Employee stock options are not a new idea, obviously.
If the story is "every company should offer stock options to its employees", then sure, that's often a good business plan. The reason not every company does it to all its employees is probably that for those employees, it wouldn't affect incentives much and it would make payment subject to the vagaries of the stock market. Your barista at Starbucks is not going to increase the stock price no matter how well he fills your order; at the same time, maybe he wants to know how much he takes home every day.
If the story is "it should be the law that every company offers stock options", then that would be a dumb law for the reasons above.
If the story is "all companies must be fully employee-owned workers' cooperatives", then first, note that you are calling for a restriction on workers' rights: they have to be given part of their pay as stocks, and they can't sell them freely. Second, that will probably make markets work worse. There's a large economics literature on this: worker-owned cooperatives have not taken over the market, although they are an available institutional form, because (a) they find it hard to raise capital (b) they tend to make decisions that maximize worker welfare rather than profit, e.g. they won't sack underperforming divisions or expand in ways that dilute existing workers' stake.
Then maybe "taking over the market" is a bad metric, and we should be optimizing for making a company that makes the workers' lives better. The US cultural bias is showing here, as it's assumed that profit is above all else, and a company that forgoes profit to make workers happier must thus be less good.
The vast majority of people in companies are workers. Let's stop optimizing for owner wealth and start optimizing for worker happiness instead.
> The US cultural bias is showing here, as it's assumed that profit is above all else
I asked my Greek teacher what they biggest change she experienced moving to the US was, and she said that in Greece, her community prioritized happiness above all else, but everyone she met in the US prioritized making money.
I also asked her what the financial crisis was like in Greece, and she said that you couldn’t find an empty seat at a taverna in her village on the weekends. They barely had any money, and few around her were employed, but they had certain priorities.
Meanwhile in the US, I had a teacher condescendingly tell me that the Greeks were lazy (ignorant of the history that led to 2008). It can be hard to see through certain cultural biases. Particularly when the primary goals are so different.
I find that people often put on rose colored glasses when talking about the "old country," myself included. It is a little ridiculous to think that Greeks don't prioritize making money over some nebulous "community happiness"'
> It is a little ridiculous to think that Greeks don't prioritize making money over some nebulous "community happiness"'
She said that the people of her community prioritized happiness, not that the people prioritized community happiness. That might, for example, mean working less to enjoy more free time at the cost of maximizing profit. And, indeed, we can see in the data that the average worker in Greece takes 9 more vacation days each year as compared to their American counterparts.
According to OECD data Greece workers work the most hours in the EU, and in most years also more than American workers[1]. So by that metric they prioritize happiness less than most others?
Or, perhaps, it isn't the happiness the person was referring to. After all, it was explicitly marked as an example, not what the person said. It could be that workers in Greece choose fun, but low paying, jobs to maximize happiness. Or maybe it is something else entirely.
I'd assume that is because they take on jobs that they'll be happy with, instead of what ever job makes the most money. If you're content with what you do, you can do it sustainably for the rest of your life, if your only motivation to do your job is the money, then you'll burn out and retire early.
Not the case. People working in say fast food in Greece have 6 workday weeks (their weekends are just 1 day per week). Doubt people are more happy cleaning restaurant toilets in Greece vs the same toilets in US.
So if they work less hours than others it's because they prioritize happiness (grandparent's post), and if they work more hours than others it's alsmo because they prioritize happiness (your post)?
The grandparent post was clearly stated as a hypothetical, so there is no expectation of it having any bearing in reality. However, what does seem to stand up to reality based on what data is available is that the people in Greece work more hours, but also take more days away from work.
Which may suggest that the "American way" is to work fewer hours per day, and then try to cram in some fun after work, whereas the Greeks allow themselves to delve into more fun over the span of entire days instead of short spurts. It is possible that more happiness is derived when one is able to enjoy themselves in larger blocks of time, even if the total quantity on a time-unit basis ends up being the same as anyone else. That would support both scenarios in the comments, even if they seem contradictory on the surface.
But, as with earlier comments, this is all based on hypotheticals for the sake of illustration. There is no indication of what the speaker from the greater thread was actually talking about.
Happiness. What hell is it even? It means nothing.
Why? Because I am the most happy when working at a high paying job with loots of interesting problems to solve.
I would be the least happy working at a high paying job with nothing to do.
Happiness is a comparator, not a number. Money on the other hand can be counted, and thus can be measured. I am 100% sure every Greek ever would be more happy with more money given nothing else changed. Only somebody who found happiness through suffering would ask for less, and be more happy with less.
All of that is "I" and "me", not everyone. Happiness isn't meaningless, it just appears that you can't internalize someone else's internal state and understand how they might achieve happiness a different way than you.
> Money on the other hand can be counted, and thus can be measured.
Not really. "1 money" is just a promise to deliver 1 unit of value in the future. But what characterizes the unit? What is the difference between one unit of value and two units of value?
In reality, we don't really know. It's a continual quest to try and figure that out and it changes on a whim.
Pretty much every Greek that I have met (my father included) did it for a better future (money, no future with the military junta, american base left later.)
Plenty of Greeks have no interest in going back because they want the "American" life, but there's no question you ate better in the village, had more community, or had a sense of history - what you didn't have was more than ~35k euros a year, if you were lucky.
A philosophical question is whether one could have it all?
Maybe the relative poverty fosters that kind of culture, and a high earning society necessarily becomes atomized, or perhaps atomized societies fosters high earning.
My dad was in the AF, and we rotated back and forth between the US and Europe. A friend of his married a British woman while stationed there, and took her back to the States when the tour was over. She endlessly complained about the US, and how Britain was so much better.
Eventually, they were rotated to Germany. As soon as they arrived, she was off to England. 6 weeks later, she was back, and did not complain about the US again.
My family did two tours in Germany (tour as in being stationed there by the military). If you're a military family, the military will move you all around the world.
> her community prioritized happiness above all else, but everyone she met in the US prioritized making money.
I'd bet that she was wealthy relative to the average Greek, but was perceived as "regular" because they are middle class relative to the rest of the west. The wealthy in the the US can prioritize happiness above all else. On average, Greeks works the longest hours in Europe, which is more than the average American.
As a Greek, a) lots of people lost their jobs during the crisis, could barely make ends meet or even committed suicide; those people certainly didn't fill the taverns. B) It is true that Greeks won't cut on food/going out as readily as others.
People in Greece certainly don't prioritize happiness instead of making money. There was a clear shift where Greeks became more and more unhappy after the (still ongoing) crisis. No1 problem is financial insecurity; as a resident (MD) I work 70-80hrs/week, for less than 7€/hour. Prices are comparable with rich EU countries.
Thanks for giving perspective from an unprivileged position. I have similar stories where people with money create national traditions of being together to celebrate festivals, family events together with friends and families and in general prioritize family over jobs. Poor people seems to have no such traditions they will stay put in whichever town/city they are stuck in their low paying jobs.
People who want to make money above all else are pursuing that because they think that will make them happy. It’s just their idea of the path that will get them to happiness. They see Mark Zuckerberg wakeboarding at his Lake Tahoe retreat and think, ‘That’s happiness — having billions of dollars, not having to worry about meeting basic needs, being able to do what you want.’
Forget the Mercedes. Money won't bring you happiness and neither will a Mercedes, but in case of illness or living discomfort (not from overwork but from other stuff out of your control, like needing physiotherapy, braces, prosthetics, dental implants, or living in a rough, loud, polluted neighborhood etc) you'll have a much easier time taking care of yourself and escaping discomfort if you have money vs not having money.
Having money helps a lot in making yourself comfortable when life makes you uncomfortable.
> Zuckerberg doesn't get to do what he wants. He's in meetings constantly and rarely has a free moment
This argument of
Conclusion: $RichPerson doesn't get to do what they want.
Premise: They're under constant obligation to $MoneyMachine
is both unsound and invalid.
The premise is wrong: at that levels of wealth, the obligation is not real, it's opt-in and you can opt-out at any time.
The conclusion is wrong too: At that levels of wealth, the person can do everything anyone else can do in their off-time, and they have much more off-time than the person making the argument anyway.
Disagree. To me this is like saying parents can always just abandon their children. Zuckerberg likely feels an overwhelming responsibility to show up as the CEO. Could he technically not show up? Sure. And any parent can technically not show up for their children. Both of them feel overwhelming responsibility to show up. In fact often the draw to work is stronger than children, hence so many stories of parents putting work first, not because they need the money, but, because they feel responsible for things at work.
Zuckerberg is a famous person though, and famous people can't go to places which are sufficiently open to the public without causing major issues.
A random billionaire nobody knows might walk around the Colosseum undetected, but try doing that with a profile like Zuckerberg's.
Also, there is the personal security concern. If you are rich, you have a lot of ability to pay kidnappers of you and your family.
There is the story that shortly after Pichai became Google CEO, he walked around a conference and he barely got recognized, but if you stay in the limelight for long enough, people recognize you.
> and she said that in Greece, her community prioritized happiness above all else, but everyone she met in the US prioritized making money.
Either they were a liar or an idiot.
Greece is the worst example as it is highly optimised for money and not social happiness/success. There is a reason that fraud is rampant and no one pays taxes unless they have to.
Does this mean Greek Culture is better or simply different? I think that’s the real question. And also better for whom? It’s a judgement call. You can find communities (small towns) that are much closer to this style of thinking than in cities like LA or NYC.
If we're sharing anecdotes from Greek-Americans, a research advisor of mine said the biggest change he experienced was getting a driver's license without bribing anyone
I’m not sure if it’s “my version” or simply a more macro lens at history.
Like all history, it’s tricky to pick a starting point, but an easy one is the end of 400 years of Ottoman Turk occupation leading into the 20th century with the Balkan Wars, WWI, and then WWII.
Greece successfully fought off Italy in WWII but then was quickly occupied by Nazi Germany for four years. During this time, the Nazis successfully exterminated every Greek Jew. This period created extremely radical political parties that persist to this day. Following WWII, Greece then transitioned into a dictatorship lasting until 1974. Greece presently has the youngest democracy in the EU (50 years old).
The past 500 years have been hard on Greece, and the past century was no exception. Modern Greece is a young country with tons of recent scars that have led to corruption and bribery that a healthier nation may not have developed as intensely. My grandfather fled the region with his father in the early twentieth century when the Italian army began regularly hanging people in their town square. It really traumatized him.
Anyway, 2008 wasn’t some event that happened in a vacuum. There were many events that shaped the country leading up to it. To simply claim it happened because the Greeks were lazy is itself a lazy take.
A very good book on the topic is Inside Hitler’s Greece[0].
If Greeks were lazy, they would not be working towards creating powerful nuclear weapons. Based on my calculations, by 2030, maximum 2035, we will have personal nuclear weapons. By we, i mean millions and billions of people on the planet, including of course Greeks.
In general, what an individual is doing with his free time, is no one's business.
Every smart person on the planet works towards nuclear weapons. It's self evident, it doesn't need source.
I am talking very about small nukes, cheap, minimal and for personal use as a self defense. Two grams of gold cheap, 1 km evaporation range and 5 km blast.
Very minimal, but as soon as millions of people have one, gather a lot of them in one place and you do some serious damage.
This lady seriously suggests that millions of Thai's will have their personal nukes, millions of Mongolians or Brazilians will have small nuclear weapons each, but Greeks will not, because Greeks are lazy somehow. I don't know where she reads that stuff, probably some comic series.
Ok, now let's assume this is correct and a deranged person in my neighborhood threatens to use their nuke, how is the police supposed to react to that? Are they supposed to detonate their personal nuke and destroy the neighbourhood?
Yeah, this is spot on. It's just that the priorities are different (even unemployed Greeks scrape enough money to have coffee with their friends), which can seem to Americans like we're lazy.
I was recently in Lisbon and was surprised that an espresso still costs 70 cents despite the influx of tourists and expats. If it's the same in Greece, I can easily see how an unemployed person can afford to hang out.
When I visited a rust belt city recently, it was amazing how many of the coffee shops and bars were still open of my preferred "sit and have a quiet conversation" variety. In my VHCOL city, where commercial rents are absurd, the only coffee shops/bars that can stay open are the ones that can drive tons of business (and thus push patrons through like cattle, with all cues pointing towards "you shouldn't be hanging out here").
It used to be 2.5 EUR or so, but now it's risen due to inflation. Keep in mind that in Greece, your family will also support you if you're unemployed, so it's not uncommon for parents to share their pension or children to share their salary with the family.
>Keep in mind that in Greece, your family will also support you if you're unemployed
That's cool, if you have a family nearby or you're a in a good relationship with yours. Sucks for those who do not, which is why social safety nets are more important. You pay taxes but in case you fall down, the safety net should catch you make sure you don't end up on the streets if you don't have a family nearby.
Again, that's Us-centric thinking. If you're unemployed and don't have family nearby, you either move there to save on costs, or they send you money. There are very few people here who have a relationship with their families so bad that the family won't support them, because it's a social expectation. That's the definition of a social safety net, as it's a safety net that society institutes.
Not it isn't, I'm European from a European centric thinking. What you're talking about applies if young people choose to continue living in the same village where they were born and their family still lives, but that hasn't been the case in a long time. Young people (in Europe) move to big metro areas for university or jobs, and often, especially in Greece, they move to other EU countries.
Your family from some Greek village, won't be able to come take care of you in Amsterdam, and most likely they won't have the money to support your NL living expenses from their Greek pensions to help you out, nor will you moving from Amsterdam back to some Greek village help you out too much since there's no jobs in your niche there, or maybe even no jobs at all so now you're broke in Greece instead of broke in Amsterdam but with less job options.
Your PoV scenario is just unrealistic in the world of today and only applies in the traditionalistic tribal village lifestyle that's more or less dead nowadays and few live it. Sure, some lucked out and were born in afluent big metro areas with universities and jobs meaning they always have their family close by, but that's more the exception rather than the rule. If you look at international cities like Munich or Berlin, most people living there weren't actually born there or have family there, they just moved there for study/work. How can family help them then?
I kind of feel like you can't lecture someone from a small Greek village on what life for people from small greek villages is like unless you've lived there.
I know plenty of people who emigrated to the Netherlands, I don't know anyone who was poor and emigrated there (they don't speak enough foreign languages to have a hope) or that lived there for more than a few months while unable to get a job
Who are these people who go be unemployed in a high CoL country?
Anyway, that's my opinion, and trying to correct people from other cultures that tell me my opinions on my culture cannot be right is tiring, so I'll leave it here.
>I kind of feel like you can't lecture someone from a small Greek village on what life for people from small greek villages is like unless you've lived there.
I wasn't lecturing, I was using Greece as an example that would be familiar to you, but feel free to use any other country where people emigrate from to go to a high CoL country: Portugal, Spain, Italy, Romania, Bulgaria, etc.
>I don't know anyone who was poor and emigrated there (they don't speak enough foreign languages to have a hope) or that lived there for more than a few months while unable to get a job
I do. Plenty of Eastern Europeans moved to high CoL countries without knowing the language or having credentials and many found jobs, not the best jobs, but being on minimum wage in Sweden or Austria is better than being broke in Romania or Bulgaria (again, assuming you don't have a well off family to help you out and many who are in the situation of taking minimum wage jobs abroad don't, since they also come from poor or broken families unable to support them, which is why social safety nets are important to catch and help such people and prevent them from perpetuating this cycle).
>Who are these people who go be unemployed in a high CoL country?
You don't "go to be unemployed in a high CoL country", I never said that, but unemployment can find you there when you get laid off, which is why safety nets are more important than a far away family from a low CoL country who has no way of helping you out.
>Anyway, that's my opinion, and trying to correct people from other cultures that tell me my opinions on my culture cannot be right is tiring, so I'll leave it here.
Regardless of your "culture", people not having parents to help out (orphans do exist you know) or family too poor to help out, is not really something that goes against the "culture" you keep harping here. Not everyone's family, Greek culture or not, will be able to help out, hence my point of tax funded welfare social nets being important. None of what you wrote so far is an argument against that.
My buddy lived in greece for a bit and he laughed at how he could order a one euro coffee delivered to his room or office almost anywhere. He couldn't comprehend how it works.
Yeah, one of the most notable thing about the HCOL US areas is that service employees are paid very well. By comparison, in India, 15 minute delivery at 3 AM costs relatively nothing.
To take over the market companies need to attract customers - i.e. make their lives better. Usually there are more consumers than employees - so I think that measure works quite well with optimising for humans. Profit is a side effect of taking over the market.
But actually to have any employees companies need to optimize for workers lives anyway. And it seems that cooperatives are not any better in this area - otherwise everybody would work for cooperatives.
> companies need to attract customers - i.e. make their lives better.
Companies need to sell the *idea* of making lives better. They don't actually have to make a customer's life better and many don't despite selling lots of product. Profitability is not a strict function of quality. If it were, we'd not give the slightest fuck about monopolies. It takes a great amount of effort to get companies to compete on "making lives better." If bettering lives is not the most profitable it is very often eclipsed by what is.
It's much more complicated than the simple lie that "you get what you pay for."
No, but it's very probable li2uR3ce bought things that were portrayed as being much better than they actually were. These days "profitable" for the seller rarely equates with "good value" for the buyer.
Feels like a false dichotomy? Brand loyalty fluctuates over time and by brand, market, etc. For example, cars are probably the largest repeated purchase in America, and car brand loyalty is nowhere as high as it once was:
People get convinced in the heat of the moment that they want something, when if they had time to reflect/research/etc. they might very well conclude that their money is better spent elsewhere. Marketing in a capitalist system is highly motivated to make you think you want or need something more than you actually do.
One tactic that some people find helpful when they want to buy a discretionary item is to wait a few days/weeks, and make sure that it's not just a whim that they'd regret.
Watch TV commercials over the years. The older ones are laughable. They steadily get more sophisticated as the years go by. That's because the customers get more sophisticated, too. You might call it evolution in action :-/
Political campaigns also get more sophisticated. Scott Adams has an interesting podcast where he breaks down the latest manipulative persuasion techniques used.
> But actually to have any employees companies need to optimize for workers lives anyway. And it seems that cooperatives are not any better in this area - otherwise everybody would work for cooperatives.
There's much more at play than just "cooperatives are not any better". Cooperatives don't get as much funding from investors because investors won't be owning a larger share of them, and taking their returns, they instead invest in a traditional company because then they can extract as much as possible from their investments.
That by itself already puts small scale cooperatives at a competitive disadvantage, you can't raise as much capital as the non-cooperative startup, even if their product could be better and their employers could be happier the lavishly monied startup will try to outcompete them by throwing money away until they get a larger share of the market.
If somehow this situation was improved where cooperatives are not immediately disadvantaged from an earlier stage we could see more of them popping up, right now there's not nearly enough cooperatives for this comparison to be possible, simply because they get extinguished by others with more capital.
>
There's much more at play than just "cooperatives are not any better". Cooperatives don't get as much funding from investors because investors won't be owning a larger share of them, and taking their returns, they instead invest in a traditional company because then they can extract as much as possible from their investments.
Unions should put their money where their mouth is and invest in cooperatives.
> Unions should put their money where their mouth is and invest in cooperatives.
Unions aren't structured for investing, and that's not their reason to exist.
I don't know where you are from so I can't comment on how unions function in your society, where I live they're definitely not in the same realm as a potential investor for cooperatives.
You are also asking for unions to compete against VCs, and banks, let's be realistic that even a large and wealthy union is not even close in terms of wealth management as a small to mid-size bank/investor. On top of that the union has responsibilities to provide benefits to all members, a bank or investor has none of that, tilting the scale even more in disfavor of an union assuming the role of investment.
It's a good thought though, another entity such as a credit union supported by workers in an industry which also takes the role on investing in cooperatives to foment them, would still be an uphill battle but if some good cooperatives came out of it maybe it could be another viable (albeit smaller) model to start companies.
Only partially true. Unions themselves aren't structured for investing, but unions have some of the largest pension funds and the managers of those pensions are some of the largest institutional allocators in the world.
Think CalPERS, CalSTRS, Teacher Retirement System of Texas, Ontario Teachers Pension Plan, and many others.
Typically[1], but both are unions. Had the previous commenter been talking about labour unions then you might have something, but it clearly says "union" and "union" alone.
[1] Although definitely not necessarily. A group of labour unions in these parts collectively own one of the largest hedge funds out there.
Most marriages - a kind of union - also don't invest in cooperatives. Even if they meet the accredited investor standard.
Neither does the Union of European Football Associations, otherwise known as UEFA. They make up for it with a dope anthem.
Neither the Kalmar Union, nor any other personal union of monarchs, ever invested in a cooperative. Although some may have invested in joint stock companies, such as the various East India companies.
Maybe the Soviet Union was into worker cooperatives? Not sure.
And finally, the union of the set of workers at cooperatives and the empty set invests in cooperatives. Hey look, we found one type of union that definitely invests in cooperatives!
(I was just having fun making this as absurd as possible. Sorry, no malice intended).
> Most marriages - a kind of union - also don't invest in cooperatives.
Is that because most marriages exist in urban centres where cooperatives are uncommon to non-existent? Out here in rural country, where cooperatives are the norm, most married people invest in cooperatives as most of the cooperatives are customer owned. You don't have much choice but to invest, assuming you want to be a customer – and no doubt you want to be, given that they provide basic services for the region.
I'm certainly an investor in several co-ops, and not because I went out of my way to do so. That is, with the exception of one co-op, which I provided additional investment to. That particular co-op runs a very successful operation and provides healthy returns in what is a comparatively stable environment to those who provide an over-and-above investment. They attract quite a lot of investment dollars as a result.
Which says something about unions that aren't investing. Why aren't they investing? Simple: The companies they see in front of them aren't worth investing in.
To the extent the bank wants to retain employees, it does need to provide some minimum level of utility. That may be as simple as an hourly wage for some, but both shareholders and employees are participating in the machine.
Unions aren't there for "Ownership" of companies or cooperatives, they're for improvement of member's work lives, it can be training, worker contract negotiations, as go-between when dealing with management or owners, etc.
Also, Richard Wolff has been advocating worker directed social enterprises (WSDE, aka coops?) for a while. Sadly, his now dated arm wavy book doesn't is more advocacy than HOWTO.
We forcibly allocate capital less efficiently; make markets less efficient and less responsive to innovation; with the sole aim of achieving a utopian worker-cooperative owned world?
> make markets less efficient and less responsive to innovation
I wish we didn't force capital to do things like that.
Then it can run wild with Mandatory arbitration which bars access to the justice system, algorithmic manipulation of prices for rents / real-estate (1) and installing spyware on the customer's computers (2) and MITM attacks of your communication (3). They are all free market innovations. Very efficient at doing the wrong thing.
Turns out the only thing we are doing is making more and more monopolies, there are no free markets and no choice for buyers. Your 88 brands of toothpaste are owned by two corporations. But yeah.
Efficiency with regard to what goal? The current allocation of capital in the US is quite inefficient if we're interested in the welfare of the public. Billionaires have far more capital than they know what to do with, and since they're unaccountable for their investment choices, they strongly tend to steer the economy toward vanity projects. Meanwhile, many families can't put food on the table, and infrastructure is falling apart.
Whatever it is about this system that you find "efficient," I don't find it valuable. The Chinese state takes a rather strong hand in allocating capital, and that has treated it fairly well over the past few decades. A mixed economy where private capitalists are not solely responsible for investment choices, and where ownership of that capital is more evenly distributed among the public, could fix a lot of problems.
Is take the American system every day. What is the moral justification for a state stealing private property?
Billionaires get to invest however they want because it's their property. What you see as a vanity project actually employs workers, feds families, and generates tax revenue. They are massively contributing to the economy.
> What is the moral justification for a state stealing private property?
I think it'd be good, is why. Non-intervention with private property is extremely low on my list of moral priorities. If someone's starving, I don't think you really have a right to keep food away from them.
> What you see as a vanity project actually employs workers, feds families, and generates tax revenue.
…and are they actually making anything useful? Or are they wasting everyone's time? Workers could be employed doing any number of things. For a rich person to "creating jobs" means nothing if those jobs are pointless. We could easily take that money away and create jobs doing something more important.
As a matter of accounting, all the net money in the system was first created by the state before the private sector could accumulate it. You're welcome.
> A lot of government funds have also been looted by CCP honchos.
Yeah, because they're corrupt and undemocratic. I certainly don't endorse China. But they do put to rest the idea that the freer the market, the stronger the economy.
What are your reasons for thinking that the Chinese economy is well-performing? Chinese per-capita income is slightly less than that of Mexico, and you wouldn't use Mexico as an example of a well-performing economy.
China is strong because of its massive population combined with an economy that performs better than the only other country with a similarly massive population.
No they don’t. China got richer when they implemented free market reforms, proving the idea.
Unfortunately Xi is now focused on saber-rattling about national security and bullying neighbors. He has cracked down on free markets, and China’s economy is suffering due to his incompetence.
The system is not perfectly efficient because humans aren’t efficient. I think the idea is, keeping a market relatively free (with a sane amount of regulation) allows capital to seek returns. This leads to a lot of independent, decentralized value production, like startups popping up out of nowhere because some founders have an idea and attract capital.
The thing is, people who pile up capital don’t have to be efficient with it. They can basically do whatever they want with their money. They can build giant vanity estates, which you could certainly call inefficient — who needs 20,000 square feet for a family of 3? But… we also care about freedom, so we let people do inefficient things. The only difference between rich people and poor people is they have more money so their inefficiencies are louder. But everybody spends money on senseless wants and vanity. Who needs manicures and hair extensions? Arguably nobody. The “poor” spend on vanity too. And we let them because we care about freedom.
If you wanted to implement a perfectly-efficient system, would that mean banning the fulfillment of any desire that wasn’t strictly a need? I don’t think anyone would want to live in such a system.
> The only difference between rich people and poor people is they have more money so their inefficiencies are louder.
Yes. Their inefficiencies are deafeningly loud and have a massive impact on the rest of us. This is why I am suggesting that we intervene to get rid of the ultrawealthy as a class.
> If you wanted to implement a perfectly-efficient system
Stop right there. Don't pretend that "what if we got rid of billionaires" is a slippery slope towards a society of perfect clones where all individuality is suppressed. You don't really believe that—you're just fishing for gotchas, and it's beneath you.
Efficiency is measured exactly by people maximizing their utility subject to their preferences and constraints.
What you see as vanity, such as hair extensions, may be a high utility item for others. Consider the hair extensions make them a more attractive mate and provide them the opportunity to breed with a better stock, for example.
Similarly, consider that 20k ft sq mansion in context: all the prior owner(s) of that property were traded revenue for the land. And the construction workers were paid. And now the gov gets taxes.
At every step, each contributor to the end product voluntarily participated and maximized their outcomes. That is maximally efficient, economically speaking.
> That is maximally efficient, economically speaking.
It is not. The resources which went towards that mansion would be (by your definition) much more efficiently spent elsewhere. The utility which one wealthy person gets from a 20k sqft mansion is much smaller than the total utility which 20 homeless people would get from a 1k sqft apartment.
Yeah I’m all for these things that I was calling “vanity”. I was only using the word vanity because the comment I was responding to used it pejoratively: “vanity projects”.
>If you wanted to implement a perfectly-efficient system, would that mean banning the fulfillment of any desire that wasn’t strictly a need? I don’t think anyone would want to live in such a system.
Holy mother of slippery slopes x) Do you think $current_economic_system can be improved? Ah so you want to ban fulfillment of any desire? Sheesh
You’re strawmanning. I was caricaturing the call for efficiency by blowing it up into a monster. I wasn’t saying I want to ban fulfillment of desire, or saying that’s the only alternative to the status quo.
The irony of accusing the other person in the conversation of strawmanning while describing your own strawmanning as "caricaturing" as if that were any different
>The current allocation of capital in the US is quite inefficient if we're interested in the welfare of the public.
The welfare of the public today is not the same as the welfare of the public for all time. The Soviet Union couldn't compete on the development of computers, because the USSR was trying to optimize towards what could computers be used for then and there. It turned out that computers could be used for a lot more than what people thought of at the time.
Drug R&D and patents lead to enormous profits for companies, because they can charge outrageous prices for the drugs. But the benefit to the public is that now those drugs and the knowledge about them exist. That's going to have a cumulative positive effect for hundreds of years in the future.
> The Soviet Union couldn't compete on the development of computers, because the USSR was trying to optimize towards what could computers be used for then and there.
You assume pharmaceutical profits are all funnelled to R&D, rather than to shareholders. I see no reason why we shouldn't slash profit margins on medicine and offer the money back in earmarked grants.
So you see, I'm actually radically in favour of R&D.
No, I'm not assuming that. The profit motive is why they get the capital to do the R&D. I'm not just talking about developing an entirely novel drug but also manufacturing and testing it.
Without the possibility of this outrageous profit we would just get less drug research done. That money would then be invested in something else. Drug prices wouldn't be so outrageous (probably), but we probably also wouldn't have as many treatment options. They might be too expensive now, but there's a chance they won't be in 50 years.
> Billionaires tend to steer the economy toward vanity projects.
Musk's only meaningful contribution to SpaceX was money. We could just have raised NASA's budget instead, but we didn't. There are lots of things that we need to spend money on. Space is not our top priority.
Musk, however, is independently wealthy and can spend his money on whatever he wants. So he spent it on rockets, as a vanity project. Yes, some useful innovations came out of that. But what was the opportunity cost? Was this where the money was best spent? I have no reason to believe so.
NASA does a lot of things. If they'd been given SpaceX's capital and a mandate to build reusable rockets, I'm sure they could. They're world-class engineers.
> It was a heck of a lot more than that. See "Elon Musk" by Vance.
I'm not going to read his biography for the sake of your post. Rich people like to act as if they're uniquely good leaders, but it's easy to take credit from a room full of people when they're all on your payroll. If Musk had something to contribute other than fame and cash, name it.
> Becoming the richest man in the world through his investing is a whopper of a reason that it was well spent.
Not at all. Him becoming rich benefits nobody but himself. Funnelling money toward one individual's personal wealth is an extremely poor allocation of resources.
> He's reached cash flow positive.
Barely. And so what? Pet rocks were profitable. Did we actually need SpaceX? Is this really best the direction that so many billions of dollars worth of economic activity could have been directed? Is Elon Musk, the buffoon who ruined Twitter, really the person who should be making that choice?
Capital allocation under capitalism is also not efficient, it's pretty damn wasteful when you consider the resources used to find its "efficiency".
Innovation is also becoming a meaningless word to defend the system, the innovations have their foundations fostered with public money, through funding of scientific research which is then later captured by the industries to develop products. The innovation is productionalising another innovation, the foundation is built mostly on public funding. Very few companies actually do ground-breaking research that innovates, they're pretty risk-averse in this sense, the productionalisation of those discoveries has its own value, not questionign that, but it only gets traction afterwards when the brunt of the work of discovery was done.
Efficiency of markets is a hypothesis of financial economics with much better written criticism than I can write here, Warren Buffet doesn't believe in it, for example. It's not a given whatsoever, nor proven empirically.
"Free markets" and "planned economies" don't encompass the breadth of possibilities of organisation of politics and economics. Case in point: TFA...
This post is precisely about a free market economy where the (imo unnatural) disconnect between working in an enterprise and owning the products of that enterprise doesn't exist. That's all.
Not sure what "command economy" has to do with it.
If you hire a landscaper to redo the landscaping of your property, is he thereby entitled to own a share of your property? How about the guy you hired to fix your water heater? Does he get a share, too? Is that natural?
What's the salient difference between hiring a worker to help your business, and thereby being entitled to a share of your business, and hiring a worker to do some work on your house, and thereby being entitled to a share of it?
Public funding for whatever means the government is picking winners and losers. Whoever pays the piper calls the tunes. Public funding always comes with strings.
The government funded Langley with $60,000 to build a working airplane. It fell into the Potomac "like a sack of wet cement".
The Wrights spent $3,000 and build a working, flying airplane.
The jet engine was invented and developed with private funds. The US government told Lockheed to stop working on jet engines and develop better piston engines instead.
AI, the biggest tech revolution in a couple decades, seems to have been privately funded.
The internet you are using right now was created by public funds.
Compilers, which you work with your whole life, came from research done by public funds.
Most medical research has been done with public funds.
Radios, modems, every single piece of networking we currently use was first researched by public funds.
We can keep cherry-picking examples if you wish go down this road, it doesn't foster much of a deeper discussion though if you are going to keep your dogma.
Public funding is necessary, private funding is necessary, what kind of system we can create that enables the best out of both worlds to evolve and be better? That's a discussion I'd like to see, this end of history bullshit is too boring, and tiring to discuss.
Capitalism as it is has empirically shown it's not the best system humanity should rely on, it has its advantages, it has major flaws, admitting that is a pretty good first step into trying to look what's next, how do we go from here. It's destructive, it's inhumane, it's simplistic, it will become a relic just like any other system that came before.
Being dogmatic about it doesn't take us anywhere, it just conserves a status quo which is not the best we can achieve.
As usual, I think you are a bright person, Walter, you've done tons and achieved a lot more than most, but keeping this dogmatic narrow-view of the world certainly pains me, exactly because you are the kind of mind that should be able to see through the bullshit...
It was an incremental step, followed by other incremental steps. There have also been many, many internets along the way: AOL, Prodigy, BYTEnet, MCI, Gopher, RBBS, etc. Every organization that had more than one computer soon figured out how to connect them. Even I did that.
BTW, Ethernet was invented by Xerox. I use it every day.
Compilers appeared shortly after computers that were capable enough to run them appeared. This suggests an inevitability, not a discontinuous invention. Jet engines were a discontinuity, too.
What I see is that if invention X is derived from inventions A,B,C,D,E,F, and D was funded by the government, the government gets all the credit.
> Capitalism as it is has empirically shown it's not the best system humanity should rely on,
How has that been shown?
> it has its advantages, it has major flaws, admitting that is a pretty good first step into trying to look what's next, how do we go from here. It's destructive, it's inhumane, it's simplistic, it will become a relic just like any other system that came before.
Show an example of any system working better.
Free markets are a chaotic system of creative destruction. There have been endless attempts at "fixing" that. None have worked better.
I think the problem is that nothing has been shown to be better, but so many people can feel their whole lives that there must be something better.
I tend to take a step back and keep in mind that Free Enterprise is not inherently a part of Capitalism and vice-versa. They've gone together pretty well but each might do better with a different partner or different arrangement altogether.
The market has spent the GDP of Madagascar to fuck over cabbies in a handful of metro areas in the US. Meanwhile "efficiency" in the ISP market has lead to regional near-monopolies and some of the worst residential bandwidth on the planet. Let's not with "efficiency and innovation" yeah? The emperor is clearly buck-ass naked.
Three quarters of a trillion dollars are spent annually on marketing worldwide. Consumers are persistently manipulated into all manner of poor choices.
Ahhh yes, the old "because the market didn't turn out the way I wanted it to once, it means the entirety of the capitalist system and the idea of free markets is fundamentally broken" retort.
I call this the "Jr. developer fallacy." Start a job, encounter some bugs, suggest rewriting the entire codebase from scratch on [insert-trendy-framework].
That's just a couple examples I picked off the pile. You wanna do hyperconcentration of wealth crushing entire small business industries, collusion on pricing, ag services cartels driving farmers to commit suicide at record numbers, centralized manufacturing eliminating meaningful competition in consumer goods markets, or the last 15 years of bullshit where the term "innovation" was rolled out to describe some combination of fleecing dumb money and fucking over low wage workers let me know. Junior developer my ass, I been doing this shit for decades sonny.
You wanna review the track record of market driven healthcare systems vs socialized medicine? Spoiler: the US has one of the worst (by any metric you care to track) healthcare systems of any industrialized nation. Just because someone else's shit is broken doesn't necessarily mean your shit is working.
> Spoiler: the US has one of the worst (by any metric you care to track) healthcare systems of any industrialized nation.
That "by any metric" is just plain wrong. There's several metrics by which the US healthcare system is among the best--in general, if the metric you are tracking is largely covering the success rates of medical procedures (sibling comment mentions 5-year cancer survival rates, for example), then the US generally scores high. If the metric you are tracking is instead covering general population health or things easily caught with preventative medicine, then the US scores abysmally in those metrics.
In other words, the US healthcare system actually turns out to be very good (if perhaps not on a per-cost metric)... but access to the good healthcare system is extremely poor. And that's kind of what you'd expect for a market-driven system: good healthcare if you can afford it, shit healthcare if you can't.
I care to track cancer 5-year survival rates and the number of new drugs introduced per year. By those metrics the US is at or near the top. The US healthcare system has plenty of flaws but it does some things quite well.
Tell that to the folks that are dying because they can't afford off-patent insulin. I know a young lady who passed away in her dorm room a couple years back because she'd been rationing, I could introduce you to her family, I'm sure they'd be delighted for your take on medical profiteering.
Socialized systems are subsidized by the US drug companies. Corporations pour billions of dollars into r&d and other countries end up making cheap generics of the final product, without having to do any of the research.
US Healthcare is expensive, but the quality is better than most other countries.
> Socialized systems are subsidized by the US drug companies. Corporations pour billions of dollars into r&d and other countries end up making cheap generics of the final product, without having to do any of the research.
The American pharma companies also don't do the research, a lot of it comes from scientific institutions funded by public money.
What pharma companies do is provide capital for drug trials which are absurdly expensive, they are more alike investment companies than actual research institutes...
> (by any metric you care to track) healthcare systems of any industrialized nation
That's certainly not true. Of course compared to pretty much every highly developed country if we factor in relative spending per capita you'd be right.
But yeah, purely market/profit driven systems (with extremely poor and inefficient regulation) certainly don't work in certain sectors like healthcare.
Also it depends on what do you mean by 'socialized medicine', if you're specifically talking about single payer, your point is only valid if you ignore all other countries which don't have single payer besides the US. The Swiss and (as far as I can tell) to a lesser Dutch healthcare systems are 'privatized' to a much higher degree than the one in US i.e. effectively fully, there are no Medicare/Medicaid equivalents there. Instead they are very strictly and relatively efficiently regulated. They pretty much have Obama/Romneycare++.
If you mean something else than single-payer then the US system is arguably heavily 'socialized', both through insurance polling (just like in the countries I mentioned) and because the US government itself spends more on healthcare than most industrialized countries even relative to GDP. e.g. if we exclude all private spending (both individual and insurance) government health spending per capita in the US is significantly higher than in Britain and more than 2x higher than in Spain (and still significantly higher if adjusted by PPP GDP per capita)
Socialism does not mean central planning of a whole economy. That was the Soviet model of communism, which doesn't work at all.
I feel that the USA's education system has indoctrinated students so deeply into the red scare that real terms have become meaningless to discuss political and economical systems with the larger American audience, the words simply don't mean the same, they mean what you've been indoctrinated to believe they mean.
> Socialism does not mean central planning of a whole economy
What other forms of semi-stable functional "socialism" are there?
> have become meaningless to discuss political and economical systems with the
Discussing hypothetical pseudo-utopian systems like "socialism" or "communism" isn't particularly meaningful either (from the economics perspective, not philosophical).
IMHO the problem with socialism is that it will pretty always be outcompeted by private ("capitalist") enterprises which can provide goods and services which are both higher quality and cheaper (yes by "underpaying" their workers but also they tend to be much more efficient). Therefore you can't really allow both in the system/country.
So realistically "socialism" can only exist if the state suppresses any alternatives using various degrees of coercion and force. Since no real competition and by extension dissent can exist (i.e. nobody has enough resources to challenge the state without significantly damaging their career/status/wellbeing) the state ends up becoming more and more oppressive/controlling and unavoidable corrupt. I'd love to see any empirical evidence disproving this but as far as I can tell historically that's what always ended up happening.
If cooperatives can survive and compete with private enterprises without excessive regulation and government coercion that limits and competition and leads to lower productivity that's great. As far as I can tell that's rarely (but probably occasionally) the case unless we're also including "guild" like organizations.
However I'm not sure cooperatives are strictly a "form" of socialism, they have been a part of capitalist societies since pretty much the very beginning. I guess it depends where we draw the lines between partnerships etc. and cooperatives, I guess hiring additional workers who don't have an equal stake/share in the enterprise or subcontracting any sort of labor (let's say on a significantly meaningful scale, but still very hard to avoid) would be it.
> simply because they get extinguished by others with more capital.
Unless you go to where capital isn't concentrated (i.e. rural areas), then co-ops are everywhere. It is not uncommon to be able to get your groceries at a coop, your gas, your phone/internet services, you name it.
Yes and: IIRC, long-term governance of coops has been a challenge.
Coops have been vulnerable to "hostile takeovers" (I don't know what to call it), transmuting from benefitting members yet another rent seeking enterprise that remains a "coop" in name only.
I was a long time member of PCC and REI. As I understand it, both experienced juntas. Histories I'd love to understand better.
I've read that most farmer coops also fell prey, becoming profiteers, from helping to harming their members. IIRC, there was even a personal account here on HN by a dairy farmer.
In conclusion, I'd LOVE for coops to be the norm. My biggest concern is how to structure coops to remain true to their mission and resilient to enemy action.
New companies have no credit rating. Investors would never buy bonds sold by a new cooperative that needs a huge amount of capital to build a new semiconductor fab or something.
The investment schemes do not have to stay static while only the structure of businesses change.
Even if it did, would it not makes sense that investor priorities would change if their only options beyond cooperative businesses were some very small startups and mom & pops?
A system of public banks could handle investment based on the priorities set by all citizens. Everyone would effectively become a shareholder. Successful businesses could be taxed based off what the public invested in those new cooperatives, and those taxes would be used at least partially be used to fund more startups.
If labor and capital truly are in tension as so much of our social and economic philosophizing says, then it’s no surprise that a structure optimized for labor is less attractive to capital.
> they instead invest in a traditional company because then they can extract as much as possible from their investments
Sure. And workers extract as much as possible from their employers. And customers go for the lowest price possible, and sell their stuff for the highest price possible.
That's how people are.
In the 50s, my dad was in Italy watching the news on TV. A man had just won the lottery. The reporter asked him what he was gonna do with the money. Before he could reply, another man stepped in front of him, saying "he's a loyal member of the Communist Party, and he's going to give it to the Party!" The winner pushed him aside, announcing "Oh no, I'm not a Communist anymore!"
Coops work where they work and don't where they don't. Mutual insurance coops also have to fight traditional banks and single-owner insurers and they do just fine. State Farm is huge. Co-ops are just not good at some kinds of markets and so they lose there.
> To take over the market companies need to attract customers - i.e. make their lives better. Usually there are more consumers than employees - so I think that measure works quite well with optimising for humans. Profit is a side effect of taking over the market.
Quantity of people benefitted isn't the only measure: magnitude of benefit is also relevant. The customer at a 7Eleven benefits in that they get to... what, buy snacks conveniently? Versus the worker who receives their entire livelihood and benefits, it becomes obvious that workers are the primary beneficiaries of a company.
> But actually to have any employees companies need to optimize for workers lives anyway.
This is quite obviously false. All companies have to do is present a united front on keeping pay low and benefits nonexistent to prevent workers from having better options. I.e. USA 2024.
> And it seems that cooperatives are not any better in this area - otherwise everybody would work for cooperatives.
>All companies have to do is present a united front on keeping pay low and benefits nonexistent to prevent workers from having better options. I.e. USA 2024.
Can we leave the cynical antiwork comments out? They aren't helpful. This is obviously not the case for a majority of companies and anecdotes don't help.
Everyone is for the highest pay possible until they run their own company and have to provide payroll.
> Can we leave the cynical antiwork comments out? They aren't helpful. This is obviously not the case for a majority of companies and anecdotes don't help.
Major companies are regularly prosecuted for conspiracy to suppress wages. It if weren't for government intervention your wages would be much lower and there wouldn't be anything you can do about it.
This blind faith that billion dollar corporations would behave ethically is highly inappropriate
Most companies aren't "major companies". I'm for busting up the big monopolies, but I'm not for throwing the baby out with the bath water and imposing communist reforms on all businesses, most of which are small and generally well behaved, just because some big ones with pathological behavior exist.
So if you acknowledge that pathological behaviors exist, what's the problem with regulating against those pathological behaviors? Given you seem to think most companies are small and well-behaved, it won't affect those companies.
Regulation only shifts corruption, it doesn't stop or prevent it. There is plenty of corruption in and around government including the judicial system.
There's A LOT of daylight between liberal capitalism and communist socialism.
The social democracies, a middle path, as the Nordic countries have experimented with, seem to have done quite well. And there's now strong evidence that our system (neoliberalism) has stunted economic growth.
Regardless...
I support simple social reforms, like sovereign wealth funds (Alaska, Norway) and universal healthcare, greatly reducing the tension between labor and capital. Then these labor, employment, and ownership reforms wouldn't be so fraught.
This discussion is about the proposal to, by law, force all businesses to be workers cooperatives. That's not the liberal capitalism found in Nordic countries, it's communism.
Communism does not have businesses, worker owned or otherwise. It does not even have currency and money at all.
Early form of capitalism didn't have limited liability companies. Just because you have to use Unlimited Liability Partnerships, for example, that does not mean it's not capitalism.
Once we move beyond capitalism, there are other words too, like mercantilism, imperialism, Neo-feudalism (arguably what we are getting to), schumpeterianism, etc. Expand your vocabulary.
>Communism does not have businesses, worker owned or otherwise. It does not even have currency and money at all.
Huh? You seem to know absolutely nothing about how the Soviet Union worked. They certainly did have money and companies. (And don't give me that BS about the CCCP not being "true communists" -- No True Scotsman fallacy)
A "true" communist society like you're talking about has never existed, outside of possibly Israeli kibbutzes and also tribal hunter-gatherer societies before civilization was invented.
In real communist societies like the Soviet Union (which are more accurately labeled "authoritarian socialism"), they need money to control allocation of goods, just like any other modern society. How exactly do you decide how many rolls of toilet paper to give to people? Some people need more than others, so either you have a giant government bureaucracy just to police how much toilet paper people use, how much of every possible type of food to eat, etc., or you just give people money and set prices for stuff, and let them figure it out themselves. These societies were centrally planned, but at some point it's simply impractical to plan everything.
> You seem to know absolutely nothing about how the Soviet Union worked
I think it’s you who doesn’t. Notice USSR stands for Union of Soviet Socialist Republics. It was not a Union of Communist Republics. Have you stopped to think, why is that?
Leaders of USSR were communists, as in they believed in Communism. However, according to them, the country was socialist and they were working towards the goal of achieving Communism. That goal would be achieved eventually, when society or economy or technology was ready. But no official or leader of the Soviet Union would claim that they have already achieved communism.
So you can use USSR to claim that putting communist leaders in charge is a bad idea, but you cannot claim that USSR was an example of communism because not even people running it at the time claimed that it was.
And yes, the eventual goal was to get rid of the concept of money. You can read any of the soviet sci-fi, like Bull's Hour, and see how they imagined it would work.
As it turns out, the Federal Reserve chairman happens to be on record as wanting to suppress wages because he blames high wages for inflation[0]. In other words, the current dumpster fire of an economy was the intended goal of the Federal Reserve's interest rate increases.
> This is obviously not the case for a majority of companies and anecdotes don't help.
That isn't obvious at all. The US has the one of the highest pay gaps of any developed nation. Our largest companies with the richest executives have employees on food stamps. I'm not being cynical, I'm talking about reality, and I'm not going to shut up about it just so you can maintain your comfortable naivete on this issue.
> Everyone is for the highest pay possible until they run their own company and have to provide payroll.
If you can't pay your workers a living wage your business has failed in the only way I care about.
This doesn't contradict your point, but fwiw the pay gap of quite a few other nations come before the US. In terms of RP, the US ranks about 35th, behind many African and Asian nations.
People like doing meaningful work that benefits their customers. I think that employee owned businesses tens to treat their customers better than companies that are owned by private equity, pension funds or other investors who never touch the product or interact with the customers.
The article you linked doesn't say anything to backup your claim. United was employee owned for a total of only 6 years. Employee ownership was institued over some employee objections and wasn't fully supported by management. The labor relation issues that caused the pilot strike and slowdown duering that period predated the employee ownership initiative.
Nobody is saying that employee ownership is a magic bullet that fixes organization disfunction but data from that first year does show that it can have a positive impact of performance and customer satisfaction.
You are making normative arguments, but the question is wholly empirical -- the metrics being applied here are the ones that actually measure the success and viability of firms, not metrics selected to fit the observer's emotional attachments.
Firms that are optimized for turning market demand into revenue streams will naturally outcompete firms that are optimized for other goals, regardless of what ideals or preferences anyone bears. This isn't something that anyone can decide upon, so a call to action based on one's own "ought" preferences isn't really meaningful.
Success and viability within a system that is mutable
> There's a large economics literature on this: worker-owned cooperatives have not taken over the market, although they are an available institutional form, because (a) they find it hard to raise capital
There are any number of ways of making it easier for co-ops to raise captital.
> (b) they tend to make decisions that maximize worker welfare rather than profit, e.g. they won't sack underperforming divisions or expand in ways that dilute existing workers' stake.
You could make a similar case that making decisions solely around stock price leads to underperformance as well, if we quantify "performance" in terms of value provided to the broader economy. Mass layoffs are great for stock price, but they deal serious damage to your institutional knowledge base. Rather than simply shuttering an underperforming division, if you buy out the ownership stakes of the people working there, they'll have cash to re-train with. If we find that co-ops have a tendency to avoid doing that when necessary, we can tweak the incentives and subsidize a portion of the buyout, under certain circumstaces. Subsidies to tweak incentives are nothing new.
> This isn't something that anyone can decide upon
Yes, it is. Policy can change which strategies predominate in the market, by shifting incentives, by controlling streams of investment, and simply by regulating undesirable strategies out of existence. Mixed economies can be very effective. The notion that the market is a force which out to go untampered with is ideological, and it doesn't serve us well.
That's what laws and regulations are for: ensuring that entities that are trying to do the right thing and make life better for actual humans aren't "outcompeted" by entities that are trying to make things better for themselves at everyone else's expense.
That might be what their proponents intend them to be for, but the extent to which they actually achieve their goals -- especially goals at odds with the manifest intentions of the actual market participants, including workers themselves -- is another story entirely.
If reality works one way, but aspirational idealists are trying to "ensure" that it works in some other way, then their attempts will falter. Many regulatory interventions are at best performative rituals that measure their success in terms of creating the appearance that something is being done, with the question of whether what is being done actually resolves the actual problem (if there is one) barely being considered. In the worst case, these performative interventions create harmful unintended consequences at the same time, leading to them being a net negative.
It's worth noting, also, that nothing other than "actual humans" are involved in any aspect of this. There are no non-human "entities" in existence that have autonomous agency and participate in economic exchange. Every question here is about interactions among humans, and the organizational models that humans use to coordinate their activities are not separate "entities" with independent intentions.
We actually have two mechanisms: laws/regulations and customers voting with their wallet.
Since we see that a majority of customers consistently go with the cheaper option, we know how they feel. So the "better" firm gets outcompeted.
So regulation, you say. But those regulations are set by governments voted in by the same consumers. Their preference for lower prices is clear, and government follows their preference.
Is your suggestion that the government go against the will of the people and apply those pro-worker-coop regulations anyway?
> Is your suggestion that the government go against the will of the people and apply those pro-worker-coop regulations anyway?
This litmus test is absurd. If more consumers buy products manufactured with child labour, is it "going against the will of the people" to ban child labour? Not in any meaningful way, certainly.
We already do this in lots of areas. It would be "cheaper" - and doubtless more profitable; lots of people would choose them! - to produce / buy, say, bicycle helmets that are made out of cardboard and nails, but we collectively recognize that would be counter-productive and require that only the "expensive" types be offered for sale. I'm sure there are some people who are upset by this.
I made a more-substantive reply to a sister post, but... Have you seen what people buy? The front page of HN on any given day teems with posts about tech-sector equivalents to cardboard helmets. The buyers usually supply their own nails.
No, I don't think that's right at all. I don't think anyone is "collectively recognizing" anything, and the reason why bicycle helmets made of cardboard and nails are not being sold is because people -- as individuals and not "collectives" -- do not in fact want them.
Forgive me some exaggeration for comic effect. What we'd actually see are helmets which advertise themselves as safe, and which look safe to uninformed external examination, some (but not all) of which are very, very cheap, but any of which (and good luck guessing which ahead of time) might as well be made out of cardboard and nails, and so when you bump it your head explodes. (Alert: black comedy again.)
Instead, in the US the DOT or the CPSC (can't be arsed to look up which) says: "every helmet sold must meet this standard of safety", and then backs that up with guns. Now you're free to price-compare, with the assurance that your head won't explode. (Yah: I keep doing it! Sorry. I like injecting levity into serious subjects. Try not to get distracted.)
Consumers, acting as individuals, have negligible influence over corporate behavior, and are easily misled.
People, acting collectively (in this case as a "government", but as other collective organizations, too - including "corporations"), can stand up to other collectives and force them to adjust their behavior in pro-social ways.
Well maybe "taking over the market" is also a monopolistic and anti-competitive practice and if we had say, working regulation that forbade the existence of these behemoth companies then the landscape of value would look a little different.
This is maybe an underappreciated point, an employee-owned company with in a monopoly (or near monopoly) market position will act just as aggressively to screw over their captured consumer base as any other private ownership model. The employees may be better off, but the rest of us will suffer the same.
This is an assumption and one that I believe is faulty. Humans' caring is often related to the degree of connection. Employees at a company are more closely connected to their customers than investors and are thus more likely to care more about those customers.
Monopolies are still bad either way, but I doubt that the failure modes at employee owned monoploes is the same as at outside investor owned monopolies.
Yeah. Saying "COOPs don't fundamentally change human behavior which has doses of greed" is like saying that a kingdom works the same way as a democracy since hey, it's all just humans. Simply involving more decision makers is a meaningful change. Certainly involving more decision makers that are outside of the business/legal/accounting class is a meaningful change.
The OP is postulating they would look different but not better. Nobody has refuted the claim that if COOPs were better they would be more popular , but they are not.
Uplifting the entire global financial system to make a COOP more attractive through regulation wouldn't change this.
You are responsible for optimizing your own happiness. A company can't and shouldn't do that for you. Unhappy with your job? Find a different one. I don't presume to know what will make you happy and dictate to you how you need to live to achieve that and neither should you presume to do that for me.
Some people are happy focusing on their family. Some people are happy working hard in their career. Some people just want a job to pay the bills and plenty of time to play video games. These are all fine and valid choices and no company is going to optimize for all of them.
It is easy to "find a new job" but things like healthcare, geographic location, and creditworthiness are tied to employment.
If employment were more isolated this argument would still only be superficially reasonable, because we also live in a society with structural sexism and racism and other bigotries. Plenty of people have fewer employment options because of the circumstances of their birth.
Then look at me, I am professional contractor and not the obvious target of any of those bigotries. 16 contracts (often 6 or 12 mo), in the past 20 years. of that maybe 3 weren't complete shitholes. How long is one person supposed to keep making major life changes to search for a job that doesn't abuse them? Because a 1 in 5 hit rate implies some things.
Setting a floor on how shitty companies can be to their employees would a boon to everyone and likely make the whole economy more productive simply by reducing depression by a double digit percentage.
> Setting a floor on how shitty companies can be to their employees would a boon to everyone and likely make the whole economy more productive simply by reducing depression by a double digit percentage.
Yes, we do that. It's called "labor laws". There are many of them.
It's a question of agency. If you assign responsibility for your well-being to others, then you're always going to be at their mercy. Sure, there's structural whatevers and bigots and all sorts of things. Some people won't hire you because you remind them of the kid that bullied them in 3rd grade. Whatever. It's still up to you take control of your life. Nobody else is going to do it for you. Every time you try and demand that someone else do it for you, you are going to end up disappointed.
No need to be so absolute no one is "assign[ing] responsibility for your well-being to others", there are grey areas and gradients and employment is fundamentally full of those.
No one person can be an expert in everything, we live in a society and should act like it. Needing to be an expert in healthcare, hiring processes, finances, and a dozen other topics just to switch jobs is a major barrier to the just switch mentality you are presenting. And I know first hand, I am just switching constantly because it is what I wanted. We should have reasonable baselines and minimums for treatment, and those should shift and get better as we improve society.
> Every time you try and demand that someone else do it for you, you are going to end up disappointed.
Yet there are countries that have better situations for labor than the US?!
Even something as simple as universal healthcare would fix a ton for millions of US people. It would empower worker to switch jobs and employers to lure top talent held by it. Only a hundred or so other countries figured it out, there is no way we could do it here we would only end up disappointed, right?
I pick that as an example, but we could go over many possible topics that aren't blanket assignments of "responsibility for your well-being to others". Consider non-compete clauses, IP transfers, minimum wage and tons of other topics that if they had a minimum floor of decency could allow more freedom the the worker and employer.
> Needing to be an expert in healthcare, hiring processes, finances, and a dozen other topics just to switch jobs is a major barrier to the just switch mentality you are presenting.
Nobody is saying you need to be an expert in all of these things to switch jobs. Consider the fact that very few people, if any, are actually experts in all of these things and yet people do in fact switch jobs all the time. Empirically, it is not required.
> Yet there are countries that have better situations for labor than the US?!
Better in some ways. Many of those countries are significantly less productive and have moribund, declining economies and low pay compared to the US.
> Consider non-compete clauses, IP transfers, minimum wage and tons of other topics that if they had a minimum floor of decency could allow more freedom the the worker and employer.
non-compete clauses: don't sign them. I've never encountered one. Negotiate terms that you feel are adequate to compensate you for not competing. If you don't have sufficient leverage to negotiate, work on that.
IP transfers: again, don't sign it, or negotiate. Most workers will never generate any significant IP so this is rarely an issue. If you are going to generate valuable IP that is 100% due to you, then start your own company.
Minimum wage: less than 1% of workers make minimum wage. Anyone with a pulse and half a brain can quickly become more valuable and qualify for higher paying jobs. Just be organized and responsible enough to be an assistant manager at a fast food place and you're already making more than minimum wage. There are store managers at Wal-Mart and Buc-ees making $250k.
> Nobody is saying you need to be an expert in all of these things to switch jobs. Consider the fact that very few people, if any, are actually experts in all of these things and yet people do in fact switch jobs all the time. Empirically, it is not required.
You vacillate between personal responsibility and skipping requirements, which is it? Should we take you seriously or not?
You do understand that when I say people need to be "Experts" I don't mean hold Phds, I mean they need to be far more well read and have a much deeper understanding outside of core competencies than our contemporaries elsewhere in the world. They get to focus on family or work, and I need to understand 50 pages of contract nonsense to sort out how screwed I am on this interstate tax law and why my health insurance won't pay.
> declining economies and low pay compared to the US
You looking at the median income or the mean income? Because if you cut out a few billionaires the US Mean drops by like 20%. If you look at median we are in line with Countries like Canada and Western Europe who have better worker protections and are doing fine economically. (And they have healthcare so insurance doesn't pin them to one job for fear of literally dying)
> non-compete clauses: don't sign them. I've never encountered one.
You are arguing specifics (and doing it incorrectly) while I am showing you a forest of problems and you go after each tree with an axe ignoring that there is a whole forest.
On this specific tree. Some states banned non-competes. Some people do run into them. Some people do. Some people have no real options without them. Some people signed them in the past not fully understanding them (because they weren't IP law experts). I am not saying these should go away I am saying there should be a floor for how hard employers can screw workers so that someone who isn't a legal expert isn't forced out of their profession in a moment of desperation.
Fundamentally, in the forest of problems you are arguing "I have leverage so this works for me" and ignoring all the people who must say "I have no leverage except for my labor and I am willing to work hard, but I sure hope the system doesn't screw out of these hard earned pennies".
> You vacillate between personal responsibility and skipping requirements, which is it? Should we take you seriously or not?
You misunderstand. These things you claim are requirements are not requirements. You do not need to be an "expert" in health insurance or interstate tax law. Mostly you just need to read and follow the basic instructions for those things that the experts already wrote out for you. You think countries in Europe don't have bureaucracy? I live outside the US in a country with public health care. It's nice, but it doesn't mean you never have to spend time navigating a bureaucracy, I promise you that.
> You are arguing specifics (and doing it incorrectly) while I am showing you a forest of problems and you go after each tree with an axe ignoring that there is a whole forest.
Yes, because this is actually how you solve problems. You look at each individual problem and say "Hmm, what can I do about this?" Then you think up a solution and do it. Vague hand-waving at a group of problems while saying "Gee, someone should do something about all this mess!" doesn't actually accomplish anything.
Better still, optimize for social value provided. If taxes and regulation are right, companies that provide social value will make profits and their owners will get rich. The proposed changes would make that less likely to happen. If nothing else, (a) individual companies all optimizing their own workers' welfare does not add up to optimizing the welfare of all workers and (b) non-workers are left out of the equation.
This is the purpose of the mixed economy in which most of us live. The government changes the rules of the game to try to align the profit motive with social good, because they are naturally not aligned.
You haven't said why worker cooperatives optimizing the benefit of their own workers wouldn't add up to more welfare if the entire economy was based around worker cooperatives.
in my opinion worker ownership of the means of production is just socialism, and that doesn't have a good historical track record.
Please list any countries are are "just socialist" not communist. If we're compared hypothetical systems vs actual real-world ones it's not exactly fair.
> existence of Norway
Which is certainly not a "socialist" countries, unless you define socialism in extremely broad and ambiguous terms at which point the word losses any meaning.
I'm more interested in hearing why the above post and the examples you've cited fixed the problems that others have encountered in the socialism space.
If this was a startup trying to make worker owned co-ops more attractive I'd see a blog post explaining how they fixed the problems everyone else was having. That, and explanations of how this scales to an entire society.
That's the standard of discussion for everything else on this site and it shouldn't disappear because the subject is socialism.
> Our world is being destroyed by capitalism, maybe its time to try something else.
Well.. same could be said about "democracy". Despite its many inherent flaws (and even a more non inherent ones) free market capitalism has been the main driving force behind human progress for hundreds of years.
I would argue capitalism just so happened to be our method of progress. It was more so humanities newfound like of education and reasoning that did it. Or, conversely, the decline of religion in the state marked when things started to look good for humanity. And then it's a pretty clear graph where less religion = more good from then on until now.
> I would argue capitalism just so happened to be our method of progress
Personally I strong believe that (free) competition was the actual real "force" behind it. It just happened that capitalism (however flawed) provided the best environment for incentivizing individual and groups to compete in a "productive" way, accumulating capital in a reasonably regulated and fair way, instead of treating the world a zero sum game (i.e. in premodern societies usually the only real option you had if you wanted to gain significant wealth besides inheriting it was taking it from other people through force or coercion). Stable legal, societal, economic environments (also things like patents, copyright etc.) created ways to reward innovation and other societally productive enterprises.
When I say "fair" I of course mean it in relative terms (and even then that limited "fairness" was almost exclusive restricted only to members of your own society). But it was a huge improvement over arbitrary despotism, societal and economic, instability and various misaligned incentives that preceded it (e.g. possibly why the Roman empire didn't really progress past the "proto-capitalist" stage).
IMHO Socialism and similar systems have a major flaw (besides the fact than they can't really exists without excessive coercion) in that they stifle competition and don't tend to incentive/reward behaviors leading to growth and innovation.
Not that monopolistic-corporations etc. are any more likely to behave any differently without strong incentives, or that non-profit/government funded/etc. organizations can't produce anything innovative or societally beneficial or are somehow inherently worse at that than profit seeking companies (often the opposite). However again they need incentives to not consume/waste all the resources they get without providing anything in return and the need to compete (or lose funding/end up privatized) with the private sector often (again in relative terms, compared to any alternative systems I can think off) provides those incentives.
Norway has more billionaires per capita than the USA.
It’s not socialist in any sense. It’s a diehard capitalist country with a lot of public services and welfare (funded by taxes generated under a capitalist system).
How does this work in practice, though. It's easy to say what you're saying, or go slightly further and say "let's stop optimising for work and start optimising for everything to be free".
Obviously they exist. But they are only certain types of business. How is a company that requires hundreds of millions of dollars before it's profitable supposed to be a co-op? Step by step?
It would be nice to have a legal framework for companies to increase employee ownership, but be able to do it incrementally with no requirement to go straight to 100%. Or ever.
For instance, even public companies might increase the percentage of employee ownership over time.
But capital needs could still be met, as the public or private non-employee stock class would still exist.
Owners are bought out. For a public company that just means buying back shares.
A company whose employees care very much about share price sounds good to me. It is not much different from companies who let employees “take” options.
> For a public company that just means buying back shares
But in practice, what does it mean? Do you want to make illegal a shareholder selling when they want to? They have to sell at whatever the price is when the company needs their shares?
Plenty of companies at various times have shareholder agreements that make it a breach of contract to sell shares, or that regulate conditions under which you can be dragged along on a sale on terms you have no say in. It affects risk, and so will affect your ability to raise funds on those terms but structuring it ways that allows the company to buy back but ensures an investor or lender with shares as security will get sufficient profit potential to outweigh the risk is still entirely possible.
Companies can issue new shares to dilute existing investors. I feel like on HN of all places, this should be common knowledge? Like, this is literally the scheme under which every tech company already operates, and yet on HN of all places some of ya'll can't conceive of a system where employees automatically get some stake in the business?
It would be straight forward to require companies over a certain size to issue and distribute some number of shares based on current pay to employees. Existing shareholders will have their stake diluted but are welcome to buy more shares on the market while employees are welcome to sell or hold. If the investors are actually good at allocating capital, they should have plenty of profits from previous investments to maintain their % ownership despite the share inflation. If they aren't, then they should find a different job.
Under this scheme, Bezos would still have become a billionaire, and we know this because Amazon and tech companies already do this exact thing by offering stock options!
And the neat thing is, when a company does a stock-buyback, this is literally the same giving a dividend of the profits to employees.
> Companies can issue new shares to dilute existing investors. I feel like on HN of all places, this should be common knowledge? Like, this is literally the scheme under which every tech company already operates, and yet on HN of all places some of ya'll can't conceive of a system where employees automatically get some stake in the business?
I know you said "literally", so all bets are off in how you'll parse a reply, but yes, I do know about share dilution. You're describing practically the same thing. You want people to risk all their capital, and if the business does well you auto-dilute them. That's fine if it's what they signed up for, but it will have a chilling effect on investment.
> Under this scheme, Bezos would still have become a billionaire, and we know this because Amazon and tech companies already do this exact thing by offering stock options!
Again, the "literally" made it clear that this wasn't going to be great, but you're committing the apex fallacy. If you only consider the highest of high performing companies in how your instincts guide you, you're going to commit some very obvious errors.
There are multiple legal frameworks for that. The simplest way is to "just" have the company buy back shares and re-issue them to staff over time. Depending on jurisdiction there can be more tax efficient ways. Some places it may be more practical and/or tax efficient to use trusts (e.g. the John Lewis Partnership in the UK, with 80,000 employees, is a trust for the benefit of employees - it means shares can't be cashed out, but all present employees share in dividends) and sell or give shares to the trust bit by bit.
> It would be nice to have a legal framework for companies to increase employee ownership, but be able to do it incrementally with no requirement to go straight to 100%. Or ever.
But this framework exists, and is used by a huge number of firms.
Nowhere did I mention or apply mandates. “Framework” is not a work that means mandated.
There seems to be a lot of sour grapes that pro employee arrangements are inherently scammy. For no good reason. None of the ESOP companies were mandated!
Thee is a legal framework for those.
There is a legal framework for changing an S-corp to C-core
There is a legal framework for going public
There is a legal framework for declaring bancruptcy
They have NOTHING to do with mandates.
Frameworks are developed over time to handle complex and not always obvious issues in a rational way.
The benefit of a legal framework is its accumulated wisdom developed by law and courts. And the fact that it becomes a recognizable thing for all parties to consider, and makes that path easier to take if that is the decision.
But any transition would (by any reasonable process) be at the agreement of current shareholders. So issues of compensation, and other issues should be dealt with sensibly.
The most sensible way for this to be an easier option, that works out well, is to develop a well thought out framework.
—-
Open source is a very valuable recognized legal framework. Between evolved OS licenses, supportive court cases and the general law, we are better for this framework.
It makes it easy for small actors to take advantage of that approach to publishing software with little legal risk (if they handle known issues, such as not including non-OS work, etc.)
> we should be optimizing for making a company that makes the workers' lives better.
Sure, you're free to optimize for anything you like. As am I and everyone else. I don't think there are any legal hurdles to set up a company that is fully owned by its workers.
Not always, no, but as the general case, they are. At the end of the day, people need to be willing to pay a business in exchange for its goods and services, and if they don't feel like they are obtaining net positive value from the transaction, they won't be.
I think key word here is "feel". The reality is that modern products are absurdly complex, and consumers truly don't know what is (and isn't) worth their money. Which is why marketing, making people "feel" a certain way, is SO important. Maybe even more important than the product itself.
I mean, do you know how any of your food is produced? If you wanted to verify that the ingredients are what they say they are, can you? If you're buying a car how confident are you the transmission is reliable? Do you actually understand how the transmission is designed OR... is it just brand name? It's brand name, right.
Ultimately companies don't need to, and are better off not, producing high quality and safe goods. It makes much more sense to produce lower quality goods and reinvest the savings into advertising. The consumer won't know the difference, and they couldn't find out even if they wanted to.
Everyone is both a producer and consumer, these are not different groups of people. While production is a prerequisite for consumption, producers have interests as consumers.
That's not as relevant as you'd think - the "customers" of teachers are, arguably, taxpayers and not children. Alternatively it's parents, or perhaps politicians who set the budget.
Focusing on children is the more pro-social preference, but children who attend schools famously don't have jobs in functioning societies.
More importantly, the teaching system is basically un-incentivized by incentives - teachers in the US (focusing just on the US for a sec) are incredibly underpaid, and basically rely on masters-degree teachers putting in effort completely disproportionate to the pay. Everyone accepts this state of affairs specifically because we're all ignoring market incentives in favor of the good of society (i.e. the quality of childrens' education).
So, let's suppose we judge teachers based on how well they appease politicians and parents who support their funding: they pass all students, regardless of how poorly they do on tests and how badly the children need to just repeat the year. This is a terrible outcome, and yet you're implicitly endorsing it.
I assure you that being allowed to teach well would greatly increase the pleasantness of life for a hell of a lot of teachers.
Nobody gets into teaching for the money—and, for that matter, there’s not a clear connection between doing it well and any kind of rewards at all, as it stands.
Teaching is a good example. When you teach in public schools which is basically where the "people own the means of production" since the school is paid for by the taxes collected by an elected government, you're absolutely right. No rewards for quality teaching basically at all.
However, if you're really good at teaching you can teach at a private school and reap a lot more rewards. Better pay, better recognition, a better work environment this list goes on and on.
/wife is a teacher and has taught in both public and private highschool
Yeah. Depends—fancy upper-middle-class and higher private schools are like that. The majority aren’t that sort, and both pay and perform on a similar level to public schools, if not worse. But the good ones, the ones people really think of when they say “private school” (but not the actual majority of such schools) do pay better and often have really good perks (the PTA-equivalent Christmas and end-of-year gifts you get at some private schools—damn!)
As a bonus, private schools are usually way more willing that public schools to tell annoying parents to get bent. Which is a pretty big perk on its own.
Stop optimizing for financial leeches sucking value out of the system and externalizing all the societal consequences, start optimizing for the vast majority of the population.
....sounds better when you elaborate on the categories you selected.
The vast majority of the population are consumers. Each of us consumes far more services than we produce. Making life better for consumers is making life better for everyone.
You're ignoring the proportions. Your happiness is maybe 80% related to your job and salary (at least up to a point where you can be considered wealthy, after that there's decreasing returns), and each product you consume from each different company affects your wellbeing by a minuscule amount. Even adding them all up won't give more than, say, 15% as most of your expenses are not on products, but things like housing and transport.
Given that, if you could make everyone's jobs more fullfilling and increase people's salaries at the cost of things costing a bit more, you would definitely increase overall wellbeing. People would afford a small amount less, but that would not impact them significantly, or maybe at all.
The problem I see is that in global competition, you may be put out of business by countries that give much less shit about worker's wellbeing because people will still spend almost all their money on the cheapest available option (even more so if they can afford less!), and that IMHO explains why American companies have taken over so many markets overseas (and now, China seems to be doing it even more). When that happens, everyone in the country loses. So there needs to be a balance, which I think Europe is doing more or less well: people still have great working conditions but can afford less than in the USA, where people have very near the worst possible working conditions (nearly no vacation mandated by law, no parental leave, no healthcare except for the best jobs), but can buy more useless stuff.
EU is on the same path. Actually even worse with over-the-top ecological requirements. Making it harded for local businesses, while making trade deals with iffy countries left and right. For now it's rolling on selling assets to China or US. But obviously that's not sustainable long term. Either we need to protect our internal market and tax the crap out of imports, or the party will be over.
>Actually even worse with over-the-top ecological requirements.
That seems hard to judge in the short term - if in 50 years some economically-critical ecosystem collapses like the north atlantic fisheries did, they will have been absolutely necessary in retrospect.
No matter what ecological requirements would EU impose on local businesses, the rest of the world would happily pollute to cover its part. And eu itself would by that stuff. Point in case - fertilizers. EU regulations for fertilizer plants are getting stricter and stricter. Local produce prices are sky-high, especially after cheap gas was cut off. Yet imports from Russia (!!!) are massive.
Given that wealth is continually being concentrated towards the very rich I don't think this is accurate. As a whole the working class is producing more value than they are consuming, but the excess is going to the rich not those producing the value
By definition, the average person consumes as much as they produce. Generally speaking, the poorer someone is, the more they produce relative to what they consume. Making life better for producers improves the lot of the poor; making life better for consumes improves it for the overconsumers (i.e. the rich).
>Each of us consumes far more services than we produce.
Speak for yourself, not everyone is in debt all the time, and some never in debt whatsoever even when they have no unusually above-average earnings.
But as part of a vast majority, you are as correct as possible.
Then again capital is just plain Other Peoples' Money, and you can't be a capitalist without capital, no matter how much you wish it was true.
One problem with housing is that real estate has investment potential but for decades it has been too expensive for average people. Debt is crafted to barely make it possible to get into a property, and you may do well if values increase but there is an entire system in place so that others profit more from the same piece of property than you. Vehicles are another high-dollar item where debt is usually incurred, but these almost always depreciate fast. You can draw the line there and be pretty realistic, but there are plenty of people who are at the extreme where everything that costs money is borrowed.
So that's about as close to capitalist as most people get. That's about all of OPM they have at their disposal, and the only thing invested in that has upside potential is the home. For those fortunate enough to have gotten in when it was more within reach. And there can still be a gradual spiral downward which is too slow to notice until it's too late.
Sometimes it helps to do the math and not be afraid to admit how far from capitalist you actually are compared to how capitalist everbody thinks they are.
Disclaimer: this article was DOA & flagged instantly with zero comments, but it seemed OK to me and I vouched and now look at it. Nobody's fault but mine.
"The US cultural bias is showing here, as it's assumed that profit is above all else, and a company that forgoes profit to make workers happier must thus be less good."
It's possible companies with lower profits don't survive when they can be outcompeted by the higher earning companies. This sort of competition has killed plenty of companies.
If every company that offers goods or services prioritizes "worker happiness", by for instance refusing to excise unproductive divisions, then the result will be a world where everything costs more and takes longer. Not just consumer goods, but any sort of public infrastructure project, R&D, etc. If you think it takes too long or costs too much to build a school or fix a road in America these days compared to a few generations ago, it would only get worse. Every single sector of the economy would start dragging its feet with no regard for efficiently getting shit done.
If only some companies are coops, then those have to compete with companies that aren't and consequently they have to work efficiently or fail. The idea behind making them all be coops seems to be removing this pressure to perform. Bad idea.
If coops could be more productive for less money they could beat out their competition without needing it outlawed. It should be easy for them if what you say is true, no Bezos means they have more margin to work with but they struggle to compete... Hmm..
"If companies who don't optimize for profit optimized for profit they would be the same as the companies who optimize for profit" is fairly obviously true, and also useless.
You're asking me if an economy that optimized for happiness instead of productivity would suffer from reduced productivity? Yes, yes it would, and it would also suffer from increased happiness.
Again, this is a culture thing, where I'm saying "I don't care about being productive, as long as I'm happy", and you're coming from a Protestant work ethic place of "but how can you be happy if you aren't productive?".
Again, this is a culture thing, where I'm saying "I don't care about being productive, as long as I'm happy",
And you're free to work part time or switch to a lower-paying job that you enjoy more. I did the latter recently; it's great, and I'm thankful that our economy is so productive that I can still afford everything I need.
I think you're confusing productivity with profit. Regardless of how company profits are distributed, our society needs productivity. I pointed out that coops are less efficient in terms of productivity, and you responded by complaining about how much money Bezos has. Redistributing the money won't make up for a decrease in productivity, which will harm society as a whole.
As for me being some sort of Christian; I'm not and I take that as an insult. Kindly go fuck yourself.
I disagree that a decrease in productivity would make society worse as a whole. For example, the change from Serfdom to a more standard 40-hour work week certainly lowered productivity, but it also made society better.
Also productivity is complicated because humans are complicated. You may assume that, say, 50 hours of work is more productive than 40. But I doubt it - from what I've seen, it might be less productive. Even though more time is spent.
The average productivity per person today is vastly greater compared to subsistence farming times. We have much more leisure time now made possible by an increase in productivity due to machines, technology, and better division of labour. (Though I argue our current debt based money system which requires constant inflation is stealing our productivity and that's why we still feel like we're on a treadmill despite massive gains in production). This greater productivity is what allows us to consume not only more stuff, but a wider variety of stuff, and stuff of better quality than in the past.
As for 'the change from serfdom', if you're referring to the improved working conditions following the peasants revolt, remember it took the Black Death to wipe out 50% of the population in England, consumption went down, but the potential productivity of survivors would not have changed much, so landowners had to pay more for laborers to attract manpower for farming.
A decrease in productivity relative to consumption is not good, as it just causes low-supply driven inflation and makes everybody poorer. That being said, I believe the quality of productivity / consumption also need to be considered, not just aggregates. It's entirely possible a lot of productivity is just garbage products and irrational consumers are happy to consume or are tricked/bamboozled. ZIRP and excess monetary expansion facilitates these distortions, giving investors cheap money to stimulate production in dubious industries, and giving consumers cheaper credit to purchase products of dubious value.
But that’s a restricted vision where being productive is a graal vs being useful for the society.
Coops don’t want to beat the competition, they want to be a useful structure for A) their clients and B) their workers.
If they manage to do A+B, they have already won. They don’t need or want to beat out competition.
They don’t play the capitalists game, they play the real game of "in a working society, workers want to be useful and customers wants a good service". There is nothing more to happiness of a society. Everything else is just about making rich people more rich.
Yes exactly. This is why, European countries, with the strongest worker protection, such as Norway, Sweden, Germany etc. are so much poorer and far behind than US in terms of QOL and quality of goods they produce.
Why do you think that prioritising worker happiness would lead to refusing to excise unproductive divisions? Do you think people like working for a company that doesn't do anything?
There are lot of countries out there in the occident where you can’t "excise unproductive divisions" and where firing a worker without a solid reason is hard and dangerous for the employer.
And guess what, they have a cost of living that is comparable to the US (except for housing which is currently shitty all over the occidental world).
Ok, you may say that the US is the first worldwide economy or whatever. And what ? A good economy is just a tool to help societies flourish. If you have a powerful economy but your citizens are sad and depressed, you are loosing the society game anyway.
Being efficient at getting shit done is probably important for global happiness, but that’s up to a point.
If people in US are sad, it’s not because schools are too long to construct or because roads are too long to fix, it’s because nobody even decides to build/fix them because it benefits "only" to the community.
Humans don’t inherently hate working, that’s even probably ingrained in their genes, they just hate being exploited.
Apple has 160k employees - biggest holder of Apple stock is Vanguard that has 50M customers who are de facto owners. Let’s skip other investment companies to make it easy and assume every Vanguard customer owns piece of Apple.
By the virtue of your argument we should optimize owners wealth because there are more owners than employees.
World is much much more complicated to be throwing simple arguments like that :)
I think this is just your anti-capitalist bias showing. “Market” is meant in purely game-theoretic terms.
> The vast majority of people in companies are workers. Let's stop optimizing for owner wealth and start optimizing for worker happiness instead.
All these workers could set up cooperatives and work for / own them instead. The fact that this hasn’t happened suggests that in reality, the for-profit companies are better at optimising workers happiness than cooperatives (maybe they pay better? Maybe they enable more job hopping?)
> All these workers could set up cooperatives and work for / own them instead.
And some people do that (modulo creating coops), just not middle-class people. No-one without a decent cushion would be able to risk it. Especially with health care being tied to employment.
I think that's a bad argument. Founding your own cooperative makes you kind of an entrepreneur but joining one doesn't. Most workers are joiners not creators in terms of companies. And I bet more than a few of them would gladly become a partial owner of the company they are working for.
But there are so few cooperatives that the chance of you joining one is very slim anyways.
This only works if you assume we are in a free market. We are not, and no such market has ever existed.
Setting up a coop versus setting up a company aren't on equal ground. One has clear legal roads, and the other is perceived as communism by 50% of Americans. Sorry, it just doesn't work that way.
It's a similar argument I hear against unions - "well go work somewhere else!"
The problem is that it's just not equal. Companies have infinitely more power and leverage than laborers. The labor market is EXTREMELY skewed in favor of companies.
If we want the labor market to not be skewed like this, we will need to allow (and even force) laborers to unionize. That's just not gonna happen. In practice union busting is not only allowed, its perceived as a good thing.
> we want the labor market to not be skewed like this, we will need to allow (and even force) laborers to unionize.
We already allow workers to unionize; a practice with which I don't agree. If we were to force workers to unionize, then we take away worker atonomy. I fail to see that as a benefit.
I don't have anything against unions generally and am happy for companies to decide they will exclusively deal with unions to reduce their costs of negotiations, but I absolutely do have a problem with laws saying employees can decide to take away atonomy from their employer and force their employer to negotiate only with a union.
As I've said, we don't really because union busting is not only allowed but expected.
The reality is that employers should not have such autonomy. What you're arguing is the right for an employer to necessarily hold more leverage in negotiation as opposed to workers. Which... isn't a right. It's an anti-right. As in, you want less rights for workers.
Unions only work if they're enforced. Just like a right to life implies an anti-right to kill, a right to fair negotiations implies an anti-right for employers to choose not to negotiate with unions.
> What you're arguing is the right for an employer to necessarily hold more leverage in negotiation as opposed to workers. Which... isn't a right. It's an anti-right. As in, you want less rights for workers.
No. My argument is that forcing companies to only negotiate with unions if that isn't want the company wants to do is an anti-right. It violates free trade. You disallow entity A from negotiating with entity B because entity C doesn't like it.
> Just like a right to life implies an anti-right to kill, a right to fair negotiations implies an anti-right for employers to choose not to negotiate with unions.
My point above is illustrated here. Person A being alive doesn't impact person B being alive, or person C being alive.
Disallowing entity A from negotiating with entity B as entity C means that you are now infringing on entity A and entity B as an external third party.
As entity C, you would be perfectly within reason to inform entity A you will not trade with them if they do not negotiate through entity D or if they negotiate with any of your peers through any channel other than entity D. Entity A would get to decide if you offer more value. But to be entities X, Y, Z and disallow entities A and B from trade is anti-rights.
Unions aren't an external third party, that's where this idea falls apart.
If an employee wants to work without a hard hat, and the employer also wants the employee to work without a hard hat, but OSHA says no, is that more or less rights?
The naive answer is less rights - well the employee wants to! In practice, this manifests as pressure. Soon no employees wear hard hats. And they're denied the right to a safe working environment.
I argue its MORE rights. Because we give the employee, and employer, the right to a safe working environment.
Meaning, if we want employees to have the right to fair negotiations, we have to restrict employers.
Even I as a somewhat skeptic of capitalism and supporter of coops can tell you this is not a USA only thing but a certain interpretation of said capitalism.
Except for the part where the company gets outcompeted and goes bankrupt.
And no, we cannot just outlaw competition. Having an efficient economy is important and valuable because it allows us to have a higher standard of living while putting in less work.
They get outcompeted because worker-owned companies aren't allowed to be leeches. You can't have your workers own negative shares.
But, many companies (especially those really competitive ones!) just... don't make money. It's easy to be a big disrupter like Uber when you make -500 million dollars a year for 15 years. Naturally that wouldn't when you aren't on capital welfare.
>> optimizing for making a company that makes the workers' lives better
Companies should not deliberately make workers lives bad. But, optimizing for the worker seems fundamentally unworkable as this would essentially mean financial independence at the time of hiring followed by bankruptcy.
This is an often stated postulate, but I'm not sure I agree. Sure, making money is necessary for a company to survive, but it doesn't have to be an end goal, and imho it's detrimental when it is. The goal can and should be to make a great product, create and make available something that otherwise would not exist, improve some product or process, etc - money and company itself are or should be just a means to a goal like that.
And the measure of how well you are making a great product, creating something that would otherwise not exist, or improve some other product or process is how much your customers are willing to pay you for what you are doing. If you are creating value for other people, you are making money -- money is a measuring unit that quantifies transferable value.
I don't think that this is true. There are plenty of businesses that make shitloads of money off of frustrating or downright crappy products because of captured markets, constrained customers, lack of transparency, and more.
Look at something like Dark Patterns. These make a business more money by making a product worse.
>No, because that falls under the fallacy that every market is a perfect market, where none is.
No, it doesn't. We live in a stochastic world, not a deterministic one, and nothing perfectly fits any speculative model. There are always outliers and edge cases, and that's fine -- the world doesn't need to perfectly adhere to any model in order for the model to be more accurate than not in the general case.
And the proposition that business profits are largely aligned with consumer interests in the general case, even despite outliers to the contrary, is very obviously true.
> the world doesn't need to perfectly adhere to any model in order for the model to be more accurate than not in the general case.
But that's my point: the world is so different from that model that it becomes inaccurate. You might be privileged enough to have a good enough approximation of a perfect market, leading you to believe that the model stands, but you are not representative of the population. Not even close to the median.
> And the proposition that business profits are largely aligned with consumer interests in the general case, even despite outliers to the contrary, is very obviously true.
I don't know why I'm debating this in the hyper-capitalistic forum that Hacker News is, but no, business profits are not. If they were, no advertising would be necessary, because products would naturally be sold. If they were, every consumer would have access to everything. If they were, no lobbying by any company to soften laws seen as too restrictive would be necessary. If they were, companies would not emit a single gram of CO2.
The whole point of business profit is to profit. Aligning with consumer interests is lucky happenstance, not a necessity. A fringe outlier, as you say. You cannot say "it is true because I see it". It needs to be backed by strong analysis.
Profit is what remains when you subtract operating expenses from income. Payroll is an operating expense. Maximizing profit is not strictly necessary for a business to operate.
My point isn't that a company shouldn't optimize for profit. My point is that the supposed logical conclusion stating "if it doesn't optimize for profit, then it will die" needs to be backed up by strong arguments. There are myriads of examples of companies not optimizing for profit and still surviving, and there are myriads of examples of companies optimizing for profit and still going bust.
> and there are myriads of examples of companies optimizing for profit and still going bust.
Do you mean there are myriads of example of companies who say that they are optimizing for profit, but don't actually follow through in their actions? Humans do, indeed, have a penchant for saying one thing and then doing another. But if they are truly optimized for profit, how could they possibly go bust?
It is not an unconstrained optimization problem. The constraints in which the company operates might result in a feasible region where even the most profitable point is still a net loss.
Those constraints may of course be self-imposed, like e.g. choosing a market to operate in.
> It is not an unconstrained optimization problem.
Of course not. The constraints are exactly what you optimizing against. Choosing to operate in a market that is not capable of supporting profitability is not optimizing for profitability, though. One may claim to be optimizing for profitability, but actions speak louder than words.
Proof of what? Proof that non profitable companies go bust, which is what your quote says? Or proof that over optimising for employee happiness results in under optimising for profit, which you haven't quoted?
Well, there are worker-owned coops, and they haven't gone bust, so how does that work? It's almost as if the workers don't actually want to lose their jobs!
Elsewhere I've seen some reporting on cooperatives report lower satisfaction on some metrics, usually suspected to be exactly because worker cooperatives tend to give employees more of a stake and so stress levels around the future of the business may be higher.
At the same time, it is flawed to focus on any purported notion that they don't optimize for "worker happiness" because workers decide what they optimize for. And so that may or may not be "happiness" for any given coop, but it certainly does mean optimizing for what workers care about.
Comparing that to, I presume the notion of e.g. the Soviet Union as representative of "communism", where workers had near no say in what the dicators imposed on them, seems to be a rather crass and gross misrepresentation when used as a comparison for workers coops where they do have a say.
There is some kind of derangement in the English speaking West, any attempt to reign in power of capital must be communist.
If free public libraries didn't exist and were proposed today, they'd be accused of communism. If free public legal deference did not exist today, anyone proposing it would be accused of being a communist. Also notice that using public money to hurt a person, i.e. prosecution, is never accused of an ideology.
These sort of comparisons are deeply unhelpful and only betray illiteracy of the accuser.
The funny thing is that Marx wanted the working class to be armed, and in Critique of the Gotha Programme, he called out the US school system as far preferable to the state-controlled school system proposed by what is now SPD (he argued the Prussian state was in need of an education by the people and shouldn't be put in a position of providing an education to the people). A lot of the people who call everything communism would be very uncomfortable with how many things they agreed with him on if they read any Marx (not because they are left wing, but because a lot of what was radical policy at the time is settled now, but also because already then a schism was developing between those on the left who favoured the state as a tool to transform society, and those who feared it as a potential oppressor, and Marx got increasingly critical of the state with age; where in 1848 he argued for state monopolies, by 1872, after the Paris Commune he criticised them for not having gone far enough in smashing state institutions, and by 1875 he criticised the now-SPD for trusting the reform potential of the Prussian state too much, such as with respect to education as above)
It is pedantic, in as much as when people use "free", we are very aware that it means "free at the point of use", and so pointing out that they are paid for is unnecessary.
This criticism would carry more weight if this entire thread wasn't full of snippets of communist fanfic about using legal force to try to upend reality and ending the profit motive for companies and enforcing worker collectives.
You mean like how we upended reality in 2008 to save corrupt institutions and/or incompetent institutions? And then again during COVID? And then again to save Silicon Valley Bank?
You pretend that current situation some kind of natural state of affairs, when in reality it is a result of ‘legal force for me but not for the’
None of those things are reality, those are how we chose as a society to interface with it. Now that they've happened, they form a part of the fabric of reality, that is the history of the universe and humanity as a species. When I say "upend reality", I mean the idealist delusions that commies hold about the nature of entropy, the nature of humanity (acting like greed doesn't exist, forgetting the iron law of bureaucracy), and the nature of the world (eat or be eaten).
Yes some people hold different views on the nature of humanity. That doesn't mean they're delusional, it just means they're different.
Personally, no I don't think greed is intrinsic. I think its learned. I also don't think its eat or be eaten. I think that's learned, ingrained, to benefit the most powerful.
I think 99% of people are good and just want a decent life. They don't care about having more or being better.
The problem is those people are trying to intellectualize animals. Humans are animals. We, presumably, have free will. We, presumably, have rationality. While these traits make us higher order animals, we are still animals, and the law of the jungle always applies. It is delusional to act otherwise, because when push comes to shove if it's a choice between starvation/death or nearly any alternative, people will choose the alternative every time, which includes violent acts, acts of greed, and all manner of despicable things. I'm not even making a moral argument here, morals are irrelevant. Morals are a fiction created by people to philosophize our own societies. But the reality of the world transcends humanity and we cannot avoid it.
Humans are animals by technicality only. We have higher thinking. Again, what you're stating is an opinion and nothing more. There's nobody anywhere saying you're right. Just you, and your beliefs. Which is fine, but when you act like your beliefs are divined from God, that is what we consider delusions of grandeur.
Yes morals are made up. Everything is made up. Everything is a social construct. "the world" (I assume you mean evil and greed?) does not supersede that. Because if you kill someone you go to jail, and jail is real. Don't believe me? Try it out.
The law of the jungle is... well... something you made up. Sorry. That may apply to your dog. But for the people I know, many would sooner end their own lives than doing something that distasteful. Hell, I've known many to end their own lives for much much less. Point being, it doesn't actually work this way.
> But for the people I know, many would sooner end their own lives than doing something that distasteful.
You bring up jail in the same breath you say that. The plural of anecdote is not evidence, and you've provided equal weighting to both that people will do terrible things and that some people will not. At the very least, presumably that's evidence of free will. Either way, it has no bearing on the iron law of nature.
Just because civilization exists, and we exist within it, does not mean that we have overcome our basest nature, we only hold it at bay, presumably by choice.
> Morals are a fiction created by people to philosophize our own societies.
This is preposterous, and frankly quite uninformed. It is especially ironic coming from you, since you are going round and accusing other people of being delusional.
We have iron-clad proof that cavemen took care of members of their tribe that were born crippled, and of the elderly. For no benefit to themselves. We have evidence of morals going back thousands of years. This is a topic well researched by anthropologists, and is not up for debate.
That's what the word 'civilisation' means - civilised behaviour and ethical standards. The people who think you can have a complex society, but have no respect for morals, are frankly savages.
It is unfortunately quite common to come across people in technology that have great talents, but they are as informed and society and civics as a high-scooler.
The other day I came across libertarians who think parents should have no obligations to feed their children and should not be held accountable if the child dies, because freedom. Might as well be speaking to Neanderthals.
> This is preposterous, and frankly quite uninformed.
I actually studied moral philosophy in a relatively well-respected institution (although I did drop out prior to getting any form of degree). Nothing I have learned about the world has ever indicated that there is any such thing as a moral absolute, although there are certain moral principles that tend to be enforced by most societies across history. You are arguing a position that both presupposes moral relativism and presupposes moral absolutism, and both cannot be true at once. At best, you are applying pragmatism towards your own political and economic beliefs and searching for post-hoc rationalizations, but the argument you have made in this entire thread is neither complete nor internally consistent.
> You are arguing a position that moral absolutism,
Not by my reading; the argument was that iron clad examples of moral behaviour exist, not that we all share a core moral absolutism.
> although I did drop out prior to getting any form of degree
Not a suprise. To be fair even had you graduated you'd hardly be the Peter Singer of moral philosphy and those that attain such heights are not without counter argument.
Maybe lay off the "I'm an (almost) expert and this is my strawman" comments, they're clearly weak and cast you in a poor light.
I don't claim to be an expert, just somebody with thoughts and opinions. It was a response to someone saying I was uninformed. I am not uninformed, I am well educated on the topic.
Like most people, I am not an expert in most things, only in a very narrow subset of things. My expertise lies in some areas of technology, not really elsewhere. There is a vast gap between being an expert and being uninformed, it's not a binary distinction.
I think it was clear that my statement of 'every time' was not to be taken literally.
I don't think we're going to construct a well-supported moral framework defined in the most literal terms in the context of a set of comments on a website.
Nothing anyone has responded to me with in any way supports the idea that communism is something that aligns with reality and is anything more than a fantasy for idealists.
It's amusing, because you'd agree more with Marx than with those "commies" with those "idealist delusions" you mention.
E.g. Critique of the Gotha Programme has a whole sections where Marx rips the then still largely Marxist precursor of the SPD for trusting the state too much, for not understanding that equal opportunity means distribution can't be equal, and The German Ideology has Marx pointing out that "eat or be eaten" means socialism according to him is impossible in a society that isn't rich enough to meet sufficient needs to remove poverty entirely through redistribution.
Overall, Marx central thesis is that workers being forced into a choice of "eat or be eaten" is what he believed would eventually force them to rise up and end capitalism once capital gains sufficient upper hand to drive labour costs down so much it's rising up or starving.
These "idealist delusions" about greed not existing annoyed him enough that there's a whole section in the Communist Manifesto mocking them, and the reason Marx and Engels used the term "communist" instead of "socialist" was to set themselves apart from socialist movements that believed that people could just be convinced to stop being greedy.
If society isn't driven by greed, that would invalidate the central theses of Marxist communism. All of his core predictions rests on the assumptions that greed is what drives the evolution of capitalism towards a stage where he believed workers would eventually not put greed aside but understand that the way to maximise their own benefits would be to work together to strip capitalist of power and wealth.
Whether or not we think he was right or wrong about that, it's in any case clear that the major inspiration of communist ideologies explicitly rejected the notion of ending greed.
>There is some kind of derangement in the English speaking West, any attempt to reign in power of capital must be communist.
I do believe corporatism is a problem with modernity. That being said, the article does sound fairly similar to "workers must own the means of production". Are we not in the ballpark of Marx, for better or worse?
If with over in overoptimized you mean where it starts cutting into optimizing for earnings it is by definition true.
One could similarly say that the company goes kaput if you over-optimize for profit extraction.
The goal should be to some-how optimize for the sweet spot where the well-being of the company, the employees, investors, the economy and the environment are sufficiently in balance.
I think the customer has a good bit of influence by voting with their wallet but we don't see it in action very often. One could underoptimize for that too!
Why are there so many more startups in the US compared to Europe?
While not a perfect measurement, there is more innovation and economic generation that happens in the US compared to Europe. Time will prove which culture of business wins.
As a generalization, American culture is significantly more optimistic than European culture. The fixation of the latter on risk and the former on reward reflects baseline cultural assumptions about what the future will look like. Building a high-growth startup, or investing in one, does not look like a sensible decision to a pessimist and this is reflected in attitudes and behaviors.
1. A larger, wealthier, cohesive consumer market sharing language, and culture.
2. A business-first, citizens-second approach to society.
3. Wealthier, and less risk-averse investors (ties back to point 2.).
Simply put, very different societies (even more considering Europe is not at all a homogeneous block), with different priorities, both extremely wealthy by global standards.
The question is more: which model is more sustainable as a society in the long-run, that play is still ongoing and we might not have a clear answer for the next 30-50 years.
>2. A business-first, citizens-second approach to society.
This is meaningless. Businesses are activities undertaken by people. Everything resolves back to the people -- the same aggregation of the same individual people in all cases. Reifying the abstraction of "business" to treat it like some separate entity that's at odds with the very people who are engaging in the actual activity that term describes is a monumental confusion of ideas.
Businesses are activities undertaken by people but they are also legal entities which have no need to abide by ethical or moral standards, shielding the underlying people from liabilities incurred by such entity. People can't do that.
Citizens need to abide to cultural norms, societal expectations, etc.
Of course everything resolves back to people, in a reductive sense, but those entities (citizens, and businesses) don't have the same standards: morally, ethically, nor legally. Neither do they share the same needs, businesses can by eventuality support the needs of citizens to sell stuff but their only motive is profit-motive, not what's best for citizens.
Business-first is a prerogative of how the USA approaches regulations, it's left first to businesses to regulate themselves until issues mount up to the point where regulations are needed, at that point the businesses have had time to amass power and fight against those. Even in the cases where regulation would be beneficial to society, even in cases where the current regulations which are business-friendly are damaging to society (US's healthcare is a clear example).
It's only meaningless if you don't want to see what it means, citizens needs are considered below the needs of businesses as entities, it's a cultural trait of the USA to let businesses roam more-or-less freely (again, with the exception of some industries) until they cause enough damage to generate popular calls for them to be restrained, at that point is not clear if the government will be able to reign in them. Businesses in the USA have much more power than the people, they make policies, they donate enormous amounts to political campaigns, etc. Citizens can't play in the same field.
There are many cases from the past decades: the global financial meltdown of 2008, the dysfunctional healthcare system, the opioid crisis fueled by a single pharma company, the nosedive of Boeing, etc.
You can attack my point in many ways but not by saying "it's meaningless", businesses interests are, in many cases, not citizens' interests. A very clear example: if a business could they would not hire any Americans, simply because the workforce is expensive, shipping this labour outside of American borders would be great for any business' bottomline, it would not help at all society as a whole. They would do that even if it meant killing their own businesses, since there wouldn't be consumers to buy their products, it wouldn't matter until the issue was extreme enough to require them to actually create a consumer market by employing people in the country.
> Businesses are activities undertaken by people but they are also legal entities which have no need to abide by ethical or moral standards, shielding the underlying people from liabilities incurred by such entity. People can't do that.
I don't understand the concept of assigning moral agency to a pattern of activity. The legal entity is itself just a conceptual framework under which actual people operate, and not a concrete entity capable of autonomous action.
The individuals who own and operate the business are the moral agents, and I don't see how they are shielded from the consequences of their own actions. Limited liability just creates a distinction between personal and business assets for the purpose of financial liability, and does not have anything to do with ethical or moral standards.
> their only motive is profit-motive,
"Profit" is just a quantification of net gain in subjective utility experienced by people, in whatever form that takes. Fundamentally, "profit motive" is a redundant phrase, because "profit" refers to the fulfillment of whatever motivation you had in the first place. Whether that's good or bad overall isn't a function of the pursuit of profit -- profit consists of fulfilling the pursuit of anything -- but rather what was being pursued, and what moral boundaries were crossed its pursuit.
Some people seem to bend over backwards to create conceptual frameworks aimed at externalizing the causality of human behavior. Perhaps those who want to create utopia need to find the fault in our stars, not in ourselves, in order to hold out hope that all the world's problems can be someday solved, so they blame abstractions like "capitalism" or fictional characters like the devil for the unethical behavior of human beings. But none of that is really valid -- all of the problems of society are rooted in the fallibility of human nature, and there's no way around that. Unscrupulous, ambitious people don't go away simply because you've altered the form of some abstract system -- they will find ways to benefit at the expense of others no mater what system you cook up.
This makes sense along with piva, probably because there is enough inconsistency in the familiar system as it has developed, that it's less possible all the time to make black & white judgments.
>Unscrupulous
>-- they will find ways to benefit at the expense of others no mater what system you cook up.
A more sophisticated chef with a dish completely unfamiliar but irresistible can still be disruptive. Whether or not it's a brand new concoction or a rehash of something so out-of-style that it's simply long forgotten.
The point of a company is to make a product that customers want, and make it as accessible as possible. “Taking over the market” and producing profit is only a byproduct of doing that. A competitor would wipe out that profit if there existed a cheaper option that delivered the same value to customers.
The minute you start optimizing for employees instead of customers, you’re delivering less value to customers (the world) and asking to be disrupted. This is good.
In the US a vast majority of adults now own index funds (either via their personal retirement or public pensions). In fact, the largest shareholder in almost all public companies is some index fund.
So workers do own the companies, in proportion to how much value they deliver to the world due to market cap weighting.
The system we have now has evolved out of thousands of years of humans battle-testing various other systems. The current form has taken pretty much the entire world out of devastating poverty at breakneck speed. Seems like we shouldn’t redesign it based on the whims of armchair internet commenters.
> The minute you start optimizing for employees instead of customers, you’re delivering less value to customers (the world) and asking to be disrupted. This is good.
You’re describing a race to the bottom for quality of jobs. But in this system we all have to have jobs, so you’re describing a race to the bottom for quality of life for most people. I think it is reasonable to question and discuss how we can better optimize our goals so that people’s material needs are met but jobs also don’t suck.
> So workers do own the companies, in proportion to how much value they deliver to the world due to market cap weighting.
This claim hides a great deal of assumptions about economics that are highly contested. For example the idea that how many shares you buy is proportional to the value you deliver assumes that workers with zero shares deliver zero value, which is obviously false. This also assumes that wealthier people, who own more of the shares in index funds, and delivering proportionally more value. Lending does have value, but it has limits. Imagine in the extreme case a company with 100 employees where 100% of the shares are owned by one person. Does that person provide 100% of the value?
My point more directly is that worker’s labor has value unrelated to ownership in shares, and simply offering stock options is not the same as a worker owned company, in practice.
What if we said the point of a company was to make its employees' lives better?
Good news. The world spent the entire last century experimenting with that idea. It did not work out well. I’ve already explained why.
But, you are of course free to start a company doing that. If it turns out to produce better outcomes for customers (the world), you will win and society will win!
I’m guessing you won’t test your ideas though, and will instead vote for authoritarian central planners who will deploy this straight to production via laws. Then your country will cease growing, and will be forced to slowly dismantle this worker-optimized system as a result. See Europe over the next 50 years for more info.
It's not authoritarian to outlaw unjust systems of power. I'm sure slave owners considered the US "authoritarian central planners" when they outlawed slavery. Doesn't make it wrong.
It is not a non sequitur! You called them "authoritarian central planners". Am I supposed to think you consider "authoritarian central planners" a totally neutral phrase with no connotations? It's telling you mention central planning in your response, when I objected to your use of authoritarian. If you had originally said "you will vote for <legislators> who will <implement laws>" your original comment is not quite as punchy, I think.
Mentioning Cuba as a failed example while omitting that they have been embargoed by the biggest economy in the world for over 60 years seems willfully dishonest.
That argument worked 10 years ago, but not today that Cuba actually started to move towards capitalism and we really see that the embargo isn't such a hinderance as you argue it is.
What? We're into late stage capitalism and you're telling me the world was experimenting with making employees lives better? I must be living under a rock!
Where are these so called experiments? I only see employee conditions getting progressively worse. If you go back long enough, we did get a few wins like weekends and some limits on hours after a lot of people died for it, but that's about it.
The last change we had was probably WFH which only affects a small portion of people and, realistically, is only being accepted because it's cheaper for companies.
>But, you are of course free to start a company doing that.
I argue nothing different than the status quo can ever succeed without deep structural change.
It's like trying to be a pacifist in the middle of a war zone. You will be killed. It doesn't mean there's anything wrong with being a pacifist, but it simply cannot work under those conditions.
The part that people seem to forget is that we chose to value profits above all else. We can also choose to change that. Even if it's extremely hard to imagine this with all the propaganda we've been bombarded with in the past century, it's possible.
> We're into late stage capitalism and you're telling me the world was experimenting with making employees lives better?
They're repeating propaganda about communism and socialism.
It's tiresome, really, the degree to which Americans have bought the propaganda that countries like the Soviet Union themselves spread, that they were communist, when in fact they were authoritarian dictatorships with a few very-badly-thought-out planned-economy features.
It is easier to have a productive conversation if you actually address the points being argued, rather than dismiss them out of hand with no justification.
I'm not sure why you think there will be a clear answer, since communism is not a word with a clear definition. It means many things to many people. It's no different to "capitalist" in this respect (and you often see lib-right people claim the US is "not real capitalism" because things like social security and govt bailouts exist).
It's obvious that "communist" policies don't entail that you have the same government as the USSR, so I think it's fair to call arguments that suggest so propaganda. It's probably meaningless to argue about whether the USSR had "true communism".
They don't want a clear answer. They never did, and likely never will.
That's the problem with this type of topic. As much as I like to talk about it, there never seems to be any real talk. People pick a side and arguments be damned.
The extent of their knowledge generally extends to "communism bad" and there's no good faith in actually talking about the shitty situation we're in today.
My original answer was not even citing communism at all. I was specifically talking about worker conditions, but people seem to be unable or unwilling to have a conversation and instead degrade it and down vote.
Says the reason we have laws to enable companies to even exist. Society want them and it wants them because of the value they provide to everyone else.
> in proportion to their wealth. That's the problem - ownership is distributed unevenly, and the inequality causes social problems.
Maybe we should work on helping people to manage their tendency towards jealousy. One way is to have a culture of personal responsibility so that if you're poor, you believe (rightly or wrongly) that it's your own fault so you're not filled with hate for people who have more money than you.
I think this is a bit of a misnomer: what's being said is not to "start optimizing for employees instead of customers", but rather to keep customers where they are in the pecking order, and to re-align the owners in this dynamic. Customers are paramount, owners are less important, workers are what make the business move.
I think workers should have a seat on every board; workers should have a right to first refusal - with a preferential price - on companies that are going through an exit; and that the state should provide an investment fund to allow for this to happen on the condition that the business be ran as a worker co-op.
I think policy such as this would bring stability, long-term thinking, and more genuine customer empathy that isn't solely profit-driven, while reducing costs and driving up baseline wages.
Democracy is important in our politics, but we spend more time at work than anything else. Therefore democracy should be part of our workplaces too.
It's worth adding that none of this prohibits businesses from starting up and reaching the point where they exit with a handsome reward.
> Customers are paramount, owners are less important, workers are what make the business move.
No, no one is more important or less important than anyone else. Every role has to be played order for anyone to benefit. Someone has to bear the risk and pay the upfront costs; someone has to do the operational work in order to deliver value to the market and someone has to be willing to pay for the resulting product in order to generate net positive value for all participants. If any one of these items is missing, the entire initiative fails.
So the participants negotiate arrangements that mutually incentivize each other to pay their parts satisfactorily. Whether those arrangements meet the speculative standards of uninvolved strangers' dogmatic ideologies is not and should not be relevant.
Sorry, I don't agree. Owners are less important. They don't need to be there for most businesses to continue to operate just fine. The same is simply not true when workers decide to down tools. Don't conflate ownership with steering and management. I don't think any owner should have some inalienable right to profit in perpetuity at the expense of everyone else including the customer. I think this is a very popular viewpoint for a reason.
> So the participants negotiate arrangements that mutually incentivize each other to pay their parts satisfactorily.
I don't think this is accurate. Stakeholders in a founding business certainly do this in order to set the pace of initial growth and retain key staff. Organisations which are in the last stages of an exit do not act in the interests of the workers or the customer - they act in the interest of the party that is set to buy them and the major stakeholders set to profit the most. And whether it's by destroying terms and conditions, laying off staff, or by slashing pensions, all of this serves the owners and major stakeholders at the expense of everyone else. Having a better distribution of ownership disincentivises these malicious activities.
Studies show that cooperatives produce more stable, sustainable businesses which are not designed for short-term speculation.
• Worker co-operatives are larger than conventional businesses and not necessarily less capital intensive
• Worker co-operatives survive at least as long as other businesses and have more stable employment
• Worker cooperatives are more productive than conventional businesses, with staff working “better and smarter” and production organised more efficiently
• Worker co-operatives retain a larger share of their profits than other business models
• Executive and non-executive pay differentials are much narrower in worker co-operatives than other firms
> Sorry, I don't agree. Owners are less important. They don't need to be there for most businesses to continue to operate just fine.
I'm afraid that this is not true. Owners are not just the ones who enable the business to be initiated in the first place, but are the ones who bear risk on an ongoing basis in order to keep the business up and running. Firms that need ongoing capital infusions to expand operations, or that incur debt in order to get past short-term financial bottlenecks, absolutely need someone to be responsible for the inherent risks associated with doing so.
Eliminating the business owner as the risk-bearer, and setting up a business in which "workers" are the responsible parties makes workers themselves bear all the risk. In the status quo, the worst risk exposure that workers face if the firm faces financial difficulty is that they will just lose their jobs -- i.e. that the customer that has to that point been purchasing their services will simply cease making further purchases. But in a situation in which these service providers were the owners, and therefore responsible for the firm's obligations, they would not only lose their jobs but would also be on the hook to repay its debts and/or will suffer the loss of whatever funds they put into it to ensure it had sufficient capital to operate.
Workers generally don't want to do this, and usually prefer to just receive an agreed upon rate for services rendered for as long as the relationship persists.
You may note that the industries in which worker-owned co-ops are relatively common are the ones that have low risk inherent in the business model -- markets with predictable demand, long product life cycles, and relatively inelastic price sensitivity, e.g. grocery stores. Industries with high volatility, rapid technological change, short product life cycles, high need for capital, and elastic demand simply don't work well under a co-op model.
> Organisations which are in the last stages of an exit do not act in the interests of the workers or the customer - they act in the interest of the party that is set to buy them and the major stakeholders set to profit the most.
Ultimately, everything is just a proxy for consumer utility. A business that is acting in the interest of a potential buyer needs to ensure that the firm is performing viably, since the buyer usually aims to operate it (or, if they aim to liquidate it, the current operators need to maximize the liquidation value).
In either case, the only way to do that is still to satisfy market demand -- we may frown at the tactics they use to do so, but ultimately, they will only use tactics that are effective in terms of encouraging customers to actually purchase their goods or services. At the end of the day, it's still customers assigning more value to the product than to the money they are exchanging for it that enables the form to earn a profit.
> Studies show that cooperatives produce more stable, sustainable businesses which are not designed for short-term speculation.
Per my point above, I believe you have the causality inverted. Co-ops are only suitable for stable, sustainable businesses that have low risk exposure and low capital requirements. The correlation you are seeing is because co-ops generally don't participate in more volatile markets in the first place.
>The minute you start optimizing for employees instead of customers, you’re delivering less value to customers (the world) and asking to be disrupted.
False comparison bc today's companies balance customer value with shareholder value.
Collectives can do the same thing.
The fatal scenario of companies optimizing for owner's benefit is in fact the scenario we have today where investor-owned companies benefits themselves more than customers, eg
pollution, disposable plastic products that can't be repaired or maintained, like the millions of apple tvs that just become landfill overnight, fake shortages to raise prices, stock buy backs, low quality processed foods manufactured in at bliss point.
>The point of a company is to make a product that customers want, and make it as accessible as possible. “Taking over the market” and producing profit is only a byproduct of doing that.
Um, what? The point of a company is to make profit for its investors, and making a useful product for the customer is only a byproduct of doing that. This is why corporations are making record profits, instead of investing it all into R&D or rainy day funds.
Fun fact: Starbucks baristas do get RSUs [1]. It was a core principle of the company under Howard Schultz and one of the big things he credits for Starbucks's success specifically because owning even a small part of the company increases employee sense of responsibility and pride. I highly recommend the recent in-depth interview that Acquired did with him [2].
Herb Kelleher famously setup Southwest Airlines with very similar principles and stock options for everyone, with pretty amazing results for decades.
I've read studies about workers coops and some of them somewhat contradict what you say in your last paragraph, specifically (b). Worker coops often cut down on their individual profits in hard times to keep the boat afloat.
I think ultimately a company creates and maintains a culture, regardless of the legal structure. Maintaining a good culture requires effort and especially a sensible, trusting image of humanity.
When we talk about the crass gap in compensation and power between workers and owners or executives, then we often hear the excuse that much of the compensation at the top is from stocks (even though that is a very incomplete picture). The big bosses can't just sell their stock to increase wages is the narrative, but they _could_ pay some of that stock as additional compensation.
A single worker doesn't move the statistical needle in a very large corporation? For one, the same fallacy comes up with voting. Secondly: This notion that people are rational robots who only optimize their profits and then also calculate the statistical impact of every of their actions is not just too theoretical, it's just wrong. Loyalty, trust and engagement are things you earn and maintain. A generous compensation (including stocks) can be a part of that.
An additional approach is to decentralize and enable partial ownership of franchises. Now suddenly the needle can be moved, day by day and year by year.
But again, the legal structure is just part of it all. I think it starts with the image of humanity, the culture and a long term strategy that incorporates all participants of a company. The details fall into place after that.
> Worker coops often cut down on their individual profits in hard times to keep the boat afloat.
Sure, I believe that. Do they do it enough though? Co-operatives were big in 19th century Britain; now they make up a small part of the market for most things. In particular the Co-op supermarket, though it's cute, is now small (6% market share).
> A single worker doesn't move the statistical needle in a very large corporation? For one, the same fallacy comes up with voting. Secondly: This notion that people are rational robots who only optimize their profits and then also calculate the statistical impact of every of their actions is not just too theoretical, it's just wrong. Loyalty, trust and engagement are things you earn and maintain. A generous compensation (including stocks) can be a part of that.
It's really true that your vote won't decide the next election! I'm sorry :-)
You're right that generous compensation can maintain loyalty and I agree people aren't robots. But for that to save the argument you need more - stocks have to be better at maintaining loyalty than just straightforward pay. Is that true? Maybe: stocks are a "stake" in the company. Is it so true that many companies could improve efficiency by paying in stocks not cash? I'll believe it when I see evidence. Is it so true that we should force companies to do it? I find it highly unlikely and the evidence is clearly inadequate.
>An additional approach is to decentralize and enable partial ownership of franchises. Now suddenly the needle can be moved, day by day and year by year.
Sounds like McDonalds is your ideal of corporate structure :-) Maybe! It's certainly successful.
The history of the mutual/building societies is interesting - customer owned financial institutions. The stock market offered them a huge amount of money to sell up in the 90s, which almost all of the customers took (after all, free money). Then 2008 hit and a lot of them had to be bailed out by taxpayer loans.
I'd presume most workers are members, but they have ~5 million members and about 56k employees, so even if all of them are members they amount to ~1% of the votes.
EDIT: In the UK, the most prominent retail workers coop of sorts is the John Lewis Partnership. It has more employees than Co-op, at ~80k (in addition to John Lewis and Peter Jones it owns Waitrose), and it could be argued that in some senses it may not strictly be a workers coop - it's owned by a trust for the benefit of the workers of the business so its employees does not have the same direct say in the operation as a pure workers coop - but the terms of the trust makes it somewhat close.
> The reason not every company does it to all its employees is probably that for those employees, it wouldn't affect incentives much and it would make payment subject to the vagaries of the stock market.
Pleast don't be so naive. The reason not every company does that is that giving ownership gives power and dilutes your own, reduces the chances at doing humongus profits that can be hoarded by a minority. Business owners are not operating out of sympathy for the workers, they are operating for themselves, by design
I'm not naive. Owners also don't pay wages out of sympathy for workers. When they give away wages, they give away profits directly. If anything, short-termist managers might prefer to give away rights to future profits, rather than profits today. Also, you're assuming that small shareholders exercise power via their voting rights - nope, most small shareholders don't vote, not surprisingly since small voting blocs would rarely change outcomes.
And yet people overwhelmingly prefer to work for these non-employees owned companies instead of working in cooperatives - how do you explain that? They could take those humongous profits for themselves but they don't do that.
My answer to that question is that organizing people is much more difficult than everybody thinks and politics is the biggest source of inefficiencies on any human organisation bigger than a few persons. And cooperatives introduce additional political layer.
Risk. Risk is the reason people aren't constantly demanding equity.
Equity is great when your base salary covers your comfortable life.
Equity is not great when your salary or hourly doesn't afford you much, and having inaccessible capital that very well may be worthless in the future is not desirable.
When people talk about this topic they hyper focus on success cases. But HN should be intimately familiar with how well start-up equity offers usually pan out.
And large stable companies usually do offer equity to employees, but that slow stable growth equity is not going to make you rich.
Employment is already a pretty bullish position on the employer. Adding equity is doubling down. If the company goes under, you lose your future wages and the investment in the equity.
Totally agree. And this is why companies should really profile when hiring to attract the right people with the right risk profile given the stage of the company.
Early on when we were just starting out (context as a founder), I used to think that the only types of people who would take on this kind of risk were young 20-something’s who had time and space and no significant other. Then we hired 2 early engineers in succession who were older.
One was just made for startups. He could never work for a large company, and he was ok with the risk and lower pay because it was still quite high relative to his cost of living in Europe.
The other already had kids who were older and independent. He always wanted to take a swing at a “Silicon Valley” startup, and he just cared deeply about that experience and could do so without having to worry about his kids financially relying on him.
They were 2 of the best engineers we had ever hired and stuck with us through thick and thin from a team of < 5 engineers through us scaling to 80+. When we got bigger, one left because we were once again too big for him (process, minor politics popping up, spending more and more time teaching newcomers how to own and operate a bigger codebase safely, etc.). The other left because of similar reasons but at a later scale.
I started the journey starry-eyed/overly-optimistic in both directions. Hiring people early on who obviously did not have the risk tolerance or an understanding of how much work was needed early. Holding on to people for too long who weren’t enjoying the new environment. Now I’m much more even about this - there is a right place and time based on what the individual wants, and being open and honest and kind about it is always the best path. Equity is simply a lever to compensate risk, but the appetite to take on the right amount of risk is the most important thing given the company’s scale.
you? Maybe. Me? I have about 15k in credit card bills, $20 in the bank, and my current rent/utiliies take up ~60% of my monthly income. I also have no leverage to be trusted to run a co-op, so I can't attract proper talent to realize the business.
Maybe in a decade when the market and my debt recovers? But I'm planing to work for myself anyway. I have no issues with a co-op if I ever make enough to bring someone else on.
Good idea, I'm gonna quit my job today and start my own coop with all the earnings my current employer shared with me! Oh, wait...
Seriously though, most people cannot afford to just quit. You at least need savings for that, and you need to be fine with burning through them and still failing, cause that's a very real possibility.
Please, again, don't be so naive. You know that creating a company requires capital (not just financial, all of them), which only the richest have. By design.
> And yet people overwhelmingly prefer to work for these non-employees owned companies instead of working in cooperatives - how do you explain that?
Easily: there are far more non-employee owned companies than employee owned. Thus this isn’t a preference at all, it’s merely the availability of the market.
Now you could say that entrepreneurs who start companies have a preference for non-employee owned, thus explaining the aforementioned market allotment. Again that’s pretty easy to explain, because of course such an entrepreneur would give up ownership in an employee-owned arrangement. It’s also just the de facto paradigm most are aware of in news cycles and business schools, and is easier to setup and support.
> yet people overwhelmingly prefer to work for these non-employees owned companies instead of working in cooperatives - how do you explain that?
Really? Or are there simply far more non-coop job openings available? Is there data on the applications per listing that directly compares ownership structures to normalize for workforce size?
This isn't about stock options or public markets. These kinds of companies are owned by the employees. You or I can not buy stock in them. This can be a much bigger incentive than regular options or the toilet paper options startups offer. Payout is over several years after you leave, so people care about the long term rather than next quarter. From your comment it seems you're not at all familiar with this model. It's not perfect but it's way better than stock options.
But that means employees cannot sell their stock, either. So if one of those millionaire employees retires and the company goes bankrupt one year later, the million is worthless all of a sudden.
I think the idea is that employees make most money from the profits paid to them as owners, instead of an increase in the stock price and then selling.
There is no difference for optimizing dividends vs. stock value increases due to reinvestment, as for any other company.
Employees that can sell shares at any time have the same financial interests as with any other corporation. As much reinvestment as grows value faster than the overall market is how much is best to reinvest.
Distribute the rest to owners to use/invest elsewhere.
It sounds like you just explained the opposite of what you said. If you can only get the dividends and can never sell your ownership outright, it makes sense to optimize for long term, sustainable growth and profits over short term profits. So, you don't care about stock value increase as you already own your shares. Actually, I'm thinking low share prices compared to dividends are good because it allows you to buy more and earn more.
It sounds like this is a much healthier concept overall?
Profits and operating cash flow are two different things. Only the latter matters in terms of meeting payroll. Very few companies of any kind cut pay or lay off employees just because they "had a bad quarter." Even when there is a bad year or two (such as during coronavirus pandemic), the government will usually step in and offer generous tax credits to try to keep employees working.
>> So if one of those millionaire employees retires and the company goes bankrupt one year later, the million is worthless all of a sudden.
Right, so everyone is interested in the long term health of the company.
It's a different model, one that may well be better than what most are doing. Of course most CEOs, private equity, and folks on Wall Street want you to think otherwise.
The problem is most employees don't have enough control to do anything about bankruptcy. Even if you see it coming you can do nothing about it from your position. seeing it coming is also hard as employees are rarely given that information - odds are a significant chunk of employees find out about the bankruptcy via the nightly news when it is too late. Once you have hindsight it is easy to look back at the financial statements and see it coming, but most people are not qualified to read those statements and so won't understand what they mean - or how a bankruptcy event looks different from normal ups and downs.
Everyone is certainly interested in the long term health of the company. But exogenous shifts like technological change, trade, COVID, etc. might cause the company to go under - or maybe you're just outnumbered by people who make poor decisions.
If this happens, people who have worked at the company for 15 years and have most of their "retirement" in the form of ESOP shares will a) lose their jobs and b) lose most of their retirement savings. On the same day.
Libertarians sometimes fantasize about how if we didn't have the FDA, people would be incentivized to do their own research on food and drug safety. Sure, sometimes dumb people would get it wrong and kill themselves! But that's just the price we (well, they) need to pay for everyone to have good incentives. This seems like the same category.
Nothing requires an ESOP to skip on a separate retirement fund for employees and expect them to retire from their share of the investment.
In the contrary, I expect the owners of an ESOP are very much in favor of having a well managed separate employee retirement fund. More so than in a publicly owned company.
But of course you are right that the risks factors of losing your income and losing your investment are pretty much 100% correlated for an ESOP. Some investment diversification is always a good idea.
If the stock an employee gets doesn't give voting rights, then it's not really even a sliver of ownership, it's just a form of profit-sharing. That's not at all bad, but a different thing.
Personally, I consider stock options to be a bit like lottery tickets. All things being equal, it doesn't hurt to have them, but I'm not going to count them as compensation and that I have them isn't going to make me work any differently.
All that said, as a customer, I tend to prefer to patronize businesses that are "employee-owned" to a significant degree.
> (a) they find it hard to raise capital (b) they tend to make decisions that maximize worker welfare rather than profit
at the end a company needs to be financially successful and for this it needs to provide competitive products and services. Otherwise, they'll just be replaced.
There of course may be a chance they'll get replaced by another employee owned company, but the odds of a free-capital owned company replacing them are probably bigger as they have more freedom to make the right decisions to become successful.
Also imagine your pension would just depend on the odds of the company you have been working for a live long, because you just cannot invest into other companies because they are only owned by employees.
My pension depends on other members of my country, as well as they depend on my. The feeling of safeness (event if it’s not 100% safe) and bound is what I call “society“, meaning we go forward together very much like what most feel with their family. Never ever will I live in a country that encourage people to compete instead of collaborate, it sounds better for the 1% stakeholders but not for the 99% others.
I wish it were that simple... even if everyone tried to "collaborate" to produce the same product, there would still be some competition somewhere, at least for ideas. somehow the final products to be made need to be decided upon and the other won't be made. That also means, that somehow the people overseeing the final products have more power than the ones that were not chosen by whatever process is in place to make those decisions...
It really has not been proven, that there is a more effective organisational form for this competition better than capital allocation using markets with a lot of freedom.
For your case or "cross-generational" pensions where the young pay for the pensions of the old: That worked well while the baby boomers were working. This may go sour when the baby boomers retire and the numbers of their first and second generation of offspring decline... Even worse: if they have made the economy, tax and debt burden for those offspring so bad, they can barely buy their own home.
Isn't the problem of adapting to change universal across all companies - and the key success factor there is leadership - rather than the structure of ownership?
Perhaps capital owned companies have the distance to be a bit more ruthless in driving change - however while that may mean you get better short term allocation of capital, it doesn't take into account the other costs.
Everytime a company lays off workers it relies on the state to ensure that those people and their dependents don't starve, potentially retrained and available to be successfully deployed elsewhere. Or to stop them, in their desperation, to gain the materials to live, start breaking the law.
ie there is an element of free-riding of private capital on the State to ensure a stable society that private enterprise existence relies on, while they employ 'creative destruction'.
Good companies - whether employee owned or not, don't free-load, they invest in their own staff through training, they pay good redundancy etc.
You could argue the above is more likely in employee owned companies.
However as I said at the start, in the end it's the leadership that matters.
> If the story is "all companies must be fully employee-owned workers' cooperatives", then first, note that you are calling for a restriction on workers' rights: they have to be given part of their pay as stocks, and they can't sell them freely.
This is simply not true. Many workers' coops issue one share per worker (there may not even be stock), which affords them one vote in company matters. In such a scenario the share may not be bought or sold, as it is a case of one share if and only if a member. It is not correct to represent proportional democratic control of a workplace as somehow a restriction on workers rights.
The employees can democratically decide how they want to run things. They can choose to issue stock, they can choose other people to make decisions about the business e.g. appoint a manager to make decisions for them. They cannot do these things in a general employment situation.
At the most bloody-minded level a food-service worker must wash their hands after going to the toilet and this is a restriction on their rights, but at the same time this infringes upon the rights of customers to not get sick eating food. Denying employees democratic control of their workplaces is a much greater restriction of their rights. And as a matter of practice, employees get the short end of the stick when they have a boss.
Well if you don't allow the traditional company governance and everything must be a cooperative - then these employees cannot choose a traditional company governance.
But my comment really was about restricting the choice of a potential employee - someone who has not yet decided what company to join.
This is similar to arguing in favour of the existence of dictatorships, as not having them restricts the choices of what kind of society people can choose to move to. The point is that in a democracy, at least in principle, people can choose their "boss", and discarding this has bigger implications for everyday freedoms.
In any realistic scenario, those shares would quickly be diluted to nothing when the company needs to raise money from capital markets. Unions are in general a much better way to protect workers.
The real power disparity between capital and labor is that capital is concentrated and labor is diffuse. Every worker negotiates with the corporation as an individual over compensation and worker rights. When you have a union negotiating the contract, then both labor and capital are concentrated and on a more equal footing, producing more equitable outcomes. Giving employees a tiny ownership stake doesn't really change the power disparity at all.
True, but could the incentuve be structured around the individual employee’s coffee shop (which would mean divulging the i individual coffee shops financials? That could make each employee look better out for the profitability of their coffee shop.
I think the idea is that feelings of co-ownership in the company could affect the company culture positively. Although I'm sure the effect diminishes with company size.
This is precisely the failure that advocates of communism fail to grasp. They failed to read their Adam Smith. We saw this play out in the Soviet Union.
There are more possibilities which open up, if we drop the 'fully' criterion, both for decision making power and share of the profits.
If employees had, say, a 30% share in board decisions (not share of profits), then the CEO would have to be more mindful of how their decisions affect employees, just like they have to constantly track the markets today. Or a more local version of this, where decisions/appointments in each unit of the company are partially handled by employees of that unit. Not enough for a badly performing group of employees to have a veto, but also not something ignorable by management.
Regarding share of profits, there were high tax regimes in Western countries in the 1950-70's. For instance, top bracket of income tax could sometimes reach 90% and corporate tax 50%. In effect, this is saying that the public has a non-voting share(sometimes even a majority share) of the profits of the company. Of course, a large organization like the government is itself often corrupt/inefficient and fails to represent the public, so the taxation could happen at a more local level.
'Market socialism' proposals sometimes involve public ownership of the stocks of privately run companies, but a high tax regime can have a lot of the same effect.
I’m not sure what you are saying the argument against them is? It kinda reads like the answer is “people with capital don’t like them because it doesn’t increase their capital fast enough”.
This is different from options and RSUs. It sounds like they’re getting paid directly in stock. They’re not being given the option to buy stock at a later date (with lower preference than the executives and early employees). Those kinds of arrangements still benefit the capital holders the most.
Whether it’s a bad thing to improve employee welfare over profits… I don’t think it’s that bad. It’s perhaps more efficient than hoping that the state will. And it’s probably temporary and tactical: profits still matter when you own stock.
> (a) they find it hard to raise capital (b) they tend to make decisions that maximize worker welfare rather than profit, e.g. they won't sack underperforming divisions or expand in ways that dilute existing workers' stake.
Maybe this is the good way of running a business, and the gigantic corporations who grow like cancer and try to control governments are a bad thing?
> Your barista at Starbucks is not going to increase the stock price no matter how well he fills your order; at the same time, maybe he wants to know how much he takes home every day.
I imagine the goal would not be to get rich off of the work, just have a democratic say in how the work is done and what work is to be done.
Co-determination was born as a compromise in Germany (between the capitalist occupiers and the communist occupiers trying to find common ground for decades) that has done well, essentially its that the Employee Union has at least one board seat, by law
employee representation on the board in combination with US stock ownership concepts would be very novel and very attractive
I think both classes of stakeholders typically have some common ground and can find a way to make austerity and growth measures economically practical with more sustainment of employee consideration
It's possible. But note that Germany has struggled to move out of declining sectors (petrol cars) and into new ones (tech) - which fits what I said about worker control making creative destruction hard. Its economic performance has been dramatically bad recently.
Equally, I wouldn't want to judge Rhineland capitalism on a few bad years, or claim that the US "open the casino" approach dominates it on every dimension.
For people living cheque to cheque, pre-IPO ESOPS are not really a great incentive either. If ESOPS come at the cost of actual salary increases, it feels more like a corporate smokescreen than an actual value-add (not everyone can afford to think long-term with their sole source of income).
House wives are often very well compensated. They have a home they don't pay for. They often have a bank account they can use to cover expenses (effectively direct deposite). The entire reason alimony exists is an acknowledgement that she has effectively been getting that benefit from the marriage and is not prepared to abruptly lose it in a divorce even after splitting the assets. Assets? Right, that's also part of the compensation package.
> The entire reason alimony exists is an acknowledgement that she has effectively been getting that benefit from the marriage and is not prepared to abruptly lose it in a divorce even after splitting the assets.
Perhaps partly. But there’s also the loss of professional work experience if she has been a full-time housewife.
Domesticated animals are also housed and taken care off very well. Their appearance is beautiful and they are very grateful to their masters.
The circus lion is bred and trained from birth not ask too many questions.
But once you give the circus lion access to the internet, sooner or later the lion is going to ask why am I jumping through hoops?
It just take one of them to find a better answer and a better purpose in life to walk off the circus, for all the others to see what options they have to totally disrupt the foundations of the circus.
The circus managers and the circus have elements of domination and exploitation that have been swept under the carpet. Its good to recognize them. Otherwise surprises and shocks are on the road ahead.
I'm sorry but how many men do you think enjoy the work they do in order to provide for their family but do it anyway in service of their family?
Your analogies are all over the place, like a dog's life is similar to a circus tiger?
A lot of women find that they've been sold this lie that getting a corporate 9-5 is more empowering than caring for their children or even having children at all and are going back to traditional roles for a reason.
Truth is few people men or women find a way to support themselves that is meaningful and most men or women if given the choice of not working at all and just spending time with family while financially well off would take that in an instant
Those who can escape the construct will do so. The number of routes available have increased thanks to globalization. You are not being imaginative enough. Look at people who don't have opportunities in their countries. Do they sit there and cry we don't have opportunities or are they moving? People are watching all this on their streams 24x7. And one thing people are good at is blindly copying what others are doing. Those who are clinging to the status quo are totally delusional about what globalization has done to the West.
What construct? Having a job is also a construct and it seems it's the dominant one. 26% of women are housewives [1].
The status quo is working mothers, are you a chatbot that thinks this is the fifties?
I'd say you are being too imaginative. You are framing a traditional family as this abusive thing, master and slave except it's 2024. Marriage, at least in the US is extremely dangerous to men, if their wives divorce them, men could be forced to support them or else go to jail so who really has the power in the relationship since the govt has given all the power to women?
Women have been framing marriage as a work contract from the 60s, world wide, since they don't get paid anywhere close to what men get paid, just like the barista and the ceo. As more of them have paths to exit this contract, they will do so. Alimony laws are temporary reactions to the problem.
There is no great benefit to sitting and spending your whole life dependent financially on someone else especially if you don't have anything in common. This is the same reason men change jobs. Once globalization provides multiple paths for workers to exist corporate environments they do so. Thanks to the internet Women get to see on their feeds what options they have, in ways their mothers and grandmothers never did.
The only problem with people who hang out on HN is they don't know any sociology or why the womens movements emerged in history. All just completely delusional about success coming on the backs of exploiting free or unpaid work of others.
> Women have been framing marriage as a work contract
Not all women. It is there job of men to figure out this kind of woman and not marry them
> There is no great benefit to sitting and spending your whole life dependent financially on someone else especially if you don't have anything in common.
Sure, why the hell would you marry someone that you have nothing in common with though?
> people who hang out on HN is they don't know any sociology
I actually went to university to try and study sociology and lasted about a month. My opinion of it is that it is more a propaganda and indoctrination tool than a science. Sociology school is just a woke factory. When I got into an argument with a professor and was winning with logic and science on my side I got told to be careful what I say because I hold "dangerous beliefs" which might stop me from being someone important one day, so warning me I might get canceled in the future for those "beliefs" which were merely common sense facts. That's when I decided I got better things to do with my time
The word "housewife" is interesting - the job of housewives has historically been to spin thread and make clothes, which was at the bare minimum 40 hours a week of work. This is on top of cooking, cleaning, and childrearing, which was its own full-time job.
There's this myth of the idle housewife which was true, but only for the aristocracy and in the last few decades, the upper middle class (who are tooootally separate from the aristocracy, yes sirree). Most housewives, for most of history, have worked full-time.
Nature of things is always changing. Once upon a time the King or Land Lord or Factory owner handed off all the shares to the eldest son. Doesn't happen anymore.
Also remember Bezos and Gates had to hand over a chunk of their wealth on divorce. That didn't happen without the nature of things changing.
Something that is naturally selected is not necessarily good. Most of nature is horrible in fact. And everything we do is a fight against nature to make it better.
But instead of things like mandatory co-ops, rent caps, minimum wages, etc., could we get the same benefits from UBI instead? It's a much simpler welfare system.
It would be cool if I could live partially off of welfare and have my job be an unprofitable charity making free software, where even if I had stock it would be worthless. Such a public good cannot exist under capitalism alone, not even for-the-workers-colored capitalism.
> worker-owned cooperatives have not taken over the market, although they are an available institutional form, because (a) they find it hard to raise capital
Isn't this just a circular argument then? The economic system based on tradable joint-stock companies is not conducive to other forms of economic organisation. Huge surprise! :)
Of course they can't raise money in an economic system where money creation is privatised, that's exactly the problem!
To be maximally charitable, some people don't want to trade one freedom for another (lots of people are just assholes, but let's ignore them for a moment).
There are some fundamental compromises in freedom. If I have a right not to be stabbed you have a lost a right to stab me. Clearly, there are some things where this is an obviously good trade, like in not being stabbed.
I suspect this person fears they will lose some freedoms if they choose to run a company or have their options reduced in the job market if companies are regulated to be less shitty. There may be some of that, but I suspect we can take the worst offences off the table and make the market more robust creating a total increase in freedom and options for everyone.
This is why I went with a child in the mines example. Getting kids out of the mines and into schools was a complete gain for everyone beneficial to society. Employers got more educated employees. Kid got out of the mines. Coal production went up.
> I want the freedom to exchange my services for money without having to care about all the bullshit ownership ensues.
Then sell immediately, no one here is proposing forcing ownership onto employees. For nearly all Americans owning something significant that is likely to grow in value distinct from the output of their labor is an exceptional opportunity.
Just like how when children were given the opportunity to leave the mines for good there wasn't a massive popular resurgence to make abusive child labor legal again. Most people wanted kids out of mines and into other opportunities.
Most people want wealth. Most people want better opportunity than coal mines. If you want to sell your ownership you can. If you want to mine coal you can when you reach the age of majority.
Rather than view de-facto employee ownership as a burden it is an opportunity to leave a metaphorical coal mine, if you want. You could choose either way if society made de-facto ownership for labor a thing. Right most of us don't have choice.
> note that you are calling for a restriction on workers' rights: they have to be given part of their pay as stocks
No matter the mental gymnastics, that’s how it already works in big tech. You can view the stock grant as “incentive”, but you can’t refuse it and take cash upfront.
Having service workers that are invested in the company and provide great service is essential to any service buissness. Sure any individul isnt single handet gone make your stock go up, but collectivly they do. The same as most engineers.
> If the story is "all companies must be fully employee-owned workers' cooperatives", then first, note that you are calling for a restriction on workers' rights:
This is completely dishonest. You're not arguing against this because you're concerned for workers.
> they have to be given part of their pay as stocks,
This is nonsense: the stock given to workers would normally be distributed to other places, so when it's given to workers instead, it's generally in addition to what they would normally be paid.
> and they can't sell them freely.
Also nonsense: this is a rule at some companies, but doesn't have to be.
> Second, that will probably make markets work worse. There's a large economics literature on this: worker-owned cooperatives have not taken over the market, although they are an available institutional form, because (a) they find it hard to raise capital (b) they tend to make decisions that maximize worker welfare rather than profit, e.g. they won't sack underperforming divisions or expand in ways that dilute existing workers' stake.
Ah, the real reason you care about this issue: "it will probably make markets worse". Screw workers, can't make markets worse!
As a society, is it our goal to have companies that "take over the market"? Or is our goal to have an economy that meets the needs of our people?
The story I read are that ESOPs are an alternative to unionization, it allows founders to cash out, it aligns incentives towards long term growth of a company and this has shown better performance in tough economic times. The barriers are that knowledge of them is low and there isn't institutional support in government for organizing companies in this way.
Getting stock or pay are not an either/or. Employee actual wages have been effectively flat for the last 30 years, whereas corporate profits have continued to increase. Companies can do both. The money is there. Most of us are not getting it. Corporate organizing hasn't worked for everyone over the last 40 years. The mantra that corporations should only deliver value to shareholders has lead to laser sharp focus on quarterly profits in exclusion to everything else. Financial engineering like stock buybacks and leveraged buy-outs only concentrate wealth and destroy value. While declaring the end of neoliberalism and ESG have been attempts at turning that around, they have not been effective at influencing change. Being smart about how to align incentives is what is going to lead to more value in our economy and lead to more equitable outcomes for all.
Speculation based on a shortage of info and, I assume (speculation), a feeling that at least some workers would rather do a different job, which would, from my POV (speculation) fit with
> Your barista at Starbucks is not going to increase the stock price no matter how well he fills your order; at the same time, maybe he wants to know how much he takes home every day.
Yes, your barista is increasing the stock price by doing his job well because customers will return for the enjoyable process and outcome. Given the positive feedback and proper operation procedures in quality assurance, workplace development and operations improvement your barista will also "design" & submit ideas to improve/change/expand certain things which can benefit process and outcome for the customers. Your barista is only one link in the supply chain to customer and daily income, which means that every decision will run through a feedback loop that creates the evolution of the company.
But that's rarely the main driver of stock prices, which are currently mostly artificial constructs based on shareholder bullshit, networked manipulation and whale circle jerks. If a company "does bad", though, these main influences are dropped and increases are reversed until company behavior serves the kinks of the shareholders financial orgy again. "Imagine" a company creating free value that can not be monetized by whales but only by the rest of the world. "Free" energy, for example, a perfectly adaptable mix of energy sources maintained by sustainable procedures the negative side effects of which are compensated by gracefully handling resulting trash, upcycling or, out of imminent necessity, the creation of industries that R&D adequate solutions. All of this happens but always based on game theory methods, and that happens only, exclusively, because leadership falsely believes they are compensating their workers based on market evaluations of their work, which, entirely ignore that consumer prices are inflated by whale circle jerk behavior. It's pathetic and deserves nothing but disrespect. But people in circle jerks are manic and obsessed.
Stocks, in their current form and with the current laws, are bullshit and serve a future world where AI will do most jobs and people in companies will only exist so that people higher up in the chain will feel pseudo-dominant, which is already the case, but too many journalists and politicians are part of the circle jerks and thus manic and obsessed as well.
> (a) they find it hard to raise capital
Because circle jerks. There's not even a game theoretical argument to justify this behavior as the giving those companies capital will either increase market and profits directly or by ways of added value as in "learning lessons" and "process of elimination".
The reason it's done anyway because the circle jerks base their decision on fear of the evolution of the game so they'd rather keep the game as it is, balancing their decisions which requires totalitarianism, dictatorship.
> (b) they tend to make decisions that maximize worker welfare rather than profit, e.g. they won't sack underperforming divisions or expand in ways that dilute existing workers' stake.
Speculation/misinterpretation. They would sack underperforming divisions if they had to, but there rarely are cases where such divisions can't be improved and made more useful or cases where underperformance has exclusively negative outcomes. Again, the problem is whale circle jerk thinking. Underperformance is a matter of the right metrics, which do not serve the shareholders but company and consumer (the _correct_ metrics, that is). Now, when it comes to expanding while diluting the workers stake, you have the same problem, because the base income won't change. Only the stock increase will, which comes on top of the base revenue and makes everybody rich. But even in the rare cases where everybody does make less money, it's always temporary and sometimes necessary. This is not closed system after all.
If the story is "every company should offer stock options to its employees", then sure, that's often a good business plan. The reason not every company does it to all its employees is probably that for those employees, it wouldn't affect incentives much and it would make payment subject to the vagaries of the stock market. Your barista at Starbucks is not going to increase the stock price no matter how well he fills your order; at the same time, maybe he wants to know how much he takes home every day.
If the story is "it should be the law that every company offers stock options", then that would be a dumb law for the reasons above.
If the story is "all companies must be fully employee-owned workers' cooperatives", then first, note that you are calling for a restriction on workers' rights: they have to be given part of their pay as stocks, and they can't sell them freely. Second, that will probably make markets work worse. There's a large economics literature on this: worker-owned cooperatives have not taken over the market, although they are an available institutional form, because (a) they find it hard to raise capital (b) they tend to make decisions that maximize worker welfare rather than profit, e.g. they won't sack underperforming divisions or expand in ways that dilute existing workers' stake.
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