Realist, not conformist analysis of the latest financial, business and political news

Another Problem We Need Do Nothing About Then

It’s entirely possible that screwing the workers – as capitalists are wont to do – produces the highest profits and thus stock valuations. It’s also possible that paying the workers well, treating them nicely, increases profits and thus produces the highest stock valuations.

Given that the capitalists are interested only in the value of their own holdings – it’s all what’s in it for me! – then we might want to know which of the two is actually true. For, if it’s be nice that wins then we don’t need laws and rules about be nice, do we? It’ll be something that can be left entirely to plutocratic greed. Self-interest will make the capitalists treat the workers well:

Investors should target companies rated highly by employees to give their portfolios an edge, according to new research.

Fund group Mobius Capital Partners found that shares in American companies that scored the highest ratings on employee review website Glassdoor delivered higher returns than the US stock market.

Shares in stock market-listed companies that featured in Glassdoor’s inaugural top 50 “best places to work” in America list published in 2008 went on to deliver returns of 582pc over the next 12 years, beating the 316pc from the US S&P 500 index.

There’s a possibility here. Which is that successful, highly profitable, companies share some of the goodies with the workers. It is, after all, true that secretaries in investment banks get paid more than secretaries in publishing, there being a certain difference in the general profitability of the two sectors.

But let’s leave that aside for a moment and treat this finding as it is meant to be treated. Be nice to the workers and you’ll make more money. OK. Therefore we don’t need to force people to be nice to the workers, do we? Because they’ll naturally be nice to the workers to make more money.

That is, this entirely kills the stakeholder case. A world in which pure shareholder interest is entirely paramount will lead to the workers being treated well, coddled with good working conditions and pay. We don’t need to do anything else, do we?

0 0 votes
Article Rating
Total
0
Shares
Subscribe
Notify of
guest
11 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
David
David
3 months ago

” A world in which pure shareholder interest is entirely paramount will lead to the workers being treated well, coddled with good working conditions and pay. ”
But that is not the world we live in.
Often the shareholders’ principal – senior management will badly treat junior staff because
either a) they are incompetent and are worried about more talented junior staff so get rid of them. This causes upgrades to IT systems cost a lot more.
b) they can’t think of anything useful do, so do pointless reorgs to make it look like they are adding value.

Spike
Spike
3 months ago
Reply to  David

Yes, there is bad management everywhere. Loss of institutional memory, after key employees are fired capriciously or driven to resign, is an unintended cost. But trying to rectify this through either activism or legislation is the worst management of all. Those writing the new rules have no information and have goals that do not align with the goals of the enterprise.

David
David
3 months ago
Reply to  Spike

Very true, I was not arguing for the legislation.

decnine
decnine
3 months ago

A former colleague and senior Personnel Manager used to advise caution about making a habit of giving non-contractual strokes to employees. “Such things quickly come to be seen as entitlements” he would say. I have seen the toxic effects on general morale of weak management failing to grasp nettles that needed to be working for a competitor. All carrot and no stick is just as damaging as All stick and no carrot.

Snarkus
Snarkus
3 months ago
Reply to  decnine

if they do become seen as entitlements then two things follow (a) too many strokes for for too little extra effort OR (b) incompetent employees having an exaggerated evaluation of their inability or (c) Both. In my decades of corporate labour, usually only stick used by upper echelons of PHB class and few carrots from lowly managers. As for point of article, it assumes consumers of investments do care about their investment performance. Ironically, I only see the big investment firms “care”. It also assumes management of corporates are astute enough to notice the benefits of ethical behavior That I… Read more »

Esteban
Esteban
3 months ago
Reply to  Snarkus

Do you find it possible to believe that politicians will get it right?

TD
TD
3 months ago

One of the recognized observations in economics is that success tends to be emulated. Someone makes huge profits. It’s noticed by others who jump into the game and perhaps price less than the first guy who must then respond unless their product truly is premium. And so it goes, and eventually no one is making huge profits, but rather ordinary ones. It largely works but a key word is “eventually”. Those who advocate for a more centrally controlled economy believe themselves so smart that they’d skip the “eventually” stage and force the best result immediately. Trial and error is hated… Read more »

jgh
jgh
3 months ago
Reply to  TD

So ask him why we’ve wasted 12 months developing a Covid vaccine. The manufacturers should have just programmed the correct parameters into the machines a year ago.

Michael van der Riet
Michael van der Riet
3 months ago
Reply to  jgh

The parameters supplied by government, you mean.

Spike
Spike
3 months ago
Reply to  jgh

Jgh: We did not waste 12 months developing a vaccine. One of the treatments we are now administering was ready a week after we decoded Covid. What we wasted 10 months at is bureaucrats and lawyers devising a basis to claim Zero Risk, and partisans ensuring the process did not complete under Trump.

None of this depended on good vs. bad treatment of workers.

TD: Trump’s remarkable structure, encouraging multiple competing vaccines and promising profit, did increase effort.

Steven C Watson
Steven C Watson
3 months ago
Reply to  Spike

You can knock mRNA vaccines up over the weekend,yes; but as far as humans are concerned they are novel. I won’t be touching one with a barge-pole because of that novelty.

The vaccine in question may have been “ready”, but it can hardly have been trialed. Those are hoops you have to jump and the time they take is the time they take. You, no matter what you might protest, are simply ignorant.

11
0
Would love your thoughts, please comment.x
()
x