[FoRK] Making robotics a priority
sdw at lig.net
Wed Jul 13 11:24:40 PDT 2011
I'm not too interested in what happens to obsolete, fat, lumbering companies that while they have income, aren't competitive and are
fatally flawed in some way. That investors, corporate takeover artists, etc. raid them rather than stretching out the inevitable
may even be good for the overall economy, however sad for those that invested time into it. By now, most people should have
experienced the contrast between a modern, well-run, lean, customer (quality/service/value seeking) oriented business compared to
gotcha / rip-you-off-when-we-can / bait-and-switch / you-can't-trust us companies. The latter have mostly quickly died off or
shrunk back to a defensible specialty or they woke up and changed.
If you're running a business and you just had a period of transactions that were extremely lucrative, in what cases would you take
your money and run to something else? If you do, either A) you have a better opportunity to pursue, B) you see that the business is
or will be uncompetitive and you are cutting your losses, C) you can't stand risks that something like that will happen soon (wrong
risk profile for the owners taste), D) you just want out (i.e. to liquidate) for reasons unrelated to the business. C and D are
weak reasons, and would seem annoying to employees and customers. Still, if you own something, you own it and can screw it up if
you want. That's the nature of it. There have been plenty of cases where employees purchased the business in these situations to
make everyone happy.
More likely, the owners were in A or B, but that was hidden from most observers.
When you're talking about publicly traded stocks, the motivation of investors seems both simpler and more complicated. It's
different because they have so little person investment, just possibly fleeting financial. When you are public, you are completely
open to whatever rapidly fluctuating estimation of your current and future value. That can be good or bad, comes with the territory.
In large part, companies and the market set the tone and interpretation of things. Some companies were founded on long-term
investment and there is no real questioning of it. Often, it is paired with consistent income / profits so they end up pleasing
both kinds of investors. However, if companies (or the industries they're in) come to be viewed as commodities or similar general
patterns, investors may be overly interested in the short-term. Hard to fix that.
There are cases where it makes sense for the board and head of companies to pay attention to short term stock pricing, but it seems
like a mistake for many cases. Unless you put stock in the crowdsourcing consensus of correctness of your actions. If it is voting
on your direction by investors, and if those votes have any wisdom, then you could argue that it does make sense to please investors
by changing direction. This seems seldom to be very valid since investors are seldom going to know all of the inside information
and also be experts on the companies market, prospects, and resources.
Any company that isn't seeking to maintain and increase competitiveness, unless it is greatly ahead of everyone else, is going to
fall behind quickly. They'll go out of business and be replaced by a company that is focusing there. It may be that the business
cycle du jour requires that this is usually a startup that replaces an existing company and existing companies find it difficult to
invest to keep competing so they slowly run aground. In most cases, this is management failure, but it could be caused by various
outside factors. Those would be interesting to identify. You could potentially point to regulatory, unions, aging, various
management practices, wall street quarterly earnings focus, etc. If it is the latter, it lends support to the point that Wall
Street has questionable value for all of their overhead.
On 7/13/11 8:47 AM, Ken Ganshirt @ Yahoo wrote:
> Hi Greg,
> This isn't about basic economics. This is about your opinion of a specific aspect: that there is a direct linkage between the profitability of a company's investors and the competitiveness of that company. I understand basic economics. I don't understand your opinion.
> At this point I won't say I disagree with you. I simply don't see that direct linkage. I would like to understand how/where/why you see it.
> I don't buy sdw's explanation. He accuses me of making assumptions but his explanation requires even more, and less believable. E.g. that because a company produces more profit for its investors they will be more willing to invest it back in that company's future ventures. I understand the theory but it takes a giant leap of faith to assume it actually works that way in the general case.
> In this day of the major investors in the market being speculators and funds -- all seeking simply to maximize their short-term returns -- that may be his largest and most fragile assumption.
> Re-investment of profit requires long-term thinking. The main players in today's market aren't long-term thinkers. And, as board members, they ensure that the managers of the companies are equally short-term-return focused through hiring practices and reward systems. That is, the short-term thinking is endemic and systemic.
> It is possible that a side-effect of actions taken to juice the quarterly numbers will occasionally produce an increase in competitiveness. That's rarely the goal. So is it really sustainable?
> --- On Tue, 7/12/11, Gregory Alan Bolcer<greg at bolcer.org> wrote:
>> From: Gregory Alan Bolcer<greg at bolcer.org>
>> Subject: Re: [FoRK] Making robotics a priority
>> To: fork at xent.com
>> Received: Tuesday, July 12, 2011, 11:22 PM
>> Hi Ken,
>> Nope, but I can point out some good links on economics for
>> you. 
>>  http://google.com/
>> On 7/12/2011 7:26 PM, Ken Ganshirt @ Yahoo wrote:
>>> --- On Mon, 7/11/11, Greg Bolcer<greg at bolcer.org>
>>>> I think they allow companies to
>>>> increase competitiveness, so not that it's zero
>> sum, but any
>>>> short term detriments are far outweighed by the
>> long term
>>>> profitability of the company which in turn goes
>> back to
>>> I don't get that, either, Greg. How is it that
>> "competitiveness", in this context, is a Good Thing?
>> Specifically, how is it that making the investors in a
>> company richer balances or outweighs having fewer people
>> working in the economy?
>>> And how is it that making a company more profitable
>> ties back to competitiveness? I can see how a competitive
>> company might, arguably, be more profitable. I don't see how
>> making a company more profitable necessarily makes it more
>>> Can you help me with that?
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