Originally Posted by dysamoria
Good. Public ownership is BS. It's not public. It's just wider distributed private wealthy ownership. Public ownership leaves companies at the mercy of people who know and care nothing about product and customers. It's one of the major failures of capitalism.
I agree, I think there should be a link between the investor and the company directly because otherwise it just gets used as a means for wealthy people to hoard more wealth. There was an example of Palm when it launched the Pre and a venture capitalist invested $325m:
Then went around making ridiculous assertions like:
"You know the beautiful thing: June 29, 2009, is the two-year anniversary of the first shipment of the iPhone. Not one of those people will still be using an iPhone a month later."
The motivation had nothing to do with the Pre itself, it was just to raise the value of the investment. As they say "the first rule of business: protect your investment". You see that on this forum sometimes where people defend or criticize Apple contrary to facts and then complain about the stock price in other threads and you can see there's an ulterior motive. It's not about finding out facts but protecting the investment.
investor looking to buy cheap: "Tim Cook shoots puppies"
investor looking to profit: "It's widely known that puppies have suicidal tendencies and probably jumped into the line of fire"
The motive creates a lot of false information. The company itself does business regardless and the outcome is that the bank balance of the wealthy fluctuates one way or another:
If they'd sold the previous year, they'd have made $1.5b in the space of probably just over 2 years and you can bet Bono wouldn't be sending it to the starving children.
It doesn't always work out of course - the guy behind Mcafee antivirus apparently lost most of his $100m fortune:
but it still highlights the decoupling of wealth and value. Money and digital wealth are by their own merit worthless. They are just assigned value and attached to entities that have value like companies which produce products and innovation. By allowing these inherently worthless assets to be exchanged for assets that have tangible value, it creates a very uncertain situation because we end up with a fictional monetary system that has no real meaning in the face of our resources. What exactly does a trillion dollars look like? It doesn't mean anything.
The worst thing I think is that it separates personal wealth from any personal responsibility to create value. Someone can work at a minimum wage job actually providing a service and never make enough to have a comfortable lifestyle but if they put aside some money and invest it the right way, they can become rich quite quickly from the work of other people e.g turning $20k into $20m in 3 years:
The wealth isn't tied to the value contribution. The value is created by the workers. Although the investment can obviously pay the workers, there's a very distinct separation in the ratios of work to reward between different wealth classes, most likely due to the scale of the global economy now where you can film your kid biting another kid's finger, get hundreds of millions of clicks and make over $150k:
These reward ratios give investors a sense of entitlement that they start demanding how the company should be run and start spreading lies to adjust the stock.
But all that is just describing the problem. There's no real fix because companies will always need investment of some kind so they'd just have to regulate the investments and returns but then they'd still end up favouring one party over another. I think given that the success of a company depends on the workers, the customers and the investors that the reward from the created value shouldn't go to just one of those parties but for the most part where investment is not needed, companies should stay private. I think Apple would be better off private at this point too. Investors are just trying to cash in and are being destructive to the company by spreading lies about the company and the market in order to make the fluctuations give them the best return.
This behaviour isn't exclusive to investors, it's just the way people are. In any walk of life people try to maximize the return on investment. If you exercise, your return is a healthy body; if you study, your return is understanding; if you work, your return is a salary (hopefully increasing). The difference seems to be that in most walks of life there are inherent constraints on your personal investment. You only have so much time to study and work, so much energy to exercise etc. Once you go digital, the equivalent contraints are much less and I think that's how our financial systems have managed to get so out of control. There's not enough practical regulation that constrains investment to resources.
Perhaps it should be mandatory that a company goes private once they reach a certain financial status. After all, why would a company that makes many billions of dollars in profits need investment? If they start to fail, the company can choose to get investment again. This forces investments in smaller businesses and limits the return to more closely match the contribution of the investor. If the customers and workers could be rewarded more too, even better.