Corporate socialization
May. 2nd, 2004 04:27 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
teddywolfThis is a small collection of thoughts about society and economy.
Over a century ago came the modern concept of the corporation: run by a very few, with limited legal and financial liability for those who run it. This prompted investors to want a larger return on investment and bascially encouraged sharks at the helm and more accountants.
A number of businesses have been run by sharks in the past. Their names are legend in their industries: J P Morgan and Rockefeller top my list. It takes a lot of nerve to run a large company, but it requires less nerve if you don't have as much responsibility for your actions.
The practical upshot of this is that the people we most encourage to run companies are the ones who will least regard their fellow humans as, well, human.
I believe people from across the political spectrum would agree that most crimes against others are the result of the criminal not respecting the inherent value of the person they are harming. For many people this may be a result of circumstances at the time - a crime of passion, if you will. For others, there is a simple lack of regard, and that's a more-or-less full time perception.
Most corporations don't care much about human cost. They care about bottom line. Some of them do look at bottom-lin as enlightened self-interest, and I can deal with that; but there are plenty of others that just don't care. And they don't care because they are run by people who don't care.
My cable company doesn't care, so long as I watch TV, play on the Internet and pay my cable bill.
My electric company doesn't care, so long as I run lots of electric stuff and pay my bill.
My car company doesn't care unless I buy more of their cars.
It's now pretty easy for people who don't care to get into business and to not care about their customers or their employees. I find this more than a little disturbing.
Enron, Worldcom, Microsoft, McDonalds, none of them operate in a corporate vacuum. Abuses of power which are called "deviations" and "not the status quo" are in fact normal and part of the status quo, to be fair on the harsher side of each. I am not saying that large companies can't be good citizens - Ben and Jerry's is still well run, as is Malden Mills and Trader Joe's - but I am saying that some changes need to be made to encourage more good citizens and fewer Kenneth Lay's. The worst excesses should be stopped, and stopped cold.
The real question, of course, is how? How can a change be made that is effective, fair, and legal?
Over a century ago came the modern concept of the corporation: run by a very few, with limited legal and financial liability for those who run it. This prompted investors to want a larger return on investment and bascially encouraged sharks at the helm and more accountants.
A number of businesses have been run by sharks in the past. Their names are legend in their industries: J P Morgan and Rockefeller top my list. It takes a lot of nerve to run a large company, but it requires less nerve if you don't have as much responsibility for your actions.
The practical upshot of this is that the people we most encourage to run companies are the ones who will least regard their fellow humans as, well, human.
I believe people from across the political spectrum would agree that most crimes against others are the result of the criminal not respecting the inherent value of the person they are harming. For many people this may be a result of circumstances at the time - a crime of passion, if you will. For others, there is a simple lack of regard, and that's a more-or-less full time perception.
Most corporations don't care much about human cost. They care about bottom line. Some of them do look at bottom-lin as enlightened self-interest, and I can deal with that; but there are plenty of others that just don't care. And they don't care because they are run by people who don't care.
My cable company doesn't care, so long as I watch TV, play on the Internet and pay my cable bill.
My electric company doesn't care, so long as I run lots of electric stuff and pay my bill.
My car company doesn't care unless I buy more of their cars.
It's now pretty easy for people who don't care to get into business and to not care about their customers or their employees. I find this more than a little disturbing.
Enron, Worldcom, Microsoft, McDonalds, none of them operate in a corporate vacuum. Abuses of power which are called "deviations" and "not the status quo" are in fact normal and part of the status quo, to be fair on the harsher side of each. I am not saying that large companies can't be good citizens - Ben and Jerry's is still well run, as is Malden Mills and Trader Joe's - but I am saying that some changes need to be made to encourage more good citizens and fewer Kenneth Lay's. The worst excesses should be stopped, and stopped cold.
The real question, of course, is how? How can a change be made that is effective, fair, and legal?
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
Re: government-supported companies != capitalism
Date: 2004-05-03 10:28 am (UTC)Pure capitalism has *not* provided the best of a poor lot. To date, the best solution I've seen has been managed capitalism. The management level varies from country to country - some countries overmanage, some undermanage. Some types of management are at best band-aids and some are inappropriately punitive; but some are effective and yes, appropriately punitive.
I do respect that a corporation can do good, but I don't see how it is an inherently better form of business than a standard partnership or sole-proprietorship. It is perhaps better at gathering initial capital, but that's it.
Enron executives broke the law as it existed. The company went kerflooie, many of the execs are being punished. Investors learned from the experience. What's the problem? It's just capitalistic feedback in action.
The problem is that when people invest, they expect that the company is going to play by the rules. If it was just a matter of the company being poorly managed then that would have been one thing - that's a standard problem of the market. However, what happened was it was not only mismanaged but it broke the law repeatedly and *hid* all of this, thus not giving most investors a chance to make a decision based on an informed opinion. In the meantime, high-ranking execs who were big time investors unloaded their stock before the revelations *and* they *actively prevented* employees who were in the company retirement fund from selling *their* stock. So employees were stuck with worthless paper at the same time that these execs cashed out and stayed rich.
The worst excesses should be stopped, and stopped cold.
Never happen, not entirely. Failure is part of the system.
Honest failure is one thing. Massive abuse of the rules is quite another.
Re: government-supported companies != capitalism
Date: 2004-05-03 03:41 pm (UTC)Enron has played by the rules. They have adhered to all GAAP standards as well as NYSE and Federal rules. Further more, everything they have been convicted for (i.e. lying to investors basically) has been disclosed in their financial statements. Enron has been punished for peoples inability and lack of intrest in reading public filings/statements. If anybody have read those before putting in their money, they would have seen the hugeley inflated sales and low NI and would have not touched that company with a 10ft pole. As for investors who got burned, well that is the price capitalism imposes when you are too lazy to do your job! For better examples, read Ayn Rand!!!
Re: government-supported companies != capitalism
Date: 2004-05-03 04:38 pm (UTC)You still haven't addressed the point of Enron workers who were not allowed to sell their Enron stock in their retirement accounts whilst all the bigwigs dumped their stocks.
Re: government-supported companies != capitalism
Date: 2004-05-03 05:16 pm (UTC)As for adressing forcing the employess to hold on to their stock:
I did not familiarize myself with this part of the enron trial however my thoughts on this are that If 'bigwigs' did not break a contract of any sorts than they are not liable. if they did, than their ass should be kicked by the emploees' lawyers, not the govt.
Re: government-supported companies != capitalism
Date: 2004-05-03 06:43 pm (UTC)In any other area of the law, this sort of baloney would be laughed out of court. "Oh, you can't be prosecuted for driving a vehicle in the park next to the "no vehicles in the park" sign because your car says "not a vehicle" on the label? Yeah, right."
The laws are highly technical, yes. They reflect compromises, sure. But there are underlying ethical principles that most people find easy enough to comprehend, even when there's a loophole somewhere in the rules as written.
As for all the facts being buried in their financial statements, so what? The rules don't say, make it possible for an expert with infinite time to dig out the truth. Companies are supposed to have the information there in recognizable form, in the expected place. As for the Great Ayn Rand, bear in mind, please, that Enron fooled EVERYONE. Nobody saw it coming, no matter how smart or expert. So, what 'objective' ethical principle is it, exactly, that says I can sucker people into a Ponzi scheme if I am the cleverest financial-statement writer in town?
As you probably know, business works 90% on trust. Trust, but verify -- but you can't spend every waking moment verifying, so you have to count on the reputation someone has built up. Enron built up a great rep, then used it cynically to cheat the shareholders and employees. If everyone did this, the system would fall apart. Why are you defending this?