Thanks for that Derek....I love this list. Thanks to all.
Mike
Mike,
I second that! We've got a great mix of activism and intellectual discourse going here, with very little acrimony.
Derek,
Please enlighten me -- what is the "principle-agent problem" with respect to the corporate governance of publicly traded companies?
Yours in liberty,
<<< Starchild >>>
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Dear Everyone;
A nice article on Gold - Stocks - Building Your Business was written by Charley Reese during the election after stories about George Soros the billionare setting aside $15 million for the defeat of George Bush.
In the Lew Rockwell column he discussed the topic of wealth is not money, gold,stocks and building your own wealth. He made some very cogent points and also told why he thought a billionare was really for the defeat of George Bush.
http://www.lewrockwell.com/reese/reese130.html
How much would you pay for a banana for a snack and how much would you pay for a banana if you are starving? It's also like a commentary about I read on gasoline prices. You don't notice the price if you can afford the prices but when you can't the prices become very noticeable. Then you start making choices of what to buy and how much.
In other words, free market economizing instead of forced price controls or politically enacted price gouging law caps. California's price gouging law is set at a 10% trigger level during disasters and emergencies and other politically motivated events.
Ron Getty
SF Libertarian
Starchild <sfdreamer@...> wrote:
Mike,
I second that! We've got a great mix of activism and intellectual
discourse going here, with very little acrimony.
Derek,
Please enlighten me -- what is the "principle-agent problem" with
respect to the corporate governance of publicly traded companies?
Yours in liberty,
<<< Starchild >>>
Derek,
Yeah, I completely agree. Current problems in corporate governance, in my view, mirror to a large extent the problems in national governance. I think libertarians should take a stronger stand on enhancing shareholder rights and power over corporations, just as we stand for increasing the rights and power of people over governments.
Some specific reform ideas, which could be demanded of corporations in exchange for allowing them to keep their government-granted charters awarding privileges such as corporate personhood and limited liability:
-require automatic splits into multiple companies when a certain size is reached (measured by either employees exceeding a certain number, volume of sales, or volume of assets)
-require annual shareholder votes on the salaries and perks of board members and top management, in the form of multiple-choice responses (e.g. "Should the CEO be paid (a) the federal minimum wage, (b) $25,000 a year, (c) $50,000 a year, (d) $75,000 a year, (e) $100,000 a year, (f) $200,000 a year, (g) $500,000 a year, (h) $750,000 a year, (i) $1 million a year, etc.)
-eliminate the ability of corporate votes to automatically get the proxy votes of shareholders who do not vote in corporate elections
-require corporations to email transcripts of annual meetings to shareholders who request them
-require shareholder consent for corporate political contributions
By the way, I think you mean "princiPAL-agent" not "princiPLE-agent." I was taught a good way to remember the difference between the two meanings and spellings of the word -- the princiPAL is a person -- he's your pal. Or, in the case of corporate managers, it might be more like, "Hey listen, PAL..."
Yours in liberty,
<<< Starchild >>>
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Dear Starchild;
Just a non-sequitor aside.
The last time I met my school princiPAL he sure the heck wasn't acting as a PAL!!!!! Of course, this was back in the good old days when principal's could be principals. Instead of like today and having to have a 24/7 legal counsel at their side for advice so all the little darlings won't get their feelings hurt.
Ron Getty
SF Libertarian
Starchild <sfdreamer@...> wrote:
Derek,
Yeah, I completely agree. Current problems in corporate governance, in
my view, mirror to a large extent the problems in national governance.
I think libertarians should take a stronger stand on enhancing
shareholder rights and power over corporations, just as we stand for
increasing the rights and power of people over governments.
Some specific reform ideas, which could be demanded of corporations in
exchange for allowing them to keep their government-granted charters
awarding privileges such as corporate personhood and limited liability:
-require automatic splits into multiple companies when a certain size
is reached (measured by either employees exceeding a certain number,
volume of sales, or volume of assets)
-require annual shareholder votes on the salaries and perks of board
members and top management, in the form of multiple-choice responses
(e.g. "Should the CEO be paid (a) the federal minimum wage, (b) $25,000
a year, (c) $50,000 a year, (d) $75,000 a year, (e) $100,000 a year,
(f) $200,000 a year, (g) $500,000 a year, (h) $750,000 a year, (i) $1
million a year, etc.)
-eliminate the ability of corporate votes to automatically get the
proxy votes of shareholders who do not vote in corporate elections
-require corporations to email transcripts of annual meetings to
shareholders who request them
-require shareholder consent for corporate political contributions
By the way, I think you mean "princiPAL-agent" not "princiPLE-agent."
I was taught a good way to remember the difference between the two
meanings and spellings of the word -- the princiPAL is a person -- he's
your pal. Or, in the case of corporate managers, it might be more like,
"Hey listen, PAL..."
Yours in liberty,
<<< Starchild >>>
Derek,
Yeah, I know about that line of thinking. It's an insidious one, because "stakeholder" sounds so much like "shareholder," and can claim to be more "inclusive" and everything. But you're completely right about the bottom line.
San Francisco, incidentally, is very heavily into applying this whole "stakeholder" model to people making decisions in the city, especially in the areas of housing and development.
Yours in liberty,
<<< Starchild >>>
Starchild:
Along these lines, one buzzword to watch out for is the "stakeholder" argument. As in, a private company doesn't exist for the benefit of it's shareholders, but it's raison d'être is to serve it's various "stakeholders" - employees, unions, the 'community', customers, management, etc. In most Western European countries, (UK excepted), it's national law for the employee unions to have multiple seats on the board of directors.
To me, the "stakeholder" argument is just socialism in a slicker package. Laws weakening shareholder rights just serve to undermine capitalism at its core IMO.
-Derek
> Yeah you're right about the Pal vs. ple. When I type quickly, my grammar ends up looking like it was composed by a ten year old, making lots of grammatical mistakes that I'm embarrassed to go back and read!
>
>
>
> > Derek,
> >
> > Yeah, I completely agree. Current problems in corporate governance, in
> > my view, mirror to a large extent the problems in national governance.
> > I think libertarians should take a stronger stand on enhancing
> > shareholder rights and power over corporations, just as we stand for
> > increasing the rights and power of people over governments.
> >
> > Some specific reform ideas, which could be demanded of corporations in
> > exchange for allowing them to keep their government-granted charters
> > awarding privileges such as corporate personhood and limited liability:
> >
> > -require automatic splits into multiple companies when a certain size
> > is reached (measured by either employees exceeding a certain number,
> > volume of sales, or volume of assets)
> > -require annual shareholder votes on the salaries and perks of board
> > members and top management, in the form of multiple-choice responses
> > (e.g. "Should the CEO be paid (a) the federal minimum wage, (b) $25,000
> > a year, (c) $50,000 a year, (d) $75,000 a year, (e) $100,000 a year,
> > (f) $200,000 a year, (g) $500,000 a year, (h) $750,000 a year, (i) $1
> > million a year, etc.)
> > -eliminate the ability of corporate votes to automatically get the
> > proxy votes of shareholders who do not vote in corporate elections
> > -require corporations to email transcripts of annual meetings to
> > shareholders who request them
> > -require shareholder consent for corporate political contributions
> >
> > By the way, I think you mean "princiPAL-agent" not "princiPLE-agent."
> > I was taught a good way to remember the difference between the two
> > meanings and spellings of the word -- the princiPAL is a person -- he's
> > your pal. Or, in the case of corporate managers, it might be more like,
> > "Hey listen, PAL..."
> >
> > Yours in liberty,
> > <<< Starchild >>>
> >
> > > Starchild:
> > >
> > > Basically, when you've got a small number of people (corporate
> > > management) managing a lot of resources that are owned by others,
> > > there is a tendency for those managers to appropriate (through for
> > > instance, A. taking on unprofitable projects if it expands individual
> > > manager's empires, B. Flying corporate jets when , C. staying in the
> > > finest hotels, D. padding expense accounts, etc. etc.). Because the
> > > costs are diffused across the entire shareholder base, it's very
> > > difficult for any individual shareholder to spend time to monitor
> > > management.
> > >
> > > Basically, the principle-agent problem can potentially occur whenever
> > > the people making decisions about how to spend resources are not
> > > themselves the owners of those resources. Just look at Congress for
> > > the best example!
> > >
> > > What I was getting at is that if one is investing their own wealth,
> > > and is able to do so in their own business rather than buying equity
> > > in a publicly traded company, that one can largely avoid such costs.
> > > (the self-employed businessman himself bears the cost of wasteful
> > > spending, so it tends to not occur). This I believe laregly explains
> > > why returns to equity are on average much higher in private
> > > investments than if one just buys shares in a public company. It also
> > > explains to a large degree how private equity firms are able to
> > > generate such huge returns when they take companies private in
> > > leveraged buyouts.
> >
>
> --
> View my blog at http://derekj72.blogspot.com--
View my blog at http://derekj72.blogspot.comSPONSORED LINKS
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