Comment on Would SpaceX continue to be immoral without Musk?

ada@lemmy.blahaj.zone ⁨2⁩ ⁨months⁩ ago

• litchralee@sh.itjust.works ⁨2⁩ ⁨months⁩ ago

  I can agree that corporations are immoral, but no one has ever offered a citation for “legally required to maximize profit”. Many corporations have failed in spectacular fashion and yet where are the lawsuits or criminal prosecutions for leaders that fail this supposed obligation?

  What does exist is the fiduciary duty to be frank with shareholders, and many corporate officers have been sued for lying by omission. I believe that a corporate officer can choose to prioritize something else besides profit/value, so long as they inform the shareholders. In turn, the shareholders can fire the officer and replace them.

  It’s no surprise that most officers won’t stick out their neck for non-financial causes, but let’s be honest if it’s simply self preservation rather than some oft-cited but wrong assertion of the law.

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  • jqubed@lemmy.world ⁨2⁩ ⁨months⁩ ago

    I don’t think there’s any legislated law that states that, but some courts treat it as a basic principle (especially in the state of Delaware). What I’ve usually seen as an early example of this is Dodge v. Ford Motor Co. from 1919. Henry Ford had amassed a surplus of more than $60 million (equally to more than $1.1 billion today) and wanted to reinvest that money in expanding the business with new factories while continuing to raise wages and cut prices on the Model T. As part of this he wanted to cease special shareholder dividends he had been playing out of the surplus. Brothers John Francis Dodge and Horace Elgin Dodge owned 10% of Ford and sued to keep the dividend payments coming.

    The court ruled that Ford had to pay out a dividend of more than $19 million (more than $360 million today) to the minority shareholders. In the ruling, in a non-binding section, the judge wrote:

    A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of men to attain that end and does not extend to a change in the end itself, to the reduction of profits or to the nondistribution of profits among stockholders in order to devote them to other purposes.

    Ford was accused of trying to turn the business into a charity. Behind the scenes, though, one of his main motivations for not wanting to pay the dividend was suspicion that the Dodge brothers were using the dividends from his successful business to setup a rival car company to compete against him, which was exactly what they were doing.

    It seems the interpretation of the ruling is controversial, even as to whether “maximize shareholder value” is actually enforceable or what the judge meant. I continue to think that the more investors a company has, the less the company will be able to focus on what’s best for the company, customers, and employees in the long run.

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  • ada@lemmy.blahaj.zone ⁨2⁩ ⁨months⁩ ago

    It’s a consequence of the eBay vs Newmark ruling. Arguments against it are theoretical only and haven’t been tested, and would be next to impossible to achieve with extant companies that don’t already have advertised social priorities.

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    • litchralee@sh.itjust.works ⁨2⁩ ⁨months⁩ ago

      The case "eBay Domestic Holdings, Inc. v. Craig Newmark, et al." in Delaware’s Court of Chancery does not support the assertion at all. What the two corporate officers did wrong was to dilute a minority stakeholder’s shares for an impermissible reason under Delaware law. One permissible reason to justify such dilution would be if the change was “reasonable to promote shareholder value” (page 49). The two officers could not prove that their actions were reasonable, nor could they prove any other permissible reason, so they lost the case.

      At bottom, the major question in that case was whether the corporate officers can conspire with the majority stakeholders to harm a minority stakeholder. It was about two corporate officers that were acting out of self preservation (page 59):

      Jim and Craig simply disliked the possibility that he Grim Reaper someday will catch up with them and that a company like eBay might, in the future, purchase a controlling interest in craigslist.

      The minor question (whether shareholder value would be promoted) could have been answered in the affirmative and those two would still have lost the case, because Delaware law also doesn’t allow harming a stakeholder, violating their fiduciary duty to eBay in this case (page 61):

      If Jim and Craig were the only stockholders affected by their decisions, then there would be no one to object. eBay, however, holds a significant stake in craigslist, and Jim and Craig’s actions affect others besides themselves.

      The court only looked at the minor question to appeal-proof the ruling, because the two corporate officers had tried to match their argument to an earlier DE Supreme Court ruling.

      For the purposes of my point in this discussion, the distinction doesn’t matter. Whether the pressure to maximise profit over morality is a legal requirement or self preservation, the end result is inherent immorality

      I disagree. Drawing the correct conclusion from the wrong cause is pure sophistry (ie “arbitrary, inauthentic, or deceptive styles of reasoning” -Wikipedia). It is intellectually dishonest to state a conclusion but then decline to support your basis, dismiss your own basis as irrelevant, and then circularly assert that the conclusion stands on its own.

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      • ada@lemmy.blahaj.zone ⁨2⁩ ⁨months⁩ ago

        Companies are inherently immoral. Whether the pressure that creates that reality is from this particular case or whether it comes from self preservatio is genuinely irrelevant to my point.

        Taking away Musk won’t make a company moral, because all publicly traded companies are immoral.

        I don’t know why this particular case gets people ignoring the topic at hand to argue about it whenever it’s mentioned…

        In providing an explanation for the immorality of companies, which was the context, 1

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• Zwuzelmaus@feddit.org ⁨2⁩ ⁨months⁩ ago

  Which law is that?

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  • ada@lemmy.blahaj.zone ⁨2⁩ ⁨months⁩ ago

    I answered elsewhere in the conversation chain.

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    • Zwuzelmaus@feddit.org ⁨2⁩ ⁨months⁩ ago

      Can you tell the name of that law again?

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      • ada@lemmy.blahaj.zone ⁨2⁩ ⁨months⁩ ago

        I answered it elsewhere. If you want real discussion, respond to that.

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• ccunning@lemmy.world ⁨2⁩ ⁨months⁩ ago

  If you believe all companies are immoral then do you also believe boycotts are pointless? If I have to pay for internet, I might as well pay for Starlink if it best fits my needs?

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  • ada@lemmy.blahaj.zone ⁨2⁩ ⁨months⁩ ago

    Boycotts aren’t pointless, because they force companies to change by attacking their bottom line/share value. It doesn’t make them moral, it just hits them where it hurts.

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• A_norny_mousse@piefed.zip ⁨2⁩ ⁨months⁩ ago

  I don’t like the way @Zwuselmaus attacks a weak point in your comment, but a weak point it is. It’s not actually law (at least concerning USA and UK), yet in principle you are correct, at least in my opinion:

  Can a Publicly Listed Company Be Sued for Not Maximizing Profit?

  Publicly listed companies are subject to more stringent regulations than private companies due to the fact that they are owned by shareholders who have invested in the company expecting financial returns. In this context, the legal obligations of maximizing profit are more clearly defined, though not as absolute as one might think.

  A Quick Search (tm) reveals many similar answers.

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  • ada@lemmy.blahaj.zone ⁨2⁩ ⁨months⁩ ago

    The quote you gave suggests that companies are legally expected to maximise profit, but with caveats/nuance. It also highlights shareholder pressure towards the same goal.

    If the claim is that fear of legal action doesn’t technically count as 'legally required ", then sure, I used the wrong word. But as I said elsewhere, it doesn’t change my point.

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    • A_norny_mousse@piefed.zip ⁨2⁩ ⁨months⁩ ago

      But as I said elsewhere, it doesn’t change my point.

      Agreed.

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