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Every company should be owned by its employees

dash2
355 replies
11h6m

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.

stavros
269 replies
10h48m

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.

zby
71 replies
8h6m

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.

piva00
54 replies
6h34m

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.

pembrook
32 replies
6h9m

But what are you suggesting?

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?

Hrmmm, where have I heard that before...

forgetfreeman
20 replies
5h30m

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.

pembrook
17 replies
5h18m

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].

malcolmgreaves
15 replies
4h56m

once

The many systemic market failure modes of capitalism are well documented and written about at great lengths.

nradov
14 replies
4h37m

The many systemic market failure modes of socialism and economic central planning are well documented and written about at great lengths.

forgetfreeman
9 replies
4h20m

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.

nradov
2 replies
4h16m

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.

forgetfreeman
1 replies
2h12m

Drug discovery clusters in the US because the EU doesn't permit profiteering

nradov
0 replies
45m

Then it seems that permitting profiteering results in better outcomes. At least for certain things.

jazz9k
2 replies
3h39m

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.

piva00
1 replies
2h23m

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...

forgetfreeman
0 replies
2h7m

Fun Fact: most large pharma companies spend more on marketing than R&D.

qwytw
0 replies
1h38m

(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)

https://data.worldbank.org/indicator/SH.XPD.GHED.PP.CD?locat...

jcranmer
0 replies
3h45m

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.

WalterBright
0 replies
1h47m

The US health care system is primarily run by the government.

piva00
3 replies
2h25m

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.

qwytw
1 replies
1h48m

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.

Miner49er
0 replies
19m

What other forms of semi-stable functional "socialism" are there?

Cooperatives. This article we're discussing here is advocating for socialism, it's just not using that word.

WalterBright
0 replies
1h43m

the USA's education system has indoctrinated students so deeply into the red scare

Never mind the heavy leftward tilt of teachers, students, and universities.

forgetfreeman
0 replies
4h13m

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.

stale2002
1 replies
3h41m

cabbies in a handful of metro areas in the US.

The ones that were overcharging consumers?

Yeah it is great for customers when prices go down.

That's a benefit, not a drawback.

Those cabbies should have offer better service at a lower price if they wanted to compete.

nativeit
0 replies
2h11m

Overcharging? It’s easier to beat their prices if you don’t have drivers or cars to pay for.

bccdee
5 replies
4h54m

We forcibly allocate capital less efficiently

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.

blackhawkC17
1 replies
4h29m

The Chinese state takes a rather strong hand in allocating capital, and that has treated it fairly well over the past few decades.

The Chinese government has spent massive amounts on vanity projects. A lot of government funds have also been looted by CCP honchos.

Thanks but no. I’ll take American capital allocators over the Chinese any day.

Most importantly, I don’t want to live in a dictatorship.

hgomersall
0 replies
2h2m

There's a big range between living in a dictatorship and having only private entities allowed to invest in things.

apantel
0 replies
3h50m

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.

WalterBright
0 replies
1h49m

Without American billionaires, there would be no SpaceX.

YCombinator is billionaires investing in startups.

Aerroon
0 replies
9m

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.

piva00
3 replies
2h55m

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.

WalterBright
2 replies
1h48m

It's way more efficient than any other system that has been tried. Free markets bury command economies.

piva00
1 replies
58m

It doesn't mean it's the end all system, if it's wasteful it can be improved.

At no point I advocated for a command economy, once more you reply to a strawman to one of my comments, Walter.

WalterBright
0 replies
12m

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.

ClumsyPilot
0 replies
5h53m

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.

1 - https://rentalhousingjournal.com/fbi-searches-property-manag...

2 - https://www.pcmag.com/news/hp-accused-of-quietly-installing-...

3 - https://techcrunch.com/2024/03/26/facebook-secret-project-sn...

aleph_minus_one
12 replies
6h13m

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.

piva00
10 replies
6h4m

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.

randomdata
4 replies
5h18m

> Unions aren't structured for investing, and that's not their reason to exist.

Depends on the union. A credit union is structured for investing and is literally their reason to exist.

alephnerd
3 replies
3h44m

Yk a Labor Union is entirely different from a Credit Union right?

randomdata
1 replies
2h46m

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.

alephnerd
0 replies
2h13m

Unions should put their money where their mouth is and invest in cooperatives

As in Labor Union.

Pedantry and HN - name a more iconic duo.

aleph_minus_one
0 replies
3h38m

For sure, but who says that they can't become more similar ...

aleph_minus_one
2 replies
5h56m

On top of that the union has responsibilities to provide benefits to all members, a bank or investor has none of that

A bank has responsibilities to its shareholders.

piva00
1 replies
4h45m

But not to all members participating in the machine, hence my point that unions have a responsibility over all its members.

hellojesus
0 replies
3h29m

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.

merely-unlikely
0 replies
3h42m

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.

WalterBright
0 replies
1h54m

Unions aren't structured for investing, and that's not their reason to exist.

They seem to have plenty of extra money to fund political candidates.

specialist
0 replies
4h40m

Agreed! I vaguely recall SEIU doing just that.

Top hit from my casual search is a report containing case studies, two of which are SEIU.

A Union Toolkit for Cooperative Solutions [2021]

https://unioncoops.wordpress.com/wp-content/uploads/2022/02/...

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.

Democracy at Work: A Cure for Capitalism [2012] https://www.amazon.com/Democracy-at-Work-Cure-Capitalism/dp/...

And his website is not very focused.

https://www.democracyatwork.info/

I'm fine with polemics (about marxism, socialism, capitalism). But I'm already convinced.

Now I just want concrete action steps.

Please share any other (better) resources and links.

throwaway7ahgb
1 replies
6h2m

Capital markets has mostly two* components : Stocks and Bonds

Investors don't need to own part of a company to buy a Bond, they just want to see good credit rating and yield.

*VC is also part of capital markets but mostly private and such a small % of global investment.

nradov
0 replies
4h39m

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.

specialist
0 replies
4h58m

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.

randomdata
0 replies
4h57m

> 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.

nicholasnorris
0 replies
5h26m

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.

carom
0 replies
1h1m

There are plenty of successful companies that did not take outside investment, why are none of them cooperatives?

apantel
0 replies
3h57m

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.

WalterBright
0 replies
1h55m

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!"

kerkeslager
10 replies
6h39m

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.

Why is that exactly?

throwaway7ahgb
9 replies
5h58m

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.

ClumsyPilot
4 replies
5h49m

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

https://www.latimes.com/business/technology/la-fi-tn-tech-jo...

lupusreal
3 replies
4h52m

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.

kerkeslager
1 replies
30m

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.

lupusreal
0 replies
0m

I support regulating businesses and never suggested otherwise!

specialist
0 replies
4h28m

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.

kerkeslager
1 replies
35m

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.

fragmede
0 replies
24m

The US has the highest pay gap of any nation.

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.

https://en.wikipedia.org/wiki/List_of_countries_by_income_eq...

bdw5204
0 replies
5h15m

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.

[0]: https://www.politico.com/news/2022/11/30/feds-powell-inflati...

JohnFen
0 replies
4h22m

Everyone is for the highest pay possible until they run their own company and have to provide payroll.

And even then, there are lots of companies who want to provide the highest pay possible. I have always strived for this in my companies, anyway.

shkkmo
2 replies
4h52m

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.

shkkmo
0 replies
1h36m

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.

li2uR3ce
1 replies
5h0m

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."

WalterBright
0 replies
2h3m

Do you buy things you don't want?

arrowsmith
35 replies
10h9m

Overoptimize on worker happiness -> underoptimize for profit -> company goes bust -> workers lose their jobs -> no worker happiness

rakoo
16 replies
9h46m

underoptimize for profit -> company goes bust

That's a wild statement that is going to need some strong proof

CodeGroyper
12 replies
9h20m

How is it a wild statement? The whole point of a company is to make money. It's like asking why workers care about their salaries.

olex
5 replies
8h52m

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.

Gormo
4 replies
6h27m

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.

rakoo
2 replies
6h20m

No, because that falls under the fallacy that every market is a perfect market, where none is.

A perfect market is one where

- alternatives can be created for little to no money so they can easily exist

- consumers have an infinity of time, money and energy to analyze products

- consumers have total agency over their decision

- picking an alternative has no cost, no drawback

- it is possible to buy nothing and still be content

There are 0 markets that fall under those conditions. The measure of how good your product is is not in its sales figures it is in... reviews.

Gormo
1 replies
5h37m

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.

rakoo
0 replies
4h34m

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.

UncleMeat
0 replies
4h15m

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.

rakoo
3 replies
6h24m

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.

randomdata
2 replies
4h22m

> 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?

mkbosmans
1 replies
3h17m

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.

randomdata
0 replies
2h49m

> 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.

UncleMeat
0 replies
4h18m

Why is that the whole point? A company needs enough revenue to pay its employees, but it doesn't need more revenue in any absolute sense.

"Just existing in the world, providing a service to customers and a wage to employees" is a fine and stable way for a company to exist.

JohnFen
0 replies
4h12m

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.

randunel
2 replies
9h40m

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?

rakoo
0 replies
9h27m

Proof that underoptimizing for profit, not being non profitable, means going bust. Exactly what is quoted in fact.

glenngillen
0 replies
9h29m

You shifted the criteria here. Under optimise for profit does not mean unprofitable.

vidarh
11 replies
9h50m

Last time I looked at data, worker coops were less likely to fail than most other corporate structures.

Jensson
10 replies
9h42m

Most worker coops doesn't optimize for worker happiness, they are like any other company, just like how communism doesn't optimize for worker happiness either.

ClumsyPilot
8 replies
5h42m

just like how communism

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.

tristor
4 replies
5h4m

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.

ClumsyPilot
3 replies
3h59m

using legal force to try to upend reality

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’

tristor
2 replies
2h23m

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).

consteval
1 replies
13m

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.

tristor
0 replies
7m

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.

havblue
1 replies
3h32m

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?

consteval
0 replies
16m

No, this is socialism as best. Not communism.

edm0nd
0 replies
3h6m

I'm just being pedantic but "free public libraries" don't really exist though.

They are paid for by property owners via tax millages rates on their homes.

Most people support this but none are free since the public pays for em.

vidarh
0 replies
9h12m

Doesn't generally seem supported by data.

E.g. https://www.fiftybyfifty.org/2021/06/workers-at-cooperatives...

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.

stavros
3 replies
10h4m

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!

MichaelZuo
2 replies
9h52m

Survivorship bias. You have to compare against all that have in fact gone bust over the same timeframe.

MichaelZuo
0 replies
5h9m

Did you reply to the wrong comment?

_s_a_m_
0 replies
10h4m

That's the cliché, and I dont think it's even remotely true.

6510
0 replies
8h42m

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!

sotix
29 replies
5h34m

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.

bayareateg
14 replies
4h44m

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"'

You should have asked her why she came to the US

randomdata
9 replies
4h34m

> 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.

nanomonkey
2 replies
2h21m

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.

victorbjorklund
0 replies
1h11m

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.

em500
0 replies
30m

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)?

randomdata
0 replies
2h56m

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.

mbrumlow
3 replies
2h29m

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.

sqeaky
0 replies
18m

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.

randomdata
0 replies
2h22m

> 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.

coldtea
0 replies
2h25m

Happiness. What hell is it even? It means nothing

Money means even less.

Why? Because I am the most happy when working at a high paying job with loots of interesting problems to solve.

Yes, people have been conditioned to be working.

keybored
2 replies
4h36m

You should have asked her why she came to the US

People sometimes have rose-colored glasses about emigrating to the US.

WalterBright
1 replies
2h7m

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.

keybored
0 replies
1h17m

Legend has it that Walter can smell anti-Americanism in the water, in fact all the way to Germany.

hobs
0 replies
4h36m

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.

stavros
4 replies
5h14m

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.

pavlov
3 replies
4h16m

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.

xeromal
0 replies
1h15m

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.

stavros
0 replies
46m

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.

InitialLastName
0 replies
3h11m

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").

apantel
4 replies
4h1m

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.’

nox101
2 replies
3h35m

Zuckerberg doesn't get to do what he wants. He's in meetings constantly and rarely has a free moment

sateesh
0 replies
3h20m

But that is the choice he has made. I guess he can very well afford to have a less hectic schedule or to not work too.

mattm
0 replies
3h15m

He could step anytime he wants to. He's not someone who is going to work to make sure him and his family have food to eat.

chasd00
0 replies
1h45m

i heard a quote a long time ago "money won't buy you happiness but it's more comfortable to cry in a Mercedes".

nradov
0 replies
5h2m

It's tough to be happy when you're broke and worrying about whether you can get another loan.

negus
0 replies
2h28m

(ignorant of the history that led to 2008)

can you share your version please?

geodel
0 replies
4h32m

So "Greek are lazy" is condescending but everyone in US prioritized making money is just fact?

BTW there must be some interesting story that your Greek teacher had to move to US and deprioritize happiness.

Aunche
0 replies
3h20m

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.

https://www.nytimes.com/2024/07/04/world/europe/greece-six-d...

vrotaru
22 replies
10h43m

Stop optimizing for consumers, start optimizing for producers.

Maybe, you want to rethink that.

Arainach
7 replies
10h36m

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.

robertlagrant
6 replies
10h26m

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.

brabel
2 replies
7h31m

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.

mantas
1 replies
6h31m

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.

Qwertious
0 replies
5h30m

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.

tempfile
0 replies
7h36m

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).

fuzzfactor
0 replies
3h24m

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.

davidcbc
0 replies
5h45m

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

stavros
6 replies
10h41m

Why? It sounds good to me.

vrotaru
5 replies
6h13m

Just an example.

Should teachers be judged on how a pleasant life they live, or how good they teach?

vundercind
1 replies
4h49m

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.

chasd00
0 replies
1h28m

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

Droobfest
1 replies
5h34m

Obviously by how well they teach, but if we give them a stake in their teaching performance, their teaching should improve even more…

seneca
0 replies
5h15m

They do have a stake in their performance. It's their salary. If their performance is poor, in a functioning system they lose that salary.

Qwertious
0 replies
5h34m

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.

aziaziazi
3 replies
10h13m

Company profits is not always aligned with consumer interests, didn’t understand why you switched them.

Gormo
2 replies
5h53m

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.

consteval
0 replies
39m

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.

JohnFen
0 replies
4h18m

if they don't feel like they are obtaining net positive value from the transaction, they won't be.

Excepting for the cases where people have no other choice.

kvgr
0 replies
10h40m

Good luck producing and not selling.

kerkeslager
0 replies
3h26m

Well, it sounds like a step up from most companies, which is don't optimize for consumers, don't optimize for producers, optimize for shareholders.

jandrewrogers
0 replies
5h29m

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.

pembrook
19 replies
7h55m

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.

tempfile
12 replies
7h42m

The point of a company is to make a product that customers want, and make it as accessible as possible.

Who says? What if we said the point of a company was to make its employees' lives better?

In the US a vast majority of adults now own index funds

in proportion to their wealth. That's the problem - ownership is distributed unevenly, and the inequality causes social problems.

pembrook
10 replies
7h24m

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.

Draiken
6 replies
6h49m

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.

danaris
5 replies
6h35m

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.

blackhawkC17
4 replies
4h13m

Of course those countries were never communist.

True communism has never been tried, it will work this time around…

tempfile
3 replies
3h28m

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.

blackhawkC17
2 replies
2h50m

The GP boldly said the Soviet Union wasn’t communist.

Please then, what was it? Capitalist? Feudal? Democratic socialism? I need a clear answer..

tempfile
1 replies
2h30m

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".

Draiken
0 replies
54m

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.

tempfile
2 replies
5h54m

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.

pembrook
1 replies
5h11m

This is a non sequitur. I'm not saying central planning in general is bad. Companies are an example of central planning. So are families.

I'm saying communism is bad.

tempfile
0 replies
5h0m

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.

EnigmaFlare
0 replies
6h44m

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.

s0l1dsnak3123
2 replies
7h29m

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.

Gormo
1 replies
5h41m

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.

s0l1dsnak3123
0 replies
4h26m

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

Source: https://www.uk.coop/sites/default/files/2020-10/worker_co-op...

chillingeffect
0 replies
6h59m

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.

TaylorAlexander
0 replies
7h35m

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.

Qwertious
0 replies
5h23m

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.

https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...

robertlagrant
14 replies
10h12m

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".

What's the actual plan?

stavros
11 replies
10h2m

I'd encourage you to Google for some articles on how worker-owned coops stay in business. This isn't a radical new idea that's never been tried.

robertlagrant
10 replies
9h50m

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?

Nevermark
8 replies
9h21m

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.

robertlagrant
5 replies
9h16m

But it would be nicer if everything were free, though.

Why would an investor invest in a company that, if it fails, they lose their money, and if it succeeds, their ownership is taken away?

Nevermark
4 replies
9h6m

Nobody “takes” ownership.

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.

That could be financially mismanaged too.

There would need to be a rational structure.

robertlagrant
2 replies
7h52m

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?

vidarh
0 replies
7h42m

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.

kaibee
0 replies
4h36m

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.

vidarh
0 replies
7h48m

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.

Gormo
0 replies
5h51m

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.

aleph_minus_one
0 replies
6h11m

How is a company that requires hundreds of millions of dollars before it's profitable supposed to be a co-op?

People and organizations who talk about social welfare (e.g. unions) should put their money where their mouth is, and do the seed investments.

kerkeslager
0 replies
3h8m

That's quite the slippery slope argument you've got there.

Narhem
0 replies
8h57m

Companies should see employee's as stock. Optimizing for anything else would be short sighted.

lupusreal
13 replies
9h57m

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.

stavros
8 replies
9h55m

Everything already costs more, because companies make crazy margins to make Bezos richer instead of making their products cheaper.

lupusreal
7 replies
9h33m

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..

stavros
5 replies
9h30m

"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.

lupusreal
4 replies
4h49m

So are you conceding that an economy built entirely out of coops would suffer from reduced productivity?

stavros
3 replies
4h45m

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?".

lupusreal
1 replies
2h19m

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.

consteval
0 replies
22m

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.

orangecat
0 replies
39m

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.

pjerem
0 replies
9h29m

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.

tempfile
0 replies
7h33m

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?

pjerem
0 replies
9h32m

Honestly that’s pretty false.

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.

glenngillen
0 replies
9h25m

Your opening paragraph here reads to me like the first decade of Google.

SomeoneFromCA
0 replies
8h0m

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.

dash2
13 replies
10h12m

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.

jjmarr
11 replies
5h50m

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.

malcolmgreaves
10 replies
4h53m

good historical track record

Please cite some sources that are not communist countries. You know, “just socialism.”

You way want to also ignore the existence of Norway, much of Europe, and popular US federal programs too when you're doing this exercise.

trinsic2
6 replies
3h44m

Exactly. Sick of people applying the catch-phrase "socialism" to everything to marginalize a method of community good.

jjmarr
4 replies
2h48m

"Every company should be owned by its employees" is the definition of socialism, which is social ownership of the means of production.

https://en.wikipedia.org/wiki/Market_socialism

Specifically this is market socialism.

trinsic2
3 replies
2h34m

I don't give a fuck with the definition is. Its not helpful to this discussion, move on.

Our world is being destroyed by capitalism, maybe its time to try something else.

qwytw
1 replies
1h21m

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.

consteval
0 replies
44m

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.

xeromal
0 replies
1h14m

Your comment seems unnecessarily hostile

qwytw
0 replies
1h26m

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.

https://en.wikipedia.org/wiki/Social_market_economy isn't socialism by any reasonable definition. Unless you think Bismarck was a socialist...

jjmarr
0 replies
2h45m

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.

blackhawkC17
0 replies
4h24m

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).

kerkeslager
0 replies
6h36m

As opposed to now, when non-executives and non-shareholders are left out of the equation...

infecto
6 replies
6h50m

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.

piva00
2 replies
6h29m

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.

Gormo
1 replies
5h48m

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.

piva00
0 replies
5h34m

No, it's not meaningless.

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.

kerkeslager
1 replies
6h47m

Why is number of startups a metric we care about?

Are we just asking rhetorical questions that pick out one data point that we think supports our presupposed notions?

vundercind
0 replies
4h41m

… especially when those startups are overwhelmingly outsourced R&D for monopolists, not in actual competition with those monopolists.

jandrewrogers
0 replies
5h7m

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.

imgabe
6 replies
4h36m

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.

sqeaky
5 replies
3h27m

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.

imgabe
4 replies
3h22m

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.

sqeaky
3 replies
3h1m

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.

imgabe
2 replies
2h42m

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.

sqeaky
1 replies
2h22m

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".

imgabe
0 replies
2h13m

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.

Gormo
6 replies
6h47m

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.

danaris
4 replies
6h42m

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.

nindalf
2 replies
4h52m

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?

eszed
0 replies
4h22m

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.

bccdee
0 replies
4h41m

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.

Gormo
0 replies
6h30m

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.

bccdee
0 replies
4h43m

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.

solidninja
5 replies
8h13m

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.

Eddy_Viscosity2
3 replies
6h29m

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.

throwaway7ahgb
2 replies
5h55m

Agreed, COOPs don't fundamentally change human behavior which has doses of greed. A large COOP monopoly will suffer the same fate as others'.

shkkmo
1 replies
4h45m

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.

photonthug
0 replies
2h5m

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.

throwaway7ahgb
0 replies
5h57m

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.

tomp
4 replies
7h55m

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?)

fileeditview
0 replies
6h49m

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.

consteval
0 replies
26m

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.

bialpio
0 replies
2h55m

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.

Aeolun
0 replies
4h18m

The fact that this hasn’t happened suggests that in reality, the for-profit companies are better at optimising workers happiness than cooperatives

Or everyone is too exhausted from their daily grind to even consider doing so, which is honestly not very surprising.

devnonymous
3 replies
10h31m

Yep! ..and when workers are owners, optimizing either ways works !

konschubert
2 replies
10h17m

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.

consteval
0 replies
18m

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.

Nevermark
0 replies
9h20m

Nobody suggested outlawing competition, or made any points that would imply anything related to that.

wkrsz
1 replies
10h12m

Would those companies be able to compete in a global market?

anentropic
0 replies
9h3m

It's in the employees self-interest for that to be so

perryizgr8
0 replies
8h33m

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.

ozim
0 replies
7h22m

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 :)

osigurdson
0 replies
4h13m

> 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.

giantg2
0 replies
3h25m

"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.

conradev
0 replies
2h39m

How do you make decisions where firing 10% of the workforce is good for 90% of the company’s happiness?

WalterBright
0 replies
2h44m

we should be optimizing for making a company that makes the workers' lives better

In the US, you are free to set up a company any way you like.

AnimalMuppet
0 replies
4h34m

If coops make it harder to raise capital, then they make it harder to invest in new tools, which makes it harder to increase productivity.

Workers keep more of the profits but there's less produced so there's less to buy? That doesn't actually make workers' lives better.

phkahler
13 replies
9h46m

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.

choeger
12 replies
9h42m

You or I can not buy stock in them.

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.

t0mas88
7 replies
9h12m

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.

empath75
3 replies
5h0m

Companies frequently make no profits. Imagine missing your rent payment because your company had a bad quarter.

kaibee
0 replies
4h27m

Are... are you familiar with layoffs? Y'know, that thing companies do where they stop paying you and you don't have a job anymore?

charles_f
0 replies
3h29m

Every worker gets a salary but also a percentage of their salary in stock ownership

That's in the second paragraph. I don't know what the fixation is in finding problems with paying more the people who produce what the company sells.

PopAlongKid
0 replies
4h40m

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.

Nevermark
2 replies
8h54m

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.

thanksgiving
1 replies
8h18m

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?

s1artibartfast
0 replies
2h21m

They are the same with respect to long term planning. You can take a dividend or sell stock to witdraw profits.

Dividends don't have to be sustainable. There are companies that are gutted and liquidated to pay out dividends too.

phkahler
3 replies
5h50m

> 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.

enoch_r
1 replies
5h19m

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.

mkbosmans
0 replies
3h2m

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.

bluGill
0 replies
5h9m

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.

rakoo
9 replies
9h42m

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

zby
7 replies
7h55m

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.

peepee1982
3 replies
7h0m

Not so many cooperatives to apply for, are there? Otherwise I would definitely prefer worker owned.

zby
2 replies
6h33m

But you can create one? If many people wanted to join a cooperative - then it should be easy to do?

rakoo
0 replies
6h26m

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.

bialpio
0 replies
2h30m

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.

Workaccount2
1 replies
4h32m

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.

vhiremath4
0 replies
2h46m

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.

chronofar
0 replies
7h14m

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.

dash2
0 replies
3h8m

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.

cen4
9 replies
9h55m

Now please use the barista argument on what house wives should be paid.

phkahler
5 replies
9h33m

> ...what house wives should be paid.

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.

cen4
3 replies
9h16m

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.

jack_pp
2 replies
8h36m

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

cen4
1 replies
6h57m

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.

jack_pp
0 replies
4h35m

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?

1. https://www.pewresearch.org/short-reads/2023/08/03/almost-1-...

keybored
0 replies
4h23m

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.

beambot
1 replies
9h48m

Turns out you can't project human values into a single (monetary) dimension...

Similarly, my estimate of the value of my life (infinite) differs from how society would broadly estimate it actuarily.

Such is the nature of things.

cen4
0 replies
9h45m

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.

Qwertious
0 replies
4h59m

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.

typicalset
6 replies
9h40m

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.

zby
4 replies
7h53m

If you cannot choose to work for an organization that is governed in a different way - then this is a restriction on your rights.

typicalset
3 replies
7h4m

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.

zby
2 replies
6h36m

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.

typicalset
1 replies
5h52m

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.

zby
0 replies
4h21m

The difference between a state and a company is that it is much more difficult to change the first.

empath75
0 replies
4h57m

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.

dgb23
5 replies
10h20m

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.

dash2
4 replies
10h3m

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.

vidarh
2 replies
9h50m

Coop is not a worker cooperative. It's a consumer cooperative, owned by its members, not workers.

vidarh
0 replies
9h8m

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.

pjc50
0 replies
8h58m

The big survivor is actually John Lewis.

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.

Aissen
5 replies
10h48m

Your barista at Starbucks is not going to increase the stock price no matter how well he fills your order

But 400k barista all doing it well might.

vsuperpower2021
4 replies
10h35m

This is not tenable. 400k people aren't going to all individually work extra hard for starbucks if their own work doesn't individually benefit them.

briandear
1 replies
9h48m

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.

bregma
0 replies
8h4m

The Soviet Union never even attempted communism.

topper-123
0 replies
10h13m

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.

ErikBjare
0 replies
10h22m

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.

yieldcrv
2 replies
10h25m

There are additional options

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

dash2
1 replies
9h55m

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.

yunohn
0 replies
9h27m

The whole world still relies on and builds petrol cars. EVs are still a small portion of the global market.

I think it’s quite disingenuous to blame Germany’s slow moving industry sector on “worker’s control”.

sqeaky
2 replies
4h14m

This sounds like someone saying that banning children from mines is a restrictions on the child's right to mine coal.

If society would be a better place than short term growth be damned.

charles_f
1 replies
3h26m

I'm not sure why so many people want to find issues with giving more to employees.

sqeaky
0 replies
3h15m

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.

jrnx
2 replies
10h35m

(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.

aziaziazi
1 replies
10h1m

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.

jrnx
0 replies
5h32m

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.

habosa
1 replies
4h44m

Your barista at Starbucks is not going to increase the stock price

Not sure I agree. If all the baristas did a better job then I think that would positively affect company value.

charles_f
0 replies
3h27m

And they would probably do a better job being happier and less stressed about money related issues

f6v
1 replies
10h47m

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.

coderatlarge
0 replies
10h22m

You can generally negotiate for more cash instead of a stock grant. Of course you have to accept the current price. I’ve done it and lost a lot :)

Gooblebrai
1 replies
10h39m

they tend to make decisions that maximize worker welfare rather than profit

That this a "con", says something worrying about the values that, as society, we have decided are more important

bootsmann
0 replies
10h16m

It maximizes _current_ worker welfare, not global worker welfare, don't confuse the two.

BigParm
1 replies
4h41m

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.

01HNNWZ0MV43FF
0 replies
4h37m

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.

ziggyzecat
0 replies
7h35m

it wouldn't affect incentives much.

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.

vegetablepotpie
0 replies
4h24m

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.

mdorazio
0 replies
6h5m

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.

[1] https://www.starbucksbenefits.com/en-us/home/stock-savings/b...

[2] https://www.youtube.com/watch?v=A0fvX-wV70Y

maxerickson
0 replies
6h21m

There are coffee shops that are owner operated, which is probably closer to what you'd get than Starbucks.

Not sure it'd be a bad thing to have more of the one and less of the other.

kerkeslager
0 replies
6h48m

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?

instagraham
0 replies
11h1m

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).

enugu
0 replies
10h10m

fully employee-owned

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.

darby_nine
0 replies
3h36m

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.

charlieyu1
0 replies
7h19m

I'm pretty sure the stock options of the corner shop near my house won't be very attractive to employees.

calibas
0 replies
4h11m

(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?

andrepd
0 replies
3h7m

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!

agentultra
0 replies
6h9m

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.

JohnFen
0 replies
4h29m

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.

IneffablePigeon
0 replies
10h43m

they tend to make decisions that maximize worker welfare rather than profit

Oh no

Aeolun
0 replies
4h25m

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”.

xmprt
90 replies
11h42m

I think the most surprising thing about trends in modern executive class pay is just how steep it is compared to the median employee. It makes me wonder why shareholders outside the company are happy with it.

For example, the Boeing CEO made 22M in 2022 and 32M in 2023. I'd argue that he did a much worse job in 2023 than in 2022 but somehow got paid almost 50% more. Even Jensen Huang, CEO of Nvidia, is "only" being paid $34M in 2024.

infotainment
34 replies
11h38m

It's so bizarre, considering that the modern CEO's only job is to issue meaningless positive statements to shareholders.

If you look at many top CEOs resumes, they are almost always devoid of any real experience. People talk about replacing various jobs by AI, but I'm pretty sure an LLM could replace most CEOs and no one would notice.

bpodgursky
14 replies
11h14m

I don't want to be rude but you have no idea what you are talking about and clearly have 0 insight into the day-to-day of an actual CEO. It's fine to argue that a particular CEO is underperforming, it's often true, but very few of them are "underworking" by any reasonable definition.

roughly
9 replies
11h1m

How’s this for a definition: the average CEO gets paid 350x what the average worker gets paid, so unless they’re generating 350x the value of the average employee, they’re underworking.

EnigmaFlare
3 replies
6h39m

If they have 350 employees, then they double the company's profit, I suppose they just generated 350x times the value of an average employee. If they have more employees, they only need to increase it a smaller proportion to be generating 350x as much value.

lesuorac
1 replies
5h27m

Doubling profit is relatively easy.

If you have 10M of revenue and 9.5M of expenses then an increase of 500k in sales doubles your profit. Given that everybody in the company is needed (for sake of argument) to produce the initial 10M I wouldn't say that the CEO inking a new sale for 500k is worth the entirety of the original company.

overrun11
0 replies
2h51m

Your example assumes 100% gross profit margins which is unlike any company I've ever heard of.

carlosjobim
0 replies
1h7m

Yes, if the 350 employees kept working the same as usual, and the only thing that changed was something the CEO did, not anything he ordered the employees to do.

s1artibartfast
0 replies
3h48m

It is very easy to generate 350x value.

If you get 1% more work out of 350 people than the alternative.

s1artibartfast
0 replies
3h45m

It is very easy to generate 350x value.

If you get 1% more productivity out of 35,000 people than the alternative you have done it.

jandrewrogers
0 replies
4h48m

The average CEO in the US gets paid FAANG SWE wages, per the US government's own data. Cherrypicking a handful of highly compensated CEOs out of the tens of thousands of large corporations in the US is misleading at best.

high_na_euv
0 replies
5h32m

Hint: impact

Workaccount2
0 replies
4h18m

CEO's get paid by shareholders, workers get paid by companies.

The money that workers bring into a company is often not being used at all to pay these CEO's. It's why so many CEO's have $0 salary or $200k salary.

It's a critical distinction because it clears up so much confusion people have about this topic. Those 300x multiple stories you see are almost always comparing two completely different income sources. You can almost think of it like a 3rd party is paying the CEO to run the company.

psychoslave
0 replies
10h56m

There are things that needs inner insights to understand and conclude anything meaningful. And there are things that can be judge by external insights alone, or even only from external point of view not being embedded in the system internal consideration while trying to emit the judgement.

We don’t need deep packet inspection to spot a very out-of-the-chart huge traffic.

We don’t need micro-details of an economical agent actions to spot an anomaly in wealth distribution.

gardenhedge
0 replies
11h10m

Empty rebuttal. Consider adding more substance to your comment. As a reader I have no idea which of you is correct.

earnesti
0 replies
11h10m

CEO's definitely are underworking. Maybe not CEO's of publicly traded companies, though.

cess11
0 replies
11h10m

Arguably CEO:s are administrators, not workers.

cess11
11 replies
11h28m

It's someone who can take blame to protect branding and is easily replaced.

infotainment
10 replies
11h27m

Exactly; is someone who is essentially a replaceable scapegoat really worth millions per year in salary?

cess11
7 replies
11h11m

Sure, if it allows owners to stay in control and keep profiting from the people that perform the labour in the organisation.

It's someone you can pin board and shareholder decisions on, as well as changes in market and accidents, that just goes away and lets some other people keep their power and profits instead of being accountable for their mistakes or lack of strategic performance.

dash2
4 replies
10h56m

I very much dislike these threads where two people act like sockpuppets of a single not-very-advanced llm, agreeing with each other's views which are invariably exaggerated, uninformed and cynical. I've been seeing more of them recently; if you see one, downvote it.

American capitalism has lots of problems. The idea that CEOs "almost always" have no real-world experience is hardly worth arguing against: "almost always" is meaningless rhetoric and "real-world" likewise (what counts as real-world experience for Google? WPP? Northrop Grumman?). Jensen Huang is mentioned literally at the top of this thread and is an obvious counterexample.

cess11
3 replies
10h38m

Sorry, I don't mean for my views to hurt your feelings.

I find it obvious from the context that they were referring to celebrity CEO:s in global corporations and not Mom or Pop in some small mom-and-pop corner store.

When I look at en.wikipedia on Huang it seems he graduated into a managing role and then founded Nvidia. By "real-world experience" I'd mean experience as a worker, but I can't answer for the person you're actually quoting.

However, it's an interesting example. Clearly Huang has managed to promote an image to you that is very different from mine. As I see it, Nvidia is a main supplier of hardware for globally fashionable grifts and scams, like large portions of so called 'crypto' and 'AI'. I also expect Nvidia to be an important supplier in the war industry, and I'm sure it is in surveillance tyranny.

dash2
2 replies
10h17m

Huang started as a chip designer and then founded a company developing chips. What other kind of work experience would be relevant? AI contains scams, but also obviously important real progress; your points about war and surveillance are pure mood affiliation and irrelevant to the topic at hand.

cess11
1 replies
7h19m

Production of chips, for example. One could argue that design is a form of administration rather than work.

I'd say so called AI is largely a scam. It's wobbly databases with non-deterministic query languages dressed up as a substitute for intelligence. Email is similarly a scam. Through mail you send someone an item, which might or might not have some script on it. Email is very different, and it's largely used for spam, even though the name seems to say it is very similar. Is this what you call progress?

No, I'm pointing out that Nvidia are supplying criminals and tyrants with the tools they need for their abusive and oppressive activities. I do not expect your mood to change from having this pointed out, rather the opposite, I expect you to already be somewhat aware of it. Personally, I try to avoid doing business with such people, and I would prefer to not be dependent on their enablers, though that is almost impossible for systemic reasons.

proteal
0 replies
3h14m

Scam is doing a lot of heavy lifting here, no? If by scam, you mean that a large volume of the “work” enabled by these tools is not productive to society, then fine, I think what you say follows. However, there’s a lot of good work that is done with email and other tools you mentioned. For every good email I send, there might be 100 spam emails, but the drag from the spam on society is surely much less than the value of my “real” email. Furthermore, the technology is an improvement over snail mail for many use cases. I agree that the jury is still out on whether or not AI is as good as imagined, but it seems overly pessimistic to entirely discount a new technology that has been at least personally useful to me. If we were to really run with this definition of scam, we’d soon realize that all technology is a scam. So why even get up in the morning? Might be a simpler life to mail bombs and rot in prison at that point…

klipt
1 replies
11h5m

But if it were just that, plenty of people would be willing to take the blame for less money.

I think the problem is you have to hire someone highly qualified and with relevant experience to at least show you're doing due diligence, and those people aren't cheap.

cess11
0 replies
10h54m

It has to be someone who looks somehow impressive, it can't just be a random homeless person doing it for a meal, that would look like the enterprise is doing something criminal.

Pay plays a part in that, it signals that the person is extraordinarily competent and all around great and important.

In large corporations CEO:s aren't very important, it's just one person who mainly collects and structures information from people closer to the work and makes public appearances on behalf of the corporation and does paper shuffling required by the state and so on. It's not rocket surgery. Using this person to protect the reputation and image of shareholders and the board as well is a 'no-brainer' decision to make if your interests are well served by it.

cootsnuck
0 replies
4h40m

When company valuations are fundamentally based on "faith to perform well", yes. It's a product of touting a speculative economy as one of "rational actors". CEOs function as mythological heroes more than anything. So there's no number too high to pay since even their defeat can be incorporated into the ongoing myth of the brand. It's very strange to me.

SkiFire13
0 replies
10h10m

To be fair if I were to be a scapegoat for Boeing there's no way I would do that for cheap.

pie_flavor
6 replies
10h6m

If it's so easy, why aren't you doing it? Presumably it requires some amount of investment to break into, but with such a high upside it's still massively +EV.

Peritract
2 replies
8h48m

Some people want to do work they find meaningful.

paxys
1 replies
7h47m

Then why complain about how much someone else is getting paid?

Peritract
0 replies
7h33m

The parent comment isn't complaining about the amount CEOs are paid, but the amount they are paid relative to the value provided.

maximus-decimus
1 replies
6h45m

The job being easy to do and the job being easy to get are two completely different things.

pie_flavor
0 replies
22m

So how are new ones minted?

pydry
0 replies
7h0m

I dont know why on earth youd assume that the executive/board/CEO club is meritocratic or that it would be open to talented outsiders.

dheera
21 replies
11h32m

Even Jensen Huang, CEO of Nvidia, is "only" being paid $34M in 2024.

26.6M of that was stock. In percentage terms it's just equity that he effectively handed out before as a founder and is getting back in return for growing the company even more. I don't see a problem with it, considering that the median employee takes almost zero risks and can leave whenever they want.

rendaw
10 replies
11h18m

What risk does Jensen Huang take and why can't he leave whenever he wants?

sgammon
8 replies
11h12m

Are you kidding?

freilanzer
5 replies
10h19m

If I earn 30 million a year, I have next to no risk and can retire anytime I want. Hell, I could retire after the first quarter.

dheera
4 replies
10h15m

Do you realize that for the first N years of Nvidia, he probably made less than minimum wage, AND had immense responsibilities on his back to try to get the company to profitability? That's the risk.

He's getting a 30M paycheck today only because he built a trillion dollar company from nothing and sacrificed the job opportunities he could have had at other companies for three decades.

mnau
1 replies
9h20m

Past is irrelevant. He too the risk and got handsomely rewarded for incredible success as he should.

But that is his stock he kept from founding the company. Not today.

He should of course still be CEO of Nvidia and get the money(stock awards), because unlike others, Nvidia execution is excellent (see market cap) and has been for decades, but that is not really any risk for him personally.

dheera
0 replies
1h10m

What do you have against him?

I say give him the 30 million dollar package because he's the only guy I can think of that has hope of turning NVDA into a a 10 trillion dollar company in a few years and I can't think of any other CEO that would do better than him.

And sure, maybe at that point his comp will be 300 million, that's fine, my NVDA stock will 10X as well and I'll be more than happy.

freilanzer
1 replies
5h24m

Do you realise that CEOs don't all start at a company from day 1 and instead get hired and immediately have a huge salary?

According to Wikipedia:

As of 2024, Huang has been Nvidia's chief executive for over three decades, a tenure described by The Wall Street Journal as "almost unheard of in fast-moving Silicon Valley".[14] He owns 3.6% of Nvidia's stock, which went public in 1999.[5] He earned US$24.6 million as CEO in 2007, ranking him as the 61st highest paid U.S. CEO by Forbes.[5]

This should tell you all you need to know.

fuzzfactor
0 replies
3h16m

CEOs don't all start at a company from day 1 and instead get hired and immediately have a huge salary?

With 20/20 hindsight which seems like the better path now?

This should tell you all you need to know.
rendaw
1 replies
10h36m

IIUC you think it's obvious but it's possible it's not obvious or that different people have different views on it, all of which they consider obvious.

sgammon
0 replies
10h4m

It's an honest question.

charlieyu1
0 replies
7h17m

He is giving a ton of business to Taiwan. That's probably enough personal safety risk.

RicoElectrico
6 replies
11h23m

No, the risk for regular employee is higher due to downside vs upside. Once you cross some wealth threshold, it's not possible to lose everything (e.g. become homeless) unless you do something deliberately stupid like gambling or drugs. There's always plan B if you're rich. Like, rent out property or something.

lnsru
3 replies
11h10m

Thanks for writing this. Owning a place to live and couple rental properties makes one economically independent. Leaving a toxic workplace means loosing fancy car and canceling expensive vacation. Loosing job before that wealth threshold means homelessness and poverty.

dheera
2 replies
10h52m

Leaving a toxic workplace means loosing fancy car and canceling expensive vacation.

Loosing job before that wealth threshold means homelessness and poverty.

No, it doesn't. Maybe don't borrow money and buy a fancy car and vacations you can't afford? Buy a normal car with cash and go on normal middle-class vacations?

If you work in an mid-level engineer capacity at a FAANG or Nvidia in the Bay Area you can easily live on 1/3 of your take-home compensation (that's including a normal car, a couple economy-class vacations a year, and a modest apartment) and invest the rest in index funds. Within a few years of working, you would have banked enough to have a decade worth of expenses saved before you'll be homeless, and I'm sure you can find another job in that decade.

I work at a big tech company, my (very normal) car cost me 1/10 of my annual take-home salary, I've never flown anything but economy class, and I save 60-75% of my take home pay and invest it. I can't afford rental properties or any of that, but I do have enough funds to last me several years at my current lifestyle.

Back when I was at startups (including co-founding one), I was never able to save more than a few months' worth of emergency fund, and that was not good for my mental health. That's one of the reason I joined a big tech company for now -- to de-risk myself financially.

Startups are financially FAR higher risk. You'll get 1/4 the pay that Nvidia gives you, the equity may end up being worth $0, and if it does end up being worth $0, you'll have missed out on the opportunity cost of being hired at any of the FAANG companies for whatever time you spent there.

I'm not discouraging anyone from doing a startup, but it IS higher financial risk in every way.

throwaway2037
1 replies
9h47m

Wow, 60-75% savings rate is incredible.

    > I can't afford rental properties or any of that
Why not? Combine a 10% down payment and a bank loan. You can definitely afford it.

dheera
0 replies
1h17m

In my book, borrowing money to buy something I don't have the cash for does NOT mean I can afford it.

Back in the days when I didn't have money to buy a car with cash, I just didn't buy a car and used a bike and public transit to get everywhere.

I mean, maybe that's why I have a high savings rate.

robertlagrant
0 replies
9h51m

No, the risk for regular employee is higher due to downside vs upside

People start businesses and actually risk everything they have on them. If you only look at someone who owns and runs the biggest company in the world, you're just using the apex fallacy[0] to justify your perspective, and hoping nobody notices.

[0] https://rationalwiki.org/wiki/Apex_fallacy

dheera
0 replies
11h19m

The risk for a software engineer at any of the big tech companies is extremely low if you have some common sense level of financial literacy.

If you're an engineer at Nvidia you'd have to do some braindead stupid things with your money to end up homeless.

Also, if you have technical skills at a level that Nvidia would hire you, you can easily get a job at probably a thousand other companies. Layoffs are a non-issue. Recruiters will be scrambling to hire ex-Nvidia folks in the event of a mass layoff, barring a major global financial collapse (in which case you're still better off than 95% of the population).

TechDebtDevin
1 replies
11h29m

Investing your talent and time in a company is a potential risk.

chii
0 replies
10h15m

an employee is not taking risk "investing in time" in a company, because they are paid wages for it.

If it were the case that employees need to put in capital into the business before being employees, then it would be a different story. In fact, those schemes exist - they're called MLM, or multi-level-marketing schemes, where you pay the company upfront to buy the product, and try to sell it at a profit (like herbalife), and try to recruit on behalf of the company!

brightlancer
0 replies
11h17m

considering that the median employee takes almost zero risks and can leave whenever they want.

This is an important point that is often ignored.

Within the past week there was a thread about "How to get paid FAANG money at non-FAANG companies", and someone mentioned starting your own business -- which folks (correctly) pointed out involved risks and time that most folks don't want to take.

(Also, it's always funny on HN when someone sarcastically talks about a CEO "only" being paid an absurd amount of money, when almost all of us are getting paid multiples of the median salary, plus whatever annual bonuses and stock.)

roenxi
6 replies
11h8m

I doubt they are happy as much as disinterested. The economy has been heavily financialised, interest rates have been at 0% [0] and a big chunk of economic activity is government spending. Shareholders don't appear to be worried about how the company actually runs in the details. What matters is that the CEO is positioning them to tap in to the money printing and borrowing game. IE, the wages suggest workers don't really matter because they don't. Profits will come from things like being in Crypto or AI booms at the right time.

It isn't the be all and end all, but I'd rather be a shareholder in, say, a military production company with solid government contacts & contracts than one with capable workers.

[0] Thank goodness that has finally changed but there is a bit of a lag while everyone catches up to the new normal.

graemep
2 replies
10h54m

I was going to say this. In addition to what you say a lot of shareholders are in i for the short term. They are interested in what the share price will do in the short term.

Directors remuneration mostly decided by other directors (and just approved by shareholders who are not bothered), who tend to take the view that it is worth paying directors very highly.

Its something that has got worse, but its not new. As GK Galbraith said "The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself."

robertlagrant
1 replies
9h55m

"The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself."

The board decides the CEO's salary, no?

adrian_b
0 replies
5h50m

The board members are frequently CEOs of other companies, where the CEO whose salary is decided may be a board member.

AnthonyMouse
1 replies
10h44m

More to the point, Boeing's revenue is over $16 billion. Some tens of millions are a rounding error when it's only being paid to one person, and that is the real source of the disparity. Paying one CEO $32 million is two tenths of a percent of their revenue. If they tried to pay each of their 170,000 employees even 1% of that, it wouldn't be 0.2% of their revenue, it would be >300% of their revenue and they'd be out of business.

This, in turn, is caused by the size of the companies being so large.

alan-hn
0 replies
2h47m

Why on earth would you pay each person 16 million per year? That's 1%

You can still make everyone's wages better without paying millions to each person and definitely not to the CEO

eru
0 replies
10h39m

The economy has been heavily financialised, interest rates have been at 0% [0] and a big chunk of economic activity is government spending.

If you want to be dramatic: we had negative real interest rates for a long while.

Nominal interest rates were close to 0% and inflation was positive.

Shareholders don't appear to be worried about how the company actually runs in the details.

And shareholders who are interested get vilified as activists or short sellers.

IE, the wages suggest workers don't really matter because they don't.

The labour share of GDP has been mostly stable for the last few decades between 55 to 65%-ish See https://fred.stlouisfed.org/series/LABSHPUSA156NRUG

Profits have also been fairly stable as a share of GDP at around 5-10%-ish: https://fred.stlouisfed.org/series/W273RE1A156NBEA

Just to be clear: going up or down by 5% of GDP is a lot in absolute terms, but not enough to justify hyperbole about "workers don't matter".

creato
6 replies
11h26m

Hiring a Boeing CEO must be pretty hard right now because whoever takes the job is signing up for some miserable work (like testifying to a hostile congress and dealing with criminal liability on behalf of Boeing), and is likely to be blamed for decades of mismanagement coming to the surface now.

Said another way: I’d demand a lot more in compensation to be CEO of Boeing than NVIDIA (or any other role for that matter).

vkou
2 replies
11h11m

because whoever takes the job is signing up for some miserable work

I'm ready to do it for a mere 5 mill/year (less than a sixth of the incumbent), and I'll happily take all the blame for all my predecessor's failings, and more.

Will I do a worse job than the incumbent? Maybe, maybe not, how the hell will anyone know?

robertlagrant
0 replies
10h1m

I disagree that everyone is equally suitable for every job. Why should someone pay you £5m? What would you do better than anyone else?

eru
0 replies
10h38m

Please feel free to make your pitch to whoever is in charge of hiring CEOs at Boeing.

jacknews
1 replies
10h27m

boohoo.

I'll take the role for a wildly discounted $20m.

It would be hard to do much worse than the recent incompe .. uh, incumbents.

coderatlarge
0 replies
10h14m

Whoever takes that job is also potentially signing up for years of litigation against them personally. 2k/hr lawyers for years add up fast :)

aziaziazi
0 replies
9h50m

Do you mean miserable jobs should be paid more than easy one ? There’s a bunch of position salaries to reevaluate in the world…

_thisdot
4 replies
11h26m

Counter point. Most of salary is decided based on how much of a loss it would be if you left. A CEO leaving a company can immediately lead to serious consequences whereas an individual employee can leave and no one might bat an eye

aziaziazi
2 replies
9h41m

A CEO leaving a company can immediacy lead to serous consequences

Is it something that has been study or observed? Most company are resilient enough to handle the leaving of an individual, being a Chief or not. The opposite would be a flag for an instable company.

Far tangent exemple: Belgium without government.

s1artibartfast
0 replies
3h34m

I dont know, transitions can easily cost many millions of dollars of swirl when our director changes. They only lead 100 people, in a small part of a large company but we spin up and cancel projects with 250 million dollar budgets. Change in leadership and direction is expensive. Bad leadership and direction is expensive too. greenlighting one more/less wasteful project pays for many years of CEO salary.

_thisdot
0 replies
7h25m

I’m looking at this from a casual stock market perspective. If I came to know the CEO of the company is unhappy and planning to leave, surely I expect the stock prices to take a hit. And the recovery will mostly depend on their successor and is altogether an expensive exercise

anigbrowl
0 replies
11h9m

True, but that's partly because power is excessively concentrated in executive officers and as a group of people they are (imho) excessively invested in leadership rhetoric that leads them to develop misconceptions about their contribution to the firm's success. Not wholly unlike ships' captains, when they're doing their job job well they're mostly just keeping an eye on things and while the execution is delegated across the organization. When they mess up it's catastrophic.

This is not to say I don't think CEOs do any work. They may make major contributions in terms of developing strategic plans, communicating them to staff and inspiring them to carry them out well, negotiating with allies, outmaneuvering competitors, and balancing the conflicting imperatives of operations, finance, security, legal and so on. But they're not compensated for labor so much as given (via negotiation) a commission on profits, revenue, stock price movement or suchlike. Inevitably there are conflicts of interest with shareholders, staff, and customers, and as a class CEOs and other high level executives seem to have tilted the tables more and more in their favor over recent decades.

strikelaserclaw
2 replies
7h27m

This phenomenon is a function of attributing all the positive developments within a company to the C-suite executives. Just as shareholders profit from the productive work of many employees, the C-suite executives often receive credit for the achievements of a large number of people. I think it is related to a fundamental characteristic of humans, that being we can't understand information unless it is calculated into simpler versions ( concepts like medians, averages, variance, "who is the best", "who is the worst", "who is the most evil", "who is the least evil" all come out of the same human need to get simplified answers). When credit and information moves up up the funnel from employees to c - suite, it gets - credit gets assigned at higher and higher levels. It is not team xyz that did it, it is their manager, or their manager's managers until it gets to the ceo who only knows that "svp x was responsible for this successful product launch" - since the people at the top determine pay scales, if theres 10-20 million to pay out in terms of increments, the board rewards the ceo with 10 million because he is apparently responsible for ALL the successful product launches, the ceo decides to reward svp with 2 million increment etc... It truly does pay to sit at the table with the decision makers.

joker99
1 replies
6h37m

I don’t consider this being a bug. The big issue is: while they get the praise, they reject or pass on the blame to the employees.

strikelaserclaw
0 replies
4h22m

It is not the same thing but probably related to whatever mechanism in the brain causes https://en.wikipedia.org/wiki/Out-group_homogeneity - The people in a position of power regularly interact with the ceo, so they can see all the nuances that go with that but to most people at the top, "employees" is a homogenous bunch of replaceable cogs.

pjc50
1 replies
8h53m

The limit case is of course https://www.forbes.com/sites/antoniopequenoiv/2024/06/13/tes...

It's difficult to understand pay of that size on a rational level. That represents individual shareholders voting for a significant dilution just to retain an extremely controversial celebrity CEO at a time when sales are falling. https://www.theguardian.com/technology/article/2024/jul/02/t...

I see this kind of thing more as "how much the CEO is allowing himself to steal from the till because there's nobody above him" most of the time. Except in this case the shareholders really did make an expensive choice.

renewiltord
0 replies
20m

Worked out for me. I bought a bunch on the last time everyone claimed Tesla was dead and then voted to keep Elon. Up 28%. Everyone’s got theories. I prefer money. What use are your theories if they don’t predict the outcome.

dclowd9901
1 replies
11h12m

They are ok with it because they believe there’s a correlation between how well a company is doing and how much they pay their CEO.

flanked-evergl
0 replies
11h10m

They are OK with it because they are not paying any attention and their voting rights are managed by companies like BlackRock who has a list of priorities from here to the moon that come before profit.

Workaccount2
1 replies
4h22m

CEO pay, like in the case of Boeing, is borne by shareholders, not the company itself.

It's chronically repeated as if companies are robbing salary coffers to pay exorbitant CEO compensation. But that is not true. It's Boeing shareholders forking over $34M, not Boeing inc.

AndrewKemendo
0 replies
4h13m

Which is precisely the point the article is making

If the CEO works for the shareholders because they are part of the investor class, they aren’t prioritizing workers or customers - and we all know at this point that improving service isn’t part of increasing profit

lynx23
0 replies
11h10m

"Who watches the watchers" is what it comes down to. Politicians, Executives... I once heard politicians need to earn a lot because otherwise they wouldn't be politicians but executives, who earn even more.

everybodyknows
0 replies
37m

What did he do worse in 2023? Recall that Calhoun was brought in only after the MAX crashes, ostensibly to clean up after multiple decades of short-termist mismanagement by his predecessors.

bell-cot
0 replies
9h21m

But Jensen Huang is both (1) extremely technically competent, and (2) a founder of Nvidia.

My sense is that both (1), and the (1) && (2) combination, correlate fairly strongly with accepting a more-modest pay package. Such people seem to actually care about the organization. Or appreciate that others are doing 99.9% of the work. Or lack "the usual" pretend-to-be-emperor-while-looting-Rome sociopathy. Or something.

Stealthisbook
0 replies
11h19m

It helps that board members are often fellow CEOs or members of multiple other company boards. They have an incentive to negotiate high pay packages and shareholders in general get presented with a yes/no question

Nifty3929
0 replies
2h51m

Higher corporate taxes create a discount on worker pay, including executive pay. Basically if I pay a worker $100, that reduces my taxable income by $100, which saves me $35 in taxes, so my net profit goes down only $65.

There was also a law passed in the '90s that forced executives to have more skin in the game in the form of stock - which caused companies to give executives a lot more stock.

oleg_antonyan
46 replies
11h52m

It's insane how socialism is growing in the west after defeat of soviet union

kanbara
24 replies
11h50m

is it so insane, in a world of disparity and outsized influence of CEOs and billionaires, where people cannot afford houses? maybe the insane thing was how for hundreds of years we let the rich dictate the rules as if they knew better for having taken advantage of others.

germandiago
11 replies
11h42m

I see. And you keep looking at billionaires instead of regulations or the things that make it possible, like housing regulations (talking Europe now, Idk America well enough).

If you really set the market more free, you will automatically have more reasonably wealthy people bc of competition. When thede few billionaires exist due to governments favors we should think what is wrong with some people selling favors to others without providing services to others.

If you start regulation after regulation you create an elite of people and normal people suffering those regulations.

The elites are basically, in this setup, a collusion of sellers of favors (politicians favoring employers) and people who buy those to avoid competition and favor their business.

This is not possible by definition if you see that with bad eyes and watch out permanently.

However, people want more and more regulation bc there are always things that are "wrong" and eventually those things take you exactly to the outcomes you complain about right now. But you want more of it. Guess what you are going to have if you ask more of it: more of that.

There is a sentence from Javier Milei that I think is very correct regarding this matter: "the politician cannot sell you a favor he does not have for selling".

Think of it. We cannot reduce all problems to that sentece but there is a very big part of truth in it.

I recommend you to take a look at the profiles of billionaires there are around the world. Some are very different to others. But the more regulations you have in a country, especially the ones that did not develop first, the less wealth transfer you have and the more money stay in the same people's hands. This is something to think about very seriously: the path to derregulation is a better choice to keep things balanced.

If you choose the other way, no matter how good it looks to you, you will get what you are asking for. Basically, "The great taking". Look for that book if you do not know it yet.

ffgjgf1
9 replies
11h37m

Free markets almost never can survive longterm without (sometimes extensive) regulation.

Historically there might have been a few exceptions to that, but basically always you have a few good years and then the winner(s) who emerges starts abusing their position (even without any regulation that might make it easier for them to do that). Unregulated markets tend to be inherently unstable.

And it’s not so much less vs more regulation, there are two axis and yes corrupt and inefficient governments tend to produce regulation that decrease competitiveness, productivity, fairness etc.

And then you have industries which simply can’t be allowed to be privately owned unless there is extensive regulation (because free competition is almost impossible in those sectors): utilities, banking, transportation etc. sometimes even telecom (e.g. roaming fees in the EU).

AnthonyMouse
7 replies
11h2m

Free markets almost never can survive longterm without (sometimes extensive) regulation.

There is no such thing as "without regulation". Nobody is suggesting a system in which murder is legal and the most powerful warlord gets a monopoly.

But there is a difference between "the government enforces contracts and anti-trust laws and prices major externalities" and "the government micromanages the economy and is captured by the incumbents".

So for example, a free market doesn't need zoning density restrictions. Their absence has no apparent mechanism that would lead to a monopoly. Therefore, a freer market in which the government has no power to impose zoning density restrictions is better than the current one in which that is possible and is consequently making housing unaffordable. Depriving the government of the authority to do that is a viable mechanism by which that form of corruption/inefficiency is avoided.

And then you have industries which simply can’t be allowed to be privately owned unless there is extensive regulation (because free competition is almost impossible in those sectors): utilities, banking, transportation etc. sometimes even telecom (e.g. roaming fees in the EU).

But even in these industries the necessary regulation is narrow and should be directed to isolating the natural monopoly from any other offering, e.g. roads are a natural monopoly but vehicle manufacturing isn't, so the government provides roads but the private market provides cars.

Conversely, the US has last mile ISPs providing phone and TV service, which isn't adequately isolating the last mile and then we get regulatory capture and corruption. It's not obvious they should even be providing transit, rather than having an entity that narrowly maintains the fiber in the street and does nothing else.

You're certainly right that it isn't just a matter of "more regulation" or "less regulation", but it is a matter of removing many of the existing regulations because they specifically are the source of the high costs and market concentration.

jltsiren
4 replies
8h19m

"The government" is a fictional entity. In reality, it's just a bunch of people.

I think the real issue is that free markets and free speech are not really compatible. If people are allowed to express political opinions, some opinions will inevitably become popular. Sometimes that happens because people don't like the outcomes of the market. Then they try to change things by regulating the market. Repeat that often enough, and you get more and more regulations over time.

defrost
1 replies
8h3m

Some would argue that the freest markets are regulated to prevent collusion, to ensure free and equal access to all relevant infomation, to penalise deliberate falsehoods, etc.

Certainly the OG Free Markets that inspired the first order Invisible Hand model were.

'free market' is such a nebulous term, bandied about en masse in forums where rarely is it questioned what specific type of free market a specific person might mean.

germandiago
0 replies
2h55m

It is not nebulous actually. We are just playing with ideas, and ideas lead to simplification. The idea of free market, in principle is lasseiz faire.

Of course most people do not propose that. My idea is that, as one spanish philosopher said (taken from Hume), that all law (derecho in spanish, not sure if it is exactly equivalent for the meaning in english, since the law tradition in Spain comes from Roman law), so take my translation with a warning. All law can be summarized in two premises:

    1. "property is not acquired or lost by violence or fraud"
    2. "Deals must be fullfilled. Whoever does not fullfill their deals shall compensate to the side fullfilling it."
The rest is not "law" as such. It is ruling, administration, and other things, but not "law". It is arbitrary in many ways, and I agree this is true for a lot of what we see. For example: there are regulations for safety that will make people die waiting a medication or someone not able to get some transport vehicle for short distances, just because it is forbidden. But you can always find a reason to regulate. OTOH, you regulate the choices and lives of others, do we really have the right to decide for others? I think that is a very paternalistic view of things. But not only that, it often promotes irresponsibility in action: since they regulate, they can be blamed, I do not need to decide. I have seen lots of that attitude at least in my country.

It also promotes more scarcity and leads towards oligopolistic setups. It is a complex topic, but I favor freedom and responsibility over regulation clearly, as long as you do not damage others. In fact, regulations do damage others but people often take them for their intentions and not for their results ... something that is a big shocking to me. It is like it gives them peace of mind even if the reality has nothing to do with the effect they are expecting or imagining.

The translation could be pretty bad, so I apologize for that. I just hope it is understandable.

germandiago
0 replies
7h45m

As such we must be very aware of your first sentence. It is really important that people understand that those who manage us are people like us with their own set of interests.

Some people think it is something like an overlord that takes the perfect, most fair decision and, on top of that, without room for mistakes.

Looking at the results I would say it does not respond to that premise at all.

germandiago
0 replies
7h56m

As such we must be very aware of your first sentence. It is really important that people understand that those who manage us are people like us with their own set of interests.

Some people think it is something like an overload that takes the perfect, most fair decision and, on top of that, without room for mistakes.

Looking at the results I would say it does not respond to that premise at all.

germandiago
0 replies
9h30m

There is no such thing as "without regulation"

No need to take my words literally. I you will, favor natural right and yes, put a bit of something on top. But this is not happening clearly. There is a lot of subsidizing and regulation. They are giving, literally, prizes to people that do nothing and punishments to people that kill themselves working. On the way, they have been swapping incentives from working hard to not work.

This in itself is a problem. Currently I see democracies as giant clientele systems. I am not far from the truth at all I think, at least in the case of my country (Spain).

germandiago
0 replies
3h7m

So for example, a free market doesn't need zoning density restrictions. Their absence has no apparent mechanism that would lead to a monopoly. Therefore, a freer market in which the government has no power to impose zoning density restrictions is better than the current one in which that is possible and is consequently making housing unaffordable. Depriving the government of the authority to do that is a viable mechanism by which that form of corruption/inefficiency is avoided.

This is so well expressed. I take it for the future. Concise and clear. This is exactly the kind of things that come to my mind.

germandiago
0 replies
9h33m

I jsut know that compare to 30-40 years ago we have been following this path of increasing regulations and the results are starting to be harmful.

However, some people ask for more of this, instead of less. It is curious when the solution to a problem is throwing more of the problem at it. If it was a transition period of some kind where the effects of some policies cannot be seen yet... but it is years and years and years. The result is high debt and collusion, or that is more of what I see around me, in all Europe. It is a chain of favors and they regulate more and more aspects of our lives, yet we are not better. We pay more, the services are not better either.

I think something is broken here and I am very aware that the result is not giving more control to regulators to even smash us more. It is quite the opposite: leave people alone. At least, this is my experience right now. I can assure that 25 years ago my country had much more balance in most areas and people were more free. I am almost 41 FWIW.

sofixa
0 replies
8h44m

Your whole premise is wrong. Billionaires (equivalent, obscenely rich people) predate regulations. As a matter of fact, both initial regulations on business and socialism, communism, syndicalism directly came as a result and backlash of abuse of rich owners.

Also, you're under the naive assumption that lacking regulations, companies will want to compete. Why wouldn't they just form oligopolies/monopolies? Either due to natural restrictions (e.g. competing in infrastructure is way too expensive, usually), or the richest company/private equity buying up all the competitors to have a free hand at abusing the market.

talldatethrow
10 replies
11h46m

People can absolutely afford houses. They can so easily afford houses that they buy them quickly, often for over asking.

If people couldn't afford houses, they would sit unsold until sellers lowered the price to a price someone could afford. Luckily so many people can afford houses in most areas they don't have to do that.

sofixa
6 replies
11h44m

You're confusing some entities, often private equity or similar corporations buying assets, often to rent, sometimes just to park, being able to buy, and the general public being able to afford to buy. In many desirable metro areas, you need two high incomes (two people in tech or lawyers or finance) to be able to afford to buy anything. What about everyone else?

throwaway4pp24
3 replies
11h39m

Why does everyone else need to live in a desirable metro area? That sounds infeasible with so few of them. If there was more desirable metro areas, the prices of those few wouldn't be so high.

sofixa
1 replies
8h36m

Why does everyone else need to live in a desirable metro area

Because if nothing else (and there is a lot of else) the tech/lawyer/finance folks want to have restaurants, shops, cinemas, street cleaners, utilities etc etc etc etc

blackhawkC17
0 replies
1h15m

Then they should be ready to pay higher rents for it, because everyone else also wants the same thing.

timschmidt
0 replies
11h26m

Why does everyone else need to live in a desirable metro area?

Jobs, mostly. Along with increased access to all the things people like, like food, other people, activities, etc.

ffgjgf1
1 replies
11h29m

often private equity or similar corporations buying assets

What proportion of housing do they own? I would assume it’s pretty small if still significant.

superb_dev
1 replies
11h40m

Some people, and a lot of private investment.

talldatethrow
0 replies
3h0m

Apparently there are more people with money than there are houses. So don't tell me people cant afford houses. Tell me that there are so few houses that they are overpriced or something, and only the top 25% can buy them.

makeitshine
0 replies
11h36m

It has become out of reach for an increasing number of people all around the world. Look at the ratios of price to annual salaries and many have risen a lot.

US: https://www.jchs.harvard.edu/blog/home-price-income-ratio-re...

If people couldn't afford houses, they would sit unsold until sellers lowered the price to a price someone could afford.

This is fundamentally not the case in much of China and Taiwan where the wealthy sit on empty homes for years or decades. The housing price in Taipei continues to climb while a large number of units sit vacant.

daedrdev
0 replies
11h22m

The housing crisis is caused by government policy voted in by locals who dont want their neibhorhoods ti change so block new housing that would lower prices. Which can just as easily happen in a Socialist country since I assume there is still democracy and people havent somehow changed to not be NIMBYS

TomK32
6 replies
11h36m

The Soviet Union was just the same old russian feudalism with a new name tag and leadership. In a sense even modern-day russians are still not emancipated citizens like we are in the West.

b800h
4 replies
11h27m

Absolute rubbish.

This is a classic trope of the fully-brainwashed. The bread queues that resulted from collectivised agriculture that couldn't respond to market conditions had nothing to do with feudalism.

The mass-murder of the middle-classes in Cambodia had nothing to do with feudalism.

Communism is a brutal, oppressive system that has to erase individual liberty in order to force people to comply with its absurd, unfair rules. If it was so great, why didn't the Russians just vote it back in again?

croisillon
3 replies
11h15m

they wrote "same old russian feudalism" and "still not emancipated citizens" and you non-sequitur it with "if it was so great"..?

b800h
2 replies
11h1m

Fair point - my argument is that it added a load of additional garbage on top. It clearly didn't achieve anything substantially positive, and it hasn't done anywhere it's been tried.

croisillon
1 replies
10h50m

i agree with that and i believe the person you answered to agrees as well

b800h
0 replies
10h48m

I'm not so sure. Sounded like apologism to me, which is dangerous, frankly.

eru
0 replies
10h46m

'Real Socialism has never been tried'?

sofixa
3 replies
11h40m

Individual companies being owned by their employees isn't socialism. For that matter, the Soviet Union wasn't socialist either - the workers owned nothing, the state owned everything. All the land, all the factories, all the manufactured goods.

oleg_antonyan
1 replies
11h24m

Yep, that's what it leads to. But it all began with "good" intentions. They destroyed well-developed empire, took the land from the rich and see where it all now. Trust me, you don't want "to take money from the rich and spread them across poor" in USA, it sucks https://en.wikipedia.org/wiki/Dekulakization. Pleas, keep being a place where anyone can build a unucorn company and become rich af

sofixa
0 replies
8h42m

But it all began with "good" intentions. They destroyed well-developed empire

The Russian empire wasn't well developed by any stretch of the imagination.

Miner49er
0 replies
25m

Individual companies being owned by their employees isn't socialism.

Actually, yes, this is the literal definition of socialism. It's workers owning the means of production.

uxcolumbo
2 replies
11h23m

How do you define socialism? I think it’s one of those terms that people define differently for themselves.

jltsiren
1 replies
9h6m

This sounds like actual socialism. The kind of socialism that seeks to abolish private property and the concept of ownership. Only personal property remains, and workers controlling the companies they work in as a natural extension. It may not be intended to be socialism, but it would lead to socialism if universally adopted.

On the average, when someone says "socialism", it's intended to be an insult. It also serves as an indicator that the person is not interested in having a real discussion. But this is not it. This is real socialism. The kind of socialism that died as a mainstream option in Europe with the USSR, but which is still somewhat popular in the US.

uxcolumbo
0 replies
6h57m

That sounds like concentrated power in a hands of a few people, government officials who decide what's what. This leads to oppression. And central planning for everything is definitely bad. Plenty of examples from China and former Soviet block.

Our current system (which is not true capitalism in my view) also has concentrated power in the hands of a few people.

So what do you call a system where the majority of people can't be exploited by the 1%?

I like Carl Sagan's answer to this topic.

https://www.youtube.com/watch?v=rDK2chgNPZM

heckerhut
2 replies
11h51m

more nuance wouldn’t hurt

oleg_antonyan
1 replies
11h35m

The headline itself literally repeats Marxists theory: the means of production belong to workers aka proletartiat. Inside the article they oppose this working class to "evil rich CEOs" aka bourgeoisie. I won't even go deeper to unrelated to the article topics like "evil imperialism" and other nowadays popular in the west ideas used by Lenin&co hundred years ago. This crap cannibalizes the very foundation of the success of the western civilization and many people fall into this - that's insane to me

Apocryphon
0 replies
1h48m

Recent article on Spain's Mondragon Corporation: https://news.ycombinator.com/item?id=40143814

No one bats an eyelid at the co-operative model in countries such as Germany, “but with these ideas in Texas or Kansas, you’re basically a communist,” says Mendieta, only half jokingly.
defrost
2 replies
11h32m

Did the Soviet Union ever actually practice effective social policy and embrace control from the lowest working level or did they just run with epilet backed dull grey committees with a promise they'd eventually get to actual socialism and communism post Stalin and all that not socialism stuff?

I'm no fan of the USSR but they're arguably no more socialist than the National Socialism of the Nazis.

dennis_jeeves2
0 replies
2h26m

actual socialism

And what is actual socialism? Perhaps more importantly how will you enforce it?

Shihan
0 replies
11h8m

Yeah, communism hasn't been really tried yet - let's try it again, I believe this time it will just work out.

On a sidenote, please read "The Gulag Archipelago".

ffgjgf1
0 replies
11h41m

It’s the opposite. In the 60s and 70s many western countries were semi-socialist. Just look at Britain, the state owned a significant proportion of the industry, housing etc. the unions were extremely powerful (by modern standards). Same in other European countries.

Arguably the US was generally much more left leaning than now, even somebody like Nixon might struggle passing off as a moderate/rightwing Democrat let alone a Republican just based on his domestic economic policies…

konschubert
30 replies
11h33m

How about every employee instead gets money every month, and then can go out an buy shares in any company they want, their own or others?

ossobuco
21 replies
11h23m

How does that work when 60% of Americans are living paycheck to paycheck?

When you're not sure if you'll manage to pay the electricity bills to keep your fridge turned on, is your first thought going to be "let's invest in the market!"?

lennixm
13 replies
9h45m

People need to stop using this stat. It's completely useless. There are literally people making top percentile incomes saying they're living paycheck to paycheck in these surveys because they interpret the survey questions wildly different than other people. A tiny, tiny percentage of Americans would literally go hungry if they didn't get their next month's paycheck the rest would have to cash out some small percentage of their S&P 500 ETF.

ossobuco
10 replies
8h34m

A tiny, tiny percentage of Americans would literally go hungry if they didn't get their next month's paycheck

"71.93% of Americans Living Paycheck to Paycheck Have $2,000 or Less in Savings"[0].

So no, it's not a tiny percentage. $2k or less in savings means being one emergency expense away from not being able to pay rent or your house loan next month.

- [0]: https://www.forbes.com/advisor/banking/living-paycheck-to-pa...

Sankozi
5 replies
7h46m

This only shows how big economic illiteracy is. Not how much people are earning vs the cost of living.

aziaziazi
2 replies
7h16m

Economic illiteracy

I respect your opinion but the stats presented before does not “shows“ illiteracy but low investments. Lack of liquidity to invest seems a very plausible raison because a revenu threshold has to be passed to be able to buy food before founds. This stat is probably almost a proxy for how many Americans are below that threshold.

Sankozi
1 replies
5h5m

It is really hard to believe that 71.93% of Americans are on the verge of homelessness and starvation. Much more plausible (and even mentioned in the linked article under "Lack of budgeting and financial planning" and "Social pressures") are just bad habits.

Of course there are economic literate people who really are struggling, but I doubt they make even half of those 71.93%.

philosopher1234
0 replies
2h11m

In this case you are revealing your own (statistical) illiteracy. It’s referring to 70% of people who claim to be living paycheck to paycheck, not 70% of all people.

ossobuco
1 replies
7h26m

The personal savings rate has slowly halved over the past 60 years[0].

Did everyone become illiterate or maybe the inflation rate has exceeded the growth rate of wages[1], among other things?

What's funny is that on two comments rejecting my argument one accuses me of considering people "too dumb" to take their own financial decisions, the other tells me people are actually too dumb and that's why they are in financial trouble.

- [0]: https://tradingeconomics.com/united-states/personal-savings

- [1]: https://www.epi.org/publication/charting-wage-stagnation/

Sankozi
0 replies
4h56m

The article you linked mentions "Lack of budgeting and financial planning" and "Social pressures" for reason of living paycheck to paycheck. And those are self reported values.

Last 60 years we experienced enormous growth of advertising - is it really hard to believe that many people are having big problems with limiting their spending.

nec4b
3 replies
7h19m

> "71.93% of Americans Living Paycheck to Paycheck Have $2,000 or Less in Savings"[0].

It's a meaningless statistic. They can still have high net worth and/or large incomes even if they don't keep cash on hand.

ossobuco
2 replies
7h14m

Well it might please you then that about 50% of the respondents report low income as the cause for living paycheck by paycheck. Even more report high monthly bills as a cause.

Just read it, it's all in there.

nec4b
1 replies
3h56m

People thinking their income is to low is not exactly news. I haven't personally met anyone who would ever claim their income is to high. Why do you think I haven't read it? Do you always agree with everything you read?

ossobuco
0 replies
2h8m

I believe you didn't read it because your argument is quite poor and doesn't mention some relevant points the article makes.

I may not always agree with everything I read, but at least I take the time to read it before openly disagreeing with it.

lynx23
1 replies
9h22m

In genera, "self reporting" needs to be viewed as the untrustworthy statistics it is. I hear it a lot recently in the social siences. And media happily parrotting the results, as proof of whatever they are currently trying to push. I wonder how much of these self-reported issues would be seen in a completely different lens if those asked were forced to discuss their answers within a certain peer group. "What, you say you're poor, with that car and that house?"

fuzzfactor
0 replies
2h47m

Also consider that some of the respondents are actually "bragging" about living paycheck-to-paycheck so they don't seem any poorer than anybody else, when they are actually not even sustainable and deeply know they are heading downward toward bankruptcy or something like that unless things look up.

eru
3 replies
11h2m

Interpreted charitably, you are making an argument that people's comp should be higher.

But I don't see any argument that paying that higher comp in the form of shares instead of in the form of cash is any better?

(Unless you want to imply that people are too dumb and need to be protected from themselves, and that why we need to give them more stocks instead of more cash? Or something else?)

ossobuco
2 replies
10h55m

Interpreted charitably

No need for your charity, thanks. I'm simply making the argument that you must live in a bubble if you think that enough people have the excess liquidity and market knowledge for this to be an applicable solution to the general population.

Unless you want to imply that people are too dumb and need to be protected from themselves

Not being wise in the markets != being dumb.

Protected from themselves? No, protected from speculators and exploiters.

eru
1 replies
10h45m

Nudging people to own a substantial chunk of their net worth in one single company protects them from speculators and exploiters? OK..

ossobuco
0 replies
10h15m

When the alternative is owning no chunk of any company? Yes, still orders of magnitude better.

Nothing prevents people from investing also in other companies if they feel like. Or are you implying they are "too dumb" to consider the possibility?

Shared ownership also protects employees from speculative decisions like mass layoffs made only to give more value to shareholders. It also prevents the alienation of working on something you don't own and gives a strong incentive for everyone to give their best.

nitwit005
0 replies
10h55m

I presume it'll work exactly as well as paying them partially in stock, as the stock and cash are interchangeable.

The people who need money now will just sell the stock as soon as they can.

konschubert
0 replies
10h23m

If they are really living paycheck to paycheck, giving them shares in the company instead of paying them isn't going to help much either.

Or are you suggesting that employees just get a fixed share when they join the company? That model exists, but it typically only works for companies that need no outside capital to get started. Like law firms.

TechDebtDevin
0 replies
11h20m

Peasent brain, they think they too can be rich like their corporate owners one day so they will support them and justify this brain rotted thinking until they die poor.

swagasaurus-rex
3 replies
10h41m

Shares of the company they work for would incentivize them to care about the company.

Shares of other public companies means no skin in the game. A day trader cash out whenever they want and wipe their hands clean of any adverse effects made by the company in the name of growth.

konschubert
1 replies
10h21m

It's true, which is why I think it's good to make shares part of the compensation.

That being said, employees already have skin in the game because they want their company to survive so they keep their job. When a company goes belly up, employees with shares are worse off than those that bought shares in other companies instead.

lolc
0 replies
8h23m

The reason I own shares of my company is that I want to have a say in where it goes. Profit sharing is a nice side effect.

eru
0 replies
10h37m

The day trader needs to find a greater fool for that to work.

Shares prices already reflect an estimate of the long running fate of the company.

TechDebtDevin
1 replies
11h22m

Why not both? The author hasn't given any indication that the equity given to employees is subsidizing their wage.. It seems like yourself and others are just arguing against a company providing bonus compensation to workers for their work. Peasent brain has grown far and wide these days. Keep slaving away for less compensation, I'd rather not.

eru
0 replies
11h1m

They can give a cash bonus just as well.

There's two questions: how much comp to pay, and how to divide that comp between various forms. They are nearly independent of each other.

lynx23
0 replies
9h28m

Nah, that would be a crazy idea... :-( In general, this article leaves a taste of communism in my mouth. I already said elsewhere, pay me fairly or go away.

dclowd9901
0 replies
11h9m

Notably this is how we’ve been doing things and… notably, the chasm of pay is growing wider all the time.

So maybe time to re-evaluate the status quo?

Nifty3929
26 replies
2h54m

I think it's easy to look at this with an existing, successful business in mind - but things don't always work out that way.

How would a business like this get started? Usually the owner is the one who invests a lot of their own time and/or money into the business to get it off the ground in the first place. Would we be asking workers to pony up in those early years when failure is likely? With Central States, the story picks up AFTER all that, when the business is already large and successful, and the owner just wants to retire.

And what happens when the business struggles or fails later? In the case of Central States, the workers were asked to buy shares from the owner, probably using a portion of the salary they'd otherwise get. IOW, they're being underpaid relative to market, in exchange for ownership, expecting to get more later when they sell the shares. So far so good, but how does this look when the business has a rough patch, even one that's not their fault?

nostrademons
9 replies
2h12m

The article is arguing for ESOPs, basically stock options for employees. The examples cited are actually quite tame by tech industry standards: "During Central States’ worst year, employees earned the equivalent of 6 percent of their pay in stock, during their best they earned 26 percent." By contrast, FANG employees routinely make >50% of their compensation in stock, and it can be up to 80% in good years.

As for how these get started, it's the same as any tech startup. The founding team owns the whole company at formation, and then they progressively give it away to increase the overall valuation of the company. You can do that through giving away stock in exchange for funding from a VC that you can use to pay employees, or you can give away stock directly in exchange for services rendered.

And yes, this looks bad during a down year. Tech companies have this problem all the time - employees are demotivated when the stock price goes down, which can have further negative effects on the stock price.

overrun11
5 replies
27m

There's no reason why this is beneficial. Money and stocks are fungible you can freely exchange one for the other as much as your heart desires. There's no difference between which one you receive.

bognition
1 replies
11m

Let's ignore that most of the places people work are not publicly traded companies and pretend that any employee could buy stock in their employer.

If that were the case and employees were compensated equally in stock vs cash, then yes there is no _rational_ difference. However, most human are not rational.

People like to take pride in their work and do a great job, this is amplified when they stand to directly benefit from their efforts. By enabling employees ownership in a company you're hoping to incentivize them to work harder and therefore amplify the return on their labor.

bumby
0 replies
6m

If that were the case and employees were compensated equally in stock vs cash, then yes there is no _rational_ difference.

Even if this assumes an equal net present value, wouldn't the volatility of stock vs. cash make a very rational difference in expected future value? For people who are risk adverse, the cash would probably be preferred; for those who are less risk adverse, the opposite is probably true.

RhodesianHunter
1 replies
22m

You seem to have missed an absolutely critical element of what drives human behavior. We call it "incentive".

overrun11
0 replies
16m

Yes both the money and the stock are incentives and they are of equal value. You've still failed to explain why one is better than the other.

nostrademons
0 replies
16m

Money and stocks would be fungible if all companies were public, all investors had perfect information, and no employee could make a difference in the stock price of their employer. All three of those conditions are false. You may be working for a private company that you would not otherwise be able to buy the stock of; sometimes, employment is the only way to get ownership of it. You often have better information about how your own employer is doing than you do about random public companies. And for smaller companies, you can often make a difference in the company's bottom line. This is why companies offer stock compensation in the first place, as an incentive for you to have a stake in the company's success.

If your company is a shithole or fraud, then you absolutely do not want to be receiving company stock. But then, if that's the case you may want to re-evaluate working for it at all.

victorbjorklund
1 replies
1h14m

Getting some of your salary in stock options isn't really an employee owned company. How many % of total Google shares are owned by employees (excluding the founding employees)? 0,0000000001%? At least 50% would be required for it to be viewed as an employee owned company.

nostrademons
0 replies
44m

I don't know about Google specifically, but I know that it's way more than 0.0000000001% because I personally have been paid more than 0.0001% of Google in stock compensation. A typical Series A startup reserves 20% of the company for the option pool, and then there are follow-on refresh grants.

Note that if you run the math on the company in the article, they're considerably less generous than that. They say they have 1500 employees, $1B in revenue, and the average employee makes about 8-26% of their earnings. Figure that's maybe $20K/employee * 1500 employees = $30M in stock compensation on $1B in revenue, so they spend 3% of their revenue on stock compensation. If you figure the company is valued at $4B, they're giving away like 0.75% of the company per year, a bit less than Google and way less than a tech startup.

This is probably a PR hit for Central States Manufacturing anyway, to help their recruitment efforts.

jasode
0 replies
1h28m

>As for how these get started, it's the same as any tech startup. [...]

To clarify, the gp was asking a rhetorical question that he already knew the answer to when he stated, "How would a business [that already looks attractive for ESOP] like this get started? [... his recap similar to your recap ...]"

To put it differently, the scenario he's trying to explain is something like this given that ~9 out 10 businesses fail :

- you can't look at just a single company's successful timeline to judge the ESOP for society; you also have to consider all the failed companies and how ESOPs would play out in those timelines as well. Since ~90% of businesses fail, you have to play out the financial dynamics of employees buying into ownership of all those failed companies. And in contradiction of employee-ownership, a lot of employees would prefer getting a bigger paycheck from a dying company rather than having money deducted to buy worthless equity shares.

- e.g. of course employees would love to be significant workers-cooperative owners of Amazon Inc and Apple Inc. But the analysis also must include employees owning worthless shares of Pets.com (bankrupt 2000 and shutdown) and Commodore Computer (bankrupt 1994). Some workers got employee-ownership shares of Commodore Inc instead of Apple Inc?!? Well, it sucks to be those workers.

hemantv
9 replies
2h30m

Individuals have visions not committee. We build monuments for individuals not for committee.

Having said that no man is island of itself. Current incentive structure works great to motivate individuals to start companies

Apocryphon
4 replies
1h53m

Seems like confirmation bias. We often than not like to lionize successful individuals, but plenty of visions are false or otherwise fail. On the other hand, we tend not to remember group efforts because it's harder to remember multiple individuals at a time. But surely they do exist. Was there a single visionary behind Bell Labs? Xerox PARC? The traitorous eight? The Apollo program? The Manhattan Project?

nsonha
1 replies
1h46m

Groups are slower and less consistent in decision making than individuals, simple as that.

Apocryphon
0 replies
1h40m

There are different types of group governance and almost all of them having an individual decision-maker at the front. Oppenheimer directed the Manhattan Project but he wasn't a "visionary individual," he had plenty of talented geniuses working under him.

harhargange
1 replies
1h14m

I believe there would be a single polymath who has skills in multiple fields, such as Oppenheimer who was great at science and administration who can lead a group for successful execution. For Apollo moon mission, it was the US president vision at the foremost. Even for TSMC and other companies such people exist. I don't want to say that entire credit goes to an individual but leaders with multiple skills are necessary.

pineaux
0 replies
12m

Nah, this is not true. This is just the narrative because someone want to get the honors or the stacks of cash. Apple wasn't created by Steve Jobs. Not even created by Steve Jobs and the Woz. They did start something that eventually became Apple. They had a lot of sway, but without all the other people that worked there and created all the important details it would have just been a pipe dream.

sidmitra
1 replies
2h13m

We build monuments for individuals not for committee.

That's the second time i'm hearing that quote today from completely unrelated sources.

The quote is from David Ogilvy, in case anyone is wondering.

"Search all the parks in all your cities; you'll find no statues of committees."

https://x.com/The_AdProfessor/status/1705254246109651053

binxbolling
0 replies
2h7m

Seems like it's deliberately using "committee" as a pejorative to make a political point. Flip it to "you'll find no statues of groups of people" and it's patently false.

Draiken
0 replies
28m

I don't think this holds to scrutiny. This breaks down as soon as you get out of the idea phase.

Everyone has visions, and most great achievements today are the results of an amalgamation of them. The really big achievements are almost always the result of groups, not individuals.

People that idolize others have to turn a blind eye to everything surrounding that individual's achievement. It's simply easier to simplify big achievements as "this person was great". In reality though, it's a culmination of everything that came before that individual, the support around them, some of their decisions and much more.

In other words: monuments are a bad argument to evaluate if something is good or not. Especially in today's individualistic society.

It's a shallow Instagram motivational phrase.

RandomCitizen12
2 replies
1h30m

How would a business like this get started? Usually the owner is the one who invests a lot of their own time and/or money into the business to get it off the ground in the first place. Would we be asking workers to pony up in those early years when failure is likely?

In Canada, there are 'Labour Sponsored Venture Capital Corporations' with union overseers to do this and special tax deductions for investing money through these.

They are, of course, a giant failure that neither provides easier access to capital for entrepreneurs nor generates any notable return for investors.

harhargange
1 replies
1h17m

Moreover, splitting the decision making is so conflict prone and unoptimised for competition. I had a look at some statistics that showed most successful startups take off when they have a single founder

esarbe
0 replies
11m

This is about ownership, not decision making. How you set up the decision making process is entirely up to the company.

The same argument could be made for any other kind of shared ownership company.

zozbot234
0 replies
18m

How would a business like this get started?

Every business gets started as "100% owned by its founders" with no other people involved. The interesting question is why founders might want to (1) cede some equity stake in the business, or (2) hire outside people for fixed wages, as opposed to a share in the business itself. The dirty little secret is that people hate to put all of their eggs in one basket, so working in exchange for an equity stake is actually a pretty bad deal in both cases. Both fixed wages and the selling of equity stakes (as an alternative to issuing debt) are, at their most basic level, mechanisms for dealing with risk and uncertainty.

In practice, a partnership-like corporate structure works well for business that have low capital intensity, which doesn't describe most startups but might be quite true of some service-provision businesses, even in the "tech" sector.

layer8overhere
0 replies
2h47m

This.

dls2016
0 replies
1h32m

IOW, they're being underpaid relative to market, in exchange for ownership, expecting to get more later when they sell the shares. So far so good, but how does this look when the business has a rough patch, even one that's not their fault?

Uhm, do you have a 401k?

munificent
25 replies
1h32m

> “It's hard to build true wealth for yourself if you don't have some type of ownership in something, and it's hard for most people to get ownership in something,” Ruger says.

I think this is a really good insight.

But it also touches on something that many of the HN crowd, especially in the Bay Area find uncomfortable: home ownership.

One of the ownership assets that is most attainable by many Americans is a little plot of real estate, so it's rational that it's a goal of many. But at the same time, once that piece of ownership has been attained it's also rational to want to preserve and maximize the value of that investment. But that can often (but not always) lead to the kind of selfish NIMBY behavior that is criticized everytime anything related to urban development comes up.

Is there a middle ground balance where we respect that ownership of property is an important, attainable kind of wealth building for middle-class people while also accepting that a city must also develop in ways that benefit people that aren't homeowners, or aren't homeowners yet?

xivzgrev
9 replies
1h13m

Homes shouldn't be an investment. They've accidentally become that in the past few decades, and as a result, affordability is getting worse.

The better it does as an investment class, the worse it will become. It's a self perpetuating spiral.

I don't see the market solving this. I only see some regulation helping here - ie any tax filer can at most own 1 SFH (this includes married couples). So no second, third, tenth homes. Corporations and foreign entities also cannot own SFH - bye bye black rock & China.

Obviously some edge cases don't work (ie people who want to put their home in a trust), but generally speaking, people should not be able to own homes as investments.

janpieterz
3 replies
1h5m

How do you suggest we handle the rental market?

thereisnospork
0 replies
42m

The drastic solution is you ban long term rentals - all 'rental agreements' must return shares in the underlying real estate and structure proportional to length of stay. The rent payments would be distributed pro rata to the existing share holders.

Of course you could also allow people to build homes at market clearing prices, so investments would just be undercut.

lelandbatey
0 replies
32m

I think they'd suggest something like: "single family homes cannot be rented, only bought or sold to individuals or families which must live there some minimum percentage of the time."

If zoning codes can make it effectively impossible to build anything but single family homes, we clearly have a legal framework for distinguishing single-family from multi-occupancy apartment buildings. Thus, apply this requirement to single-family homes (or at least homes in single-family zoned areas).

There are a lot of unintended consequences and edge cases to this though, clearly. For example, I live in a building that is "technically" an apartment building right in the middle of nothing but single family homes. You couldn't build an apartment building like this here, now. This is because it was originally a single family home but was converted into a duplex ~100 years ago (2 different electrical services) and has remained a duplex legally ever since. I purchased the land and home jointly with a family member so that each of our families could live in one half of the duplex, which is how we currently live. A home like ours could end up being classified in very different ways depending on the specifics of a law like we're discussing.

Regardless, I still want my home price to crater if it means everyone else I know can buy a home. I hope home prices go down massively and the residential speculative bubble in this country dies a violent death. The only reason we even bought this house was because buying a home cost so much money that we had to buy half a home to make it a possibility. Even if I'm upside down on this house, I'd still rather be stuck paying off the mortgage or going bankrupt than hold everyone else financially hostage. Housing is too important.

jquery_dev
0 replies
41m

Being from UK: stop multi home ownership for private companies/persons. Move to majority council owned houses, which then feeds money back into the communities. Follow right to buy, where the money goes back to the council.

kbmckenna
1 replies
37m

Restricting ownership may help but there are aren’t enough houses or apartments in the places people want to live.

Building more housing is the best answer. It lowers the price because there is more supply. There simply aren’t enough homes in the Bay Area, NYC and many other major cities.

If you could build many large apartments in the Bay Area you could fill it with people who’d rather live there compared to a tiny old overpriced house. Zoning and existing residents stop that from being built though.

kajecounterhack
0 replies
22m

Building more housing is the best answer. It lowers the price because there is more supply. There simply aren’t enough homes in the Bay Area, NYC and many other major cities.

One problem is building more luxury housing leads to more rent-seekers / investment homes / transplants, which doesn't solve the problems the area faces (e.g. lower income families can't make it work, and in addition to it sucking for them, they staff lots of critical functions so it ends up sucking for everyone since the price of everything increases and you get a whole class of supercommuting low-income folks -- ask bay area folks about their daycare teachers).

We need more _affordable_ housing, likely gated on AGI.

psunavy03
0 replies
36m

This is justifying tyranny using pie-in-the-sky thinking. God forbid someone have a little lake house their parents and grandparents built that they want to retire to while working elsewhere. Nope, The Party says you can't have that dacha, Comrade.

The proper answer is to accommodate the free choices made by others and regulate where they intersect with others, not paternalistically tell grown adults what they can and can't do.

nostrademons
0 replies
23m

Having homes be investments is a good thing, in the original sense of "investment": something that you own which you put effort into in the hopes of making it better later. Incentives change dramatically as a homeowner in ways that are generally beneficial to the community: you are incentivized to improve the property, to maintain the property, to put effort into the local community in ways that make the land and location more valuable, and so on.

I think that what you're complaining about is the financialization of investments, where every investment has an associated dollar value and that dollar value must always go up. This affects more than just homes. The need for monotonically-rising corporate earnings makes corporations pull all sorts of accounting shenanigans, it makes them cut costs and push sales until the product quality is the bare minimum people will buy, and it results in all sorts of pain for workers in the resulting reorgs and layoffs. The usage of Bitcoin as a token whose value just goes up has negatively hurt the development of the crypto economy, because people aren't actually using crypto, they're just hodling and hoping $$$ go up.

The elephant in the room here is fiat currency, positive inflation targeting, and negative real interest rates. If you know that the dollar's value is eventually going to zero (which follows mathematically from inflation being an exponential curve), then the sum of the cash flows from any productive asset becomes infinite, and the only check on its value is that investors can't really reason about infinite time horizons. If inflation were targeted at zero (or at least some value that gave positive real interest rates), then that sum converges and you can speak about properly valuing assets and allocating capital efficiently.

carlosjobim
0 replies
36m

They've accidentally become that

There is no accident at all. The bankers decided that real estate should be the primary vehicle for new money to be created and released into circulation.

This means that the increase in total real estate monetary value will always be larger than the monetary value of total labour and trade productivity within a nation. It is a mathematical fact that won't change unless the monetary system changes.

In short: the landed gentry will always become richer while the non-landed will always become poorer, under this banking system. If you are both a real estate owner and a worker, then you should expect your main source of income to be the value increase in your real estate. If not already, then soon.

So no matter how much the people of a nation work and increase their productivity, they will always be short and increasingly indebted, because the monetary system works that way. This is why there has been a frenzied rush into real estate the past decades, because the odds are stacked against you getting ahead by working.

standardUser
2 replies
1h21m

once that piece of ownership has been attained it's also rational to want to preserve and maximize the value of that investment

By that logic, the idea of workers having part ownership of the companies they work for has a lot of upside.

skybrian
0 replies
1h5m

It does, and Silicon Valley is built on that, but for startups it’s more of a lottery ticket, and for a tech giant, what you do as a worker doesn’t make much of a difference for financial results. And even in between, how the investment does is pretty risky and partly determined by unpredictable outside events, so you’ll want to hedge.

And then for shared ownership, governance is often messy.

Individual ownership of a stable asset that you can improve by making your own decisions (deciding what fixes to pay for, at least), is a different thing.

WJW
0 replies
45m

Focusing on the possible upsides tends to ignore the possible downsides. Worker ownership is only great when the company does well. If the company does not do well, the workers don't just lose their job but their nest egg at the same time. Let's not pretend that you can always influence whether your company will grow or not, sometimes you just work at Altavista and Google just launched.

The average worker has enough of their income tied up into one employer already, they don't need to have even more economic concentration. It would perhaps be better if every company was owned by everyone other than its employees, with the employees of every company being forcibly made to invest in every other company. That way everybody gets to have an cushion if they ever lose their job or their company goes under. A bit like a DIY UBI if you will.

goalonetwo
2 replies
56m

Homes should not be an investment.

And Homes are also generally a bad investment even though there is a whole lobby of people that try to convince you that you need to buy at any price.

The only reason why homes have been a good "investment" for most people is that it is a forced saving through your mortgage, which most people would have spent stupidly otherwise.

But we should normalize renting and investing in actual investments like the SP500. Everyone would be better off and you would end up with more assets.

unyttigfjelltol
0 replies
47m

It's been a good investment for many people for obvious macro reasons but also because: 1. You can live in it (thus realizing value directly). 2. Since you live there you can't easily panic and sell in a downturn. 3. Leverage (U.S. gov't FHA provides almost 30:1 leverage) 4. Lenders can't liquidate you simply on account of decline in value (no margin calls)

jkaplowitz
0 replies
48m

Homes should not be an investment.

[…]

But we should normalize renting

Isn’t it investors who would normally own rented homes, and own them specifically as an investment, whether each investor only owns one home or several/many?

I’m guessing you meant that an owner-occupied primary residence shouldn’t be an investment, which is usually good advice.

apwell23
2 replies
1h25m

One of the ownership assets that is most attainable by many Americans is a little plot of real estate

most attainable is buying stock through IRA account.

officeplant
1 replies
1h6m

As someone who had their first stock based savings account gutted by the 2008 economy we really shouldn't rely on stocks. I was in college and my college fund vanished very quickly. It was a fund set up for me as a kid, managed by my petrodollar worshipping uncle. We're all just a collapse away from nothing while being desperate for line goes up behavior to save us. But this is just my point of view from someone on the poorer side of things.

tadfisher
0 replies
33m

Your scenario is an example of mismanagement; you were already in college, so those funds should have been moved to less-risky investments (bonds, money-market, or even a savings account).

For retirement, Fidelity and Vanguard offer "Target-date retirement" funds, which automatically rebalance to reduce risk as you age. This is a misnomer, though, as you could easily select one of those funds for college savings or whatnot.

overrun11
0 replies
36m

Anyone can invest in public companies, how is it unattainable? I genuinely do not know what you or the article writer are referring to when you make this point.

khuey
0 replies
1h1m

Home ownership in the immediate post-war era functioned as a form of forced savings. To the extent it was an investment it was more akin to a reverse bond than a stock bought on margin: you pay a fixed payment on a loan for 30 years and at the end you own a substantial asset. The focus on price appreciation is relatively new.

In California specifically this was driven by Prop 13 gutting the property tax system and removing the natural check that higher property taxes impose on homeowners engaging in the sort of anti-development cartelism that has run rampant in California in the last half-century.

indoordin0saur
0 replies
1h26m

Land value tax.

bobthepanda
0 replies
1h21m

Part of the problem with upzoning is that for people who are not going to redevelop because they like their house or they do not have the financial means to do so, and are also unwilling to sell, they get no monetary benefit from the upzone.

In some jurisdictions, this is alleviated by allowing the sale of excess zoning capacity to others, which now gives people in that situation a way to realize monetary gains. https://caldwellcommercial.com/understanding-commercial-real...

AnimalMuppet
0 replies
9m

How about this scenario:

Houses go up in price exactly in keeping with inflation. I buy a house with 10% down[1] as a way of locking in the current price, to avoid my rent going up every six months, even if the initial payment is more than my rent[2].

Time passes. The price of everything doubles. If I had kept my down payment instead of buying the house, it would have grown into twice as many dollars, and still be worth the original amount in actual value. My house has also doubled in value. But I only paid for 10% of it with pre-inflation dollars (and since then I have paid the mortgage with dollars of decreasing value). I come out ahead in that scenario - my net worth has grown, even adjusting for inflation.

[1] Yes, I am ignoring the difficulty of scraping together the down payment.

[2] Yes, I am also ignoring the difficulty of having enough spare cash to make the payments the first year or two.

Analemma_
0 replies
1h6m

Is there a middle ground balance where we respect that ownership of property is an important, attainable kind of wealth building for middle-class people while also accepting that a city must also develop in ways that benefit people that aren't homeowners, or aren't homeowners yet?

No. I like finding middle grounds where possible, but you're asking for something which is inherently contradictory: for something to be a good source of "wealth-building", it to increase in value (i.e. price to the next buyer) forever, or at least most of the time. When that happens to housing, it fucks over the next generation.

There is no fix here that doesn't involve terminating housing as an investment opportunity. It will be a painful transition, but the end state is actually fine. Plenty of countries (e.g. Japan) don't treat housing as a middle-class investment and they function fine.

Murky3515
20 replies
11h51m

Every year, those employees get a percentage of their salaries in company stock.

Ok? Anybody can choose to do this if they work at a public company. But what happen if it's mandatory and the stock goes down? Now your labor was stolen at below market rate! Then we will hear "employees compensation should be resilient to market fluctuations."

sofixa
6 replies
11h47m

Not every public company pays its employees in stocks/stock options/RSU/etc.

dan-robertson
5 replies
11h40m

If the company is public, one can simulate the scheme by buying their stock, I guess. Taxes may be different and phrased like that, it seems weirdly risky to buy more of the thing you’re most exposed to (if the company lays you off, the stock may be down too).

glandium
4 replies
11h33m

if the company lays you off, the stock may be down too

Don't most layoffs make the stock go up?

AnthonyMouse
2 replies
10h53m

Layoffs generally imply the company is contracting rather than expanding.

Jensson
1 replies
10h39m

Depends on if you are cutting fat or cutting muscle.

AnthonyMouse
0 replies
10h29m

The Iron Law of Bureaucracy implies it's usually the second one though. If the company isn't already dying then the insiders will fight against cuts until it is.

vineyardmike
0 replies
10h13m

TLDR: Research says no

Some companies experience short-term improvements in price as their costs drop, but usually it has a longer-term impact on morale and productivity that takes longer to play out. Additionally, layoffs are typically performed on unhealthy companies (eg. not usually companies like Google and Meta that print cash and have huge margins), and unhealthy companies typically have other secular or structural issues beyond too-many-employees.

seanmcdirmid
6 replies
11h48m

People are lazy. You can always sell your grant as you get it, they can’t make holding stock mandatory, but a lot of people (including me) just hold the stock in a really undiversified portfolio.

oneshtein
3 replies
11h27m

This will tank price of shares.

eru
2 replies
11h7m

Huh, why, how?

HelloNurse
1 replies
10h33m

Of not traded shares that don't really have a price?

eru
0 replies
10h31m

Well, there's still a bid and an ask quote on the market, even when no trading is happening?

eru
0 replies
11h6m

You can always sell your grant as you get it, they can’t make holding stock mandatory, [...]

They can. It's easy in private companies to limit what an employee can do with their stock, and in public companies they can insert a clause in the contract to that effect just fine. Or just have very long vesting periods.

(Of course, as a would-be employee I would take these restrictions into account when deciding where to work.)

Murky3515
0 replies
11h47m

So they're too lazy to buy stock when they get paid, but not too lazy to sell stock when they get paid?

jrflowers
4 replies
11h44m

I like this caricature of the spoiled entitled employee because it completely ignores the concept of shareholders having a say in governance. If stocks were only a proxy for money and nothing else the example would be spot-on.

stavros
3 replies
10h46m

If stocks were only a proxy for money and nothing else the example would be spot-on

They are, in the modern startup world that HN is mostly in. That's why commenters here don't remember there are voting shares.

coderatlarge
2 replies
10h18m

What are some corporate votes that you feel wider employee ownership would have improved?

stavros
0 replies
10h15m

Laying off 10% of the workforce because the company isn't growing fast enough and then giving the CEO a bigger bonus.

psd1
0 replies
4h4m

Lindy Fiorentina fucking up HP. Boeing all over. I'd hope to see employee-owners counteract short-termism

phkahler
0 replies
9h30m

This is not about publicly traded companies. It's about employee owned ones. Your point is still valid, but not in the way you think.

shswkna
7 replies
11h23m

There are many advantages to having employees own shares in a company. However, I would add that it depends on the industry, type of company and other circumstances.

These are factors that play a role and should add to a more nuanced discussion: - Ownership also implies responsibilities and risk. There might be capital risks or surety needed for certain industries. Not all people want this in their lives. - For any chance of high reward, there is a also a risk of failure/loss. This side is often forgotten and a one-sided view of ownership is often romanticised. - Thus I think a popular discussion of this topic needs to be infused with a more realistic view of reality.

Guthur
4 replies
11h19m

What capital risks? Private equity many times purchases a company, loads it up with debt, strips it off assets, pay themselves fat dividends and then walks away when it all falls apart.

shswkna
1 replies
10h48m

That is the “popularised” and one-sided view of reality I was referring to. A full set of experiences will give you a more nuanced view.

Guthur
0 replies
10h30m

That is a reality in can point to many examples. From Thames water to Sara Lee in Australia.

rabite
1 replies
11h7m

A fracking rig costs 900k and many of them sit idle for years at a time:

https://www.csmonitor.com/Environment/2022/0415/Demand-for-o...

You are essentially saying that the roughnecks that work the rig for $30-40 an hour should be owning it. They don't have the capital to own it and pay for the oil rights to use it, or the risk tolerance that it will sit idle and still have to be maintained, stored in a rented warehouse, and guarded when regulation does not allow them to be used. Nor is there any evidence they would be able to successfully run an oil company even if they were given it for free -- compliance issues surrounding commodities deals typically require a different skillset than the guy working the rig.

The vast majority of businesses are not software. Virtually all industry has capital outlay requirements and capital risks equal to or greater to this.

Guthur
0 replies
10h28m

This has been debated for 100s of years and the era of funny money that is created at the stroke of a key i don't see how we can maintain the view that it should be so skewed towards capital.

dclowd9901
1 replies
11h8m

As a business owner of a small growing business, I don’t want employees who aren’t invested in the company. I think we use that same rubric in startups. How is this any different?

eru
0 replies
11h4m

Not everyone wants to have a substantial chunk of their net worth tied in one illiquid undiversified chunk that's highly correlated to how well their job is going.

dools
7 replies
11h15m

Worker co-ops and ESOPs are already available as business structures. If they’re better, they will be more common, it’s as simple as that. Mandating employee ownership is ridiculous.

In terms of policy I think a cap on revenue per employee for a privately held company and a cap on individual ownership is a better solution to reducing income inequality.

That and eliminating involuntary unemployment so that companies have to compete with a guaranteed job that is not exploitative.

Let the private sector figure out the details within those boundary conditions, that’s what it’s there for.

hurril
3 replies
11h12m

What is gained by preventing the company from accepting more money than your revenue cap? It would be bad for everyone. What are you trying to optimise?

dools
2 replies
11h2m

They can have more revenue than the cap I’m just saying they should be publicly listed.

hurril
0 replies
9h32m

Oh, misunderstood. You still need to think about what it is you wish to optimise for. I am not a regulation hater but naive regulations tend to cause rather than mitigate pathological economic incentives. It is very very hard to get these kinds of things right.

Another thing, one related to your original post: it is, of course, good imho to have a working hand-out system so that you don't starve when you are out of a job, or are forced to have to work for really shitty conditions.

This causes another problem, however. It is very easy to get dependant on these hand-outs because the difference in pay between the jobs you are able to do and the size of the hand-out can be very small. Even negative. We have (had) this problem in Sweden for a long time. And it is a problem because when people are less poor, then things cost more money because of it. Cynical, I know. Economics is very very hard.

chii
0 replies
9h59m

what makes public listing a good criteria for which the revenue cap be removed?

in fact, i dont get the rationale for revenue caps at all. It doesn't produce less inequality, and only produces inefficiencies.

t-writescode
1 replies
10h19m

If they’re better, they will be more common

Unfortunately, the word "better" is doing a lot of heavy lifting here. Better for the employees is a world of difference compared to "better at getting funding to start a business", "better at getting Venture Capitalists or Angel Investors or Banks" interested.

It takes working two jobs, being independently wealthy or getting outside help to start a company, and most of that outside help very likely doesn't want employee owned.

chii
0 replies
9h58m

may be the word is 'fitter', rather than 'better'.

After all, darwinian natural selection is taking place in a free-market economy.

eru
0 replies
10h33m

That and eliminating involuntary unemployment so that companies have to compete with a guaranteed job that is not exploitative.

You don't need to have job guarantees for that. A strong economy in general helps for this, and a basic income would also help.

talldatethrow
6 replies
11h48m

The company I work for sucks. I rather take more cash and just by stocks in companies I believe in more.

teaearlgraycold
5 replies
11h32m

Why not work for a company that sucks less?

twelve40
0 replies
11h25m

That's beside the point: the idea of hedging your bets has its place. You already sink 8 hours every day into one company, it makes sense to invest parts or all your compensation into other things instead of dumping it all into the same company. Unless you are balls-to-the-wall bullish on this one business.

morning-coffee
0 replies
5h48m

That ignores the costs (time spent) of finding another company and assumes one has information to conclude that it does indeed suck less without actually having the experience of working there to know.

loa_in_
0 replies
58m

Ultimately I don't decide what company I work for, but others do

knifie_spoonie
0 replies
10h13m

Not everyone has that luxury

eru
0 replies
10h57m

Perhaps talldatethrow believes that his employer sucks as a business, because they are overpaying workers?

Or when I was working for Google in the mid-2010, I thought Google was a great company and I liked working there; but I also thought that their stocks were probably overpriced. (These days, I guess Tesla or Nvidia might fill that role for some? These are just examples, I have no opinion on them.)

In the other direction, one can love Amazon as both a customer and a shareholder, while simultaneously not wanting to work there.

djokkataja
5 replies
10h57m

Are there any companies that are hybrids of this, where they have some fixed structure in terms of voting power that's, say, 60% employee-owned, and 40% which is publicly traded and has a board? So the employee-owned side of things maintains the primacy of their skin in the game because the 60% control that they have is not something which can be amended, but they can also receive outside investment to some degree? As someone who's definitely not an expert on these things, the idea seems intriguing to me, but I have no idea if there are some reasons why this obviously cannot logically or practically work (as opposed to simply being something which people don't presently do--or something which I just haven't heard of people doing).

eru
3 replies
10h36m

German companies come pretty close. See https://en.wikipedia.org/wiki/Codetermination_in_Germany

Also see how many cooperatives are run.

You can definitely make these kinds of things work and eg worker cooperatives are generally legal to set up around the world, but they don't necessarily work any better than vanilla companies (and that includes not necessarily being better for the employees).

nutrie
2 replies
10h26m

German companies come pretty close.

Worked for one with this setup. It was all great until the stock price fell to ~20 % of its original value and has stayed that way since. Employees didn't like it, which was kinda funny (it's a risk they signed up for).

throwaway2037
1 replies
9h35m

Jeez, that must have been some giant scandal to lose 80% of market cap. What is accounting fraud?

eru
0 replies
9h5m

Lots of leverage can do that, too.

raybb
0 replies
10h41m

I'd guess Wawa or Publix might be. They're both ESOP but from the people I know who work there it doesn't end up being much cash difference.

There is a whole book about Wawa that talks about the ESOP decision and such. It's called the Wawa Way. https://openlibrary.org/works/OL19986572W/The_Wawa_way?editi...

SoftTalker
5 replies
3h47m

This is a really bad idea for the average worker.

"We've got a number of people that have been here 15, 20 years and they have $1 million plus balances"

Sounds good but they are catastrophically undiversified. Nobody should have their entire nest egg in one stock. Yes they are motivated for the company to do well, but so many things play into a stock price that are out of any one person's control.

Just giving them profit sharing that they can invest as they wish would have most of the same motiviations. Anyone making a decent wage and saving in a 401K should be able to save $1 million over the long term. And do it much more safely in a well-diversified portfolio.

francisofascii
1 replies
3h26m

Isn't there some asset insurance vehicle to protect against a catastrophic loss?

Mesopropithecus
0 replies
1h34m

That's what options are for. But I find it more cost effective to just diversify my investments.

ragebol
0 replies
3h41m

(These) shares yield dividends right, even if the stock price itself is low? Profit sharing doesn't give you any say in anything.

charles_f
0 replies
3h18m

This is so backwards!

Workers are always at the mercy of shareholders (for whom apparently it's not bad to own a share?), and whom again and again will do a little layoff here and there because we need a percent or two more this quarter. Profit sharing will be the first thing to stop if results are temporarily worse. On the other hand, if the company is owned by its workers, nothing prevents them from redistributing all of the profits in dividends, aka, profit sharing.

asoneth
0 replies
3h31m

Agreed that there are some downsides for employees.

I worked at a company that incentivized owning the company's stock. The company was doing fine but it was still controversial among employees because of the risk of correlating your employment and investments -- if the company does poorly then you may lose your job and a large chunk of your investment at the exact same time.

(In practice there also ended up being some jealousy as people who decided to play it safe missed out on some large gains.)

marsten
3 replies
11h16m

My favorite pizza place in Sunnyvale became employee-owned, and shortly after decided they only wanted to stay open 3 days a week.

I'm happy for those employees but man, I also wish I could get pizza on Monday.

perryizgr8
1 replies
8h24m

I also wish I could get pizza on Monday

In a functional market there would be others willing to send you a pizza on Monday.

KolmogorovComp
0 replies
7h54m

A neighborhood is not a functional market, because location is key and not fungible.

relaxing
0 replies
6h8m

Order in advance, keep it in your fridge?

hgyjnbdet
3 replies
11h41m

I suppose a side effect might be employee loyality, which might be a good thing. And the wealth disparity we have now is obscene. But all this is predicated on the company doing well, where's the story about the companies set up like this that struggle or fail? Are the employees worse off than those in a traditional company?

eru
2 replies
10h32m

Wealth disparity is a function of overall worker comp, but it doesn't matter whether you force companies to pay part of that comp in shares instead of cash.

chii
1 replies
9h56m

what the proposal for employee ownership _actually_ want to achieve is for the existing owners to have part of their ownership reliquished (without much, if any, compensation), and given to the workers.

AKA, the workers do not take on the prior capital risk that the owners have, but reap the rewards of success. Obviously, a failed company means no such shares given to the workers (by definition). Therefore, under this imagined scenario, the workers only gain.

of course, reality cannot work like this.

eru
0 replies
9h17m

Yes, that sounds closer to what the proposal seem to amount to.

But it doesn't make much sense: just because I work at Google (which is worth a lot per employee) I don't deserve more re-distribution than someone manning the cashier at eg WalMart.

If you want to re-distribute, I would suggest to tax the owners and hand money to the people, regardless of where they work.

daedrdev
3 replies
11h29m

If you have every company owned by its employees, it can cause big problems for society. There are many arguments to make, such as how investment and hiring would decrease but an interesting one is that it prevents people from de risking their savings.

Normally, if your company goes under your savings which are invested in a wide range of companies will be fjne. But since we cant invest in other companies your savings are the ownership of your company. When when it goes under your life is ruined enron style.

Its fine to do this if you want, but if this compnay in the article goes under, those people will have lost millions. And dont force me to be an owner, I really dont want to be one and resent people who want to force me to own part of the company I work for.

sgu999
2 replies
10h7m

Your savings don't need to be tied to the stock market, it's actually not the case for most people outside of the US afaik. Your retirement pension even more so. How we choose to redistribute the extra wealth generated by others is mostly political.

Nasrudith
1 replies
9h40m

Isn't the case for most people outside the US government funded pensions essentially just "the Stock Market but with extra steps"? If the market crashes pensioners are going to have a bad time.

sgu999
0 replies
9h13m

It's apparently called "pay as you go" in the english jargon. Here we call it "répartition" in opposition to "capitalisation" [0]: active workforce directly pays for the inactive population, in exchange for a future right to a pension. Which is roughly what you do with capital-based pensions, but with less variability.

[0] https://de.m.wikipedia.org/wiki/Umlageverfahren

atmosx
3 replies
11h3m

Reminds of Varoufakis proposal which is way more radical tl;dr:

——————

To imagine what transcending capitalism might mean in practice requires rethinking the ownership of corporations.

Imagine that shares resemble electoral votes, which can be neither bought nor sold. Like students who receive a library card upon registration, new staff receive a single share granting a single vote to be cast in all-shareholder ballots deciding every matter of the corporation — from management and planning issues to the distribution of net revenues and bonuses.

Suddenly, the profit-wage distinction makes no sense and corporations are cut down to size, so boosting market competition. When a baby is born, the central bank automatically grants them a trust fund (or personal capital account) that is periodically topped up with a universal basic dividend. When the child becomes a teenager, the central bank throws in a free checking account.

Workers move freely from company to company, carrying with them their trust-fund capital, which they may lend to the company they work in or to others.

Because there are no equities to turbocharge with massive fictitious capital, finance becomes delightfully boring — and stable. States drop all personal and sales taxes, instead taxing only corporate revenues, land, and activities detrimental to the commons.

—————

Excerpt from https://www.irishexaminer.com/opinion/commentanalysis/arid-3...

eru
2 replies
10h48m

To imagine what transcending capitalism might mean in practice requires rethinking the ownership of corporations.

Imagine that shares resemble electoral votes, which can be neither bought nor sold.

Interesting idea. Perhaps the take-away is that we should allow trading in electoral votes.

Nasrudith
1 replies
9h30m

I thought the main reason we didn't allow for vote buying directly (advertising is doing the same thing but less reloably) was because it encouraged "corporate raiders" too much, one for whom a sufficient amount of capital would be encouraged to leave a mess by stripping out the copper wiring and selling it for a profit. Combined with the other issues of non-secret ballots like (political) bosses extorting votes.

eru
0 replies
9h15m

Huh, I don't understand the reference to copper wiring?

vladms
2 replies
3h9m

Some ideas were in fact already tried, but whomever does not history might suffer reliving it. For example check: https://www.familistere.com/uploads/media/5a9c4bd061fce/fami...

To quote: "the association’s economic and social model fell victim to its users and competitors. The hierarchy of association members, originally intended to reflect ability, led to opposition between Associates (whose status had finished by seeming hereditary) and other, less privileged active members. The spirit of the Familistère co-operative colony faded with each new generation."

It is fascinating that these things were already tried more than 100 years ago. It is also interesting that they did not succeed for simple reasons (people trying to take advantage of other people). I think any proposed solution must be more structural - involve more than ownership but a set of values...

hkt
1 replies
3h1m

Some other examples:

* Yugoslavian worker self management (arguably successful: the place had some other problems that hampered them, shall we say) * Mondragon (the world's largest worker cooperative) * John Lewis Partnership/Waitrose (an employee trust with some workplace democracy) * Rehn–Meidner model (which is more about mass ownership across the wider economy and was tried in Sweden if memory serves)

There are a _lot_ of variations of this kind of thing and only some have been tried. Most haven't seen much action at all, just a few sui generis examples - most of the more specific examples above, really.

s1artibartfast
0 replies
2h37m

yeah, It is really fascinating to learn about the historic and academic study of these challenges.

Most of them have been explored, mapped, and debated by economists in a very robust manner for 100+ years.

One interesting perspective that I gained from a recent Econtalk podcast[1] is that neither profit driven corporations or democratically governed worker collaboratives are perfectly efficient. It is rather a question of when and how the two perform or fail in contrast. It is easy to build criticisms of each when comparing it to an idealized alternative, where all of the challenges have been hand waved away, but that is a meaningless comparison.

https://www.econtalk.org/does-market-failure-justify-governm...

sgammon
2 replies
11h13m

Equity is zero-sum. Once you hand it out, it's gone. You can create more, but it will dilute everyone else. Not a very good arrangement for something that should create value over a long period of time.

eru
1 replies
10h53m

You know that stock buybacks are a thing?

In any case, things are a bit more complicated.

If the company manages to sell equity at a premium to current market prices, existing shareholders benefit, they don't get diluted in any absolute sense.

Conversely, if the company does stock buybacks at a premium, continuing shareholders suffer.

sgammon
0 replies
10h45m

Yes, a thing predicated on cooperation between humans.

rich_sasha
2 replies
10h13m

I was wondering about a similar, but different mechanism. There's a pool of shares that are effectively rented for free to employees, and part of their pay is the dividend they get. When you join, you get them for free (maybe there's some vesting schedule), when you leave they go away, not as a sale but just for free again.

Soo... It's not like you're always inflating your share base with options. Just part of what people are paid is basically same as shareholders.

This isn't some "align with shareholders" bullshit, rather I wonder if it somewhat decreased the myopic perspective of an employee. They get paid off of the success of the whole company, they have an interest in prudent cost management, and so on. They get to vote on issues affecting the whole firm, too - collectively maybe they are 5-10% or whatnot, not lots but enough that they have a voice.

Otherwise, there is a prevalent, and sadly reasonable perspective of extreme cynicism towards an employer. The employer always says how we're all in it together, teamwork etc. but really, every employee is best served by entirely optimizing only their own utility. But surely this can't be optimal at the society level.

chii
0 replies
9h37m

every employee is best served by entirely optimizing only their own utility.

but this would still remain the case in the scheme proposed.

Even suppose those employee-class shares get a voting right, they would want to maximize their own benefits: such as higher dividend payout. As for why - imagine if there's a decision between long term investment in plant & equipment, vs paying out dividend today. An employee who might not wish to stay will vote to get the dividend, as their "share" is going to be gone by the time the long term investment pays off.

So the only way to align employee and owners, is to have employees own regular shares.

TrueSlacker0
0 replies
8h8m

That's a profit share plan. Something implemented like as xx% (usually 20%) of net profit is dispersed to staff each quarter. You don't buy into shares or anything. You don't get them when you leave.

kryptiskt
2 replies
10h17m

So you make all the employees equal partners, what will happen? If the company is a money-making machine like Google, the employees will not be sad if the employee base is kept small and most stuff is outsourced to other (likewise worker-owned) companies that gets a slim margin above their cost.

So I predict that this world will have very small, very profitable companies which have some secret sauce but hands off most of the work to big companies making much less money.

vineyardmike
1 replies
10h10m

If the company is a money-making machine like Google, the employees will not be sad if the employee base is kept small and most stuff is outsourced to other (likewise worker-owned) companies that gets a slim margin above their cost.

Google does this already, even not being a co-op. They have a huge contractor army, and their core employees are handsomely rewarded with massive salaries.

So I predict that this world will have a have very small, very profitable companies which have some secret sauce but hands off most of the work to big companies making much less money.

This is kinda what we see already, except everyone want to grow their kingdom, (and hire their friends and family) so it seems inevitable that the "Small profitable secret sauces" will still get diluted without strong control

throwaway2037
0 replies
9h58m

Microsoft was pretty famous for this in the 90s and 00s. Huge amounts of work was done by contractors, who were treated like second class citizens. There was even a big lawsuit about it, that changed how Microsoft uses contractors.

talkingtab
1 replies
3h30m

Corporations pay employees and generate profits for owners. The third party is the customers. The first comment (currently) uses the word "profitable", in other words it asks what happens when a corporation is NOT profitable.

We live in a time when profit is shrinking or drying up. So what happens? Corporations are controlled by owners, so they do two things: - they lower wages (inflation) - they raise prices

This happens even when the owners have made stupid decisions. This happens even when the owners have committed criminal acts (Boeing, Sacklers, and many more). And the owners are also protected from legal consequences.

The corporate model is obsolete. Simplistic answers like letting employees also be small owners will not fix this. We need a new model that provides the benefits of Corporations while ending the excesses, irresponsibility and criminality of owners.

In the USA our constitution does not allow any action that denies equal protection under the law. Corporations have decide they enjoy the rights of citizens to buy elections. Owners, having made this decision may not enjoy any protection under the law that are not provided to ordinary citizens. No protection of their assets from bankruptcy and no protection from criminal prosecution. If you as an individual decide to sell OxyContin to any and everyone you would go to jail and you would be bankrupt. But not owners.

[edit: typo "if owners ..." => "if you as individual ..."

arminiusreturns
0 replies
3h16m

I often hear people say "if corporations are people how do we execute them?"

I remind them that this current insanity of profit at all costs has not always been the norm. Of course to a certain degree it has, but a long time ago, in America at least, corporations had to prove they were providing a public good or service, and if they were found to not be, their charter could be revoked! That right there is the death penalty for a corporation. While I'm sure it would have its own set of issues, I often dream about a world in which that becomes the norm instead of destroying the world so a multimillionare can get a few extra mil and the billionares get a few extra bil, while they oppress us and compromise our governments.

t-writescode
1 replies
10h27m

I was speaking to an employment lawyer about how to structure the business I'm trying to start. I wanted partial ownership from all employees and, more importantly, aggressive profit sharing.

The particular models that I wanted to look at - the partial ownership - turns out to be incredibly expensive when hiring on new employees - from what I've understood - and so I'm leaning in to the profit sharing model, hard, and perhaps the company design will be one that enforces that aggressively. I didn't understand everything the employment lawyer was discussing and it was just a preliminary discussion. I think it's worth it for every person interested in starting a business to work with and speak with a lawyer.

I'm not really much of a fan of everyone owning stock, though, myself - especially everyone gaining stock over time. There's a million ways to build a company, of course. Giving employees stock over time seems like it could be a good plan if there is real intent to become publicly traded at some point. I personally wouldn't want the profit sharing to be tied to a stock amount. It would reward seniority or tenure a bit too much (in my opinion).

A system I would prefer would be one where:

  * all employees regular salaries and all business costs are paid
  * a reserve 'warchest' is kept or grown where the goal 'size'
    of the 'warchest' is relative size to keep the company afloat for
    x years of low or zero income (to survive bad years).
  * profit share "the rest" (or most of the rest).
Exact specifics of the profit-sharing could be unclear. Could be:

  * a flat "every employee gets 1/(# employees) the rest".
  * each division gets a percentage and then each employee in that
    division gets 1/(# employees in division)
  * a point system where tenure gives you more points and you get Xi/(sum X)
    portion.
Lots of options.

I prefer profit-sharing myself because it doesn't lean in the direction of becoming public and everyone experiences the fruit of their and their coworkers' labors.

I've been warned a bit against partial ownership because "what if the existing employees don't want to be profit sharing anymore", etc? I dunno. Lots of thoughts.

etothepii
0 replies
10h4m

I'm interested in why you want to do this? What is the goal you are trying to achieve? Why would you not do this with salaries? Will there be some people paid more than others that do different roles? If so, why would their profit shares be the same? Who decides on war chest size? Ownership is an interesting word, because as you say if it was ownership then when an employee leaves they still get a share of profits and surely they could sell (otherwise it's not ownership). I've wondered myself about whether I should have some sort of union but what I really mean is an alternate reporting line to hear about problems. My suspicion is that there's a lot of what founders think of as profit that isn't really profit. My founder salary is probably around 25% of what I'd need to be willing a job. I'd everyone at the company did this we'd have a lot of extra "profit" to share out but it isn't real profit.

sotix
1 replies
5h43m

My grandfather founded a construction company by himself many decades ago. He built it up over many years to a behemoth in the region and created a culture where people worked there for life. When he retired, he sold the entire company to the employees with everyone getting a cut.

His funeral was full of so many faces I had never seen before. Somebody pointed out to me that these were the dozens of people that he made millionaires by deliberately deciding to do right by the employees. It was really moving to talk with so many people who had reaped the benefits of their labor and were grateful for his decision.

That to me is the model that I want to work for. Yes, people at the top made more than at the bottom. But they had been there for decades longer, and the gap was not as extreme at every other company I’ve worked for. Wealth was collectively shared.

My family could have been a lot wealthier if he had kept a cut of the company. But he retired comfortably and didn’t feel that he deserved any more money that others earned for him. I really admire that decision.

astura
0 replies
22m

My family could have been a lot wealthier if he had kept a cut of the company.

Unlikely... He probably made just as much or more with the ESOP than he would have selling in a private sale. When a business owner creates an ESOP for their business they sell their shares of to the company to the company itself TAX FREE for a fair independent valuation. It's just another way for a founder to cash out. It absolutely does benefit the employees, but it's not an act of charity, the owner still cashes out and realizes the full valuation of the company they built.

https://www.forbes.com/sites/darrendahl/2016/07/07/if-you-di...

phoyd
1 replies
9h36m

Giving employees stock options does not solve the "employes should own the company" problem, when there is a market to sell the stock. Shareholders and employees have different goals and interests regarding the company. For example, the employees they may have to decide on the elimination of their own jobs in order to secure the value of their stock holdings (which btw. would make the company not owned by their employees anymore)

A more interesting approach would be a model where being a employee automatically gives you a vote on company wide decisions including. the distribution of profits, just how being a cititzen of a democratic country gives you a vote on the fate of your country (similar to the Mondragon Corporation in Spain)

android521
0 replies
8h7m

so in the extreme case, the employees can decide to return 99% profits to themselves and return 1% to shareholders? It sounds cute but will be hard to make it work when incentives are not aligned well. Just like Communism sounds good in theory and everyone with a kind heart will like more equality but in practice, it destroys the entire cake.

philip1209
1 replies
3h54m

Countries work well as democracies, but businesses thrive as dictatorships.

dennis_jeeves2
0 replies
2h32m

Excellent way to put it.

paxys
1 replies
5h52m

Something doesn't add up. The company claims to be 100% employee owned, and hands out new shares to employees every year as part of their salary. But the employees can also sell their shares to fund purchases. So...who do they sell to? And what happens when an employee with a bunch of shares quits or gets fired?

itake
0 replies
5h3m

The company might buy those shares back

ozim
1 replies
3h50m

There is a little * and fine print.

Every profitable company. There is nothing written in the article what happens when company would be profitable 5 years and then suddenly crashes because of market forces. Can employees take the hit and work next 2 years without salaries to wait out until market goes back?

panarky
0 replies
3h41m

When a company's shareholders are employees, their wages don't stop just because the company loses money two years. Just like a company whose shareholders are pension funds and index funds doesn't stop paying its employees when they have a couple down years.

openrisk
1 replies
10h42m

Ownership is such an empowering concept it is a bit of puzzle why there aren't larger numbers of employeed-owned companies. There is definitely a historical / cultural aspect to this:

Exhibit 1: In agricultural societies land ownership was highly concentrated for the longest time (feudal society) before there were land reform movements [1].

Exhibit 2: Owner-occupancy is celebrated in many cultures but less so in others. E.g., it ranges from 10% to near 100%. [2]

Given that modern corporate organization and culture is typically endured (pays the bills) rather than loved and given that legal frameworks to establish alternatives do exist, there must be various fundamental reasons for the ESOP paucity (beyond the obvious resistance of vested interests).

One explanation might be that if judged purely on financial returns (i.e., ignoring the externalities of bullshit jobs, burned-out, disillusioned employees etc.) - the advantage of employee ownership in securing financial returns (especially short term) is not dramatically higher than a conventional external shareholder entity.

[1] https://en.wikipedia.org/wiki/Land_reform

[2] https://en.wikipedia.org/wiki/Owner-occupancy

itake
0 replies
10h35m

The problem with employee wholely owned organizations is the employees at the primary location aren’t typically incentived to grow the business beyond their area.

The primary location would need to set aside profits to fund new locations and their money would go towards new employees.

Most employees, especially ones living pay check to pay check would much rather take the check than use that money to pay someone else.

nnbvvklduwiw282
1 replies
10h44m

whaat, is this anarcho-syndicalism?

aloisdg
0 replies
10h25m

It should be.

ninetyninenine
1 replies
3h8m

The tragedy of the commons applies here. Any time you have something that’s commonly owned by many people (the more people, the more the tragedy applies) you have incentives that become misaligned.

dennis_jeeves2
0 replies
2h33m

The tragedy of the commons applies here.

Agreed. More specifically it's a tragedy of commons of people who are of average iq + maturity.

Overall cohesive group size is directly proportional to the iq + wisdom of participating individuals.

linsomniac
1 replies
9m

I came shockingly close to being a billionaire, and one of the things I've been fantasizing about recently for how I'd spend a billion dollars is: angel investing in a private Amazon/WalMart replacement (online, retail, warehouse, delivery). Never to touch the stock market. With the goal being to build a business that could pay people a living wage to work there, and allow them time to hit the john when they need to.

Rather than filtering vast sums of the revenue into the C-suite and shareholders, coming up with a way to make the workers be able to afford housing.

So far, it's just a pipe dream. "We're all in the gutter, but some of us are looking at the stars."

xikrib
0 replies
7m

Doesn't sound like you're in the gutter champ

karol
1 replies
8h32m

Ha ha ha.

When I hear the average quality of employers ideas I thank for the leaders and the founders who can see through that gibberish.

There is no large company in the world right now that is run this way and for a good reason.

sunaookami
0 replies
8h29m

Ah yes the competent founders, leaders and managers that always find new ways to exploit their workers and customers.

There is no large company in the world right now that is run this way

Huawei

irusensei
1 replies
10h46m

If I lived in the authors socialist lalaland and had a good marketable idea the first thing I would do is to and start my company in another country.

Maybe that’s why they’ve build a wall to keep people in.

jblezo
0 replies
10h21m

Moving to another country is a good idea as an individual. However, for a nation as a whole, nothing is easier but building rich people: Leave, and somebody else will take your place.

infinitedata
1 replies
8h40m

When I first saw this, more than money, I thought about voting rights. You shouldn’t need a CEO, direction of the company would be all about shareholders voting and bringing ideas.

android521
0 replies
7h58m

wow, have you seen any organization with more than 50+ people that can make it work this way? if everyone has equal voting rights, this company or organization would be destroyed in no time. In democracy, you vote a leader but then the leader(s) or the elite elected few would make decisions themselves. You can vote them out but you certainly don't get to vote on every decision or ideas.

gorgoiler
1 replies
11h24m

I haven’t heard of an ESOP before. As I understand it, this is an (additional?) pension fund where the value of your pension is tied to the company valuation in the form of a promise to sell you stock units when you either retire or leave the company.

Sounds like a nice perk to have but one would obviously be unwise to rely on that for retirement.

eru
0 replies
10h47m

You are better of taking the value of that entitlement, and investing it in an index fund or annuity.

Diversification is the one free lunch we have in finance.

Terr_
1 replies
11h45m

After they leave the company or retire, the complete balance of their accounts will be paid out to them over a six-year period.

Hmmm, so that line is a little misleading since they don't really "own" the stock in a conventional sense. They can't sell it to anybody else and they can't hold on to it indefinitely.

To the extent they "own" it they are are forced to only ever "sell" it back to the same company at some market-defined rate. (Arguably a form of stock-buybacks by the company.)

However that does sidestep the other tricky problems of taking money from retired employees (via diluting their stock) to award an ever-growing pool of shares to current employees every month.

phkahler
0 replies
9h25m

It's tricky. It wouldn't be employee owned if you could sell your shares to the public or keep them indefinitely after you leave. That's why you have to sell them back to the company/employees. Doing that over a period of time makes you value longer term company performance vs short term.

zokier
0 replies
9h57m

The article seems to imply that the company would need to hold cash enough to buy back all outstanding shares, which sounds absolutely bonkers to me?

Are the shares getting constantly diluted, how is that handled? How is valuation of shares done here? I can't really see this scheme working for public companies

yamumsahoe
0 replies
11h29m

it's a no for me.

it's like the idea of taxing the rich. it sounds great until you become one of those rich people.

this idea sounds great until you become a founder or an investor yourself.

these are laws, systems, and regulations that sets the first movers and real builders apart from the average laymen. all comes down to risk/reward incentives.

it's poor people telling the rich how to spend and allocate their money. the rich people will just say "the fuck do you know about it?"

wseqyrku
0 replies
9h17m

People work for their paycheck and not their company, and they have the nerve to talk about "loyalty" and stuff like that when they won't do any of this.

But I understand why companies prefer to pay you in full rather than stocks, (1) it's gonna be miniscule compared to their actual cash flow and (2) they would prefer to pay you whatever your contract says and keep whatever interest for themselves, even if that's not much.

So they are optimizing for their own interest in both ways. I'm not knowledgeable in this area but as a normie that would be my guess.

varispeed
0 replies
10h37m

Funny that in the UK, small business owned by employees is typically associated with tax dodging (basically there is strong anti small business agenda in the government). So we have this legislation called IR35 that very much stops employee owned company from generating profit. This applies to b2b only, but I wouldn't be surprised if strong lobbying from big corporations will get its scope expanded. After all why someone should run their own shop if they could work at a supermarket? Big corporations are worried that the most skilled people engage in running their own business rather than being available in the employee market, so there is strong push to stop it.

toldyouso2022
0 replies
9h0m

Uuuh no thanks, I want to be paid now whether things work out or not

thriftwy
0 replies
11h40m

This means you will need to invest capital when joining.

Imagine a bus drivers cooperative. The pay will be nice but the downside that you have to show up with your own bus to join. And then probably be indebted to a bank.

If a company is owned by employees, where does the capital come from?

sarkron
0 replies
9h51m

I am seeing a lot of debate here about what Socialism is or is not. Lots of interesting points but none of them come close to this article by the Leszek Kolakowski (Polish Philosopher and author of Main Currents of Marxism)

It was written in 1956 but was seized by the censor and the student journal for which it had been written was closed down. The essay was then pinned up on a bulletin board at Warsaw University until - very shortly afterwards - the authorities took it down. From then on underground copies of it were circulated. It remained unpublished in Poland until after the fall of communism.

We intend to tell you what socialism is. But first we must tell you what it is not - and our views on this matter were once very different from what they are at present.

Here, then, is what socialism is not:

- a society in which someone who has committed no crime sits at home waiting for the police;

- a society in which it is a crime to be the brother, sister, son, or wife of a criminal;

- a society in which some people are unhappy because they say what they think and others are unhappy because they do not;

- a society in which some people are better off because they do not think at all;

- a society in which some people are unhappy because they are Jews and others are happier because they are not;

- a state whose soldiers are the first to set foot in the territory of another country;

- a state where people are better off because they praise their leaders;

- a state where one can be condemned without trial;

- a society whose leaders appoint themselves;

- a society in which ten people live in one room;

- a society that has illiterates and plague epidemics;

- a state that does not permit travel abroad;

- a state that has more spies than nurses and more room in prisons than in hospitals;

- a state where the number of bureaucrats increases more quickly than that of workers;

- a state where people are compelled to lie;

- a state where people are compelled to steal;

- a state where people are compelled to commit crimes;

- a state that possesses colonies;

- a state whose neighbours curse geography;

- a state where cowards are better off than the courageous;

- a state where defence lawyers are usually in agreement with the prosecution;

- a tyranny, an oligarchy, a bureaucracy;

- a society where vast numbers of people turn to God to comfort them in their misery;

- a state that gives literary prizes to talentless hacks and knows better than painters what kind of painting is the best;

- a nation that oppresses other nations;

- a nation that is oppressed by another nation;

- a state that wants all its citizens to have the same views on philosophy, foreign policy, the economy, literature, and morality;

- a state whose government determines the rights of its citizens but whose citizens do not determine the rights of their government;

- a state in which one is responsible for one's ancestors;

- a state in which some people earn forty times as much as others;

- a system of government that is opposed by the majority of the governed; - one isolated country;

- a group of underdeveloped countries;

- a state that employs nationalist slogans;

- a state whose government believes that nothing matters more than its being in power;

- a state that makes pacts with criminals and adapts its worldview to these pacts;

- a state that wants its foreign ministry to shape the worldview of all mankind at any given moment;

- a state that is not very good at distinguishing between slavery and liberation;

- a state that gives free rein to proponents of racism;

- a state that currently exists;

- a state with private ownership of the means of production;

- a state that considers itself socialist solely because it has abolished private ownership of the means of production;

- a state that is not very good at distinguishing between social revolution and armed invasion;

- a state that does not believe that people under socialism should be happier than people elsewhere;

- a society that is very sad;

- a caste system;

- a state where people can be pushed around, humiliated, and ill-treated with impunity;

- a state where a certain view of world history is obligatory;

- a state whose philosophers and writers always say the same things as the generals and ministers, but always after the latter have said them;

- a state where city maps are state secrets;

- a state where the results of parliamentary elections can always be unerringly predicted;

- a state where slave labour exists;

- a state where feudal bonds exist;

- a state that has a monopoly on telling its citizens all they need to know about the world;

- a state that thinks freedom amounts to obedience to the state;

- a state that sees no difference between what is true and what it is in its interest for people to believe;

- a state where a nation can be transplanted in its entirety from one place to another, willy-nilly;

- a state in which the workers have no influence on the government;

- a state that believes it alone can save mankind;

- a state that thinks it has always been right;

- a state where history is in the service of politics;

- a state whose citizens are not permitted to read the greatest works of contemporary literature, or to see the greatest contemporary works of art, or to hear the best contemporary music;

- a state that is always exceedingly pleased with itself;

- a state that claims the world is very complicated, but in fact believes that it is very simple;

- a state where you have to go through an awful lot of suffering before you can see a doctor;

- a state that has beggars;

- a state that is convinced that no one could ever invent anything better;

- a state that believes that everyone simply adores it, although the opposite is true;

- a state that governs according to the principle oderint dum metuant; - a state that decides who may criticize it and how;

- a state where one is required each day to say the opposite of what one said the day before and to believe that one is always saying the same thing;

- a state that does not like it at all when its citizens read old newspapers;

- a state where many ignorant people are considered scholars; the politics of its government will not allow you to discover this;

- a state that does not like it at all when its regime is analysed by scholars, but is very happy when this is done by sycophants;

- a state that always knows better than its citizens where the happiness of every one of its citizens lies;

- a state that, while not sacrificing anything for any higher principles, nevertheless believes that it is the leading light of progress.

That was the first part. And now, pay attention, because we are going to tell you what socialism is. Here is what socialism is:

Socialism is a system that ... But what's the point of going into all these details? It's very simple: socialism is just a really wonderful thing

protocolture
0 replies
6h36m

I think I read some compromise position years ago where the workers didnt just own the business, but the business would issue new bonds/shares every year based on effort put in.

The problem with traditional worker owned businesses is that you assume that being a shareholder would incentivize work, but it turns often enough into a race for the least effort while still getting paid. A classic coop failure mode.

If share of profit is proportional to effort every 12 months you eliminate that.

That said, I cbf reading the article. Sorry but at least I am honest.

peacechance
0 replies
11h21m

Can someone please share the National ESOP Database?

overrun11
0 replies
40m

The company profiled, Central States Manufacturing, has compounded at 20% per year since its formation in 1988 (according to the article). In comparison, Amazon has compounded at 23% since its IPO in 1997. If you are lucky enough to be a worker at an employee owner company that has 1 in a million anomalous stock growth you will do very well. This is not surprising.

World wide public equities have grown at 5% real over the longest datasets available, 7% for US based companies. Even these numbers are misleading because company returns are heavily left skewed: a small minority of companies do tremendously well and the rest are stagnant or shrinking. From 1991 to 2020, 55% of US stocks underperformed 1 month T-bills. From 1926 to 2016, 4% of stocks have outperformed the total stock index.

I do not see what is so amazing about this? If you think that employees deserve a larger share of the spoils then you can advocate that they receive more of it directly as compensation, no employee owned corporation needed. If they will make the same on net but with some of it locked away in a single company's equity than you've just made those employees' economic situation _more_ precarious than it was before.

Non-employee equity ownership arises naturally but these articles always try to paint it as the result of the nefarious machinations of top-hat wearing capitalists. Suppose this company needs more capital than employees can raise but won't or can't take on new debt. Equity must be sold to outsiders.

The article also wrongly suggests that owning equity is exceptionally difficult without employee owned companies: "it's hard for most people to get ownership in something." But we have a whole public equities market that anyone can participate in and innovation has only made it easier over time. Index funds have made diversification automatic, fractional shares have solved daunting investment minimums and payment for order flow has eliminated transaction fees and concern about getting a fair fill price.

nutrie
0 replies
10h43m

This is a rabbit hole miles deep, and don't get me wrong, I sort of support the idea, but:

Just like Jeff Bezos can sell a portion of his Amazon stock to buy a new house, employees at ESOPs can pull money out of their stock accounts to pay for tuition, medical bills, or as a downpayment on a primary residence.

Maybe I'm missing sth, but, erm... what happens with the stock after? Because that portion of the company is no longer in the hands of its employees, and it's unlikely that it's a closed circuit.

I get that your stock need not be publicly traded. But that brings a variety of other issues to the table.

morning-coffee
0 replies
5h53m

Every company should be owned by its employees

Today's latest example of someone, after observing the current state of some system governed by laws of economics, declaring a "solution" by merely stating how something "should" be. If only the world worked this way...

maximilianroos
0 replies
11h37m

How are you going to finance a capital-intensive business from employees? Are you going to build a nuclear reactor with sweat equity?

markus_zhang
0 replies
5h48m

I think the idea is, every company should be managed and owned by its employees. Employees in total should own about 51% of the stocks, as a start. Nowadays you see so many examples of management and even the owning entities (VC and other funds) mismanage the companies, simply to benefit themselves, and leave employees in the wind.

marklubi
0 replies
2h33m

I'm all for giving equity in a company to incentivize employees.

The problem I have with this blanket statement, and the article itself, is that most of those employees didn't take on any of the risk. The risk/reward system is askew at that point.

When you're ready to put everything on the line, let me know. Been there. Took three attempts where I went broke and had to find employment before finally getting one to stick.

lynx23
0 replies
11h0m

Just pay a decent salary, and the rest is moot. I dont really want stock from the company I wor for. Because if it is doing well... Yes, but that pendulum can also swing in the other direction, and experience has it that just because my company is doing badly, it mustn't be my fault. Everything between bad luck and co-workers slacking off for some reason can define my outcome. Thats pretty communist in my book. But well. Anyway, stock is a risk-taking behaviour, now force onto you because you're trying to fix your bad salary. Nope, thanks. Also, this smells of "we are a family" because "if the company is well, everyone is well". No, thanks.

kkfx
0 replies
5h48m

Companies needs money, money came from revenues but typically it's not sufficient and loan are not cheap. So companies try to get money from third parties, it's a bit cheaper but still not so cheap, stocks are cheaper, and if you have stocks while employees can buy them, have options and so on, they likely have not enough money so you can't keep the ownership "inside". Similarly you can "give ownership" to those who are new hired and get back ownership" from those who left for some reasons.

To resolve current very unbalanced society we need another thing: public money. We need to ANNIHILATE central banks and the current banking system. Money must be created by the government with public investments, so the government propose a new road, the parliament accept the proposal, some will make the new road getting "new" money from the State. Doing so regulate enough to avoid hyper inflation but still tie money on a physical substrate, tied to the real world resources avoiding pure finance.

kemiller
0 replies
2h3m

Honestly the big tech tech companies are already captured by their employees. I used to think that would be a good thing but in reality it just means the economic opportunity is limited to a small set of people with highly elite and performative entry criteria. But a gradual path to employee ownership might make sense at smaller companies.

karaterobot
0 replies
4h25m

I've never worked for a company where I would have traded $1 of my salary for $2 in ownership. Most companies' stock isn't worth anything financially, and I don't give half a shit about a sense of ownership. Just pay me money in exchange for work, and let me get back to living my life.

jackcosgrove
0 replies
4m

I've wondered if there's some way to structure an accelerator along similar lines, if not employee ownership then a partnership.

For example, it's well known that startups are risky. VCs mitigate this risk by spreading their funding across many startups. Could founders do the same with their equity? Consider an accelerator class with thirty companies. As a condition of being in the accelerator, each founder could agree to give X% of options to every other founder in the class. If one of the companies takes off, the other founders could wind down their own (probably failing) companies and join the one success.

You would probably have to tinker with the ratios to provide good incentives, i.e. every founder doesn't get an equal share of every company; the winning founders get the largest share among their class, etc. And the accelerator would have to exercise a lot of quality control with whom they admit.

But still it's an acknowledgement that business success is in large part random and diversification is how you account for that. Or rather, it's an extension of that acknowledgement to the founding/managing class of early ventures, rather than reserving it for investors.

igleria
0 replies
9h18m

I would prefer having my salary indexed by inflation. Yes, even if we get deflation, before some ceo-wannabe asks about that.

heckerhut
0 replies
11h52m

We’re thinking along the same lines with Common Ground, a social app for communities.

We’re leveraging a coop but also combine it with tokenized ownership.

https://www.commonground.cg/blog/about-us

germandiago
0 replies
11h46m

I disagree. This is a matter of contract between sides.

fx1994
0 replies
9h21m

We had companies owned by people/state in communism. It failed miserably and I would not suggest anyone to try it again. But to be paid with optional stocks or money after n years working for a company, hell yes. I would be the first to take that bonus of stocks and I would care much more for my company then. Now, I don't care whatever happens since no one would care if they throw me out.

fsckboy
0 replies
1h53m

If you tie your income and your savings together, you're not saving for a rainy day. A rainy day will wipe you out.

Ever heard the investment advice "diversify"? It's recommended because it's mathematically provable that you can achieve the same income with lower risk by diversifying away the co-variances between your different income streams.

In the same way that it's nice to go to the market and buy the phone you prefer, the car you prefer, the milk you prefer, etc. you should make investments that are right for you too from among choices.

fourseventy
0 replies
2h48m

"But unlike Walmart, Amazon, and Apple, it’s not just the executives getting paid out." ???? Employees at all three of those companies get options as part of their comp.

foreigner
0 replies
10h38m

Does nobody remember Enron? They encouraged their employees to invest in company stock, and when the company collapsed those employees were doubly screwed: no more job and no more savings. Too many eggs in one basket IMO. Investing in your own company is only for people who can tolerate very high risk.

flerchin
0 replies
1h29m

Aligning incentives is how you get everyone pulling in the same direction.

flanked-evergl
0 replies
10h48m

The only cooperative I ever worked for was also the most corporate and toxic company I have ever worked for, and the company was run so poorly that they would not be able to pay someone to take their shares if they were publicly traded.

fairdistribute
0 replies
10h18m

Ok then we get rid of employees

It's surprising how unnecessary they are.

eru
0 replies
11h9m

Owning their employer is a rough deal for employees.

My career is already tied up to my industry and to my employer. I don't need to increase that exposure even more.

I'd rather invest in an index fund, than hold more stocks of my employer than I need to. (If anything, I should probably short my industry, so that my overall exposure is neutral.)

elijahjohnston
0 replies
2h24m

Our society isn't ready for this.

Because of the godlessness of our society, the self has no grounds by which to engage with others, and by further incentivizing profit for more individuals, the further our society will tend to engage with itself as profit as its highest purpose — even outside of the workplace — consciously or unconsciously.

I could see this being less dangerous if our society was deeply rooted in a religious reality, where an individual's engagement with the world is driven by a holistic good, as opposed exclusively to a financial good.

derelicta
0 replies
6h38m

Yes. It's like every now and then STEM-folks discover that workplace democracy is actually a good thing and maybe the goddamn soviets were unto something lmao.

choeger
0 replies
9h37m

While this might sound great at first, it comes with a tangible risk: In a worker-owned enterprise, workers cannot freely sell their stock (or it would not be worker-owned for long). So their wealth is tied to the company and the value of every stock hinges on the company's long-term success. Imagine going into retirement with this six-year plan to learn that the company goes bankrupt one year later.

Of course, there are probably ways to try to minimize the risk (e.g., saving the profits for the payout and keeping them separate from business cash) but it won't be very diverse. Or maybe several such companies could put their stocks in a basket and allow employees to diversify their portfolio.

So I think it's a great idea as an add-on, but no one should bet their retirement on it.

benced
0 replies
11h25m

Maybe we should create some sort of super-stock that can be any company and give employees that. We could also make that super-stock valid tender for burritos or houses or bulldozers.

Oh wait, it's money. Fungibility is great!

bankcust08385
0 replies
2h13m

Apart from communism, worker- and customer-owned co-ops is the only escape hatch for workers from for-profit, extractive corporations subject to the demands of investors to commit arbitrary dismals, create unsafe working conditions, and all manner of other problems when the interests of owners and workers are out of alignment. Unions are a half measure that don't address the fundamental problem of an adversarial relationship between workers and managers/owners.

amadeuspagel
0 replies
11h7m

Production, Information Costs, and Economic Organization[1] is classic economics paper that explains how different firms are structured to align incentives, rather then making claims about how every company should be structured.

[1]: https://www.aeaweb.org/aer/top20/62.5.777-795.pdf

alfiedotwtf
0 replies
4h46m

<door bursts open>

Economics 101 has entered the chat

WalterBright
0 replies
2h51m

Back in the 90s, the Seattle Times reported that there were 10,000 Microsoft millionaires in the Seattle area, not including home equity.

Microsoft has made a heluva lot of people rich. So has Amazon.

I also know employees who rejected getting part of their compensation as stock, wanting a higher salary instead, and then got mad when their coworkers made bank on the stock.

SanderNL
0 replies
7m

Businesses are some kind of feudal leftovers that refuse to die. The serfs not only accept it, they actively defend it. Meanwhile the billionaires lean back and smile.

I don’t see why nation states should be democracies, but “businesses” should be private dictatorships. It’s a waste of shared resources. Your personal army of value generating serfs is taking away from our collective capacity to do useful communal work.

PaulRobinson
0 replies
9h30m

Companies can be owned by employees (or customers!) without the messiness of stock options. It's called a co-operative.

I know in the US that worker co-operative can be marred by accusations of "communism" and that trade unions will own the business, but it doesn't have to be that way.

In the UK (hardly a hotbed of communism with now close to 50 years of centrist governments), one of the best known and most aspirational brands is the John Lewis Partnership. The "Partnership" in the name refers to the fact it doesn't have "employees" - they're all partners in the business. People working at JLP, and its subsidiary supermarket Waitrose, receive a share of the profits in addition to their salary.

The current CEO is dancing around trying to get private equity in to the business, but they are finding - like most businesses that seek capital investment - that investor interests in eternal rapid growth don't align well with employee interests.

JLP isn't alone in being a partnership. The vast majority of UK professional firms (accountants, law firms, management consultancies and so on), are LLPs, meaning senior partners are the owners and distribute profits between themselves.

Perhaps slightly more radical is the customer-owned co-operative. Started in Rochdale (possibly with the help of some of my ancestors who hail from there), in 1844, shoppers with the Co-Op, effectively get a return of profits based on how much they spend - the original loyalty program.

Mutuals are also structured in this way like Nationwide are the largest mortgage brokers in the country, and if you have even £1 in a savings account or mortgage with them, you have voting rights at AGMs, and own part of the organisation. Credit unions are similar, but typically operate as non-profits.

And this is all healthy. Look at the oldest businesses in the World[1], they're not driven by growth, they're not driven by next quarter's targets, they're about longevity and creating something that lasts. They're typically family owned or owned in a way that means the workers reap the benefits. Many of them change hands in private ownership, sure, but no hedge fund is going to be interested in extracting value from them - they're not intended to scale on purpose.

I've come around in recent years to Cory Doctorow's ideas on capitalism (in the purest sense of that word, not "free markets", but investors making their living by demanding returns on capital), being misaligned with a healthy long-term business, particularly in the tech industry. "Building to scale" has become toxic. Unicorns are destroying our industry. I don't understand - and I know this will be controversial here on HN - why anyone would want to make some billionaire investment fund richer, just so they can have a yacht, making money off adtech.

The next thing I do will likely be an LLP or a co-op (probably employee owned, but a tech firm that is customer-owned co-op would be interesting). The goal will be to build something that outlives me by a long, long time. I'd encourage others to look at alternatives too.

[1] https://en.wikipedia.org/wiki/List_of_oldest_companies

Narhem
0 replies
8h59m

Let's take it a step further and say when a company screws the livelihood of others they should be holden to providing financial compensation for their failures.

That being said working for a company who actively fights against me makes me just not want to work.

Luker88
0 replies
5h36m

This reminds me of that old funny viral video:

"democracy is government... by the people...of the people...for the people... but the people are retar*d"

Like everything, the best things probably require balance, and the devil is in the details. IMHO it has merit, but with caveats.

I would not want to have the same shares as a normal worker if I have personal risks (like a work security responsible, or CEO). For better or worse, CEOs have experience in guiding companies, and almost no employees have that.

OTOH even a small worker representation might do wonders, increase engagement, better law compliance and the like.

the options are not just 0% and 100% to workers, there could be different requirements depending on the size of the company.

Small companies could be required to have a bigger worker representation, because the impacts of the single worker is much higher.

The weight of the workers' shares in money could be different than its weight in the decisions of the company, too.

Maybe the workers just get a vote for X% on the board, regardless of actual shares.

HumblyTossed
0 replies
20m

Easy for you to say, but did those employees start the business with the full backing of their rich parents? No! They didn't!

GardenLetter27
0 replies
7h38m

A nice idea in theory, in practice it becomes a bureaucratic nightmare though - even just offering shares is extremely difficult between different countries, tax treaties, etc.

ETH_start
0 replies
3h5m

"Why are worker’s cooperatives so rare? This is not a trivial question — because they can pay “dividends” in the form of wages, they can entirely avoid corporate income tax. They must be so inefficient by nature of their structure to outweigh their advantages."

https://x.com/captgouda24/status/1780345152885641350

Animats
0 replies
17m

Central States is in litigation with some of its retirees over a "dilution event".[1] This is like CAP table problems of additional funding rounds, where earlier owners are diluted.

The picture in the article doesn't look like a Central States product. Central States makes prefab metal buildings. So do other companies, most notably Butler Buildings. Most farms and rural businesses have some of those. They look nothing like that picture.

[1] https://ia601700.us.archive.org/11/items/gov.uscourts.arwd.6...

ARandomerDude
0 replies
1h49m

It's amazing how many people believe that every company is publicly traded. The vast majority of companies do not have stock and never will.

If every company were owned by its employees, the net result would be higher unemployment, and many of those who found work would then do so as contractors. Hiring an employee is a major decision, especially for small- to mid-size companies. For a fledgling family business, giving an hourly employee an ownership stake in the company you and your wife started in your garage is a non-starter for most people regardless of their stated political ideology. For megacorps with deep pockets, mandatory ESOP would immediately accelerate the replacement of humans with machines.

If you look at the incentives you can fairly quickly guess a person's (and a company's) future behavior.