Samir’s Selection 01/20/2017 (p.m.)

  • tags: corporateinterests corporategovernance shareholderinterests corporation capitalism

    • Wiser executives know that shareholder value comes in shades of grey.
    • Start at the far right of the spectrum, with the corporate fundamentalists. Boosting their profits and share price—immediately—is their goal. Firms built on these objectives rarely do well for long.
    • Shift a little to the left and there are the corporate toilers.
    • Corporate oracles, the third group, want to maximise profits within the law, but with a twist. They think the law will evolve with public opinion and so they voluntarily do things today that they may be required to do tomorrow. Most energy firms have become greener to anticipate changing public expectations on pollution and safety.
    • Corporate kings are in a luxurious position. They are so successful at creating shareholder value that they have a licence to ignore it periodically. In July Jamie Dimon, the boss of JPMorgan Chase, now the world’s most valuable bank, gave its lowest-paid staff a pay rise, “because it enables more people to begin to share in the rewards of economic growth”.
    • Outside Western boardrooms, the most common sect is the fifth, corporate socialists. These firms are controlled by the state, families or dominant managers. They think that shareholder value is not as important as social objectives such as employment, high pay or cheap products. But they recognise that institutional investors have some legal powers. So profits are set according to an informal quota system—outside shareholders should get the minimum required to avoid a revolt, but no more.
    • On the far left are the corporate apostates. They are organised in a corporate form but don’t care about shareholders at all. Usually this is a result of political dysfunction.
    • In the contest between shareholders and the people, companies and bosses are caught in the middle. But there are no final victories. Just constant, pragmatic accommodations.
  • tags: nationalism populism demagogue democracy legitimacy disillusionment publicopinion freedom propaganda disinformation MartinWolf tribal identity group racism

    • The capacity to create imagined communities is humanity’s strength and among its biggest weaknesses. Imagined community defines what people share. But what binds them together divides them from others. Today, as in the past, leaders foment aggrieved nationalism to justify despotism and even war.

      For much of human history, war was seen as the natural relationship between societies. Victory brought plunder, power and prestige, at least for elites. Mobilising resources for war was a core role of states. Justifying such mobilisation was a core role of culture.

      Another way exists to achieve prosperity: commerce. The balance between commerce and plunder is complex. Both require strong institutions supported by effective cultures. But war requires armies, underpinned by loyalty, while commerce requires security, underpinned by justice.

      Perhaps the greatest contribution of economics is the idea that societies will gain more from seeking to trade with one another than trying to conquer one another. Moreover, the richer their partners, the greater the opportunities for mutually enriching commerce. The wise relationship between states, therefore, is one of co-operation, not war, and trade, not isolation. This brilliant idea happens to be correct. But it is also counter-intuitive, even disturbing. It means that one might gain more from foreigners than fellow citizens. It erodes a sense of belonging to the imagined tribe. For many, this erosion of tribal loyalty is threatening. It becomes more threatening if foreigners are allowed to immigrate freely. Who, people ask, are these strangers, who reside in our home and share in its benefits?

    • In a brilliant essay, the Polish analyst, Slawomir Sierakowski, lays out how this is working in his country. The would-be despot condemns personal freedom as chaos, constraining institutions as illegitimate, independent sources of information as corrupt, foreigners as duplicitous and immigrants as threatening. The cultivation of paranoia justifies every step. The would-be despot needs enemies. They are always easily found. All the while, would-be despots stress that the majority is on their side (even if it is not).
    • Yuval Harari, the Israeli thinker, has recently argued that: “For all the disillusionment with liberal democracy and free markets, nobody has yet formulated an alternative vision that enjoys any kind of global appeal.” This is true, yet irrelevant. Authoritarian nationalism potentially has such appeal. It has moved into the core of the world system. That changes everything.

Posted from Diigo. The rest of my favorite links are here.


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