If you are a good Capitalist and also have a fiduciary obligation to your stockholders shouldn’t you just outsource as much as it makes sense financially? What obligations do CEO’s have to this country besides to follow the laws and pay tax?
Out with it…what are you really trying to say?
you are correct - and if a CEO/corporation has the option of polluting and paying fines, if that is more profitable then complying with EPA rules, he should, no he has an obligation to the stockholders to pollute and pay the fines; etc.
Out with it…what are you really trying to say?
If a CEO finds someone to work for less anywhere in the world and it makes financial and business sense, isn’t the CEO crazy not to turn the work over to them? They have no obligation to this country to promote jobs here, correct? It may screw us all eventually but isn’t that just part of world-wide economics to go with whoever can do the job for less? We have to be able to differentiate that what is good for the Company is not always good for the country but that’s business in the 21st century.
except the universe is twisted. if the stockholders actually paid any attention to the stock they own and what it means, many of them would NOT support the polluting.
as it is, most holders of the stock don’t have any real interest or knowledge of the company, so in what sense does the CEO have an obligation to these people?
public companies as they work today are kind of broken.
you are correct - and if a CEO/corporation has the option of polluting and paying fines, if that is more profitable then complying with EPA rules, he should, no he has an obligation to the stockholders to pollute and pay the fines; etc.
You just opened up a big can of worms. Until the penalties exceed the profit you’d be crazy not to pollute. That’s just astute business. Sick, but astute.
If a CEO finds someone to work for less anywhere in the world and it makes financial and business sense, isn’t the CEO crazy not to turn the work over to them?
Yep.
They have no obligation to this country to promote jobs here, correct?
Nope.
It may screw us all eventually but isn’t that just part of world-wide economics to go with whoever can do the job for less? We have to be able to differentiate that what is good for the Company is not always good for the country but that’s business in the 21st century.
Actually it will eventually work for us…after it screws us 
Right now we are in an era of “Global equalization”. Up until 1970 or so it was prohibitively expensive to have many of the jobs that we currently outsource, outsourced. In the last 30-40 years through a mix of communication improvements and transportation improvements the transportation, implementation etc cost has dropped and “Labor” portion of the cost has gone up. In essence any labor market with “Cheap labor” has significant potential for “Easy profits” that simply weren’t there prior to 1970-1980 or so.
The good news is that eventually labor costs in those market will rise and they will rise at a rate that is faster than ours. I can even see ours falling and probably would be falling right now if we had not added on trillions of dollars of debt, in essence mortgaging future increases to hold the line now.
~Matt
If a CEO finds someone to work for less anywhere in the world and it makes financial and business sense, isn’t the CEO crazy not to turn the work over to them? They have no obligation to this country to promote jobs here, correct? It may screw us all eventually but isn’t that just part of world-wide economics to go with whoever can do the job for less? We have to be able to differentiate that what is good for the Company is not always good for the country but that’s business in the 21st century.
And it is f**ked up. We lose tech and manufacturing expertise, which severely hinders our ability to develop and sell new technology in the future. Instead we shift to “industries” like finance… and we see how well that worked out.
The only way to prosperity is via improved efficiency productivity and innovation. If we offload this to other countries, we will continue to suffer an economic decline as we have for the last 40 years.
Capitalism in a nutshell
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There are lots of economic reasons not to pollute. Future liability being one. If your damage to the environment hurts people, you are subject to class action lawsuits, e.g Erin Brockovich. So that’s a risk. Or it may later be determined that you need to clean up your mess, which is probably way more expensive than not polluting in the first place. (unfortunately it’s often hard to hold the original polluters financially responsible, and the taxpayer pick up with the bill) Which leads to another risk - public backlash, which is continually increasing.
What looks good to the beancounters in the short term may not be in the best long-term interest of the company.
As for job outsourcing, I’ve recently read some articles about outsourcing saying that the cost benefits aren’t always what they appear to be, and that outsourced jobs are hurting in the recession just like any other job. Here’s one.
The only way to prosperity is via improved efficiency productivity and innovation. If we offload this to other countries, we will continue to suffer an economic decline as we have for the last 40 years.
And if we don’t offload this to other countries our labor cost would not allow us to be competitive. The only market we would serve would be our own, if that. In short no matter what way you look at it we have a fairly long period of stagnation or decline ahead of us as far as “Life style” is considered…IMHO.
~Matt
“he has an obligation to the stockholders to pollute and pay the fines”
That’s what you have to love about capitalism - just throw morality or concern about the next generations health out the window in favor of keeping the stockholders happy.
and the communist Soviets and Chicoms have done a great job keeping their environments pristine…jeez.
We’ve done magic here in States - in many ways - over the past few decades.
“he has an obligation to the stockholders to pollute and pay the fines”
That’s what you have to love about capitalism - just throw morality or concern about the next generations health out the window in favor of keeping the stockholders happy.
I was waiting for someone to toss out the “M” word. The code of moral conduct that is appropriate for Wall St. is certainly not the one I would subscribe too but that’s a difference in philosophy. Same for war and many other events/jobs.
And if we don’t offload this to other countries our labor cost would not allow us to be competitive. The only market we would serve would be our own, if that.
That is a common argument, but it makes no sense to me. If we managed a good living standard back in the day when we designed and built most of the stuff that we used, then why should we now allow outsourcing and importing from 3rd world countries to our economic detriment?
I’d be cool with allowing “free” trade with countries that have living standards and environmental policies similar to our own, but it seems insane to let everything flow to the world’s “low-bidder”.
Secondary, or “spillover” costs, and the question is who bears those costs. In the US we have a fairly evolved system of keeping those costs with the company, as it should be…of course they get passed on to the consumer. That’s my complaint about allowing the offshoring of manufacturing to countries that have little to none.
On a related topic, if one can see where a CEO might want to do this, should not our govt. have a higher bar? I’m thinking of the recent story of the condom manufacture in AL. that will go overseas. There are other, more real, costs associated with that decision, in the form of unemployment, retraining, welfare, and the like, that our govt. decision makers should factor in.
Sure a CEO is generally hired with a mandate that will include maximising the company’s stock price but there are many things that can effect stock price. Profits = upside pressure but a law suit and possible fines over pollution may reduce profits which = downside pressure and may affect public sentiment = downside pressure (maybe).
If people want to invest in a company that they know pollutes is that the company’s fault or the investors? Anyone own shares in Exxon? If everyone demanded Exxon be more environmentally friendly and the company did not comply then everyone could sell their Exxon shares. Exxon would then be forced to change their practices else they would be taken over by a company that would initiate change. Human nature being the way it is… and that’s why we have laws and regulations.
As an aside - There is a very slowly growing trend in “corporate social responsibility”. There are funds that will only invest in companies that meet certain levels of corporate social responsibility be that in relation to the environment or labor agreements or whatever.