Another potential flaw in current economic theory... (fwd)

[Jim Burnes]

On Tue, 6 Oct 1998, Jim Choate wrote:

> Forwarded message:
> 
> > Date: Tue, 6 Oct 1998 08:51:21 -0600 (MDT)
> > From: Jim Burnes <jvb at ssds.com>
> > Subject: Re: Another potential flaw in current economic theory...
> 
> > > It occurs to me that there is another potential flaw in current economic
> > > theory and business practice.
> > > 
> > > Currently (ala Friedmann) the parties that reap the benefit of a succesful
> > > business are the shareholders, this is currently seen to exclude the
> > > employees in many cases/companies.
> > > 
> > 
> > Actually not.  There are quite a few business that have employees as
> > shareholders.  Most shares of companies are reasonably priced and
> > easy enough to get a hold of.  Selling them on the other hand is
> > not so straightforward.
> 
> This doesn't effect the premise under standard economics that the
> responsibility of managers is to the shareholders *exclusively* in regards
> profits and business operations.
>

Hmmm.  You imply that the employees and employers interests are not
the same.  The whole idea is to make a profit.  Out of those
profits the employees are payed the salaries they use to keep
their families in beer and bedclothes.  What other sort of interest
do you suggest the company should have?  They already get significant
benefits in insurance etc.  Many employees already have the option
to buy shares.  Certainly this is the case in publically traded
companies -- many publically traded companies offer these same
shares at a discount to employees.  

Any other sort of interest would simply induce a market distortion
in the cost of investment capital.

The market detects socialism as damage and routes around it.

The entire market would never do this voluntarily, so by definition any
distortion would have to be induced in a centrally managed economy.

By definition socialism.

But look at the bright side.  We already have people who think
they can centrally manage the economy.  They've certainly made
inroads.

jim