Post: #1

I had been thinking about this a long time ago and thought I'd make a thread about it.

My understanding is that there is a huge amount of inequality in the West and alot has to do with top-down power structures. Many (if not most people) work in large companies that are publicly listed. The main aim of such companies is maximising shareholder value. This basically means these companies main aim is to make the the shareholders richer by keeping the shareprice as high as possible. This usually leads to a focus on short-term results (earnings reports) at the expense of long-term value and stability.

I dont like the idea of people getting rich off the backs of others. Royal mail was privatised a few years ago, and I know outside investors (hedge funds and such) made a killing off it. These guys did nothing but buy some shares, and then sell them when the price went up. Most average people simply cant do this due to not having the required free capital to invest, nor the specialist knowledge to be able to take advantage of such situations. It's the normal people who work in these companies, yet the rich who know nothing about the work, frequently manage to get the benefits.

On top of that, you have a massive financial services industry consisting of brokers, traders and money managers who it seems to me add very little value to the economy yet make huge money off it. If someone can tell me how these guys add value I'd love to know. We have a system where the best and brightest in our societies go and move money around from one place to another. These guys dont know anything, they cant make anything, they cant do anything. This cannot be the best system for any society.

Basically there are two models that can be used. Talent hires capital or capital hires talent. We use the latter in our society. People who have money but know nothing about an industry have control over those who have the skills and knowledge but not the capital. This can lead to a disconnect between decision-making and knowledge/experience.

The other way round would work much better. People would own and work in their businesses. Society would'nt get upset of the a stock index went up 100 or down 100 points. The amount of capital in the system would be the same, except businesses would borrow money at fixed interest, then take the profits for themselves.

The stock market to me just looks like something that largely benefits the rich and manipulative, the speculators and salesmen, the charlatans. Those that get their money in first make a killing, those coming in later just make the first ones rich.

Post: #2

Large companies with 20,000+ people on the payroll could not grow to that size without receiving billion-dollar injections from selling stock.
Selling stock allows them to finance growth. Many of those larger companies with huge payrolls, would not be large at all if they didn't get the help from investors.

Many venture capital firms require you have millions minimum to be able to invest in their prospective startups, A public stock market you just need an online $10 broker you can invest.

The real problem is the federal reserve who makes the interest rates so low that debt has inflated and overwhelmed the system. Quantitative Easing has inflated and given many years of those ridiculous returns you are talking about.

BTW, you're not really 'controlling' anybody who's not already agreeing to the transaction. That's like if I spend $15 at burger king and watch them make my food because I paid them, HAHA I OWN YOU, LOOK AT YOU MAKE THAT FUCKING BURGER FOR ME!. You're both agreeing to the trade, as are the employees. That's the point of capitalism.

But the government's monetary policies fuck up everything and then they get you to blame the 'evil' business owners who have more than you. They play on your envy to let the government confiscate markets.

Post: #3

You're talking about communism where the workers own the means of production. The problem isn't the stock market. It's the lobbyists in the government that lobby for these companies to maintain almost absolute control over their industries.

Edit: The poster above me is right. You need to focus your energy on the FED, not the market itself.

Post: #4

I'm just talking about companies where people who run the business are also the ones who own it.

Post: #5

If you got rid of your smartphone bill of paying $100 a month, you could buy $1200 worth of stock every year. Over years a normal person could get to 100k easily. especially with those 'huge returns' you think they're all getting.

You are giving the workers guaranteed money when you, as the owner, get no guarantee of profit. If it loses 3% of it's value, the worker still gets their paycheck (barring layoffs). They're getting paid for something that isn't always productive. Speculation, venturing, and guessing is how innovations and cool shit are made.


Edit: but yes, the current state of the stock 'market' is pretty fucked. it's manipulated by financial engineering and like you said is hardly used in productive pursuits. Just moneychanging. IPO's are where the real productivity occurs.

Post: #6

Oh yes, I remember now. I was looking at this a few years ago. The model I preferred over listed companies was co-operatives. I remember I thought they were really cool. Gonna re-read some stuff and get back.

Post: #7

(05-20-2016 08:16 PM)Disco_Volante Wrote:  Large companies with 20,000+ people on the payroll could not grow to that size without receiving billion-dollar injections from selling stock.
Selling stock allows them to finance growth. Many of those larger companies with huge payrolls, would not be large at all if they didn't get the help from investors.

John Lewis, the UK retailer is Employee Owned, and has 81,000 on the payroll.

Quote:The John Lewis Partnership is one of the few UK companies where bumper bonuses do not provoke a public outcry.

All staff — from chairman Charlie Mayfield down to Saturday shelf-stackers – receive the same percentage payout which rises or falls in line with its financial fortunes. Last year its staff, or "partners" as John Lewis calls them, received 17% which is the equivalent of around nine weeks' pay.

The retailer's employee-owned partnership model operates differently from private-equity backed businesses and stock market-listed companies as instead of profits flowing to the shareholders, at John Lewis they flow to the staff, in the form of the annual bonus. It is not a one-off; according to the Employee Ownership Association there more than 100 UK companies with significant employee ownership, a section of the economy that is worth more than £25bn annually. Other examples include Blackwell bookshops, jam maker Wilkin & Sons and polymers manufacturer Scott Bader.

John Lewis's ownership structure was established by pioneering businessman John Spedan Lewis whose father founded the business in 1864. He signed away his ownership rights in 1929 to allow future generations of employees to take forward his "experiment in industrial democracy". His ideas are set out in the company's constitution which at its heart has the idea of establishing a "better form of business".

All 76,500 of John Lewis's permanent staff are partners and they ultimately own the retailer's 35 department stores and 272 Waitrose supermarkets, which generate annual sales of more than £8bn. As the company itself puts it: "Partners share in the benefits and profits of a business that puts them first." John Lewis's constitution also lists a formal mission to maximise the "happiness" of its staff. The power structure involves a staff council – for ideas and complaints to filter up to the board – and a weekly magazine where staff can air their views about policies and management, anonymously if they choose.


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Tony Greenham, the head of finance and business at the New Economics Foundation says it is important that employees should "have a greater say in how their businesses are run, not just a bigger share of the profits". He said: "The idea that workers have nothing useful to contribute to management belongs to the 19th century, not the 21st."

Greenham says both privately held and employee owned businesses can contribute to an economy that does a better job of creating social and environmental value over the long run. "A successful economy is one where private interests ultimately serve the broader public interest," he adds. "What companies like John Lewis demonstrate is that this does not have to come at the expense of commercial success."

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John Lewis staff earn the same as shopworkers at rival chains – but the year-end bonus is a significant top-up. Its directors, on the other hand, are paid substantially less than their boardroom counterparts at businesses such as Tesco, Marks & Spencer and Sainsbury's. Staff also receive employee perks – worth £70m this year – ranging from holiday homes to sailing clubs, theatre outings, theme park admissions, and even a choir, all subsidised. It also one of the dwindling number of companies to operate a final salary pension scheme which is funded entirely by the company.

The ownership model means it is in the interests of John Lewis and Waitrose staff to work hard as they are the direct beneficiaries.

Companies such as Next are far more profitable than John Lewis but a report by academics at the Cass business school found that employee-owned businesses had a higher rate of sales growth and job creation during the recession than companies in conventional ownership. Over the course of the boom-and-bust period between 2005 and 2009, they generally created new jobs more quickly and were at least as profitable as their counterparts.

The findings — based on a survey of more than 60 senior executives of both types of company, and financial data from more than 250 firms — back up other studies that show that employee owned businesses typically outperform those companies in which employees do not have an ownership stake or the right to participate in decision-making. "The advantage comes from taking a stakeholder rather than a shareholder view of management," said the study. "Employees who have a stake in the company they work for are more committed to delivering quality and more flexible in the face of the needs of business."

https://www.theguardian.com/business/201...el-lessons

Post: #8

(05-20-2016 08:08 PM)Atheistani Wrote:  On top of that, you have a massive financial services industry consisting of brokers, traders and money managers who it seems to me add very little value to the economy yet make huge money off it. If someone can tell me how these guys add value I'd love to know. We have a system where the best and brightest in our societies go and move money around from one place to another. These guys dont know anything, they cant make anything, they cant do anything. This cannot be the best system for any society.

100% correct.

The only ones who make money from the stock market are the ones who earn commissions. Why? Because they make money whether or not they make their investors money.

The thing about money is it's scaleable. It's the most scaleable invention human's have ever invented and will ever invent. That's why the upside potential of a financial manager is so yuuuge. Because they can make commissions off every person in the whole world. Nothing else is as scaleable as money.

Take iPhones for example, one of the most popular consumer items ever. Everyone in the world will never have an iphone, and even if they do, they'll have one ever 3 years on average. That's one transaction every three years for maybe 20% of the world's population. Money, on the other hand, (at least first-world money), will be exchanged hands billions of times every day by every single person in the world. Even a small slice of that pie will yield exponentially more returns than a large slice of the Apple pie because money is just that scaleable.

And money managers really don't do much to earn that kind of money. But they weasel their way in the system so they can make money off everything.

Post: #9

What you're forgetting is that everyone's pensions are fully invested in the stock market - that's how they can pay you back more than you paid in. It's the fully functional and fluid stock market that allows Western society to thrive the way it does. China doesn't have a pension culture, families save for themselves. That's why their stock markets are shit, there is no monthly influx of pension money buying up company stock.

Stock markets despite their often volatile nature, actually provide the financial stability the West has grown on.

The problem, as pointed out by other posters, is now the interference and artificial manipulation of the FED and other central banks, once again, reaching beyond their original remit and interfering in an attempt to engineer society centrally.

BLOATED GOVERNMENTS are the problem, not the stock market.

Post: #10

Without stock markets, nothing would ever have got done in the World.

They go back 1000s of years (in slightly different forms).

Post: #11

My major problem with the stock market is that when you remove functional ownership from a company then you also remove acceptable levels of culpability for wrongdoing.

Something goes horribly wrong. Who's to blame? The CEOs there now? The CEOs who went before them? The shareholder typically takes the hit and the thinking that lead to the problem is reduced to a simple question of whether it was profitable.

I'm sure this sounds a bit naive but in the days gone by when businessmen owned their companies then you know the buck stopped there. They were men, perhaps fabulously wealthy, but flesh and bone. They could be tried, if nothing else than in the court of public opinion.

Post: #12

(05-21-2016 06:48 AM)Leonard D Neubache Wrote:  My major problem with the stock market is that when you remove functional ownership from a company then you also remove acceptable levels of culpability for wrongdoing.

Something goes horribly wrong. Who's to blame? The CEOs there now? The CEOs who went before them? The shareholder typically takes the hit and the thinking that lead to the problem is reduced to a simple question of whether it was profitable.

I'm sure this sounds a bit naive but in the days gone by when businessmen owned their companies then you know the buck stopped there. They were men, perhaps fabulously wealthy, but flesh and bone. They could be tried, if nothing else than in the court of public opinion.

The primary reason for the creation of the legal fiction that is the corporation was to prevent the buck from stopping with the owner of a business.

This is neither all good nor all bad. The bad part is obviously that someone who runs a company, derives any number of benefits from it, but does not actually own that company therefore can avoid liability for most misdeeds he does in that company's name. Indeed it is a legal obligation on a company's director, i.e. the guy who runs the company, that he must do whatever is in the best interests of the company first, without regard to any other primary concerns.

On the other hand, as some people have already said, had there been no limitation of liability and therefore no limitation of risk in corporate ownership, there is every chance that risky but profitable ventures simply would not occur. The legal distinction between a corporation and its owners is one of the heavy prices that the West has paid for most of its innovation and creation over the past three hundred years or so.

Shareholder disempowerment in part is due to the atomisation of ownership that happens when a company starts to issue tens of thousands, if not millions of shares. When that happens institutional investors are generally the only ones with enough percentage of the shares to cause changes in the board of directors, that is, in the way the company is run. Oddly enough it's a similar problem as representative democracy suffers: when everyone gets a say, paradoxically it's only an unrepresentative minority that gets anything done.

More generally on this topic, have a look at Heller's The Gridlock Economy.

God save us from people who mean well. -storm

Post: #13

(05-20-2016 08:08 PM)Atheistani Wrote:  My understanding is that there is a huge amount of inequality in the West and alot has to do with top-down power structures. Many (if not most people) work in large companies that are publicly listed. The main aim of such companies is maximising shareholder value. This basically means these companies main aim is to make the the shareholders richer by keeping the shareprice as high as possible. This usually leads to a focus on short-term results (earnings reports) at the expense of long-term value and stability.

This is exactly how it works. They are also largely focused on creating "buzz" and generating good publicity. Publicly-traded companies operate like a democracy. Private companies operate like a monarchy.

Quote:The stock market to me just looks like something that largely benefits the rich and manipulative, the speculators and salesmen, the charlatans. Those that get their money in first make a killing, those coming in later just make the first ones rich.

I wonder if we would have a stock market if we truly did have a free market. Corporations also create the concept of limited liability. A corporation can be sued for billions of dollars, but the only thing the stock holders can lose is the value of the stock. The CEO won't lose his house or his car, for example.

This is largely why businesses do incorporate. It's a protection against liabilities.

Post: #14

(05-20-2016 08:16 PM)Disco_Volante Wrote:  Large companies with 20,000+ people on the payroll could not grow to that size without receiving billion-dollar injections from selling stock.
Selling stock allows them to finance growth. Many of those larger companies with huge payrolls, would not be large at all if they didn't get the help from investors.

Here is a list of large privately-owned companies:

Koch Industries
Dell
Cargill
Publix
Hearst Corporation
Ernst and Young
IKEA
ALDI

What purpose does this growth serve? Most of the time, it serves none.

I'm currently leaving a publicly-traded company. Considering all the compliance bullshit they have to go through, I wonder why anyone would do it.

Most jobs are created by small businesses. Corporations spend just as much time cutting people as they do hiring them.