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245 comments on DrumBeat: September 12, 2007
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245 comments on DrumBeat: September 12, 2007
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Rex Tillerson-
I find it interesting that Mr. Tillerson says that the National Companies will come to the majors for "technology" they don't have...
It seems to me over the past 20 years the majors have abandoned technology development and research centers in exchange for quarterly earnings and outsourced this cost to Schlumberger and Halliburton....
Now it can be bought for a price because Schlumberger and Halliburton are in the business of selling it.
It's that darn vision thing again.
FF
Tillerson sounded completely helpless in that article, didn't he?
And Halliburton is a Dubai company now, at least the oilfield services part. What country is it loyal to?
Meanwhile, a horde of Chinese engineering students toils away, waiting for their government to tell them what to specialize in...
Corporations aren't loyal to anything but their stockholders, and never have been.
Nor should they be.
...comment made as a stockholder and a citizen.
and that, in a nut shell, is the problem with contemporary corporations.
No, that is the problem with contemporary American governance. If we expect investment vehicles to deabte, define, or implement national policy we are in sad shape. ...and we are.
you missed the point (which actually further emphasizes it).
What's your point?
You must understand that 90% of the posters at TOD believe we should strive for a 'steady state' economy, where economic growth is solely measured by improvements in efficiencies, which in turn theoretically increase the lifestyle of its workers.
Yeah, you really understand the problem.
Legal entities are way for a few people to profit, while externalising costs to the rest of society/the planet. That model is beneficial to a few, harmful to many.
Society is supposed to be a way for many humans to live together in relative harmony (i.e. a way to limit intra species competition while maximising species survival through co-operation, empathy, etc.). Anyone who doesn't want to change a model that benefits a few and harms many is therefore a psychopath, by definition:
http://en.wikipedia.org/wiki/Psychopathy
"You can never solve a problem on the level on which it was created."
Albert Einstein
Right, and a steady state economy working for the benefit of all fixes that...
NZSantuary said:
"Legal entities are way for a few people to profit, while externalising costs to the rest of society/the planet. That model is beneficial to a few, harmful to many."
Only in your communist fantasy world is this true. It never ceases to amaze me the imaginary demons people create to explain things they don't understand. Sure, some people in some corporations are scumbags. But by a large margin, businesses and their owners are good people who contribute to society.
Only in your monetarist fantasy. Corporations exist to make a profit and minimize costs. A major cost is labour and that is why they fought tooth and nail to prevent workers getting a good wage for decades. Before unions the USA and Canada were third world countries with a negligible middle class. Thanks to the offshoring of skilled well-paying jobs to the third world the middle class is slowly disappearing and the USA and Canada are regressing into third world toilets. Cheap credit can't hide this degeneration for long and the illusion is already starting to fail.
I agree that the future is dim, but the problem is not corporations. The critical constraint is and always has been...mankind.
Exactly! The corporate model (the legal structure) is the product of individuals who had self-interest at the heart of their creation. What is imaginary about this? Just because you use emotive words ("communist fantasy", "imaginary demons") to raise a strawman doesn't change the fact.
"You can never solve a problem on the level on which it was created."
Albert Einstein
All human economic activity is done out of self interest. You could disolve all corporations and replace them with sole proprietorships, co-ops, government organizations.... anything you desire, and the problems we have discussed would still be present. Hence the problem is not corporations, it is human nature. So if you want to start a thread ranting about how evil, wasteful, and short sited mankind is, I could probably get on board with that. By shifting the blame to corporations, we draw incorrect conclusions, which lead to sub-optimal solutions. If one assumes that mankind is a peaceful, compassionate, and wise species, and that the root of all evil is the system in which he operates, one would conclude that we can abolish corporations, and all will be right with the world. I don't beleive that for a second. Our current economic system is far from perfect, but it's still the best thing going.
Disagree. Jared Diamond talks about what it takes to be a sustainable society. It's possible, without changing human nature. People will take care of the environment and think of future generations, if they feel a sense of ownership. And not in the corporate sense.
If it's your lake, your land, your trees, and you expect your children to live off those resources (and only those resources), you will be a good steward. It's in your self-interest to do so.
It was the best thing going. It won't be, in a resource-constrained world.
This article, posted to a previous DrumBeat, illustrates clearly what's wrong with corporations.
That is the problem with corporations in a nutshell. If, say, it was a king, and not a CEO, he would not be thinking, "I know the spit is going to hit the fan, but hopefully I'll be retired by then." I'm not saying I want a king, but I am saying there are better models than corporations, if your goal is sustainability rather than profit.
I thought corporations existed as a legal framework for pooling capital, managing legal liability, accessing the advantages of scale and division of labor, and disconnecting the functions of management and ownership so capital can flow freely to better managers and/or better business models. And by and large (99% of the time) they do that pretty well. I rebut Moneyman's assertion that corporations are the only source of economic progress - those Roman roads got built, one way or another - but the corporate model has served us tolerably well for the past several decades.
Third World Toilets? Cutely-worded nonsense. Get a sense of perspective, man. You can find problems in any country if you look hard enough, but several thousand Mexicans a year are risking their lives because they disagree with your assertion - and Mexico ain't Third World by a long stretch.
I think the "managing legal liability" part is the problem. Corporations allow people to avoid liability. Incorporate, and, in the words of Robert Kiyosaki, you "own nothing, but control everything."
Corporations, like capitalism, are very good at quickly exploiting plentiful natural resources. They aren't good at planning long-term. And, like capitalism, I suspect they will not be good tools in the post-carbon age. IMO, it's foolishness to think that the institutions that worked well for us on the upside of the resource curve will do so on the downside.
Leanan is right Corporations exist to avoid Liability, to maximize profits by fleecing the uninformed, to influence legislation through advantages of scale in order to better avoid liability and fleece the uninformed. The corporate model has served who? The corporations, the fleecers and scammers. Mexico is currently involved in a class war. A revolution against stolen elections, disrupting energy supplies to the maquiladoras(Corporations exploiting the working class forced to work for slave wages just to feed their families.) Yes I agree with you on one point. They ARE risking their lives, to expel the exploiters and bring about a better future for their children. If only the working class in the US could learn from their example.
I think all of the anger towards corporations is usually misplaced. A corporation is a human machine designed to make profits through commerce. That's it. It's not designed to create jobs, support the economy, or worry about long term energy security. To often the shorcomings people cite are not corporate shortcomings, they are human shortcomings. So adjust your expectations with reality, and maybe you won't be so dissapointed.
As a student of business, I think that the modern corporation, properly run, is a phenominal machine. As I glance around my office, I don't see one single item not produced by a corporation. I think it is fair to say that without the "evil corporations" life on earth would be much different, in an 1800's kind of way. You wouldn't like it. If you are unhappy with a particular company, don't buy their product and don't own their stock. Problem solved.
No offense intended, but what a load of crap. What do you think a corporation is other than a collection of individuals (ie, humans)? Corporations didn't make anything in your office--people did. Without evil corporations life would be different no doubt, only better in my humble opinion.
Until you discover a way to get large groups of humans to spontaneously organize themselves to build electric grids, water supply systems, hybrid automobiles, and of course basic office supplies, corporations are the best thing going. No other structure can organize the vast amounts of financial and human capital needed to efficiently run our modern economy(pre or post peak oil). In the future, look for those evil corporations to be the ones mass producing wind turbines, solar pv systems, and building up the electrified rail system. If you want to live in a world without corporations, be my guest... go live in a hole. I'll take my chances.
Until you discover a way to get large groups of humans to spontaneously organize themselves to build electric grids, water supply systems, hybrid automobiles, and of course basic office supplies, corporations are the best thing going. No other structure can organize the vast amounts of financial and human capital needed to efficiently run our modern economy(pre or post peak oil).
History has examples of Co-ops and governments doing both electric grids, water supply systems
I agree that corporations are not inherently evil! However, they are privately-controlled entities that have tremendous economic power. Such power can be easily misused, e.g. exerting undue influence on the democratic process through manipulation of public opinion by control of popular print and broadcast media; direct influence on decisions made by politicians (campaign finance, lobbyists,etc.). If such potential for the abuse of power is not checked, what will result is a symbiotic fusion of private economic power with a government corrupted by it. Such a perversion, when government of the people becomes a servant of private interests, can be regarded as fascism.
So, corporations are not inherently evil, but they have great power that must remain under the strict control of an open and transparent government of the people with a watchdog press to ensure everyone stays honest. The survival of true democracy depends on it.
RACHAEL
It seems your department doesn't
believe out new unit is to the
public benefit.
DECKARD
A humanoid robot is like any other
machine, it can be a benefit or a
hazard. If it's a benefit, it's
not our problem.
early draft,
"Blade Runner"
Moneyman wrote
"Adjust your expectations with reality.."
Han Solo - Well that's really the trick, isn't it?
The fantasy in so many of our Science Age creations is that we think we can keep things divided in their own little petri dishes, and that the 'Pure Profit' motive of this idealized corporate model of yours gets to live without any relationship, impact or responsibility towards the whole system that is around it and supports it. "The Environment IS the Economy"
Guess I'm having a Harrison Ford kind of day.. tomorrow will probably be a Ford Prefect day..
Bob
Corporations are used to gain advantage and to mitigate against consequences. They have been extremely effective in this, so effective that "they" have managed to secure government sanction to enhance these functions to the point were they are the only game in town, an anti competetive anti capitalist hegemony. If they were only "a human machine designed to make profits through commerce" there wouldn't be a problem, but the legal entity status of corportaions has allowed an elite to used them as a screen to act with impunity, citing "free market forces" as justification. I don't think you'd be able to find even a small piece of the "market" that hasn't been regulated in some way, often to the advantage of corporations and the people that control them.
*edited for spelling
exactly right
--
All these memories will be lost in time
like tears in rain
"as a student of business"
kinda says it all...
the fact is that a corporation - like a market - is a machine programmed for a single purpose... this is why you get the externalization of costs wherever possible... because they find the most efficient way of concentrating capital for the stockholders - that's their purpose... they are a structure for controlling the labour inputs on resources to "add value"...
the problem is that they find the most efficient mechanism for doing it within very simplistic programming - you don't have a great degree of granularity telling markets what to do - so because you cannot predict every possible idea and legislate for it you get myriad unintended consequences...
It's like the introduction of bio controls for pests - where they find the predator they bring in prefers the native flora and fauna to what it's supposed to eradicate, and becomes a bigger pest...
i am not sure what the items produced by corporations line of argument does for you... that's just a comment on how things work today
it is exactly because corporations are efficient at concentrating human shortcomings... for example a human shortcoming may be a certain amount of callousness but only a corporation and the efficient market system of decision making could come up with such end results as, for example, putting out a harmful product because the cost of litigation for the few cases of death is lower than the likely cost of refitting the product... because they concentrate these shortcomings they are a problem - they are worse than the worst psycopath in their behaviour but are protected in ways individuals are not, and they don't have the same vulnerabilities of individuals like keeling over and dying
--
All these memories will be lost in time
like tears in rain
"as a student of business"
kinda says it all... "
-Right... because those who have studied, have worked in, and who understand business clearly have nothing of value to add to an "evil corporation" thread.
My point is that for all of the shortcomings and all of the mis-steps, the world is still a better off with companies than we would be without them. I would venture to say that life as we know it wouldn't be feasible without corporations. For some, that may seem desirable, at least until they try to plow an acre with a mule and need a refill for their Viagra.
So... for all of those who have a deep hatred for the C-corp.... does anyone actually have a better idea, or do you just like to complain?
I think the better idea is for the government to do a better job of thinking long term. Its true that corporations are a great way to create jobs and wealth in general. The problem is that the concentration of wealth that goes to the investors and managers tends to take power away from the rest of society. I suppose that is partially a human failure. Unfortunately for us humans the result is that "externalizing costs" becomes things like global warming and the destruction of the Mississippi delta.
Yet with the citizenry generally hypnotized with advertising, dumb media and their own laziness (30% of Americans still think Iraq was responsible for the 9/11 attack)we will probably never have a government in this society that can create an environment for corporations to do more good than harm.
Yes, actually, I have a better idea.
To cut to the chase see an earlier post here and here.
We live in an industrial society. The structure and nature of those industries determine to a large extent the structure and nature of the society, and vice versa. All the TODders here are understandably ticked off that this world we live in is steaming for PO full speed with out a plan. This also holds for climate change, government ineptitude and the Growing inequality in the distribution of wealth. This is of course the reason for all the angst towards "Evil Corporations" as they are the dominant economic actors in the global economy.
A note, in fairness and in point of fact, quality of living has improved substantially since the advent of corporations. Quality of living has been rising for centuries, and the corporation was in important step, but it is not the end of the line.
To reiterate: PO, GW, inequality, government gridlock, etc. are not the problem, they are the result of the problem. The problem is our current modus operandi.
The solution is to change the nature of business, industry, societal organization. If we change the structure and nature of the actors in the system we change the overall system and we get different results.
I think the solution is to replace corporations with worker owned businesses. There are several different business models and legal structures to do this. The one I like best is still a corporation but without stock where ownership is vested in employment and thus non transferable.
The example I always give for this is the Mondragon Corporation. In essence worker owned businesses socialize ownership but retain the market environment. Changing the ownership structure changes the decision making process and converts a business from planning for a single bottom line (profit denominated in dollars) to planning for multiple bottom lines (profit, employee wellbeing, social cohesion, environmental integrity, etc.) The thing I like best about worker owned businesses is the daily practice with democracy and governance that is required when running your own business with several equal partners.
That's my two cents.
-Tim
PS Since the first half of the fossil fuel age is coming to an end tomorrow or the next day, the question is: What is going to replace it?
Nice post Tim.
My point above was that corporations are flawed models (in the sense that overall they benefit few and harm many), and not ones we should be promoting.
The worker-owned business you mention is one of many innovations that should be explored. The rigid thinking that keeps people's views ingrained in the status quo will lead to ever growing economic/social/environmental problems. We need to be open to large-scale change - otherwise we will continue merely to scramble to plug the million holes springing leaks in our dike.
"You can never solve a problem on the level on which it was created."
Albert Einstein
Thanks NZ,
First off, hyperlink correction from the above post: economic inequality
I agree with you on this. If we somehow solve peak oil, global warming and the war on terror, but we fail to change our mind set in any meaningful way then we will be faced with something else. Ocean collapse, peak phosphorus and top soil erosion on the environmental side of things, riots, crime and loss of community on the social and market instability, corruption and exploitation on the economic side of things.
We have to fundamentally restructure our mindset. I think the most direct way to accomplish this is by changing the ownership and structure of industry, the means of production. From that everything else will follow. I struggled for a long time with the notion of changing our mind set from the other end, be it media, government or individual. I worked with Indymedia, the Green Party, the IMF/WTO protestors but it never went anywhere. Indymedia is still marginal, the Green Party is in horrible shape, and the protesters mostly went on to work for the man.
In essence all the groups are defined by their enemies. To really change the world you have to build something, you have to be for, not against. So the conclusion: build something good and out compete you rivals, thus worker owned businesses.
Tim
MBA - Masterful Bu11sh1t1ng A$$h0le
Hi Substrate,
I used to agree with you, holding business majors in the highest contempt. The antithesis of all that was good and wholesome in this world. then I came to understand the wisdom of this quote:
“If you want a symbolic gesture, don't burn the flag; wash it.” -Norman Thomas
Business isn't the problem. The things businesses do, the way they operate is the problem. And I realized that to fix the problem I needed to get into business. To set things right I would need to drive the Masterful Bu11sh1t1ng A$$h0les out of town. The only way I can think do accomplish this is by building a better a better mouse trap, beating them at their own game. Which shouldn't be that hard. To the extent that modern business is flawed, it is unsustainable. And, after all by definition unsustainable things can't last.
So I need to build sustainable businesses, socially, environmentally, economically and in all other ways. I think worker owned businesses will come closer to that metric than corporations are capable of giving them the competitive advantage.
Tim
And nor should corporations be considered "persons" in the eyes of the law, and nor should money equal "speech".
All the priveleges, none of the responsibilities. T'was ever thus.
I don't even think they are always loyal to their stockholders in this day and age. Not every move made is to please the shareholders.
I think the corporations must make their shareholders happy enough, but ultimately are loyal only to themselves.
Corporations are run by and for the benefit of a small number of people in the upper management. They don't give a sh^%&^t about share holders, employees or anyone else. When times are good, the CEO and people under him take credit and pay themselves huge bonuses. When times are bad they don't take the blame and fire people at the bottom. When times are really bad they pay themselves huge "retention bonuses" because obviously they don't want to lose "precious talent" which is needed to steer the corporate ship out of troubled waters :-)
Either way, regardless of what happens, they win!
People in upper management of large corporations are almost invariably also shareholders in the company. Why? Because for-profit corporations under the U.S. legal system are hemmed in by case law that requires that the corporation hold profit and the bottom line above all else, even above the public good.
People in upper management of large corporations are almost invariably also shareholders in the company.
Yes, but unlike regular shareholders they don't buy stock in the open market with their life savings. The compensation committee (or board of directors) - which consists mostly of their golf buddies - grants them stock and stock options. There is tremendous incentive for the upper management to do whatever it takes to move the stock price up in the short term & cash out even if it is harmful for the corporation in the long term. If you don't understand what I am saying just talk to any employee or ex-employee of Lucent Technologies.
The problem is not that corporations try to maximize profits. The problem is that:
1. The focus is very short term.
2. A very large CEO/peon compensation ratio (in US) compared to other countries.
3. The CEO and upper management make a large amount of money and have good job security even when they perform poorly.
4. Even when they get fired for poor performance, they get paid an obscene amount of money as "severance package" (a la the ex-CEO of Home Depot).
Hence my contention that corporations are run by and for the benefit of upper management.
Along those lines...
Employees sue Countrywide over 401k plan
http://www.businessweek.com/ap/financialnews/D8RK22JO0.htm
Enron lite.
Yes, yes, yes. Except for it's for the primary benefit of the major stockholders, many of whom are in upper management.
But it's also true that power has its perks.
It's good to be the king.
Anyone who thinks that the executives and board of a publicly held corporation acts ONLY in the interests of a broad shareholder class is off their rocker, and has certainly never sat on the board of a public company
--
All these memories will be lost in time
like tears in rain