forced to bear short-term risk or to hold out for a long-term upside that depends on lots of stuff they have no control over working out for the best.
"Customers"?
Mechanically it's pretty similar to if the company had just paid out cash as salaries (cash leaves the corporate treasury and enters the employee's brokerage account at market values), but the market is the intermediary, and the tax and accounting treatment is pretty different.
Also, the majority of employees in a company other than small startups do not have the ability to shift their company's success materially to make it a worthy incentive to own and hold employer issued stock.
Plus it's bad to have your investments and job in the same place. If the company fails you lose you job and savings at the same time.
Yes, there are non-financial reasons to have "shares in the place where I work". But financially it's a bad investment.
(If the shares come with management rights, responsibilities, obligations, decision making, that's different.)
That is, you should treat them like receiving cash and convert them into whatever you would normally do wisely with extra cash you received.
Does that make more sense?
If your company is a shithole or fraud, then you absolutely do not want to be receiving company stock. But then, if that's the case you may want to re-evaluate working for it at all.
If that were the case and employees were compensated equally in stock vs cash, then yes there is no _rational_ difference. However, most human are not rational.
People like to take pride in their work and do a great job, this is amplified when they stand to directly benefit from their efforts. By enabling employees ownership in a company you're hoping to incentivize them to work harder and therefore amplify the return on their labor.
Even if this assumes an equal net present value, wouldn't the volatility of stock vs. cash make a very rational difference in expected future value? For people who are risk adverse, the cash would probably be preferred; for those who are less risk adverse, the opposite is probably true.
Most workers are not sophisticated investors and I'd rather they put excess savings into broadly diversified index funds instead of low quality equity in whatever small business they happen to be working at.
when the people in the article cash out their ESOP shares to buy a house... who's on the other end of that deal to buy those shares? is it some other employee? Wouldn't that mean that money is just switching hands between your employees rather than helping all your employees get rich?
related: i exercised some options for a startup that i used to work at a few years ago. they're now >10 years old and financially healthy, but no IPO in sight. what's the point of those shares if there's never an exit?
By enabling employees to be owners you grant them access to those profits and to participate in discussions around how to spend/re-invest profits.
We spend our profits in different ways. Some of it goes to future planning (bigger stock piles, larger cash reserves, growing headcount etc). Technically all our working capital, all our assets, all our stock, has been funded by "retained income".
That said we also pay bonuses (13th check) in profitable years , and we issue dividends to owners. The dividends can be significant. Or 0. Or less than 0 (salary deferred in bad years.)
We want long-term sustainability , but also returns for being owners (otherwise we might as well go get a job somewhere. )
Organic growth is fine, sales going up is good, but we're not looking for hyper growth.
There us no "exit" (for the business) on the cards. An IPO is out of the question, and having seen the destruction caused by corporate acquisitions that's not a route we like either.
It's not glamorous being a small business churning out regular profits. But it pays well.
What gets me most is that rank and file employees in the ESOP almost never have directly exercisable rights as shareholders to vote or have any say in the business. You don’t get to say no to a merger. You don’t get to fire the CEO when his big idea is a flop. The ESOP vote is wrapped up in a trust or some abstraction controlled by an advisor or a board probably appointed by the real board of the company. Ultimately the executive staff and hand-picked insiders will have all the real authority of ownership. Employee stock thus is not much more than a complex pension program for almost everyone. Regular employees will not be real owners in any meaningful sense unless they get into the small trust network of existing owners.
If you’re an early arrival to an ESOP with good growth potential, you will do way better than someone with a little 401K match. They also get great tax breaks. Overall they’re good for employees, but the messaging is usually misleading.
Uhm, do you have a 401k?
In Canada, there are 'Labour Sponsored Venture Capital Corporations' with union overseers to do this and special tax deductions for investing money through these.
They are, of course, a giant failure that neither provides easier access to capital for entrepreneurs nor generates any notable return for investors.
The same argument could be made for any other kind of shared ownership company.
As opposed to putting your retirement fund into other company's stocks, which everyone does at the same time, making those companies too big too fail without unraveling several threads of social fabric.
I think your statement actually proves why employees should have stock in the company.
If we really were worried about issues such as this we'd have universal (not attached to you employer) healthcare and a pretty robust (but minimal) retire fund for citizens.
But we have the opposite of that with none of the upsides.
On the other hand, if my wealth is in Acme Corp and they go bankrupt, I lose my wealth and my income.
The first model is less risky, yet profitable enough to be worth it. And everyone can still own the means of production.
I don't understand how your scenario is applicable; it's definitely constructed.
But any investment manager will recommend that your savings are diversified. That helps to insulate you from individual events thus making your savings more resistant to failure.
So you might invest in public shares, or property, or personal energy (residential solar) and so on. You might mix different kinds of shares. Etc.
By contrast owning shares where you work offers few financial upsides. It may or may not out perform the market. It may or may not be liquid. And so on.
It does however come with substantial financial risk. With one point of failure, one event, you can lose your income and savings.
Only you can decide if the risk is worth the upside. For most people, it's not.
Seems to me the best option would be to offer employees ownership. You could have two compensation structures:
- 100% cash compensation - 50% cash/50% equity
See which ones employees prefer. I'll bet it's overwhelmingly the first.
The one I know, it just started out with some people who were all equal co-owners. When a new employee joins, they get the same share as everyone else. When someone leaves, they lose their share. Shares can't be sold, everyone has the same amount. It's a cooperative.
They're organized at team level, teams have to write business plans that must be approved by people from other teams, teams decide whether to recruit an extra person, and so on.
Large investments (they built a new hq) are voted on by the whole company.
But the employees also have other things in mind besides profit, like their work load.
Alas this would be a big issue. It is the deferred payment test writ large. Do you want $20 now or $30 next week.
For a lot of humanity when times get difficult we will tend towards the immediate payoff rather than the long term. To eat the seed corn.
For example, the Boeing CEO made 22M in 2022 and 32M in 2023. I'd argue that he did a much worse job in 2023 than in 2022 but somehow got paid almost 50% more. Even Jensen Huang, CEO of Nvidia, is "only" being paid $34M in 2024.
If you look at many top CEOs resumes, they are almost always devoid of any real experience. People talk about replacing various jobs by AI, but I'm pretty sure an LLM could replace most CEOs and no one would notice.
It's someone you can pin board and shareholder decisions on, as well as changes in market and accidents, that just goes away and lets some other people keep their power and profits instead of being accountable for their mistakes or lack of strategic performance.
I think the problem is you have to hire someone highly qualified and with relevant experience to at least show you're doing due diligence, and those people aren't cheap.
Pay plays a part in that, it signals that the person is extraordinarily competent and all around great and important.
In large corporations CEO:s aren't very important, it's just one person who mainly collects and structures information from people closer to the work and makes public appearances on behalf of the corporation and does paper shuffling required by the state and so on. It's not rocket surgery. Using this person to protect the reputation and image of shareholders and the board as well is a 'no-brainer' decision to make if your interests are well served by it.
American capitalism has lots of problems. The idea that CEOs "almost always" have no real-world experience is hardly worth arguing against: "almost always" is meaningless rhetoric and "real-world" likewise (what counts as real-world experience for Google? WPP? Northrop Grumman?). Jensen Huang is mentioned literally at the top of this thread and is an obvious counterexample.
I find it obvious from the context that they were referring to celebrity CEO:s in global corporations and not Mom or Pop in some small mom-and-pop corner store.
When I look at en.wikipedia on Huang it seems he graduated into a managing role and then founded Nvidia. By "real-world experience" I'd mean experience as a worker, but I can't answer for the person you're actually quoting.
However, it's an interesting example. Clearly Huang has managed to promote an image to you that is very different from mine. As I see it, Nvidia is a main supplier of hardware for globally fashionable grifts and scams, like large portions of so called 'crypto' and 'AI'. I also expect Nvidia to be an important supplier in the war industry, and I'm sure it is in surveillance tyranny.
I'd say so called AI is largely a scam. It's wobbly databases with non-deterministic query languages dressed up as a substitute for intelligence. Email is similarly a scam. Through mail you send someone an item, which might or might not have some script on it. Email is very different, and it's largely used for spam, even though the name seems to say it is very similar. Is this what you call progress?
No, I'm pointing out that Nvidia are supplying criminals and tyrants with the tools they need for their abusive and oppressive activities. I do not expect your mood to change from having this pointed out, rather the opposite, I expect you to already be somewhat aware of it. Personally, I try to avoid doing business with such people, and I would prefer to not be dependent on their enablers, though that is almost impossible for systemic reasons.
It's the dissonance between promise and delivery that make the term appropriate in my opinion. There's nothing intelligent about AI, and you can't transfer a package to a friend through email.
And, well, yes, one might argue that capitalism is basically a scam. Instead of serfs and slaves that were traded and exploited personally, we're now being traded and exploited collectively. I think Engels said this more succinctly at some point.
In general prisons are suppliers of cheap labour, and don't allow people to actually rot in them, though some inmates aren't actually supplied as labour, for reasons. As the person you're likely alluding to shows, grudge-laden manifestos and bombs don't do much to change society. It's a better idea to get organised around mutual aid and strikes in a wide sense.
If you have 10M of revenue and 9.5M of expenses then an increase of 500k in sales doubles your profit. Given that everybody in the company is needed (for sake of argument) to produce the initial 10M I wouldn't say that the CEO inking a new sale for 500k is worth the entirety of the original company.
> the company would make less money and it would be the CEO's fault.
It would be the CEO's fault, and the workers who were not at fault would be fired when the company needs to tighten the belt.
The money that workers bring into a company is often not being used at all to pay these CEO's. It's why so many CEO's have $0 salary or $200k salary.
It's a critical distinction because it clears up so much confusion people have about this topic. Those 300x multiple stories you see are almost always comparing two completely different income sources. You can almost think of it like a 3rd party is paying the CEO to run the company.
If you get 1% more work out of 350 people than the alternative.
If you get 1% more productivity out of 35,000 people than the alternative you have done it.
We don’t need deep packet inspection to spot a very out-of-the-chart huge traffic.
We don’t need micro-details of an economical agent actions to spot an anomaly in wealth distribution.
You could probably get away with it for months, honestly.
Simply being born into a richer family means you're significantly more likely to earn a higher education. Simply being born into a white family means you're more likely to finish high school.
And this is leaving out connections. If you know the people hiring, you have a better chance of getting hired. High-status people know other high-status people. If your family is high-status you're at a HUGE advantage.
That doesn't mean the opportunity "manifested" for you. But, it does mean your likelihood of obtaining said opportunity went higher.
I mean, when you look at the proportion of CEO's who are white, tall men as opposed to the regular population you notice that. It's an open secret. Some say its coincidence. I don't think anyone really believes that.
26.6M of that was stock. In percentage terms it's just equity that he effectively handed out before as a founder and is getting back in return for growing the company even more. I don't see a problem with it, considering that the median employee takes almost zero risks and can leave whenever they want.
If it were the case that employees need to put in capital into the business before being employees, then it would be a different story. In fact, those schemes exist - they're called MLM, or multi-level-marketing schemes, where you pay the company upfront to buy the product, and try to sell it at a profit (like herbalife), and try to recruit on behalf of the company!
If you're an engineer at Nvidia you'd have to do some braindead stupid things with your money to end up homeless.
Also, if you have technical skills at a level that Nvidia would hire you, you can easily get a job at probably a thousand other companies. Layoffs are a non-issue. Recruiters will be scrambling to hire ex-Nvidia folks in the event of a mass layoff, barring a major global financial collapse (in which case you're still better off than 95% of the population).
> Loosing job before that wealth threshold means homelessness and poverty.
No, it doesn't. Maybe don't borrow money and buy a fancy car and vacations you can't afford? Buy a normal car with cash and go on normal middle-class vacations?
If you work in an mid-level engineer capacity at a FAANG or Nvidia in the Bay Area you can easily live on 1/3 of your take-home compensation (that's including a normal car, a couple economy-class vacations a year, and a modest apartment) and invest the rest in index funds. Within a few years of working, you would have banked enough to have a decade worth of expenses saved before you'll be homeless, and I'm sure you can find another job in that decade.
I work at a big tech company, my (very normal) car cost me 1/10 of my annual take-home salary, I've never flown anything but economy class, and I save 60-75% of my take home pay and invest it. I can't afford rental properties or any of that, but I do have enough funds to last me several years at my current lifestyle.
Back when I was at startups (including co-founding one), I was never able to save more than a few months' worth of emergency fund, and that was not good for my mental health. That's one of the reason I joined a big tech company for now -- to de-risk myself financially.
Startups are financially FAR higher risk. You'll get 1/4 the pay that Nvidia gives you, the equity may end up being worth $0, and if it does end up being worth $0, you'll have missed out on the opportunity cost of being hired at any of the FAANG companies for whatever time you spent there.
I'm not discouraging anyone from doing a startup, but it IS higher financial risk in every way.
> I can't afford rental properties or any of that
Back in the days when I didn't have money to buy a car with cash, I just didn't buy a car and used a bike and public transit to get everywhere.
I mean, maybe that's why I have a high savings rate.
I can quit my job with full peace of mind, that's what this whole thread is about.
If and when I have money to buy a house, I'll just buy one. It's not that different from buying a fancy meal or a plane ticket. If I have the money I might buy it. If I don't, I don't think about it. I'm simple like that, and as a result, I have very few financial worries.
People start businesses and actually risk everything they have on them. If you only look at someone who owns and runs the biggest company in the world, you're just using the apex fallacy[0] to justify your perspective, and hoping nobody notices.
He's getting a 30M paycheck today only because he built a trillion dollar company from nothing and sacrificed the job opportunities he could have had at other companies for three decades.
But that is his stock he kept from founding the company. Not today.
He should of course still be CEO of Nvidia and get the money(stock awards), because unlike others, Nvidia execution is excellent (see market cap) and has been for decades, but that is not really any risk for him personally.
I say give him the 30 million dollar package because he's the only guy I can think of that has hope of turning NVDA into a a 10 trillion dollar company in a few years and I can't think of any other CEO that would do better than him.
And sure, maybe at that point his comp will be 300 million, that's fine, my NVDA stock will 10X as well and I'll be more than happy.
Agreed it is not about the risk
According to Wikipedia:
As of 2024, Huang has been Nvidia's chief executive for over three decades, a tenure described by The Wall Street Journal as "almost unheard of in fast-moving Silicon Valley".[14] He owns 3.6% of Nvidia's stock, which went public in 1999.[5] He earned US$24.6 million as CEO in 2007, ranking him as the 61st highest paid U.S. CEO by Forbes.[5]
This should tell you all you need to know.
With 20/20 hindsight which seems like the better path now?
>This should tell you all you need to know.
>hindsight grants better insight into decision making
That may be true but that's not the point.
You can't compare a company started when Nvidia did, against anything recent without involving a fair bit of hindsight.
And you can only see how it really turns out by waiting until now :)
Outside hiring can be what makes a CEO more like a "ceremonial" position or something, where if the "best of the best" is truly needed, there's still a lingering flavor that it's like hiring the very best interior decorator or landscaping gardener. It may be the best, and appearances have never been more outstanding, but tastes can change so there's an inherent perception of a temporary era stemming from this kind of thing.
A company like Boeing is going to be at its best when the top person has truly known how to build aircraft their entire life.
OTOH, a candidate CEO from a completely different industry, especially an experienced financial manipulator, could have already reached such a stratospheric salary history that it dwarfs anything achieved by anyone technically qualified. It costs a lot more than reasonable to recruit this kind of inflated ego or CV, and it wasn't always supposed to be forever. With the kind of multiple they are paying the hired CEO compared to the technically qualified leader, they expect that same multiple of financial performance to be achieved starting from that point forward, probably when they need it most or many wouldn't do it. With a bonanza like that they can justify paying the CEO exorbitantly, and they can be expected to retire in only a few years when things can be re-evaluated. When people blindly think it's actually worth it, that's where their thinking goes wrong. This can be very persuasive to shareholders who don't know anything about building aircraft themselves. Once all the Jack Welch wannabes pounced on this it's never been the same.
Hence an employee-owned company that builds aircraft, if they do decide to hire a non-aircraft-experienced CEO (even just for the expected short-term), at least that decision is being made exclusively by "aircraft-building" shareholders.
That may be even more confusing, I've been watching this dumpster fire unfold for decades due to some kind of underlying senselessness, and this is one of the things least sensible that's not well recognized any more. I'm not surprised Boeing was brought up but I wasn't expecting it when I pulled this article out of its coffin without a comment, where it had been immediately buried before it had a chance to trigger anybody else, capitalist or not.
I didn't submit the article but it's interesting to see how much it blew up and where it went. I figured if I did comment I would be adding something about an employee-owned company founded by a wizard scientist whom I had met before he founded it. It was iffy at first but now they can't be stopped, he's long retired but the company is now stronger than alternatives even though they have always had the disadvantage of competing when they are mere entrepreneurs in a capitalist-dominated market which they can never be expected to realistically dominate, just participate in.
I really don't even think every company should be employee-owned, for one thing there might not be as much of a thriving capitalist market to participate in. As that would be approached though, a worthwhile substitute might be a market where capital does not dominate, but I wouldn't be holding my breath on that.
I'm with you 100% on retiring after the first quarter too :)
If I had a strong point to make I probably would have made the initial comment, but I guess I felt it was enough to just vouch for the naked submission and let it stand on its own. And within an hour it went through the roof, sheesh, who knew?
Once again, nobody's fault but mine ;)
For example I didn’t advocate anything about retiring
Sorry, it was freilanzer whose idea it was to retire after the first quarter of a 30 million pay scale :/
This is an important point that is often ignored.
Within the past week there was a thread about "How to get paid FAANG money at non-FAANG companies", and someone mentioned starting your own business -- which folks (correctly) pointed out involved risks and time that most folks don't want to take.
(Also, it's always funny on HN when someone sarcastically talks about a CEO "only" being paid an absurd amount of money, when almost all of us are getting paid multiples of the median salary, plus whatever annual bonuses and stock.)
This is not to say I don't think CEOs do any work. They may make major contributions in terms of developing strategic plans, communicating them to staff and inspiring them to carry them out well, negotiating with allies, outmaneuvering competitors, and balancing the conflicting imperatives of operations, finance, security, legal and so on. But they're not compensated for labor so much as given (via negotiation) a commission on profits, revenue, stock price movement or suchlike. Inevitably there are conflicts of interest with shareholders, staff, and customers, and as a class CEOs and other high level executives seem to have tilted the tables more and more in their favor over recent decades.
Is it something that has been study or observed? Most company are resilient enough to handle the leaving of an individual, being a Chief or not. The opposite would be a flag for an instable company.
Far tangent exemple: Belgium without government.
Said another way: I’d demand a lot more in compensation to be CEO of Boeing than NVIDIA (or any other role for that matter).
I'm ready to do it for a mere 5 mill/year (less than a sixth of the incumbent), and I'll happily take all the blame for all my predecessor's failings, and more.
Will I do a worse job than the incumbent? Maybe, maybe not, how the hell will anyone know?
Usain Bolt can run 100m in around 9.58s, and gets paid a lot for that ability (indirectly via sponsors etc). Assume I can run half as fast, say 100m in 19s; do I 'deserve' half of Bolt's fame and half of his sponsorships?
Similarly, you can't hire five 20% generals to put in charge of your army, and expect the same result as hiring one 100% general.
Or try hiring five 20% novelists or film makers or artists or actors etc.
> That's the whole point here - CEOs aren't paid proportionately like you or me.
Yes, and pay _not_ being proportional to ability is common and normal in all kinds of fields. It's nothing specific to CEOs.
If anything, pay being (even approximately) proportional to ability is probably the exception.
However, the jobs you listed are creative jobs. Not methodical ones. A filmmaker, truly, can never be replaced because he is his brain. He invented worlds nobody else could.
A CEO, however, does not make products generally. Nor does he come up with new things. He's a face, a leader, and not much beyond that. He could easily be replaced with an algorithm - if humans were receptive to that. They're not, unfortunately. So for now we need a warm body. Who that body actually is... meh, not really important. Best case, pick someone tall, white, and handsome. That usually works out.
And yet, we see companies opt for highly paid CEOs.
Sure, you can claim that boards (or whoever picks CEOs) to be all in cahoots with each other. But we also don't see greedy, activist investors racing each other to force companies to replace highly paid CEOs with the kind of anonymous dolls you describe; even though they are otherwise quite happy to clash with incumbent management, and even replace them wholesale, when they get control. Usually with some other highly paid and experience people.
Do you have any hypothesis as to why?
> I would agree that pay not being proportional is common because as you get closer to the skill ceiling the job becomes more difficult. You need more amount of effort/expertise/knowledge per unit of skill.
I'm not sure that's the right argument to make. I can't look into Usain Bolt's mind, but I don't think he'd be paid any less, even if hypothetically his running wouldn't take him any effort at all?
For the other two (expertise and knowledge), how would you define them in such a way that your statement is not circular?
I tend to see this as more of a case of marginal contribution. If you have a big, complicated machine that needs a tiny screw somewhere to work, and a normal screw costs 5 cents, but there's a fancy screw that enables the whole machine to be 1% more productive, the fancy screw might be worth up to ten million dollar a year, if your machine's output goes from 1 billion dollars a year to 1.01 billion dollars a year.
(I say 'up to', because in practice it depends on the supply of fancy screws. If there are lots of suppliers in the market, competition will drive their price down to close to production costs, even if they still give you ten million dollar in increased productivity.)
Similarly, perhaps a brand name CEO would only increase output by 1% over your hypothetical anonymous handsome guy, but that might still be worth millions a year.
---
In any case, I would be quite baffled if famously greedy and supposedly short-termist shareholders, would leave money on the table by not replacing name brand CEOs with some anonymous doll, if that worked as well as you suggest.
I'll take the role for a wildly discounted $20m.
It would be hard to do much worse than the recent incompe .. uh, incumbents.
Unfortunately the voters are handcuffed to the two party system by First Past the Post voting and the spoiler effect that comes with it.
It isn't the be all and end all, but I'd rather be a shareholder in, say, a military production company with solid government contacts & contracts than one with capable workers.
[0] Thank goodness that has finally changed but there is a bit of a lag while everyone catches up to the new normal.
Directors remuneration mostly decided by other directors (and just approved by shareholders who are not bothered), who tend to take the view that it is worth paying directors very highly.
Its something that has got worse, but its not new. As GK Galbraith said "The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself."
The board decides the CEO's salary, no?
This, in turn, is caused by the size of the companies being so large.
You can still make everyone's wages better without paying millions to each person and definitely not to the CEO
> You can still make everyone's wages better without paying millions to each person and definitely not to the CEO
The point is that the CEO's pay typically scales with the size of the company more than the media wage. Moreover, the latter is set by supply and demand in the labor market, so if you want it to go up you either need less labor or more demand for labor.
Unless you want to get into anti-immigrant and protectionist measures, the first one looks like instituting a UBI or increasing the child tax credit so people are less compelled to take bad jobs for low pay. The second one is "make the economy stronger" (e.g. reduce corruption/waste or lower taxes) and "make the market more competitive" (e.g. make companies smaller so there are more of them and they have to outbid each other for labor and customers, so labor receives the gains as either higher wages or lower prices).
There is no point at which "expect publicly traded for-profit companies to spontaneously become charitable with wages" is a viable strategy, and they do not respond to shame.
People who have a job at Boeing are already well off by global standards (and probably even by developed world standards). If you want to take from the rich and give to the poor, how about we give to the actual poor?
If you want to be dramatic: we had negative real interest rates for a long while.
Nominal interest rates were close to 0% and inflation was positive.
> Shareholders don't appear to be worried about how the company actually runs in the details.
And shareholders who are interested get vilified as activists or short sellers.
> IE, the wages suggest workers don't really matter because they don't.
The labour share of GDP has been mostly stable for the last few decades between 55 to 65%-ish See https://fred.stlouisfed.org/series/LABSHPUSA156NRUG
Profits have also been fairly stable as a share of GDP at around 5-10%-ish: https://fred.stlouisfed.org/series/W273RE1A156NBEA
Just to be clear: going up or down by 5% of GDP is a lot in absolute terms, but not enough to justify hyperbole about "workers don't matter".
My sense is that both (1), and the (1) && (2) combination, correlate fairly strongly with accepting a more-modest pay package. Such people seem to actually care about the organization. Or appreciate that others are doing 99.9% of the work. Or lack "the usual" pretend-to-be-emperor-while-looting-Rome sociopathy. Or something.
It's difficult to understand pay of that size on a rational level. That represents individual shareholders voting for a significant dilution just to retain an extremely controversial celebrity CEO at a time when sales are falling. https://www.theguardian.com/technology/article/2024/jul/02/t...
I see this kind of thing more as "how much the CEO is allowing himself to steal from the till because there's nobody above him" most of the time. Except in this case the shareholders really did make an expensive choice.
It's chronically repeated as if companies are robbing salary coffers to pay exorbitant CEO compensation. But that is not true. It's Boeing shareholders forking over $34M, not Boeing inc.
If the CEO works for the shareholders because they are part of the investor class, they aren’t prioritizing workers or customers - and we all know at this point that improving service isn’t part of increasing profit
There was also a law passed in the '90s that forced executives to have more skin in the game in the form of stock - which caused companies to give executives a lot more stock.
Ok? Anybody can choose to do this if they work at a public company. But what happen if it's mandatory and the stock goes down? Now your labor was stolen at below market rate! Then we will hear "employees compensation should be resilient to market fluctuations."
They can. It's easy in private companies to limit what an employee can do with their stock, and in public companies they can insert a clause in the contract to that effect just fine. Or just have very long vesting periods.
(Of course, as a would-be employee I would take these restrictions into account when deciding where to work.)
Look up eg a 'poison pill' for an example where you don't "either own or stock or you don't". (See https://en.wikipedia.org/wiki/Shareholder_rights_plan)
Don't most layoffs make the stock go up?
Some companies experience short-term improvements in price as their costs drop, but usually it has a longer-term impact on morale and productivity that takes longer to play out. Additionally, layoffs are typically performed on unhealthy companies (eg. not usually companies like Google and Meta that print cash and have huge margins), and unhealthy companies typically have other secular or structural issues beyond too-many-employees.
They are, in the modern startup world that HN is mostly in. That's why commenters here don't remember there are voting shares.
A classic example would be an employee forced to work in an unhealthy manner. If the cost of replacing the employee when they're worn out is less than the extra profit made by causing the employee to work in that manner it might be the right form of governance for shareholders. Even if it would not be profitable if the health costs weren't externalised.
Hmmm, so that line is a little misleading since they don't really "own" the stock in a conventional sense. They can't sell it to anybody else and they can't hold on to it indefinitely.
To the extent they "own" it they are are forced to only ever "sell" it back to the same company at some market-defined rate. (Arguably a form of stock-buybacks by the company.)
However that does sidestep the other tricky problems of taking money from retired employees (via diluting their stock) to award an ever-growing pool of shares to current employees every month.
"We've got a number of people that have been here 15, 20 years and they have $1 million plus balances"
Sounds good but they are catastrophically undiversified. Nobody should have their entire nest egg in one stock. Yes they are motivated for the company to do well, but so many things play into a stock price that are out of any one person's control.
Just giving them profit sharing that they can invest as they wish would have most of the same motiviations. Anyone making a decent wage and saving in a 401K should be able to save $1 million over the long term. And do it much more safely in a well-diversified portfolio.
I worked at a company that incentivized owning the company's stock. The company was doing fine but it was still controversial among employees because of the risk of correlating your employment and investments -- if the company does poorly then you may lose your job and a large chunk of your investment at the exact same time.
(In practice there also ended up being some jealousy as people who decided to play it safe missed out on some large gains.)
Workers are always at the mercy of shareholders (for whom apparently it's not bad to own a share?), and whom again and again will do a little layoff here and there because we need a percent or two more this quarter. Profit sharing will be the first thing to stop if results are temporarily worse. On the other hand, if the company is owned by its workers, nothing prevents them from redistributing all of the profits in dividends, aka, profit sharing.
edit: spelling
If it's worker owned, what happens to the shares when a worker leaves? Do they have to sell? In which case, is the company buying back, or the remaining workers (or is that the same thing?). If that's so, the share behaves less like a regular share, and more like a vested interest that doubles as a layoff package.
Also, is the value of a share that's owned by someone expecting a salary going up when there's a layoff? Since the only people who can buy are internal to the company (which is a very small pool), do you apply the same rules when it comes to valuation? I wouldn't presume its value behaves in the same way as an externally owned shareholder.
The incentive to keep the number of workers low is certainly there, though ; I'm wondering if that's more of an incentive against hiring (which you can see as a healthy thing).
If we're only looking at dividends and the profit generation of the company stays roughly the same from year to year then its in the worker's interest to reduce the number of workers so that the same profits are shared among fewer individuals; increasing the per share value of those dividends.
A buyout of exiting workers doesn't actually reduce the value of the company as you're either decreasing the number of outstanding shares or redistributing those shares to the remaining workers. You're just trading one asset (cash) for another (shares).
Normally, if your company goes under your savings which are invested in a wide range of companies will be fjne. But since we cant invest in other companies your savings are the ownership of your company. When when it goes under your life is ruined enron style.
Its fine to do this if you want, but if this compnay in the article goes under, those people will have lost millions. And dont force me to be an owner, I really dont want to be one and resent people who want to force me to own part of the company I work for.
To quote: "the association’s economic and social model fell victim to its users and competitors. The hierarchy of association members, originally intended to reflect ability, led to opposition between Associates (whose status had finished by seeming hereditary) and other, less privileged active members. The spirit of the Familistère co-operative colony faded with each new generation."
It is fascinating that these things were already tried more than 100 years ago. It is also interesting that they did not succeed for simple reasons (people trying to take advantage of other people). I think any proposed solution must be more structural - involve more than ownership but a set of values...
* Yugoslavian worker self management (arguably successful: the place had some other problems that hampered them, shall we say) * Mondragon (the world's largest worker cooperative) * John Lewis Partnership/Waitrose (an employee trust with some workplace democracy) * Rehn–Meidner model (which is more about mass ownership across the wider economy and was tried in Sweden if memory serves)
There are a _lot_ of variations of this kind of thing and only some have been tried. Most haven't seen much action at all, just a few sui generis examples - most of the more specific examples above, really.
Most of them have been explored, mapped, and debated by economists in a very robust manner for 100+ years.
One interesting perspective that I gained from a recent Econtalk podcast[1] is that neither profit driven corporations or democratically governed worker collaboratives are perfectly efficient. It is rather a question of when and how the two perform or fail in contrast. It is easy to build criticisms of each when comparing it to an idealized alternative, where all of the challenges have been hand waved away, but that is a meaningless comparison.
https://www.econtalk.org/does-market-failure-justify-governm...
When you're not sure if you'll manage to pay the electricity bills to keep your fridge turned on, is your first thought going to be "let's invest in the market!"?
But I don't see any argument that paying that higher comp in the form of shares instead of in the form of cash is any better?
(Unless you want to imply that people are too dumb and need to be protected from themselves, and that why we need to give them more stocks instead of more cash? Or something else?)
No need for your charity, thanks. I'm simply making the argument that you must live in a bubble if you think that enough people have the excess liquidity and market knowledge for this to be an applicable solution to the general population.
> Unless you want to imply that people are too dumb and need to be protected from themselves
Not being wise in the markets != being dumb.
Protected from themselves? No, protected from speculators and exploiters.
Nothing prevents people from investing also in other companies if they feel like. Or are you implying they are "too dumb" to consider the possibility?
Shared ownership also protects employees from speculative decisions like mass layoffs made only to give more value to shareholders. It also prevents the alienation of working on something you don't own and gives a strong incentive for everyone to give their best.
I thought you just said that this isn't a viable option for most people? Now it is on the table?
> are you implying they are "too dumb" to consider the possibility
For what it's worth, reading through this thread, it seems like you were the one who claimed most people don't have "market knowledge"...
I was just commenting on what I was seeing in your comments - sorry that I struck a nerve..
I'm not sure what bubble you think I'm living in, given how little you know about me. But in "your bubble" it doesn't seem like there's a way to reconcile two very antithetical propositions: 1- people don't have the resources/knowledge to invest, but also 2- they can use their excess resources to diversify away from having significant investment with solely their employer. How does that work?
And just to re-iterate, no one besides you has brought up the intelligence of "most people" when it comes to the ability to invest. So...?
That's a good argument to make.
Among the entire workforce of a successful employee-owned org, I would think there would be no disagreement, IOW nothing to argue about.
It surely depends how successful, but all you need is to do the math to know for sure.
Beyond a certain threshold, companies where most of the workers are living paycheck-to-paycheck can end up paying them more and that bugaboo can go away completely. Whether or not they are actually awarded or entitled to any shares in their employer yet. Even during a time when it's just the rest of the employees owning the company.
What good are shares if you're never going to sell? I mean never sell your shares nor (vote to) sell the company.
The only thing shares like that entitle you to is dividends. And you only get dividends when the company makes enough money to declare a dividend. Over and above any shortcomings that might need to be overcome.
The net difference is that distributions that go to outside investors under the more-familiar arrangement, are instead returned only to employees when they are the only shareholders.
And sometimes that could be a very life-changing difference for doing the exact same work. Sometimes yes, sometimes no.
That's why you do the math.
The people who need money now will just sell the stock as soon as they can.
Or are you suggesting that employees just get a fixed share when they join the company? That model exists, but it typically only works for companies that need no outside capital to get started. Like law firms.
"71.93% of Americans Living Paycheck to Paycheck Have $2,000 or Less in Savings"[0].
So no, it's not a tiny percentage. $2k or less in savings means being one emergency expense away from not being able to pay rent or your house loan next month.
- [0]: https://www.forbes.com/advisor/banking/living-paycheck-to-pa...
Did everyone become illiterate or maybe the inflation rate has exceeded the growth rate of wages[1], among other things?
What's funny is that on two comments rejecting my argument one accuses me of considering people "too dumb" to take their own financial decisions, the other tells me people are actually too dumb and that's why they are in financial trouble.
- [0]: https://tradingeconomics.com/united-states/personal-savings
- [1]: https://www.epi.org/publication/charting-wage-stagnation/
Last 60 years we experienced enormous growth of advertising - is it really hard to believe that many people are having big problems with limiting their spending.
I respect your opinion but the stats presented before does not “shows“ illiteracy but low investments. Lack of liquidity to invest seems a very plausible raison because a revenu threshold has to be passed to be able to buy food before founds. This stat is probably almost a proxy for how many Americans are below that threshold.
Of course there are economic literate people who really are struggling, but I doubt they make even half of those 71.93%.
It's a meaningless statistic. They can still have high net worth and/or large incomes even if they don't keep cash on hand.
Just read it, it's all in there.
I may not always agree with everything I read, but at least I take the time to read it before openly disagreeing with it.
There's two questions: how much comp to pay, and how to divide that comp between various forms. They are nearly independent of each other.
So maybe time to re-evaluate the status quo?
Shares of other public companies means no skin in the game. A day trader cash out whenever they want and wipe their hands clean of any adverse effects made by the company in the name of growth.
Shares prices already reflect an estimate of the long running fate of the company.
That being said, employees already have skin in the game because they want their company to survive so they keep their job. When a company goes belly up, employees with shares are worse off than those that bought shares in other companies instead.
> Just like Jeff Bezos can sell a portion of his Amazon stock to buy a new house, employees at ESOPs can pull money out of their stock accounts to pay for tuition, medical bills, or as a downpayment on a primary residence.
Maybe I'm missing sth, but, erm... what happens with the stock after? Because that portion of the company is no longer in the hands of its employees, and it's unlikely that it's a closed circuit.
I get that your stock need not be publicly traded. But that brings a variety of other issues to the table.
I think this is a really good insight.
But it also touches on something that many of the HN crowd, especially in the Bay Area find uncomfortable: home ownership.
One of the ownership assets that is most attainable by many Americans is a little plot of real estate, so it's rational that it's a goal of many. But at the same time, once that piece of ownership has been attained it's also rational to want to preserve and maximize the value of that investment. But that can often (but not always) lead to the kind of selfish NIMBY behavior that is criticized everytime anything related to urban development comes up.
Is there a middle ground balance where we respect that ownership of property is an important, attainable kind of wealth building for middle-class people while also accepting that a city must also develop in ways that benefit people that aren't homeowners, or aren't homeowners yet?
most attainable is buying stock through IRA account.
For retirement, Fidelity and Vanguard offer "Target-date retirement" funds, which automatically rebalance to reduce risk as you age. This is a misnomer, though, as you could easily select one of those funds for college savings or whatnot.
In some jurisdictions, this is alleviated by allowing the sale of excess zoning capacity to others, which now gives people in that situation a way to realize monetary gains. https://caldwellcommercial.com/understanding-commercial-real...
By that logic, the idea of workers having part ownership of the companies they work for has a lot of upside.
And then for shared ownership, governance is often messy.
Individual ownership of a stable asset that you can improve by making your own decisions (deciding what fixes to pay for, at least), is a different thing.
The average worker has enough of their income tied up into one employer already, they don't need to have even more economic concentration. It would perhaps be better if every company was owned by everyone other than its employees, with the employees of every company being forcibly made to invest in every other company. That way everybody gets to have an cushion if they ever lose their job or their company goes under. A bit like a DIY UBI if you will.
The better it does as an investment class, the worse it will become. It's a self perpetuating spiral.
I don't see the market solving this. I only see some regulation helping here - ie any tax filer can at most own 1 SFH (this includes married couples). So no second, third, tenth homes. Corporations and foreign entities also cannot own SFH - bye bye black rock & China.
Obviously some edge cases don't work (ie people who want to put their home in a trust), but generally speaking, people should not be able to own homes as investments.
Of course you could also allow people to build homes at market clearing prices, so investments would just be undercut.
If zoning codes can make it effectively impossible to build anything but single family homes, we clearly have a legal framework for distinguishing single-family from multi-occupancy apartment buildings. Thus, apply this requirement to single-family homes (or at least homes in single-family zoned areas).
There are a lot of unintended consequences and edge cases to this though, clearly. For example, I live in a building that is "technically" an apartment building right in the middle of nothing but single family homes. You couldn't build an apartment building like this here, now. This is because it was originally a single family home but was converted into a duplex ~100 years ago (2 different electrical services) and has remained a duplex legally ever since. I purchased the land and home jointly with a family member so that each of our families could live in one half of the duplex, which is how we currently live. A home like ours could end up being classified in very different ways depending on the specifics of a law like we're discussing.
Regardless, I still want my home price to crater if it means everyone else I know can buy a home. I hope home prices go down massively and the residential speculative bubble in this country dies a violent death. The only reason we even bought this house was because buying a home cost so much money that we had to buy half a home to make it a possibility. Even if I'm upside down on this house, I'd still rather be stuck paying off the mortgage or going bankrupt than hold everyone else financially hostage. Housing is too important.
Building more housing is the best answer. It lowers the price because there is more supply. There simply aren’t enough homes in the Bay Area, NYC and many other major cities.
If you could build many large apartments in the Bay Area you could fill it with people who’d rather live there compared to a tiny old overpriced house. Zoning and existing residents stop that from being built though.
One problem is building more luxury housing leads to more rent-seekers / investment homes / transplants, which doesn't solve the problems the area faces (e.g. lower income families can't make it work, and in addition to it sucking for them, they staff lots of critical functions so it ends up sucking for everyone since the price of everything increases and you get a whole class of supercommuting low-income folks -- ask bay area folks about their daycare teachers).
We need more _affordable_ housing, likely gated on AGI.
There is no accident at all. The bankers decided that real estate should be the primary vehicle for new money to be created and released into circulation.
This means that the increase in total real estate monetary value will always be larger than the monetary value of total labour and trade productivity within a nation. It is a mathematical fact that won't change unless the monetary system changes.
In short: the landed gentry will always become richer while the non-landed will always become poorer, under this banking system. If you are both a real estate owner and a worker, then you should expect your main source of income to be the value increase in your real estate. If not already, then soon.
So no matter how much the people of a nation work and increase their productivity, they will always be short and increasingly indebted, because the monetary system works that way. This is why there has been a frenzied rush into real estate the past decades, because the odds are stacked against you getting ahead by working.
The proper answer is to accommodate the free choices made by others and regulate where they intersect with others, not paternalistically tell grown adults what they can and can't do.
I think that what you're complaining about is the financialization of investments, where every investment has an associated dollar value and that dollar value must always go up. This affects more than just homes. The need for monotonically-rising corporate earnings makes corporations pull all sorts of accounting shenanigans, it makes them cut costs and push sales until the product quality is the bare minimum people will buy, and it results in all sorts of pain for workers in the resulting reorgs and layoffs. The usage of Bitcoin as a token whose value just goes up has negatively hurt the development of the crypto economy, because people aren't actually using crypto, they're just hodling and hoping $$$ go up.
The elephant in the room here is fiat currency, positive inflation targeting, and negative real interest rates. If you know that the dollar's value is eventually going to zero (which follows mathematically from inflation being an exponential curve), then the sum of the cash flows from any productive asset becomes infinite, and the only check on its value is that investors can't really reason about infinite time horizons. If inflation were targeted at zero (or at least some value that gave positive real interest rates), then that sum converges and you can speak about properly valuing assets and allocating capital efficiently.
This is such a common mistake. By HODLing, you are using it - to store your wealth. This is what the bitcoin network is optimised for - storing large amounts of value for large periods of time. Nothing else has fundamental properties that come close for this use case.
No. I like finding middle grounds where possible, but you're asking for something which is inherently contradictory: for something to be a good source of "wealth-building", it to increase in value (i.e. price to the next buyer) forever, or at least most of the time. When that happens to housing, it fucks over the next generation.
There is no fix here that doesn't involve terminating housing as an investment opportunity. It will be a painful transition, but the end state is actually fine. Plenty of countries (e.g. Japan) don't treat housing as a middle-class investment and they function fine.
In California specifically this was driven by Prop 13 gutting the property tax system and removing the natural check that higher property taxes impose on homeowners engaging in the sort of anti-development cartelism that has run rampant in California in the last half-century.
And Homes are also generally a bad investment even though there is a whole lobby of people that try to convince you that you need to buy at any price.
The only reason why homes have been a good "investment" for most people is that it is a forced saving through your mortgage, which most people would have spent stupidly otherwise.
But we should normalize renting and investing in actual investments like the SP500. Everyone would be better off and you would end up with more assets.
[…]
> But we should normalize renting
Isn’t it investors who would normally own rented homes, and own them specifically as an investment, whether each investor only owns one home or several/many?
I’m guessing you meant that an owner-occupied primary residence shouldn’t be an investment, which is usually good advice.
Again, the main advantage of a mortgage is that it forces you to save. If you are disciplined enough to save and invest in the SP500, you are way better off doing that.
Houses go up in price exactly in keeping with inflation. I buy a house with 10% down[1] as a way of locking in the current price, to avoid my rent going up every six months, even if the initial payment is more than my rent[2].
Time passes. The price of everything doubles. If I had kept my down payment instead of buying the house, it would have grown into twice as many dollars, and still be worth the original amount in actual value. My house has also doubled in value. But I only paid for 10% of it with pre-inflation dollars (and since then I have paid the mortgage with dollars of decreasing value). I come out ahead in that scenario - my net worth has grown, even adjusting for inflation.
[1] Yes, I am ignoring the difficulty of scraping together the down payment.
[2] Yes, I am also ignoring the difficulty of having enough spare cash to make the payments the first year or two.
Yes, but you can't live in a Vanguard account.
Additionally, your return over the long term on personal real estate is only 4% per year while the S&P 500 average returns per year are 10%.
Home ownership is not always desirable or the best financial decision for many people.
I'm happy for those employees but man, I also wish I could get pizza on Monday.
In a functional market there would be others willing to send you a pizza on Monday.
A more interesting approach would be a model where being a employee automatically gives you a vote on company wide decisions including. the distribution of profits, just how being a cititzen of a democratic country gives you a vote on the fate of your country (similar to the Mondragon Corporation in Spain)
Or when I was working for Google in the mid-2010, I thought Google was a great company and I liked working there; but I also thought that their stocks were probably overpriced. (These days, I guess Tesla or Nvidia might fill that role for some? These are just examples, I have no opinion on them.)
In the other direction, one can love Amazon as both a customer and a shareholder, while simultaneously not wanting to work there.
The particular models that I wanted to look at - the partial ownership - turns out to be incredibly expensive when hiring on new employees - from what I've understood - and so I'm leaning in to the profit sharing model, hard, and perhaps the company design will be one that enforces that aggressively. I didn't understand everything the employment lawyer was discussing and it was just a preliminary discussion. I think it's worth it for every person interested in starting a business to work with and speak with a lawyer.
I'm not really much of a fan of everyone owning stock, though, myself - especially everyone gaining stock over time. There's a million ways to build a company, of course. Giving employees stock over time seems like it could be a good plan if there is real intent to become publicly traded at some point. I personally wouldn't want the profit sharing to be tied to a stock amount. It would reward seniority or tenure a bit too much (in my opinion).
A system I would prefer would be one where:
* all employees regular salaries and all business costs are paid
* a reserve 'warchest' is kept or grown where the goal 'size'
of the 'warchest' is relative size to keep the company afloat for
x years of low or zero income (to survive bad years).
* profit share "the rest" (or most of the rest).
* a flat "every employee gets 1/(# employees) the rest".
* each division gets a percentage and then each employee in that
division gets 1/(# employees in division)
* a point system where tenure gives you more points and you get Xi/(sum X)
portion.
I prefer profit-sharing myself because it doesn't lean in the direction of becoming public and everyone experiences the fruit of their and their coworkers' labors.
I've been warned a bit against partial ownership because "what if the existing employees don't want to be profit sharing anymore", etc? I dunno. Lots of thoughts.
> (edit: sorry, I missed this one!) why you want to do this?
I believe in pay transparency and paying people for the value they bring to a company. I don't like it when there's a call center with everyone making a dollar above minimum wage, when they take the pain of all the poor decisions people who make 5-10x what they do made.
> What is the goal you are trying to achieve?
A greater alignment to the earnings someone makes for the company and their earnings out of the company.
> Why would you not do this with salaries?
I believe a salary is a promise, something that can be consistently relied upon. Profit sharing is above and beyond that.
> Will there be some people paid more than others that do different roles?
Since a salary is a promise, yes. It also allows for more tenured and skilled employees to "grow" in the company. Generally a more senior person has more responsibilities and my promise to them should correlate well with that.
> If so, why would their profit shares be the same?
Undecided
> Who decides on war chest size?
Probably a collection of employees, including the CEO, and it would be the sum of company expenses for a certain number of years, including cost of living adjustments.
> but what I really mean is an alternate reporting line to hear about problems
I hadn't considered that as a use of a union and I think I like it. I should think on this more.
> My suspicion is that there's a lot of what founders think of as profit that isn't really profit. (and the added part about you underpaying yourself)
Probably! In my context regarding profit sharing, I am thinking that everyone is making an appropriate salary already - before that, it's not really profit. Admittedly, given the structure, the official salary would probably be a little below market rate; but again, that's just the promise of minimum payment and when profit sharing went into full swing, I would like to think it would increase those numbers.
Exhibit 1: In agricultural societies land ownership was highly concentrated for the longest time (feudal society) before there were land reform movements [1].
Exhibit 2: Owner-occupancy is celebrated in many cultures but less so in others. E.g., it ranges from 10% to near 100%. [2]
Given that modern corporate organization and culture is typically endured (pays the bills) rather than loved and given that legal frameworks to establish alternatives do exist, there must be various fundamental reasons for the ESOP paucity (beyond the obvious resistance of vested interests).
One explanation might be that if judged purely on financial returns (i.e., ignoring the externalities of bullshit jobs, burned-out, disillusioned employees etc.) - the advantage of employee ownership in securing financial returns (especially short term) is not dramatically higher than a conventional external shareholder entity.
The primary location would need to set aside profits to fund new locations and their money would go towards new employees.
Most employees, especially ones living pay check to pay check would much rather take the check than use that money to pay someone else.
So I predict that this world will have very small, very profitable companies which have some secret sauce but hands off most of the work to big companies making much less money.
Google does this already, even not being a co-op. They have a huge contractor army, and their core employees are handsomely rewarded with massive salaries.
> So I predict that this world will have a have very small, very profitable companies which have some secret sauce but hands off most of the work to big companies making much less money.
This is kinda what we see already, except everyone want to grow their kingdom, (and hire their friends and family) so it seems inevitable that the "Small profitable secret sauces" will still get diluted without strong control
These are factors that play a role and should add to a more nuanced discussion: - Ownership also implies responsibilities and risk. There might be capital risks or surety needed for certain industries. Not all people want this in their lives. - For any chance of high reward, there is a also a risk of failure/loss. This side is often forgotten and a one-sided view of ownership is often romanticised. - Thus I think a popular discussion of this topic needs to be infused with a more realistic view of reality.
https://www.csmonitor.com/Environment/2022/0415/Demand-for-o...
You are essentially saying that the roughnecks that work the rig for $30-40 an hour should be owning it. They don't have the capital to own it and pay for the oil rights to use it, or the risk tolerance that it will sit idle and still have to be maintained, stored in a rented warehouse, and guarded when regulation does not allow them to be used. Nor is there any evidence they would be able to successfully run an oil company even if they were given it for free -- compliance issues surrounding commodities deals typically require a different skillset than the guy working the rig.
The vast majority of businesses are not software. Virtually all industry has capital outlay requirements and capital risks equal to or greater to this.
However, something should definitely be done about funny money printers. There are plenty of mechanisms in history shown to be successful dealing with them, such as going to where they live and taking care of them in the dead of night. I agree that massive inflation is a serious problem, but the solution is not to say "let's get rid of the utility of money!" -- it is to punish the people subverting market utility for their own gain.
Trying to change reality because a small group of bad actors is absurd. Just get rid of the bad actors.
If every company were owned by its employees, the net result would be higher unemployment, and many of those who found work would then do so as contractors. Hiring an employee is a major decision, especially for small- to mid-size companies. For a fledgling family business, giving an hourly employee an ownership stake in the company you and your wife started in your garage is a non-starter for most people regardless of their stated political ideology. For megacorps with deep pockets, mandatory ESOP would immediately accelerate the replacement of humans with machines.
If you look at the incentives you can fairly quickly guess a person's (and a company's) future behavior.
There is a whole book about Wawa that talks about the ESOP decision and such. It's called the Wawa Way. https://openlibrary.org/works/OL19986572W/The_Wawa_way?editi...
Also see how many cooperatives are run.
You can definitely make these kinds of things work and eg worker cooperatives are generally legal to set up around the world, but they don't necessarily work any better than vanilla companies (and that includes not necessarily being better for the employees).
Worked for one with this setup. It was all great until the stock price fell to ~20 % of its original value and has stayed that way since. Employees didn't like it, which was kinda funny (it's a risk they signed up for).
AKA, the workers do not take on the prior capital risk that the owners have, but reap the rewards of success. Obviously, a failed company means no such shares given to the workers (by definition). Therefore, under this imagined scenario, the workers only gain.
of course, reality cannot work like this.
But it doesn't make much sense: just because I work at Google (which is worth a lot per employee) I don't deserve more re-distribution than someone manning the cashier at eg WalMart.
If you want to re-distribute, I would suggest to tax the owners and hand money to the people, regardless of where they work.
Are the shares getting constantly diluted, how is that handled? How is valuation of shares done here? I can't really see this scheme working for public companies
In terms of policy I think a cap on revenue per employee for a privately held company and a cap on individual ownership is a better solution to reducing income inequality.
That and eliminating involuntary unemployment so that companies have to compete with a guaranteed job that is not exploitative.
Let the private sector figure out the details within those boundary conditions, that’s what it’s there for.
in fact, i dont get the rationale for revenue caps at all. It doesn't produce less inequality, and only produces inefficiencies.
Another thing, one related to your original post: it is, of course, good imho to have a working hand-out system so that you don't starve when you are out of a job, or are forced to have to work for really shitty conditions.
This causes another problem, however. It is very easy to get dependant on these hand-outs because the difference in pay between the jobs you are able to do and the size of the hand-out can be very small. Even negative. We have (had) this problem in Sweden for a long time. And it is a problem because when people are less poor, then things cost more money because of it. Cynical, I know. Economics is very very hard.
In relation to your concerns about a job guarantee they’re all addressed in writing, in particular by Pavlina Tcherneva who has done the most comprehensive work on the subject along with Bill Mitchell and Randall Wray. It should be noted that I disagree with Bill Mitchell on some political issues but his JG work is rock solid.
You don't need to have job guarantees for that. A strong economy in general helps for this, and a basic income would also help.
If you’re waving a magic wand anyway why not choose the best policy?
There are already too many clear and well rounded refutations of the UBI bingo card talking points to count, there’s no point in my spilling pixels here to go over them again.
Unfortunately, the word "better" is doing a lot of heavy lifting here. Better for the employees is a world of difference compared to "better at getting funding to start a business", "better at getting Venture Capitalists or Angel Investors or Banks" interested.
It takes working two jobs, being independently wealthy or getting outside help to start a company, and most of that outside help very likely doesn't want employee owned.
After all, darwinian natural selection is taking place in a free-market economy.
"Better for workers" only shows up in for profit companies if doing things that are better for workers is also better for the profitability of the company.
Trying to make for profit companies have a social conscious is, IMHO, pretty dumb. They're for profit.
Making things better is what governments are for. A guaranteed job at a socially inclusive minimum wage and set of conditions that the private sector needs to exceed in order to hire people would go a hell of a long way towards resolving many of the problematic workplace tactics used by for profit companies (and is a LOT easier than the patchwork of industrial relations regulations the governemnt currently plays whack-a-mole with).
I think that governments are really good at setting boundary conditions and for delivering things that are too important to be left to the whimsy of the private sector (and for natural monopolies like aiports and roads and fiber optic networks and so on), and that most importantly includes the floor price/conditions for labour.
> It takes working two jobs, being independently wealthy or getting outside help to start a company, and most of that outside help very likely doesn't want employee owned.
Hell I'm working 2 jobs to start a company and I sure as shit don't want to be obliged to give a chunk of my company to everyone that comes and goes along the way. If ESOPs or co-ops or whatever make sense it'll be because they help me attract and retain the best talent who are the most profitable. If that's not the case, then why should I share the returns with people who have taken none of the risks?
For example, it's well known that startups are risky. VCs mitigate this risk by spreading their funding across many startups. Could founders do the same with their equity? Consider an accelerator class with thirty companies. As a condition of being in the accelerator, each founder could agree to give X% of options to every other founder in the class. If one of the companies takes off, the other founders could wind down their own (probably failing) companies and join the one success.
You would probably have to tinker with the ratios to provide good incentives, i.e. every founder doesn't get an equal share of every company; the winning founders get the largest share among their class, etc. And the accelerator would have to exercise a lot of quality control with whom they admit.
But still it's an acknowledgement that business success is in large part random and diversification is how you account for that. Or rather, it's an extension of that acknowledgement to the founding/managing class of early ventures, rather than reserving it for investors.
it's like the idea of taxing the rich. it sounds great until you become one of those rich people.
this idea sounds great until you become a founder or an investor yourself.
these are laws, systems, and regulations that sets the first movers and real builders apart from the average laymen. all comes down to risk/reward incentives.
it's poor people telling the rich how to spend and allocate their money. the rich people will just say "the fuck do you know about it?"
Soo... It's not like you're always inflating your share base with options. Just part of what people are paid is basically same as shareholders.
This isn't some "align with shareholders" bullshit, rather I wonder if it somewhat decreased the myopic perspective of an employee. They get paid off of the success of the whole company, they have an interest in prudent cost management, and so on. They get to vote on issues affecting the whole firm, too - collectively maybe they are 5-10% or whatnot, not lots but enough that they have a voice.
Otherwise, there is a prevalent, and sadly reasonable perspective of extreme cynicism towards an employer. The employer always says how we're all in it together, teamwork etc. but really, every employee is best served by entirely optimizing only their own utility. But surely this can't be optimal at the society level.
but this would still remain the case in the scheme proposed.
Even suppose those employee-class shares get a voting right, they would want to maximize their own benefits: such as higher dividend payout. As for why - imagine if there's a decision between long term investment in plant & equipment, vs paying out dividend today. An employee who might not wish to stay will vote to get the dividend, as their "share" is going to be gone by the time the long term investment pays off.
So the only way to align employee and owners, is to have employees own regular shares.
The problem I have with this blanket statement, and the article itself, is that most of those employees didn't take on any of the risk. The risk/reward system is askew at that point.
When you're ready to put everything on the line, let me know. Been there. Took three attempts where I went broke and had to find employment before finally getting one to stick.
"democracy is government... by the people...of the people...for the people... but the people are retar*d"
Like everything, the best things probably require balance, and the devil is in the details. IMHO it has merit, but with caveats.
I would not want to have the same shares as a normal worker if I have personal risks (like a work security responsible, or CEO). For better or worse, CEOs have experience in guiding companies, and almost no employees have that.
OTOH even a small worker representation might do wonders, increase engagement, better law compliance and the like.
the options are not just 0% and 100% to workers, there could be different requirements depending on the size of the company.
Small companies could be required to have a bigger worker representation, because the impacts of the single worker is much higher.
The weight of the workers' shares in money could be different than its weight in the decisions of the company, too.
Maybe the workers just get a vote for X% on the board, regardless of actual shares.
My career is already tied up to my industry and to my employer. I don't need to increase that exposure even more.
I'd rather invest in an index fund, than hold more stocks of my employer than I need to. (If anything, I should probably short my industry, so that my overall exposure is neutral.)
Not that it is all that bad. One sale happened after I left the company. The sale of the company included the shares owned by employees through the ESOP. So for one sale, I got several tens of thousands of dollars (hadn’t been part of the ESOP that long) and the other company’s sale gave me about 150% of my current salary. Both went right into retirement accounts to defer taxes.
The mood or “culture” was better, I think, during the ESOP period. Certainly cost saving was more on everyone’s mind, because every company dollar unspent was part of the profit and increased the valuation.
How was your experience being an employee-owner at either one of these companies? Did you receive any transparency of the ESOP plan (distributions, allocations, etc.)?
For both companies, how did you receive the funds once the companies were sold to the larger corp companies (cheques, direct, etc.)?
It may have been culture brainwashing, but we definitely felt more of an ownership vibe. We awaited the periodic valuations that the ESOP share price was based on and the process seemed relatively transparent.
An accounting and legal firm handled the dismantling of the ESOPs. We received a letter itemizing our shares and the value based on the company sales price. Then a few months later, we got a check (which you could have made out to your IRA management or whoever or to yourself if you were ready to pay taxes on it.
In the case of the company I’d left, I had to wait 6 years to get paid out (turned out to be about 4.5 because of their sale).
Of course, there are probably ways to try to minimize the risk (e.g., saving the profits for the payout and keeping them separate from business cash) but it won't be very diverse. Or maybe several such companies could put their stocks in a basket and allow employees to diversify their portfolio.
So I think it's a great idea as an add-on, but no one should bet their retirement on it.
Today's latest example of someone, after observing the current state of some system governed by laws of economics, declaring a "solution" by merely stating how something "should" be. If only the world worked this way...
The picture in the article doesn't look like a Central States product. Central States makes prefab metal buildings. So do other companies, most notably Butler Buildings. Most farms and rural businesses have some of those. They look nothing like that picture.
[1] https://ia601700.us.archive.org/11/items/gov.uscourts.arwd.6...
https://freakonomics.com/podcast/should-companies-be-owned-b...
——————
To imagine what transcending capitalism might mean in practice requires rethinking the ownership of corporations.
Imagine that shares resemble electoral votes, which can be neither bought nor sold. Like students who receive a library card upon registration, new staff receive a single share granting a single vote to be cast in all-shareholder ballots deciding every matter of the corporation — from management and planning issues to the distribution of net revenues and bonuses.
Suddenly, the profit-wage distinction makes no sense and corporations are cut down to size, so boosting market competition. When a baby is born, the central bank automatically grants them a trust fund (or personal capital account) that is periodically topped up with a universal basic dividend. When the child becomes a teenager, the central bank throws in a free checking account.
Workers move freely from company to company, carrying with them their trust-fund capital, which they may lend to the company they work in or to others.
Because there are no equities to turbocharge with massive fictitious capital, finance becomes delightfully boring — and stable. States drop all personal and sales taxes, instead taxing only corporate revenues, land, and activities detrimental to the commons.
—————
Excerpt from https://www.irishexaminer.com/opinion/commentanalysis/arid-3...
> Imagine that shares resemble electoral votes, which can be neither bought nor sold.
Interesting idea. Perhaps the take-away is that we should allow trading in electoral votes.
Ever heard the investment advice "diversify"? It's recommended because it's mathematically provable that you can achieve the same income with lower risk by diversifying away the co-variances between your different income streams.
In the same way that it's nice to go to the market and buy the phone you prefer, the car you prefer, the milk you prefer, etc. you should make investments that are right for you too from among choices.
But I understand why companies prefer to pay you in full rather than stocks, (1) it's gonna be miniscule compared to their actual cash flow and (2) they would prefer to pay you whatever your contract says and keep whatever interest for themselves, even if that's not much.
So they are optimizing for their own interest in both ways. I'm not knowledgeable in this area but as a normie that would be my guess.
Because of the godlessness of our society, the self has no grounds by which to engage with others, and by further incentivizing profit for more individuals, the further our society will tend to engage with itself as profit as its highest purpose — even outside of the workplace — consciously or unconsciously.
I could see this being less dangerous if our society was deeply rooted in a religious reality, where an individual's engagement with the world is driven by a holistic good, as opposed exclusively to a financial good.
The problem with traditional worker owned businesses is that you assume that being a shareholder would incentivize work, but it turns often enough into a race for the least effort while still getting paid. A classic coop failure mode.
If share of profit is proportional to effort every 12 months you eliminate that.
That said, I cbf reading the article. Sorry but at least I am honest.
Fast forward to 2024, the employers who now own the company are fighting amongst each other, involved in bribery, and the company is now at risk of a hostile takeover perhaps even bankruptcy as they've been losing market share steadily after it became 100% employee owned 50 years ago.
We live in a time when profit is shrinking or drying up. So what happens? Corporations are controlled by owners, so they do two things: - they lower wages (inflation) - they raise prices
This happens even when the owners have made stupid decisions. This happens even when the owners have committed criminal acts (Boeing, Sacklers, and many more). And the owners are also protected from legal consequences.
The corporate model is obsolete. Simplistic answers like letting employees also be small owners will not fix this. We need a new model that provides the benefits of Corporations while ending the excesses, irresponsibility and criminality of owners.
In the USA our constitution does not allow any action that denies equal protection under the law. Corporations have decide they enjoy the rights of citizens to buy elections. Owners, having made this decision may not enjoy any protection under the law that are not provided to ordinary citizens. No protection of their assets from bankruptcy and no protection from criminal prosecution. If you as an individual decide to sell OxyContin to any and everyone you would go to jail and you would be bankrupt. But not owners.
[edit: typo "if owners ..." => "if you as individual ..."
I remind them that this current insanity of profit at all costs has not always been the norm. Of course to a certain degree it has, but a long time ago, in America at least, corporations had to prove they were providing a public good or service, and if they were found to not be, their charter could be revoked! That right there is the death penalty for a corporation. While I'm sure it would have its own set of issues, I often dream about a world in which that becomes the norm instead of destroying the world so a multimillionare can get a few extra mil and the billionares get a few extra bil, while they oppress us and compromise our governments.
Sounds like a nice perk to have but one would obviously be unwise to rely on that for retirement.
Diversification is the one free lunch we have in finance.
My wife is in an industry that’s quickly getting unionized by 20-something who think unions are a paneca and are about to learn unions just create a different set of problems and add misaligned incentives.
What is really needed is something more like Germany where employees are significant steakholders
Every profitable company. There is nothing written in the article what happens when company would be profitable 5 years and then suddenly crashes because of market forces. Can employees take the hit and work next 2 years without salaries to wait out until market goes back?
Most of companies in the world are mid to small size companies that cannot survive 2 years continuous loses without taking a loan to pay their employees. Those loans are not "mortgage rate" like 2% but more like 20% and it sinks those companies quite a lot.
Most company owners are not Elon Musk or Bill Gates or Steve Jobs as people would like to imagine and unfortunately most of arguments I see are like 99% of company owners would be flowing in riches like ones mentioned ... just to remind Steve Jobs died of cancer and all the money he had did not help him (like Walt Disney who is frozen /jk)...
This is not what "unicorn" means. I do not think this author knows much about what they are writing about.
Not everyone wants to be forced to buy a risky investment as a condition of employment, or just the hassle.
Rather than filtering vast sums of the revenue into the C-suite and shareholders, coming up with a way to make the workers be able to afford housing.
So far, it's just a pipe dream. "We're all in the gutter, but some of us are looking at the stars."
That being said working for a company who actively fights against me makes me just not want to work.
All too often founders can and do derisk/cash out in funding rounds and then the common stock winds up at 0. Employees = fucked
In any case, things are a bit more complicated.
If the company manages to sell equity at a premium to current market prices, existing shareholders benefit, they don't get diluted in any absolute sense.
Conversely, if the company does stock buybacks at a premium, continuing shareholders suffer.
Agreed. More specifically it's a tragedy of commons of people who are of average iq + maturity.
Overall cohesive group size is directly proportional to the iq + wisdom of participating individuals.
When I hear the average quality of employers ideas I thank for the leaders and the founders who can see through that gibberish.
There is no large company in the world right now that is run this way and for a good reason.
>There is no large company in the world right now that is run this way
Huawei
They can reap the benefit, but also take losses. Seems entirely fair.
Oh wait, it's money. Fungibility is great!
NOT every company should give stock options to its employees, because ... it only makes sense if long term success of the company can be significant influenced by its employees. Also, those stock options can be a barrier to growth and become a liability if needed adjustments are blocked in order to protect "stockholder"
NOT all employees should get stock options, specially not the ones who contribute very little to the value generated.
NOT all employees want stock options, as people just want to take the actual money and be free to switch companies. The stock options are a way to control employees.
employee stock options are interesting when the allow to vote on the board. THIS is amazing - and almost nobody does it, because it would actually shift power to the employees.
In most companies, giving stock options is almost a scam; you save actual money for salaries, pretend to share revenues (you don´t) and lock-in high value employees. Also you spread your stocks so you are more protected against hostile takeovers.
Stock options are a great way for the actual owners to save money and actually become more powerful.
Imagine a bus drivers cooperative. The pay will be nice but the downside that you have to show up with your own bus to join. And then probably be indebted to a bank.
If a company is owned by employees, where does the capital come from?
World wide public equities have grown at 5% real over the longest datasets available, 7% for US based companies. Even these numbers are misleading because company returns are heavily left skewed: a small minority of companies do tremendously well and the rest are stagnant or shrinking. From 1991 to 2020, 55% of US stocks underperformed 1 month T-bills. From 1926 to 2016, 4% of stocks have outperformed the total stock index.
I do not see what is so amazing about this? If you think that employees deserve a larger share of the spoils then you can advocate that they receive more of it directly as compensation, no employee owned corporation needed. If they will make the same on net but with some of it locked away in a single company's equity than you've just made those employees' economic situation _more_ precarious than it was before.
Non-employee equity ownership arises naturally but these articles always try to paint it as the result of the nefarious machinations of top-hat wearing capitalists. Suppose this company needs more capital than employees can raise but won't or can't take on new debt. Equity must be sold to outsiders.
The article also wrongly suggests that owning equity is exceptionally difficult without employee owned companies: "it's hard for most people to get ownership in something." But we have a whole public equities market that anyone can participate in and innovation has only made it easier over time. Index funds have made diversification automatic, fractional shares have solved daunting investment minimums and payment for order flow has eliminated transaction fees and concern about getting a fair fill price.
I don’t see why nation states should be democracies, but “businesses” should be private dictatorships. It’s a waste of shared resources. Your personal army of value generating serfs is taking away from our collective capacity to do useful communal work.
Microsoft has made a heluva lot of people rich. So has Amazon.
I also know employees who rejected getting part of their compensation as stock, wanting a higher salary instead, and then got mad when their coworkers made bank on the stock.
His funeral was full of so many faces I had never seen before. Somebody pointed out to me that these were the dozens of people that he made millionaires by deliberately deciding to do right by the employees. It was really moving to talk with so many people who had reaped the benefits of their labor and were grateful for his decision.
That to me is the model that I want to work for. Yes, people at the top made more than at the bottom. But they had been there for decades longer, and the gap was not as extreme at every other company I’ve worked for. Wealth was collectively shared.
My family could have been a lot wealthier if he had kept a cut of the company. But he retired comfortably and didn’t feel that he deserved any more money that others earned for him. I really admire that decision.
Unlikely... He probably made just as much or more with the ESOP than he would have selling in a private sale. When a business owner creates an ESOP for their business they sell their shares of to the company to the company itself TAX FREE for a fair independent valuation. It's just another way for a founder to cash out. It absolutely does benefit the employees, but it's not an act of charity, the owner still cashes out and realizes the full valuation of the company they built.
https://www.forbes.com/sites/darrendahl/2016/07/07/if-you-di...
Beat that, bitches! :)
It's surprising how unnecessary they are.
Economics 101 has entered the chat
It was written in 1956 but was seized by the censor and the student journal for which it had been written was closed down. The essay was then pinned up on a bulletin board at Warsaw University until - very shortly afterwards - the authorities took it down. From then on underground copies of it were circulated. It remained unpublished in Poland until after the fall of communism.
We intend to tell you what socialism is. But first we must tell you what it is not - and our views on this matter were once very different from what they are at present.
Here, then, is what socialism is not:
- a society in which someone who has committed no crime sits at home waiting for the police;
- a society in which it is a crime to be the brother, sister, son, or wife of a criminal;
- a society in which some people are unhappy because they say what they think and others are unhappy because they do not;
- a society in which some people are better off because they do not think at all;
- a society in which some people are unhappy because they are Jews and others are happier because they are not;
- a state whose soldiers are the first to set foot in the territory of another country;
- a state where people are better off because they praise their leaders;
- a state where one can be condemned without trial;
- a society whose leaders appoint themselves;
- a society in which ten people live in one room;
- a society that has illiterates and plague epidemics;
- a state that does not permit travel abroad;
- a state that has more spies than nurses and more room in prisons than in hospitals;
- a state where the number of bureaucrats increases more quickly than that of workers;
- a state where people are compelled to lie;
- a state where people are compelled to steal;
- a state where people are compelled to commit crimes;
- a state that possesses colonies;
- a state whose neighbours curse geography;
- a state where cowards are better off than the courageous;
- a state where defence lawyers are usually in agreement with the prosecution;
- a tyranny, an oligarchy, a bureaucracy;
- a society where vast numbers of people turn to God to comfort them in their misery;
- a state that gives literary prizes to talentless hacks and knows better than painters what kind of painting is the best;
- a nation that oppresses other nations;
- a nation that is oppressed by another nation;
- a state that wants all its citizens to have the same views on philosophy, foreign policy, the economy, literature, and morality;
- a state whose government determines the rights of its citizens but whose citizens do not determine the rights of their government;
- a state in which one is responsible for one's ancestors;
- a state in which some people earn forty times as much as others;
- a system of government that is opposed by the majority of the governed; - one isolated country;
- a group of underdeveloped countries;
- a state that employs nationalist slogans;
- a state whose government believes that nothing matters more than its being in power;
- a state that makes pacts with criminals and adapts its worldview to these pacts;
- a state that wants its foreign ministry to shape the worldview of all mankind at any given moment;
- a state that is not very good at distinguishing between slavery and liberation;
- a state that gives free rein to proponents of racism;
- a state that currently exists;
- a state with private ownership of the means of production;
- a state that considers itself socialist solely because it has abolished private ownership of the means of production;
- a state that is not very good at distinguishing between social revolution and armed invasion;
- a state that does not believe that people under socialism should be happier than people elsewhere;
- a society that is very sad;
- a caste system;
- a state where people can be pushed around, humiliated, and ill-treated with impunity;
- a state where a certain view of world history is obligatory;
- a state whose philosophers and writers always say the same things as the generals and ministers, but always after the latter have said them;
- a state where city maps are state secrets;
- a state where the results of parliamentary elections can always be unerringly predicted;
- a state where slave labour exists;
- a state where feudal bonds exist;
- a state that has a monopoly on telling its citizens all they need to know about the world;
- a state that thinks freedom amounts to obedience to the state;
- a state that sees no difference between what is true and what it is in its interest for people to believe;
- a state where a nation can be transplanted in its entirety from one place to another, willy-nilly;
- a state in which the workers have no influence on the government;
- a state that believes it alone can save mankind;
- a state that thinks it has always been right;
- a state where history is in the service of politics;
- a state whose citizens are not permitted to read the greatest works of contemporary literature, or to see the greatest contemporary works of art, or to hear the best contemporary music;
- a state that is always exceedingly pleased with itself;
- a state that claims the world is very complicated, but in fact believes that it is very simple;
- a state where you have to go through an awful lot of suffering before you can see a doctor;
- a state that has beggars;
- a state that is convinced that no one could ever invent anything better;
- a state that believes that everyone simply adores it, although the opposite is true;
- a state that governs according to the principle oderint dum metuant; - a state that decides who may criticize it and how;
- a state where one is required each day to say the opposite of what one said the day before and to believe that one is always saying the same thing;
- a state that does not like it at all when its citizens read old newspapers;
- a state where many ignorant people are considered scholars; the politics of its government will not allow you to discover this;
- a state that does not like it at all when its regime is analysed by scholars, but is very happy when this is done by sycophants;
- a state that always knows better than its citizens where the happiness of every one of its citizens lies;
- a state that, while not sacrificing anything for any higher principles, nevertheless believes that it is the leading light of progress.
That was the first part. And now, pay attention, because we are going to tell you what socialism is. Here is what socialism is:
Socialism is a system that ... But what's the point of going into all these details? It's very simple: socialism is just a really wonderful thing
I know in the US that worker co-operative can be marred by accusations of "communism" and that trade unions will own the business, but it doesn't have to be that way.
In the UK (hardly a hotbed of communism with now close to 50 years of centrist governments), one of the best known and most aspirational brands is the John Lewis Partnership. The "Partnership" in the name refers to the fact it doesn't have "employees" - they're all partners in the business. People working at JLP, and its subsidiary supermarket Waitrose, receive a share of the profits in addition to their salary.
The current CEO is dancing around trying to get private equity in to the business, but they are finding - like most businesses that seek capital investment - that investor interests in eternal rapid growth don't align well with employee interests.
JLP isn't alone in being a partnership. The vast majority of UK professional firms (accountants, law firms, management consultancies and so on), are LLPs, meaning senior partners are the owners and distribute profits between themselves.
Perhaps slightly more radical is the customer-owned co-operative. Started in Rochdale (possibly with the help of some of my ancestors who hail from there), in 1844, shoppers with the Co-Op, effectively get a return of profits based on how much they spend - the original loyalty program.
Mutuals are also structured in this way like Nationwide are the largest mortgage brokers in the country, and if you have even £1 in a savings account or mortgage with them, you have voting rights at AGMs, and own part of the organisation. Credit unions are similar, but typically operate as non-profits.
And this is all healthy. Look at the oldest businesses in the World[1], they're not driven by growth, they're not driven by next quarter's targets, they're about longevity and creating something that lasts. They're typically family owned or owned in a way that means the workers reap the benefits. Many of them change hands in private ownership, sure, but no hedge fund is going to be interested in extracting value from them - they're not intended to scale on purpose.
I've come around in recent years to Cory Doctorow's ideas on capitalism (in the purest sense of that word, not "free markets", but investors making their living by demanding returns on capital), being misaligned with a healthy long-term business, particularly in the tech industry. "Building to scale" has become toxic. Unicorns are destroying our industry. I don't understand - and I know this will be controversial here on HN - why anyone would want to make some billionaire investment fund richer, just so they can have a yacht, making money off adtech.
The next thing I do will likely be an LLP or a co-op (probably employee owned, but a tech firm that is customer-owned co-op would be interesting). The goal will be to build something that outlives me by a long, long time. I'd encourage others to look at alternatives too.
> No one bats an eyelid at the co-operative model in countries such as Germany, “but with these ideas in Texas or Kansas, you’re basically a communist,” says Mendieta, only half jokingly.
If people couldn't afford houses, they would sit unsold until sellers lowered the price to a price someone could afford. Luckily so many people can afford houses in most areas they don't have to do that.
Jobs, mostly. Along with increased access to all the things people like, like food, other people, activities, etc.
Because if nothing else (and there is a lot of else) the tech/lawyer/finance folks want to have restaurants, shops, cinemas, street cleaners, utilities etc etc etc etc
What proportion of housing do they own? I would assume it’s pretty small if still significant.
https://www.washingtontimes.com/news/2024/mar/15/in-shift-44...
US: https://www.jchs.harvard.edu/blog/home-price-income-ratio-re...
> If people couldn't afford houses, they would sit unsold until sellers lowered the price to a price someone could afford.
This is fundamentally not the case in much of China and Taiwan where the wealthy sit on empty homes for years or decades. The housing price in Taipei continues to climb while a large number of units sit vacant.
If you really set the market more free, you will automatically have more reasonably wealthy people bc of competition. When thede few billionaires exist due to governments favors we should think what is wrong with some people selling favors to others without providing services to others.
If you start regulation after regulation you create an elite of people and normal people suffering those regulations.
The elites are basically, in this setup, a collusion of sellers of favors (politicians favoring employers) and people who buy those to avoid competition and favor their business.
This is not possible by definition if you see that with bad eyes and watch out permanently.
However, people want more and more regulation bc there are always things that are "wrong" and eventually those things take you exactly to the outcomes you complain about right now. But you want more of it. Guess what you are going to have if you ask more of it: more of that.
There is a sentence from Javier Milei that I think is very correct regarding this matter: "the politician cannot sell you a favor he does not have for selling".
Think of it. We cannot reduce all problems to that sentece but there is a very big part of truth in it.
I recommend you to take a look at the profiles of billionaires there are around the world. Some are very different to others. But the more regulations you have in a country, especially the ones that did not develop first, the less wealth transfer you have and the more money stay in the same people's hands. This is something to think about very seriously: the path to derregulation is a better choice to keep things balanced.
If you choose the other way, no matter how good it looks to you, you will get what you are asking for. Basically, "The great taking". Look for that book if you do not know it yet.
Historically there might have been a few exceptions to that, but basically always you have a few good years and then the winner(s) who emerges starts abusing their position (even without any regulation that might make it easier for them to do that). Unregulated markets tend to be inherently unstable.
And it’s not so much less vs more regulation, there are two axis and yes corrupt and inefficient governments tend to produce regulation that decrease competitiveness, productivity, fairness etc.
And then you have industries which simply can’t be allowed to be privately owned unless there is extensive regulation (because free competition is almost impossible in those sectors): utilities, banking, transportation etc. sometimes even telecom (e.g. roaming fees in the EU).
There is no such thing as "without regulation". Nobody is suggesting a system in which murder is legal and the most powerful warlord gets a monopoly.
But there is a difference between "the government enforces contracts and anti-trust laws and prices major externalities" and "the government micromanages the economy and is captured by the incumbents".
So for example, a free market doesn't need zoning density restrictions. Their absence has no apparent mechanism that would lead to a monopoly. Therefore, a freer market in which the government has no power to impose zoning density restrictions is better than the current one in which that is possible and is consequently making housing unaffordable. Depriving the government of the authority to do that is a viable mechanism by which that form of corruption/inefficiency is avoided.
> And then you have industries which simply can’t be allowed to be privately owned unless there is extensive regulation (because free competition is almost impossible in those sectors): utilities, banking, transportation etc. sometimes even telecom (e.g. roaming fees in the EU).
But even in these industries the necessary regulation is narrow and should be directed to isolating the natural monopoly from any other offering, e.g. roads are a natural monopoly but vehicle manufacturing isn't, so the government provides roads but the private market provides cars.
Conversely, the US has last mile ISPs providing phone and TV service, which isn't adequately isolating the last mile and then we get regulatory capture and corruption. It's not obvious they should even be providing transit, rather than having an entity that narrowly maintains the fiber in the street and does nothing else.
You're certainly right that it isn't just a matter of "more regulation" or "less regulation", but it is a matter of removing many of the existing regulations because they specifically are the source of the high costs and market concentration.
No need to take my words literally. I you will, favor natural right and yes, put a bit of something on top. But this is not happening clearly. There is a lot of subsidizing and regulation. They are giving, literally, prizes to people that do nothing and punishments to people that kill themselves working. On the way, they have been swapping incentives from working hard to not work.
This in itself is a problem. Currently I see democracies as giant clientele systems. I am not far from the truth at all I think, at least in the case of my country (Spain).
I think the real issue is that free markets and free speech are not really compatible. If people are allowed to express political opinions, some opinions will inevitably become popular. Sometimes that happens because people don't like the outcomes of the market. Then they try to change things by regulating the market. Repeat that often enough, and you get more and more regulations over time.
Certainly the OG Free Markets that inspired the first order Invisible Hand model were.
'free market' is such a nebulous term, bandied about en masse in forums where rarely is it questioned what specific type of free market a specific person might mean.
Of course most people do not propose that. My idea is that, as one spanish philosopher said (taken from Hume), that all law (derecho in spanish, not sure if it is exactly equivalent for the meaning in english, since the law tradition in Spain comes from Roman law), so take my translation with a warning. All law can be summarized in two premises:
1. "property is not acquired or lost by violence or fraud"
2. "Deals must be fullfilled. Whoever does not fullfill their deals shall compensate to the side fullfilling it."
It also promotes more scarcity and leads towards oligopolistic setups. It is a complex topic, but I favor freedom and responsibility over regulation clearly, as long as you do not damage others. In fact, regulations do damage others but people often take them for their intentions and not for their results ... something that is a big shocking to me. It is like it gives them peace of mind even if the reality has nothing to do with the effect they are expecting or imagining.
The translation could be pretty bad, so I apologize for that. I just hope it is understandable.
Some people think it is something like an overload that takes the perfect, most fair decision and, on top of that, without room for mistakes.
Looking at the results I would say it does not respond to that premise at all.
Some people think it is something like an overlord that takes the perfect, most fair decision and, on top of that, without room for mistakes.
Looking at the results I would say it does not respond to that premise at all.
This is not caused by free speech, it's caused by an error in the way our system was designed.
The premise was that something should not become law unless it has widespread buy-in. So the federal government had limited, specifically enumerated powers and passing a law required a majority of the House, a majority (or filibuster-proof majority) in the Senate (which was meant to represent the states) and the signature of the President (or a veto-proof majority in the legislature).
But we de facto interpreted out the enumerated powers by reading the commerce clause so expansively, and Senators are no longer appointed by state legislators so the states have no representation at the federal level anymore, which took the brakes off what legislation could be passed. Which severely exacerbated the main defect:
We made it just as hard to repeal a law as to pass it. So we keep accumulating laws there is no longer widespread consensus to keep, because the corrupt influences who want the law only need to control all three bodies once and then the law is stuck for as long as they can maintain control of even one.
It should be easier to repeal a law than to pass it.
Free speech is also the freedom to change the rules. If something becomes popular in the marketplace for ideas, there is always a way of turning it into a law. The exact procedures and thresholds may vary, but the possibility always exists. Because laws and constitutions don't enforce themselves. People enforce them, and those people (or their replacements) may choose to enforce them in a different way.
You say that repealing laws should be easier than passing them. But maybe the opposite idea wins in the market. Then it will be easier to pass a new law than to repeal an existing law. Under free speech, all laws, constitutions, and rights are ultimately temporary opinions subject to the whims of the market.
This is so well expressed. I take it for the future. Concise and clear. This is exactly the kind of things that come to my mind.
However, some people ask for more of this, instead of less. It is curious when the solution to a problem is throwing more of the problem at it. If it was a transition period of some kind where the effects of some policies cannot be seen yet... but it is years and years and years. The result is high debt and collusion, or that is more of what I see around me, in all Europe. It is a chain of favors and they regulate more and more aspects of our lives, yet we are not better. We pay more, the services are not better either.
I think something is broken here and I am very aware that the result is not giving more control to regulators to even smash us more. It is quite the opposite: leave people alone. At least, this is my experience right now. I can assure that 25 years ago my country had much more balance in most areas and people were more free. I am almost 41 FWIW.
Also, you're under the naive assumption that lacking regulations, companies will want to compete. Why wouldn't they just form oligopolies/monopolies? Either due to natural restrictions (e.g. competing in infrastructure is way too expensive, usually), or the richest company/private equity buying up all the competitors to have a free hand at abusing the market.
Arguably the US was generally much more left leaning than now, even somebody like Nixon might struggle passing off as a moderate/rightwing Democrat let alone a Republican just based on his domestic economic policies…
The Russian empire wasn't well developed by any stretch of the imagination.
Actually, yes, this is the literal definition of socialism. It's workers owning the means of production.
In the same way that China having private companies doesn't make it capitalistic.
This is a classic trope of the fully-brainwashed. The bread queues that resulted from collectivised agriculture that couldn't respond to market conditions had nothing to do with feudalism.
The mass-murder of the middle-classes in Cambodia had nothing to do with feudalism.
Communism is a brutal, oppressive system that has to erase individual liberty in order to force people to comply with its absurd, unfair rules. If it was so great, why didn't the Russians just vote it back in again?
I'm no fan of the USSR but they're arguably no more socialist than the National Socialism of the Nazis.
On a sidenote, please read "The Gulag Archipelago".
And what is actual socialism? Perhaps more importantly how will you enforce it?
On the average, when someone says "socialism", it's intended to be an insult. It also serves as an indicator that the person is not interested in having a real discussion. But this is not it. This is real socialism. The kind of socialism that died as a mainstream option in Europe with the USSR, but which is still somewhat popular in the US.
Our current system (which is not true capitalism in my view) also has concentrated power in the hands of a few people.
So what do you call a system where the majority of people can't be exploited by the 1%?
I like Carl Sagan's answer to this topic.
Maybe that’s why they’ve build a wall to keep people in.
We’re leveraging a coop but also combine it with tokenized ownership.
To resolve current very unbalanced society we need another thing: public money. We need to ANNIHILATE central banks and the current banking system. Money must be created by the government with public investments, so the government propose a new road, the parliament accept the proposal, some will make the new road getting "new" money from the State. Doing so regulate enough to avoid hyper inflation but still tie money on a physical substrate, tied to the real world resources avoiding pure finance.