# A Company's first duty should be to the Staff & Community, not the Shareholders **URL:** \ **Category:** Great Debates\ **Created:** [December 17, 2008, 2:50pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560 "2008-12-17T14:50:36Z")\ **Posts on this page:** 20\ **Page:** 6
**Author:** ![Ruminator](https://avatars.discourse-cdn.com/v4/letter/r/b9bd4f/32.png) [@Ruminator](https://boards.straightdope.com/u/Ruminator)\ **Post date:** [December 19, 2008, 2:44pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/101 "2008-12-19T14:44:44Z")
> [@Martini\_Enfield](#): > > But, if I ever found a company, I’ll be making sure … that the company will look after the staff first, Even though it seems like a lot of folks here on SDMB have torn apart your idea, in reality, most of the 6 billion people out in the world actually think like you do. Imagine recruiting one hundred Martini Enfields – they all think just like you – employees come first. Now 20 of those MartinEnfields are investors. And 20 MartinEnfields more are executives/managers. And the rest, 60 MartinEnfields are “staff”. Here is the puzzle for you to think about: Why haven’t those Martin Enfields created such a company? Why don’t they exist on the list of Fortune 1000? Why are none of your local businesses like restaurants and grocery stores created via the MartiniEnfield method? What’s the missing ingredient to make your method work? Mathematically, the population of MartiniEnfields outnumber SamStones by a huge margin. So why are all companies created via the SamStone method and zero done via MartiniEnfield method? Have you thought about this puzzle at all? ---
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [December 19, 2008, 2:51pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/102 "2008-12-19T14:51:36Z")
> [@Martini\_Enfield](#): > > Note I never said that I thought the idea was workable, just that it would be nice if things worked that way. Well, we agree then that the world would be a better place if people were more not so selfish and people were more sympathetic to other people’s problems. Not only people close to them but humanity as a whole. > [@Martini\_Enfield](#): > > And yes, I’m well aware of the parallells to Communism (looks great on paper, doesn’t work in practice). The problem is that if it looks great on paper you are not analysing it right. If you know what to look for it does not look great of paper. F. Hayek explained it very well: the free market acts as a means of transmission of information and that is destroyed in a centrally planned economy. No matter how nice or benevolent people are in a communist regime it cannot work > [@Martini\_Enfield](#): > > FWIW, I’ve been called a Fascist often enough for me to think there’s probably some truth in it. Just be glad I’m not in charge of a country. 😉 Hayek also noted that while the intentions of those who defend central planning are good, in practice their plans can only be implemented by a ruthless dictatorship. His analysis “on paper” has been proven correct in practice. I highly recommend “the road to serfdom” as I have done many times before as well as [“The Use of Knowledge in Society”](http://www.google.com/search?hl=en&q=%22The+Use+of+Knowledge+in+Society%22+hayek). I have no doubt Fidel Castro did not set out to ruin Cuba. I am sure he wanted to make it a better place for Cubans and he did the very best he could. It’s just a shame it’s crap. ---
**Author:** ![Algher](https://avatars.discourse-cdn.com/v4/letter/a/3d9bf3/32.png) [@Algher](https://boards.straightdope.com/u/Algher)\ **Post date:** [December 19, 2008, 4:10pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/103 "2008-12-19T16:10:42Z")
> [@erislover](#): > > Force you to share responsibility for ownership? :rolleyes: Force me to have a higher level of responsibility for ownership. I already HAVE responsibility, in the form of the investments that I have made. If the firm goes under, I LOSE that money. Why do you not see that as already taking responsibility? Again - do you want the police going door to door to the shareholders of Polaroid (who just declared bankruptcy)? Should every shareholder in Polaroid, who have already lost money on their investment, be required to hand over the keys to their car since Polaroid is going under? Is that what you are proposing? ---
**Author:** ![Rand\_Rover](https://avatars.discourse-cdn.com/v4/letter/r/db5fbb/32.png) [@Rand\_Rover](https://boards.straightdope.com/u/Rand_Rover)\ **Post date:** [December 19, 2008, 4:17pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/104 "2008-12-19T16:17:44Z")
> [@Sam\_Stone](#): > > Let’s get back to basics to illustrate what an incredibly bad idea the OP is expressing. > > The drive for profits is the drive to make products better and cheaper than your competitors do. A corporation or any other business does not exist to be a welfare agency or to be a source of jobs. It exists to take ideas for products and implement and sell them to people who want to buy them. That it needs to pay people wages and give them careers and benefits is a result of the invisible hand, and not the prime motivation of the business. > > Imagine how this would work in practice. You notice your market share falling. If you are focused on profits, what do you do? You perhaps redouble your efforts to regain market share. But maybe you’re just not good enough - your competitors have superior products or superior processes for making them, and people are increasingly choosing those products over yours. > > The drive for profit leads you now to downsize. You can’t make profits supporting a workforce sized for a market share you no longer have. So you lay them off. You close offices, you shrink and regroup and rebuild and try to improve starting from a more sustainable corporate footprint. > > Is this a bad thing? Not on your life. Not for society as a whole. Those workers you laid off were not productive in the job they held, and now they are free to seek other, more productive work. Other businesses with ideas can hire them and add value to the economy elsewhere. Ultimately, this is good for the workers, because when workers are employed in jobs where they are more productive they tend to earn more money and be more satisfied. But most importantly, all of this churn drives the economy towards the Pareto-optimal path. This is why capitalism is so good at building the wealth of nations. > > In practice, if you decided you were going to favor the workers over profits, you’d soon find you have neither. Other businesses would out-compete you. Other businesses would be more attractive to investment. Customers don’t care about your employee’s retirement plan - nor should they. They care about maximizing the value of their own dollar and buying the best products they can with their money. And it’s best for society if they do that. We need customers to discriminate objectively on the merits of the goods they buy, if we want to send signals to corporations that they must provide the best products they possibly can to find a market. > > Now let’s suppose you passed a law forcing all business to ‘put the employee first’. What would be the result? First, it would be impossible to manage and police. But let’s say you could. Businesses are now all protecting their employees and putting profits last. What would be the end result? Inefficiency. People employed in jobs where their skills are not utilized to their best advantage. Products would be shoddier and more expensive. The general standard of living would decline. It would be difficult to find investment money when you’re essentially asking investors to give to charity. > > Just how much room do you think there is in ‘profits’? How much more generous can companies be? Let’s take a look at Wal-Mart, which some would accuse of being the most rapacious, bottom-feeding corporation out there. Surely they’re just swimming in money, right? They could easily afford to treat the employees much better, right? > > In the last quarter, Wal-mart made $3.14 billion in profit. That represents 77 cents per share, and with a share at $56, that represents a whopping 1.4% of return on the money. An annualized rate of 5.6%. There is just not a lot of room in there to ‘take money out of profits’ before your company becomes completely unattractive to investors. But let’s say you did. Let’s give all $3.14 billion to the employees. How much do they get? Well, there’s about 2 million of them. That’s about $1500 each. $6,000 per year. And if the company did that, it would have no profits at all and cease to operate. > > Corporations don’t run lean ships because they’re greedy - they run lean ships because they _have to_. The pressures of the market drive profits down to the point where the return on investment is slightly greater than the cost of the additional risk taken on by investing in something less stable than government bonds. Companies that make ‘excess profit’ usually find themselves being eaten by other companies more willing to work for a little less. So we’re currently not far from exactly where we should be with respect to overall corporate profits. Anything less, and corporations would become less viable. > > And of course, we live in a global economy. Unless you can get the whole world to play this game, the result would be a decline in American competitiveness, and ultimately a much lower standard of living as consumers increasingly turn to exports to find value. Are you going to erect trade barriers to prevent that? If so, kiss another 20% of GDP goodbye. > > Finally, if you’re talking about forcing businesses to do this, guess what that makes you? A fascist. The difference between fascism and communism is that communists want to own the commanding heights of the economy and run them, while fascists are content to let a private corporate sector retain ownership of the means of production - so long as they do everything the government directs them to do. Nice post, sir. I wish I had your patience with the likes of the OP. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [December 19, 2008, 5:01pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/105 "2008-12-19T17:01:43Z")
> [@Algher](#): > > Force me to have a higher level of responsibility for ownership. I already HAVE responsibility, in the form of the investments that I have made. If the firm goes under, I LOSE that money. Why do you not see that as already taking responsibility? I have explained this already in this thread. > [@](#): > > Should every shareholder in Polaroid, who have already lost money on their investment, be required to hand over the keys to their car since Polaroid is going under? I have answered this question already in this thread. > [@](#): > > Is that what you are proposing? I have actually already taken rather great pains in this thread to explain what I am proposing and why I am proposing it. ---
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [December 19, 2008, 5:07pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/106 "2008-12-19T17:07:41Z")
Yup. Pretty much everything has already been said in this thread. Now everybody can go bang their heads against the wall in frustration in their respective corners. At least we’ll keep Aspirin and Tylenol in business. ---
**Author:** ![Algher](https://avatars.discourse-cdn.com/v4/letter/a/3d9bf3/32.png) [@Algher](https://boards.straightdope.com/u/Algher)\ **Post date:** [December 19, 2008, 5:31pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/107 "2008-12-19T17:31:12Z")
> [@erislover](#): > > I have explained this already in this thread. > > I have answered this question already in this thread. > > I have actually already taken rather great pains in this thread to explain what I am proposing and why I am proposing it. You may have taken pains, but your explanations have not sunk in. This is why I have asked a few times of those of you who are proposing the destruction of modern capitalism to walk us through a real world example. Find a company that went under, that did not have the assets to pay off those it owed. Tell me EXACTLY how you would allocate the remaining debt to the shareholders. Your theories sound nice on paper, and in the comfort of a dorm lounge or coffee shop. I posit that they are impractical and unworkable in the real world. If you want to convince me that your system is workable, you need to show me an example instead of just posting :rolleyes: at me. There are many things that stand in the way of a system that would remove the corporate shield: Multiple levels of ownership. A share of stock may be owned by a mutual fund, that has shares owned by a pension fund, that represents thousands of current workers and retirees. Tell me how your system would account for this. Different time periods of ownership. One shareholder may have held shares for 20 years, another for 20 minutes. Who takes the fall? Tell me how your system would account for this. Allocation of liability. Under US law in many places, the liability is NOT always equally allocated, and instead goes to those able to pay. Would your system adjust this, or would you just keep collecting from shareholders who could pay? Tell me how your system would account for this. Now - those stand in the way of just collecting. You will also raise the risk level of investment even higher than it is today. This will make it very expensive to invest, which means fewer jobs out there. Finally, you and your _fellow travelers_ in the thread seem to be under the mistaken impression that a job is worth more than what the investors have put in. I have put in many many thousands into my company. If it shut down tomorrow, I would lose all of that money. My employees would just need to find a new job. It would take most of them 2-3 months at MOST to get a new position, less if they are willing to take a pay cut (I pay well, and I provide benefits). It would take me several years to get back my investment (once I took a new job as well). Yet, you seem to want me to risk even MORE. If that is the case, I would have never helped get this firm off of the ground and I would have stayed in Academia. The jobs created by me (and my partners) would not exist. The increase in revenue and profits from my customers would not exist. The additional jobs created by my customers to use my software would not exist. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [December 19, 2008, 5:34pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/108 "2008-12-19T17:34:28Z")
> [@John\_Mace](#): > > INTC currently pays a 3.6% dividend. Up significantly because of the drop in share price. Not sure when the dividend started, but I think at least a decade ago. There wasn’t one when I worked there, about a decade ago. MSFT pays a dividend also now, but this happened because it was sitting on so much cash there was pressure to give some back. INTC also, I suspect. However there was no dividend for either even when they became market dominators, and there isn’t a dividend for a lot of tech companies even now - or even during the bubble. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [December 19, 2008, 5:40pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/109 "2008-12-19T17:40:34Z")
> [@Algher](#): > > Nonsense. Companies fund growth through additional sales of shares, the value of which are based on value returned to shareholders. Without owners, the companies WOULD NOT EXIST. It happens, but when companies do this it dilutes the value (ownership stake) of the current shareholders, so it is not a popular strategy. Growing through reinvestment of profits works a lot better - assuming there are profits. If there aren’t any, then you don’t want invest in growth. Also, if there are no profits, and your share price is down, going to the market for another offering isn’t going to work very well. This does happen all the time for pre-IPO start-ups, where the VCs invest more money and get a bigger stake. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [December 19, 2008, 5:56pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/110 "2008-12-19T17:56:29Z")
> [@Sam\_Stone](#): > > In the last quarter, Wal-mart made $3.14 billion in profit. That represents 77 cents per share, and with a share at $56, that represents a whopping 1.4% of return on the money. An annualized rate of 5.6%. There is just not a lot of room in there to ‘take money out of profits’ before your company becomes completely unattractive to investors. But let’s say you did. Let’s give all $3.14 billion to the employees. How much do they get? Well, there’s about 2 million of them. That’s about $1500 each. $6,000 per year. And if the company did that, it would have no profits at all and cease to operate. What Sam is not telling you that in WalMart’s industry segment a 1.4% margin is damn good. High volume resellers. like WalMart and supermarkets and oil companies, typically make small margins. If MSFT had a 1.4% margin they’d be in deep doodoo, I suspect WalMart’s is better than industry norms. It’s not all from screwing their workers - they are also very good at running their supply chain and data mining. The assumption here is that more money to the workers comes right out of profit with no benefit. I’m not against a screw the workers business model, so long as my taxes aren’t subsidizing it. But a few more pennies to workers might get people like me into the stores. That might allow WalMart to sell higher margin product more successfully - remember how their attempt at selling better clothes crashed and burned? Having comparable product while underselling the higher end chains might make them more money. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [December 19, 2008, 6:08pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/111 "2008-12-19T18:08:58Z")
> [@Voyager](#): > > What Sam is not telling you that in WalMart’s industry segment a 1.4% margin is damn good. High volume resellers. like WalMart and supermarkets and oil companies, typically make small margins. If MSFT had a 1.4% margin they’d be in deep doodoo, I suspect WalMart’s is better than industry norms. It’s not all from screwing their workers - they are also very good at running their supply chain and data mining. > > The assumption here is that more money to the workers comes right out of profit with no benefit. I’m not against a screw the workers business model, so long as my taxes aren’t subsidizing it. But a few more pennies to workers might get people like me into the stores. That might allow WalMart to sell higher margin product more successfully - remember how their attempt at selling better clothes crashed and burned? Having comparable product while underselling the higher end chains might make them more money. That isn’t a 1.4% margin. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [December 19, 2008, 6:18pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/112 "2008-12-19T18:18:56Z")
> [@Algher](#): > > You may have taken pains, but your explanations have not sunk in. This is why I have asked a few times of those of you who are proposing the destruction of modern capitalism to walk us through a real world example. Perhaps you are confusing me with someone else holding some other position. I am talking about assigning liabilities to those who stand to receive the benefits. This is actually when capitalism works best. Externalities are _problems_. Perhaps there is some other way apart from my proposal to deal with them. I’m all ears. > [@](#): > > Your theories sound nice on paper, and in the comfort of a dorm lounge or coffee shop. I posit that they are impractical and unworkable in the real world. Which theory, exactly? > [@](#): > > If you want to convince me that your system is workable, you need to show me an example instead of just posting :rolleyes: at me. I’m sorry but when you suggest I’m proposing a repo man show up at someone’s door there’s little other response that’s more appropriate. > [@](#): > > Multiple levels of ownership. A share of stock may be owned by a mutual fund, that has shares owned by a pension fund, that represents thousands of current workers and retirees. Tell me how your system would account for this. I have not proposed a specific system. I have suggested that the stock market, as a first approximation, represents an excellent mechanism for liabilities that shareholders are currently shielded from. Implimenting this is beyond the scope of this thread. I am also interested in epistemology but creating an entire dissertation on epistemology is beyond the scope of a message board, even though I will happily engage you on what it means to know something. That said, there are plenty of analogies in ownership of anything else that includes liabilities to draw on. I have done so in this thread, suggesting things like insurance, class-action suits distributing funds, and so on. Perhaps in practice it means that a person must have some kind of credit rating to acquire stock, and credit ratings of businesses would be more clear. Honestly, it is not for me to _dictate_ how the free market should operate. I only point out that a liability sheild is antithetical to the idea of a free market. > [@](#): > > Different time periods of ownership. One shareholder may have held shares for 20 years, another for 20 minutes. Who takes the fall? Tell me how your system would account for this. This is a good question. Common sense tells me it matters who owns the stock when the judgment was rendered, except in cases of conspiracy. > [@](#): > > Allocation of liability. Under US law in many places, the liability is NOT always equally allocated, and instead goes to those able to pay. Would your system adjust this, or would you just keep collecting from shareholders who could pay? Tell me how your system would account for this. This kind of technical detail really is outside the scope of a post on a message board, and I find it completely unreasonable for you to even ask. Correcting market problems like externalities is not something one just does and dusts off one’s hands. Surely you know this. Whatever system would be implemented to account for this would go through many iterations. For a first pass I have already suggested that it be allocated based on proportion of ownership, and gave a specific example. > [@](#): > > Now - those stand in the way of just collecting. You will also raise the risk level of investment even higher than it is today. This will make it very expensive to invest, which means fewer jobs out there. It’s as if you are somehow under the impression that if shareholders aren’t assuming this burden, the burden doesn’t exist. > [@](#): > > Finally, you and your _fellow travelers_ in the thread seem to be under the mistaken impression that a job is worth more than what the investors have put in. I doubt you have given my posts, or **clairobscur** ’s posts (who I seem to agree with in terms of problems, if not solutions), serious consideration. > [@](#): > > I have put in many many thousands into my company. If it shut down tomorrow, I would lose all of that money. My employees would just need to find a new job. It would take most of them 2-3 months at MOST to get a new position, less if they are willing to take a pay cut (I pay well, and I provide benefits). It would take me several years to get back my investment (once I took a new job as well). Yet, you seem to want me to risk even MORE. If that is the case, I would have never helped get this firm off of the ground and I would have stayed in Academia. The jobs created by me (and my partners) would not exist. The increase in revenue and profits from my customers would not exist. The additional jobs created by my customers to use my software would not exist. Blah blah blah. Somehow all other economic activity happens without such extreme liability shields but you are free to continue your chicken little parade as if none of it were true. It is true, though, and anyone willing to look around can see so. ---
**Author:** ![davidm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidm/32/225_2.png) [@davidm](https://boards.straightdope.com/u/davidm)\ **Post date:** [December 19, 2008, 6:22pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/113 "2008-12-19T18:22:13Z")
> [@Martini\_Enfield](#): > > …Basically, I think that Companies should, if they are turning a profit, not be cutting jobs or slashing expenditures just to keep the shareholders happy… > > When I used to work for A Well Known Electronics Retailer, we were constantly faced with our wages budgets being cut so the company would meet the profit targets that the shareholders were promised and they’d get their dividends or whatever was in it for them. > > I, on the other hand, ended up having to do twice as much work for the same pay. Why? So the shareholders could collect a dividend and the company could make some insane profit that would contain far too many zeroes in the number to be easily readable at first glance… Very few companies are going to do this out of the goodness of their heart. This is what unions are for. ---
**Author:** ![Algher](https://avatars.discourse-cdn.com/v4/letter/a/3d9bf3/32.png) [@Algher](https://boards.straightdope.com/u/Algher)\ **Post date:** [December 19, 2008, 6:24pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/114 "2008-12-19T18:24:40Z")
> [@Dangerosa](#): > > That isn’t a 1.4% margin. Wal-Mart’s profit margins: Q3: 3.19% Last Year: 3.51% Last 12 months: 3.47% 5 Year Average: 3.63% Dividend Yield is 1.72% (All of this from the Wall Street Journal online) ---
**Author:** ![Algher](https://avatars.discourse-cdn.com/v4/letter/a/3d9bf3/32.png) [@Algher](https://boards.straightdope.com/u/Algher)\ **Post date:** [December 19, 2008, 6:32pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/115 "2008-12-19T18:32:15Z")
> [@erislover](#): > > This kind of technical detail really is outside the scope of a post on a message board, and I find it completely unreasonable for you to even ask… In the midst of continued, ah - you call it blah blah blah, sits this nugget. You have a theory, but you are unwilling to discuss its application. :rolleyes: ---
**Author:** ![The\_Flying\_Dutchman](https://avatars.discourse-cdn.com/v4/letter/t/9fc348/32.png) [@The\_Flying\_Dutchman](https://boards.straightdope.com/u/The_Flying_Dutchman)\ **Post date:** [December 19, 2008, 8:03pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/116 "2008-12-19T20:03:53Z")
> [@Sam\_Stone](#): > > In the last quarter, Wal-mart made $3.14 billion in profit. That represents 77 cents per share, and with a share at $56, that represents a whopping 1.4% of return on the money. An annualized rate of 5.6%. There is just not a lot of room in there to ‘take money out of profits’ before your company becomes completely unattractive to investors. But let’s say you did. Let’s give all $3.14 billion to the employees. How much do they get? Well, there’s about 2 million of them. That’s about $1500 each. $6,000 per year. And if the company did that, it would have no profits at all and cease to operate. > > Corporations don’t run lean ships because they’re greedy - they run lean ships because they _have to_. Lets take a look at the other avenue of Walmart stockholder return. Walmart opened in 1970 at $16.50 per share. After numerous stock splits up to and including February 93 where the split stock was valued at $34.00, an original 100 shares, worth$1650 was now worth [$3,500,000.](http://books.google.ca/books?id=haF1pOaAxNwC&pg=PA348&lpg=PA348&dq=walmart+%22stock+price%22+history&source=web&ots=lRz-UxtVyP&sig=CF48DOIdI3QE1p-3U5a-7G080V8&hl=en&sa=X&oi=book_result&resnum=4&ct=result#PPA348,M1) The stock split again in 1999 and is now worth $56.00. Doing the math, it comes out that $1 invested in 1970 is now worth $7000.00. That’s one hell of a rate of return I’d say that is greedy given the Walmart reputation with regard to its workers. ---
**Author:** ![Happy\_Fun\_Ball](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/happy_fun_ball/32/17664_2.png) [@Happy\_Fun\_Ball](https://boards.straightdope.com/u/Happy_Fun_Ball)\ **Post date:** [December 19, 2008, 8:22pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/117 "2008-12-19T20:22:01Z")
> [@Algher](#): > > You have a theory, but you are unwilling to discuss its application. **erislover** , please believe me that I am not saying this to be snarky, but this is how I read it also… You have not given any detail in this thread how you think the system should be changed, at least in any way that is coherent to me. What do you think we should do to make the shareholders (especially small shareholders and those investing through vehicles like mutual funds and 401ks) responsible for their investment? I thought **Algher** ’s questions very pertinent… > [@erislvoer](#): > > Somehow all other economic activity happens without such extreme liability shields but you are free to continue your chicken little parade as if none of it were true. It is true, though, and anyone willing to look around can see so. Like where? What activity are you talking about? As an employee of a company, neither I nor my coworkers are on the hook if my company is negligent. Even if I, personally, design a widget that electrocutes people by the thousands due to my ineptness, I will be shielded from the consequences. I will most likely lose my job (and may have trouble find work in the future) and my employer may go under, but no one will take my house. If I start a business the only thing I will be on the line for is the money I put into the business. If I put the value of my house in the business (say as collateral for a business loan), I could lose my house, but only if I have tied it the business. This is the way it should be or nobody would start a business… ---
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [December 19, 2008, 9:07pm UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/118 "2008-12-19T21:07:35Z")
> [@Ruminator](#): > > Even though it seems like a lot of folks here on SDMB have torn apart your idea, in reality, most of the 6 billion people out in the world actually think like you do. > > Imagine recruiting one hundred Martini Enfields – they all think just like you – employees come first. Now 20 of those MartinEnfields are investors. And 20 MartinEnfields more are executives/managers. And the rest, 60 MartinEnfields are “staff”. Here is the puzzle for you to think about: Why haven’t those Martin Enfields created such a company? Why don’t they exist on the list of Fortune 1000? Why are none of your local businesses like restaurants and grocery stores created via the MartiniEnfield method? What’s the missing ingredient to make your method work? > > Mathematically, the population of MartiniEnfields outnumber SamStones by a huge margin. So why are all companies created via the SamStone method and zero done via MartiniEnfield method? Have you thought about this puzzle at all? This isn’t so clear cut either. Companies depend and need good workers and need to keep them happy, at least as happy or happier than the competition, to be successful. Contrary to what many people think, companies do not fare well by exploiting their workers to the max. Companies with high turnover are generally not successful companies. The same as companies need satisfied customers. Screwing customers is generally bad business practice. So, it comes to coincide that the interest of the owners of the company is to have satisfied employees and satisfied customers and so the owners prosper when the other two parties are satisfied. It is no coincidence. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [December 20, 2008, 12:29am UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/119 "2008-12-20T00:29:57Z")
> [@Martini\_Enfield](#): > > Erm no, we can’t. > > The housing situation is completely different here in Australia than it is in the US. But thanks for sounding like my Mum, who really does think money grows on trees and that my wife and I should be able to spend our weekends in Fiji, and that we can pull $400,000+ out of thin air to buy a house and not have to live on 2 minute noodles for the rest of our lives to make the repayments. While I understand the US has a better ratio of wage to housing costs the opportunity of house ownership is a function of a process involving leverage. Welcome to home purchasing 101. I taught this to a couple of people who are now homeowners. Everyone pays for a house whether they own it or not. Owners pay the bank directly and renters make the mortgage payment to the owner. In the US, rental fees are usually higher than the mortgage payment. The difference between renter and owner is the down payment. The value of the house and the value of rent paid can be leveraged in a number of ways. My father did it by using his labor to build his first house. He leveraged his free time against the labor costs of the house. He was able to mortgage the construction material. The same principle of labor can be applied to the purchase of a distressed property. That can be done in a number of ways either through a bank or as a renter/purchaser who agrees to improve a property in return for a percentage of the rent applied toward principle. I leveraged my “rent” money by purchasing a used mobile home. It was cheaper than renting so I was able to bank the difference and used it to buy company stock at a discount through my company. By doing this I was able to convert most of my living expenses into stable assets. The mobile home was already depreciated in the market so I actually sold it for more than I paid for it. I further leveraged the value of the house I bought by building a garage. Before you argue that you can’t build a house consider that my father did it with a high school education and the most basic of tools. I had a better collection of tools at age 16 then he did when he died. While I did learn some repair skills from my father I learned construction skills by helping my friends work on their houses. I looked it as a free education from a school that served pizza and beer to its students. I also got free labor in return when I needed help on my projects. And this same process of leverage can be applied to any goal. I learned to fly by helping friends restore an airplane, which, I eventually bought shares of. They taught me to fly while I worked on their plane. The plane was built at a vocational school so they saved on mechanics fees. To save money on plane rentals I joined a flying club to reduce the cost. I volunteered as plane captain so I got to fly free while ferrying the plane around for maintenance. My actual flying costs were probably half what it would cost if I had just rented a plane. It’s all about setting a goal, and working towards it. I’m not a highly motivated person. I did all of the above while working my way through school. None of it was complicated or required anything that wasn’t taught in primary education. In fact I would say that none of the math involved exceeded the skills of a 4th grader. The most technical thing I ever used was a business calculator that would calculate payments. ---
**Author:** ![Ruminator](https://avatars.discourse-cdn.com/v4/letter/r/b9bd4f/32.png) [@Ruminator](https://boards.straightdope.com/u/Ruminator)\ **Post date:** [December 20, 2008, 12:33am UTC](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560/120 "2008-12-20T00:33:43Z")
> [@sailor](#): > > Companies depend and need good workers and need to keep them happy, at least as happy or happier than the competition, to be successful. Contrary to what many people think, companies do not fare well by exploiting their workers to the max. I don’t think any sensible owner exploits their workers to the max. Companies like Costco, The Container Store, and SAS Institute are often cited as places that treat their employees very well. A few years ago ,the tv show “60 Minutes” had a segment on SAS Institute and all the generous benefits they offer employees. However, even at those well-rated companies, there should be no illusions as to who has #1 priority – it is still the owners not the employees. Martini Enfield is proposing a system that even those companies do not (and cannot) do. [Previous page](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560.md?page=5) [Next page](https://boards.straightdope.com/t/a-companys-first-duty-should-be-to-the-staff-community-not-the-shareholders/477560.md?page=7)