Shareholders Care About More Than Just Profits

[@vandertuber]

Friedman *DID NOT* argue that a company should just pollute and then have someone else use dividend payments to clean up the mess. Friedman argued that pollution causes third party extrinsic costs, and the polluter should directly pay for or eliminate those costs. Total misrepresentation of Friedman's viewpoint.

[@vandertuber]

Vik S, correct.

[@Ironcabbit]

Even though pollution causes third party extrinsic costs and the polluter should directly pay for or eliminate those costs, with severely limited government in Friedtopia whom is going to force the company to clean up the spill if they refuse, or prevent the company from spinning off the cost onto the taxpayer?

[@westg463]

@@Ironcabbit well if we didn’t fund corporate welfare and public welfare we would have enough money to fund police and court institutions to enforce those laws

[@sunesnigel]

@@westg463 and they would probably be exposed to far less lobbying then today since it's profit first. 😆

[@williemherbert1456]

@@westg463 This argument broke down when you consider globalism on economy prevent such measure by collective voluntary means from each individual to be useless, sure the local could fight back, but how long they could endure the battle? Most of the time, the local are ended up being thrown away and their home's environment at the end being freely polluted by these big corporates to outproduce their record of productivity over the goods they are selling to the global market that would be purchased by so many people in the other side that are ignorant to what happen to these locals and their homeland. This is why there's government that wield immense but not infinite power of sovereignty, it's just like huge trade union of nation that purposefully made to be the social life risk divider and sustenance of oblige charity to help each other in need at the difficult time and condition while they will endure the high loss to do all of those, filling the blank gap of basic need. And at this case, being responsible to culminate power leverage to make strike deal to the impotent larger and stronger entities than single polity of community and individuals when they're trying to resolve the issue over strategic aspect towards these strongman, either by wealth or armed men. Sure, they would be that same entities of strongman itself as mean to be able to challenge the other informal non-state strongman equally, but the main different is unlike in the past, we have more control of owning such entities to begin with, we're essentially one of the shareholder of the state's power of governance, in theory.

[@richardyoung8279]

As shareholders there are a hoard of things to be considered + profit. Reputation is a big chunk of being successful.

[@johnmartin4641]

I’d rather be rich and have a reputation for being an asshole than be poor and have a reputation of a nice guy because having a reputation as a nice guy is not going to help me provide for my family and allow me to retire so I don’t have to eat cat food. I made good investments and focused on profit maximization and I am now retired and eat at the best restaurants in town. Much better than cat food.

[@atcqmm5916]

Yeah for sure. Nestle sure cared about their reputation in willingly using child labor to maximize profits. Absolutely.

[@NazriB]

Lies again? Young Boss Yeti Bear

[@NothingXemnas]

@@atcqmm5916 And which reputation is barely even known! Hell, I DIDN'T know about their absurdities until way older! Reputation comes from having your mistakes being broadcast/spread, but if no one does it (or does enough of it), you can get away with it completely unscathed... So much for "reputation", eh?

[@hridaytulsianj1832]

The way I think of it, both the examples he made were completely inaccurate, both are examples have a question of basic morality, of making money despite harming others, charity is very different

[@mikevanover1721]

Never heard someone twist up Friedman's words that bad. I have never heard him say we should pollute a lake and then clean it up.

[@nickh2541]

Putting words in his mouth absolutely disgraceful. Can’t believe they even gave him tenure let alone a Nobel or Pulitzer or whatever it was he got

[@trax72]

He doesn't twist up Friedman's words, he's just giving examples and saying that this is a possible result of applying Friedman's argument. On this specific issue though, Friedman's proposal was to impose a tax on pollution to incentivize companies and consumers to minimize the problem.

[@mikevanover1721]

@@trax72 in a Freedman market the company would be sued by anyone using the lake. as it is now the company can not be sued because they have made a deal with government to pollute an amount within guide lines. government made it ok to a certain amount.

[@MichaelJayValueInvesting]

If a decision makes sense from a business standpoint, then as a shareholder I am all for that. But I am not supportive of CEOs and other executives using companies as their own outlet for their political beliefs (for either side). Buffett said it well, "I do not believe in imposing my political opinions on the activities of our businesses."

[@carecup809]

@blah blah You are the one that seems to not have watch the video.

[@jordanthomson8675]

I agree as a shareholder before making any decisions I look at everything from financials to how to ceos are presenting themselves

[@jaredfontaine2002]

Friedman would state that the externalized costs would be settled in a court of law. This is a perversion of Friedman.

[@Ironcabbit]

How does one get justice in Friedtopia if one cannot afford the court system?

[@andreipopescu5342]

No he wouldn't. He would state that it's society's job to internalise those costs.

[@sunesnigel]

I got a feeling Friedman would like Dupont and their little incident with CFC's.

[@jeremiahlawrence9240]

Entreprises are supposed to increase the economic pie. Making more money is hence a foremost. His point of view is part of the philosophical values of the company and the type of shareholders it will attract. Saying that Milton Freeman is wrong is a clickbait.

[@karanraajsingh7330]

On the lake example Milton Friedman's argument would have been to impose some sort of pollution tax on businesses so they naturally would want to not pollute to save costs.

[@jeroenvdbeken126]

Would that really be milton's answer? Sounds more like pigou to me

[@atcqmm5916]

Friedman would have argued for government “interference” aka regulation?

[@davidtumm]

That's not the Friedman argument applied to these cases. He misrepresented his position. Pathetic. Of course Milton Friedman would support polling the shareholders to see if they want to take a course of action such as not polluting the lake.

[@carecup809]

@blah blah M. Friedman has won a Nobel Prize too. What's your point? Also making an argument from authority.

[@carecup809]

@blah blah M. Friedman has won a Nobel Prize too. What's your point? Also making an argument from authority.

[@nickh2541]

I’ve never heard such a load of twaddle. Friedman never encouraged corporations or anyone else to break the law. He did advocate for the basic sets of laws this twaddler is talking about. Argumentative and a non starter. This chap should re read his o level economics course books

[@andreipopescu5342]

Preach!

[@speedy1773]

Whether to polute a lake in order to make a profit should not even be a question. Since some companies lack a moral compass and are willing to do almost anything to make profit, we need regulations imposed on businesses. Otherwise the society will pay the price in a different form, for the unjust activities done by corporations... Also the sanctions for pollution should be much higher. Companies should not test the courts in a lawsuit leveraging that it is still profitable for them to cause damage and pay repercussions or even get away with it thanks to a good lawyer or lobist backing them up. It's disgusting what people are capable of doing for a piece of shinny paper...

[@jackkraken3888]

My problem with CSR is that there is often a hidden element to it. And it's usually more than just branding or getting a better image in the eyes of the customers. Sometimes the organisations they use to carry out the CSR maybe involved with them and they could be doing some sort of money laundering for example..

[@esmolol4091]

It's true shareholders don't just care about profit. They only care about INCREASING profit each year.

[@MrStephenRGilman]

I think he's comparing apples to oranges. The debate over a corporation taking a position on a political issue is a whole different discussion than the debate about the efficiency of giving corporate funds to charity.

[@vkrgfan]

Politicians are in bed with Corporations it’s not a separate issue, they are very close. building strong social programs are also stimulate wellbeing of society and economy, as you probably noticed the paper money worth nothing without contribution and satisfaction of workers. Any corporation can be dismantled by the power of workers if they show the middle finger to their boss.

[@darkzeroprojects4245]

​@@vkrgfan That's why they hire foreigners and ai.

[@danielritsema7373]

Just came across this video, thus the comment on a 5 year old video. However, I felt the need to clarify this guy's gross misrepresentation of Friedman's argument. Friedman argued that a business and/or CEO should only act in the best interest of their shareholders. The business should not do things like donating to charity or siding with a particular political party without being directed to do so by the shareholders. The shareholders, on the other hand, can do what they want with the business. If they want the business to donate to charity, then the business should. If they don't want their business to sell guns, then the business should not sell guns. From what he said, it sounds like he earned his nobel prize by misrepresenting Friedman, then repeating what Friedman already said. This just goes to show that the Nobel Prize Committee just doesn't do their homework when it comes to deciding who should be awarded the prize.

[@wgmyler]

His Dicks Sporting Goods example actually cuts against his argument. When shareholders invested in Dicks, was the intent to secure a return on investment out to engage in anti-gun activism? And when Dicks stops selling guns, in the absence of legislation impacting all retailers / gun dealers, Dicks not selling guns simply drives that portion of their business to competitors like Academy Sports that continue to engage in the lawful sale of firearms. This results in no reduction in the number of guns, only cutting off and disenfranchising a subset of customers, not to mention the shareholders that don't agree with or wish to support anti-gun activism. Freidman's argument is more compelling.

[@AriVovp]

Next time i will record my board meeting and share with you sir

[@MrSupernova111]

Milton wasn't wrong on this one. Companies shouldn't be left to their own devices, especially large companies, when it comes to their impact on society and the environment. This is why we have government. Companies have proven time and again that they can't be trusted.

[@tychoordo3753]

"Companies have proven time and again that they can't be trusted." As have Governments. Both are made up of imperfect humans. The difference between them is that one of the two can legally use violence, while the other one can't. Government should use violence only to stop others from using violence, it should not use violence to reach it's own goals, however noble they may sound, for that inevitable leads to tyranny.

[@MrSupernova111]

@@tychoordo3753 . You're missing the point. You still rule of law and for that you need a government.

[@romaromes]

But what if the shareholders who want gun control are the vast minority?

[@bautistalorente2323]

Amor Royer same , he is using things that Friedman never say to "prove" his point

[@racheljohnhyatt4028]

What about workers even though dividends don’t decrease wages but with a buyback they decrease wages

[@MrAykut23]

All shareholders are of diff character though & some ppl only primarily care about money. I think its fine for a company to use the money it makes in whichever way it prefers & if pro-social expenditure isnt favorable for you, then you can go invest your lousy money somewhere else

[@carecup809]

There's no such thing as "a company use the money it makes in whichever way it sees fit". There's either shareholders using their money how they see fit or board of directors or executive officers, people. What's being argued is who should engage in acts of charity.

[@carecup809]

There's no such thing as "a company use the money it makes in whichever way it sees fit". There's either shareholders using their money how they see fit or board of directors or executive officers, people. What's being argued is who should engage in acts of charity.

[@wweweqws]

If you know that there's a group in the country that is so ignorant it will boycott you for anything that seems right-wing it is in your own interest and also the shareholders interest to cut off any business that might cause you a boycott and hurt your business, goodwill and brand even more. The company isn't listening to the public because it cares about your opinion, it cares about keeping you as customer and making money. Why else do businesses mine so much data ? Its merely a risk analysis. Everyone knows in business school you only take CSR into account because it's great pr, great marketing and an extra value which lead up to an increase in sales or consistent sales.

[@thenobodysoldierbackup6473]

Milton friedman is correct. People should decide, not companies.

[@ReddyHD]

The worst joke I've heard since Trump was elected as POTUS.

[@Mike01029]

🙄

[@marcusdavenport9847]

This guy is wrong... that's why Milton is Milton and he's... If 51% of shareholders want to destroy the company like telling a gun shop to not sell guns and they were victim to a hostile take over in this guys dream world this is great. In reality, in a free society, the company is providing a service and their goal should be to provide the best service. If you don't like the service, create a company telling them not to, buy the entire company not just controlling shares, convince people, don't use money via the socialist lite system that we have to force your will on others.

[@sheldz501]

He seems unprepared for this question, doesn't represent Friedman's argument very well here. Perhaps the paper is a better critique.

[@johnreilly5600]

This guy is just jabbering on about nothing. Friedman would have killed what this guy thinks is a legitimate & logical POV and answer to what Friedman’s point about letting the shareholder collect dividends and make their own decisions. Hell i could crush his argument in two minutes flat myself.

[@jayvhoncalma3458]

Imo shareholders are the bane of companies *I'm looking at you McDonald shareholders*

[@__-qf9fm]

Friedman vs. stakeholder model.

[@markchmiel3794]

ROI is usually an entity's #1 objective. If their customers increase/decrease revenue/ROI because of social advocate concerns (gun safety, environment) then the entity must address. And/or if shareholders have other #1 objectives or are social advocates, again the entity must address. However, Friedman's thinking was not incorrect---return on capital remains #1--but, an entity today has more influences to consider what impacts their ROI. To say he was wrong, shows a lack of intellectual bandwidth, especially for a "Harvard man".

[@cakebabyman5090]

This guy is spouting crap. If shareholders don't want guns then they don't invest in companies that make / sell them and polluting a lake is illegal so I'm not sure Friedman was promoting crime. Talk about ignoring facts to support your argument.

[@robbadlands9281]

youtube is a random record of my spontaneous thoughts. i have a strong negative pathos towards economists. and even the hard work of those economists, or any reasonable essay by an economist really does not sway that. milton friedman won a nobel for being the opposite of what that represents. if you think about the suffering in society obessively enough, you start to see some closer-to-root events. the magnitude of harm caused by milton's prostelyzation of the trickle-down is immense. i'd liken it to ronald's war on drugs. tremendous harm caused to millions of people for decades. i hope, one day, economics as a discipline will make it common ciriculum to use milton as an example of how economists must think about ethics. that, in fact, as much physics envy as they have, they are not practicing a science. that the current state is grossly unprepared to make real-world predictions with the confidence of milton. and i hope, one day, that will "trickle-down" to the masses, who will rmbr milton will shame.

[@robbadlands9281]

dont retreat to "o but in the end, i mean, this is wat he meant". he saw his ideas play out. economists watch them play out today. yet, these cowards say nothing..

[@hevnervals]

CSR is first and foremost marketing. It's all about the brand. This is pure ideology

[@c.b.7153]

It’s either he fried or not

[@ScubaDaveGSXR]

Holy shit this guy hot mess. The fact that Nobel gave him a prize... is quite suspect.

[@CPNT-ic8gk]

This guy is very wrong in his basic assumptions of how the free market operates. The free market is a market wherein if you do not support a company's actions in providing goods and services, you should therefore not invest and become a shareholder in that company. The man in his pollution example assumes that pro-environmental people would invest in a groundwater polluting company. In free market systems, you are free NOT to invest in these companies and therefore not get the dividend back as a result of company profit. Why would you invest in a company that pollutes when it goes against your values? You can see how he has used wrong examples and analogies.

[@DeezNuts-cz9gc]

Dude, you're one of those people that like to hear themselves talk, uh? Professor Hart is a nobel prize winning economist (Like Friedman) and is infinitely smarter than you. He didn't just come up with this on the spot. This man has had 50 years to dissect Friedman's economic philosophy. You on the other hand have watched a handful of Friedman, Sowell videos (maybe read a few book chapters) and you've convinced yourself that you know more than he does 😂 Milton Friedman was wrong. Deal with it.

[@venture3800]

people who care about social issues and can do something about it volunteer their time and money because they want to. some billionaires are literally scrooge.... these guys are definitely not the kind of people we would all prefer to be in positions of any kind of power... but then you have buffet, gates, carnegie, hell even the Koch bros, who do care prosocially about issues, and dont just want to trash the world they live in. Henry Ford.

[@LeoLeo-yi5yx]

First

[@clashroyaletheultimate]

And this guy wins a nobel price .... pure bullshit if a shareholder doesnt support what the company is doing he would pull out of the investment , that would be the right way

[@lrodger2486]

Absolute and utter rubbish .... total and utter misinterpretation of Milton.

[@8523wsxc]

nothing like a good laugh about dumb lies 😂