[FoRK] Obama: communitarian, redistributionist, confused? (from NYT)

Jeff Bone jbone at place.org
Mon Aug 25 20:53:44 PDT 2008


On Aug 25, 2008, at 5:24 PM, geege schuman wrote:

> Jeff and JAR, check out the fifth point.

By the way...

"Fifth, in this perspective, shareholders are not genuine owners. They  
contribute nothing of value to the competitive strengths of the firm,  
enjoy the benefits of limited liability and are well able to diversify  
the risks they run."

Silly.

Shareholders are *of course* genuine owners;  it is merely that the  
ownership structure is not some simplistic quasi-feudal arrangement.   
They do indeed contribute something of value:  upon IPO, the new owner  
contributes liquidity to the previously-illiquid assets of the  
original owners as well as capital to the firm.  It is this incentive  
structure (among various other exit scenarios and other motivations)  
that encourages entrepreneurs to do what they do.  Upon follow-on  
investments, capital is also provided;  and the constant buying and  
selling of shares on an ongoing basis provides a (hopefully  
appreciating) liquid market for remaining employee-owners, again  
providing the crucial incentive.

These third-party owners indeed take risks, and whether they may (or  
may not) be "well able to diversify the risks they run" is beside the  
point.

This whole rant that this guy puts on is like standing in the street  
yelling at a mule for sitting on his ass and not moving, all the while  
ignoring the piles of carrots and sticks by the roadside.  That said,  
I actually agree with some of his points;  in fact have made some of  
them on-list myself over the years, particularly apropos "corporation  
as entelechy."


jb



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