[LMB] OT: Marylin's economics discussion

Ed Burkhead ed at edburkhead.com
Thu Nov 4 14:51:15 GMT 2010


On 2010-11-04 3:46 AM, mtraber251 wrote:
> Companies should not put the interests [and profits] of the 
> stockholders first. The main reason that offshoring is happening is to 
> eke out more profits for the stockholders and executives.

Marilyn,

The companies are *owned* by the stockholders.  It's their investment.

Certainly you can make a company where all the profit goes to the 
employees -- just make it an *employee owned* company.  The grocery 
store I grew up with in Iowa has now expanded to my (displaced Iowan) 
location in Peoria, Illinois -- HyVee is an employee owned company.  It 
grows, it's successful, it does well.

But, must all business follow that model?  I don't think so.

Many companies offer their employees stock options to provide a feeling 
of ownership and participation in the company.  That can work - we have 
some stock in the company in which my wife worked.  It can also be a 
catastrophe - think of the Enron employees who had their retirement 
accounts invested in company stocks.  When the company went down, they 
lost *both* their stocks and their retirement nest eggs.

At the same time, I think that boards of directors who pay ridiculous 
sums to their high executives are dumb.  I would not choose to invest in 
such companies.

At the same-same time, I can understand that a company that feels 
threatened may want the special proven-by-experience top gun executive 
to save them.   It could really be worth any price to save their 
investments not to mention the jobs of 10,000 or 40,000 employees.

Blanket statements (including this one) are unwise.

JMH non-specialized O

Ed




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