posted on Feb, 18 2009 @ 07:17 AM
Public companies are the root of all our problems.
The trouble with public companies is the lack of concern for along term outlook that considers the well-being of the company itself, and the
Think of a public company like this:
The public company is akin to a large bag of blood. Attached to this bag of blood are millions of vampire bats (share holders). They live for the
blood (dividends/share price increase). Controlling the flow of blood to the bag is the chief vampire bat (CEO).
The only reason the bats have attached to the bag is so they can get fat from the blood provided by the chief vampire bat. If they get fat enough,
they give up a portion of their serve to reward the chief.
(Enough of the analogy - you get what I mean).
CEO's are required to increase the value of the shares, and to provide dividends to the share holders. Create and maintain GROWTH.
Simple as that. How they do this is not rocket science.
They have a limited suite of techniques to do this:
1. Sell more widgets (maintain/increase sales growth)
2. Create efficiencies in the company to increase profit margins, and/or
3. Merge with or acquire another similar company.
Trouble is, the company is limited my the market's capacity to increase the growth of widget sales, so there's only so much the CEO can do in
order to further penetrate the market. The CEO can only sack so many people, or re-employ so many people on lower wage contracts, before this idea
runs out of steam. Finally, there are only limited amount of businesses are merge-worthy or acquisition-worthy.
Yet, they carry on as if there is some kind of mystical brilliance in their methods, but as far as I can see, they do 1, 2 or 3.
So, what we have is unsustainable. When the last employee is replaced by machines; when widget sales reach saturation (due to unsustainable growth);
and when the last company has been acquired, what happens next?
Has nobody thought this through? It is a giant game of musical chairs, and when the music stops; nobody will have a seat.
Privately owned businesses are fundamentally different. There is no reason why a private business can't just float along with a 15% nett profit from
the widget-selling (adjusted for inflation, of course) from here to eternity. The owner gets his/her profit. The employees have a secure job. And
the customer gets a well-made (remember that??) widget. If times get tough in the widget business, employees can take a pay-cut or work less hours to
ride it through. When widgets are running off the shelves, the employees can get bonuses to squirrel away for the hard times. Unlike the public
company, the private company is not based upon unsustainable growth. This means that there will always be a market for their widgets.
I don't know about you, but I am sick and tired of being presented with cheap and nasty products that I need to replace every year. I want to buy
something of superior quality that lasts. And YES, I am prepared to spend more.
People should realise that we are just in an era that lionises the share market, and it will come to an end; just like all the previous
eras in human history.
In a few hundred years time, I believe that historians will view this era with disdain.
Solution? De-list! Dump the share holders, concentrate on quality and sustainability. There will be more jobs that are secure and long-term.
Yes, we will sell less, and customers will buy less, but what is made will last longer. Less resources will be used. The only down-side that I see
are a few less private jets and mansions on the French Riviera. I can live with that.
Well, there's my brain-dump. This isn't a complete thesis. Apologies if this has been done, but I searched and did-not-find within ATS.
I look forward to questions/queries/problems/points!