Originally published at: https://boingboing.net/2018/02/20/asset-strippers-beware.html
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"servants of industry not the masters of us all."
Can he just be President of the UK and the USA?
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Truly the stupidest of all policies. Who the heck is he to tell my pension fund who to sell its shares to? Hostile takeovers rid shareholders of inept and greedy managers.
Don’t spend another second thinking about the idea - instead read this about how Chavez foobarred Venezuala: http://www.nybooks.com/articles/2018/03/08/venezuela-hell-fiesta/
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We have an economy, we allow corporations to exist, to make life better for everybody. Not to serve corporations, or their majority owners. Corporate “rights” have to be put under closer control, and the gutting of companies for profit of a few and the harm of many should be prevented.
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Meanwhile, the present government show their commitment to proper regulation of financialised hypercapitalism.
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…please stop saying that.
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Apparently he’s someone who understands that stakeholder value is as important if not more important than shareholder value. Some pension funds (e.g. large unions) are divesting themselves of certain investments when it becomes apparent that they end up being bad for everyone, including their shareholders who might benefit financially.
If a takeover is likely to involve massive job losses or higher prices for consumers or other large-scale negative externalities then it is the business of a nation-state’s government to propose a stricter “public interest test.” And guess what: such tests already exist in most Western countries.
Only as a secondary objective at best for vulture capital firms, which are usually more interested in asset-stripping, and for large incumbents like Kraft, which are looking to eliminate competitors and move as close as possible toward a monopoly position in the market. If you’re looking for an acquirer whose first priority will be eliminating bad management, you’re thinking of value investors who take a longer-term view toward building shareholder value.
If you think this proposal by Corbyn is remotely comparable to what Chavez and his successors have enacted (putting aside the wildly different context in which they occured) you must have a very black-and-white view of economics.
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But this won’t benefit anyone except managers.
.There is a huge cost to stretching any public interest test. No political decision on corporate governance is cost free. This would have huge consequences in terms of discouraging investment into the UK. Would you buy shares in something if you thought a politician might suddenly turn round and forbid you from selling?
Yes I do. He plans to nationalise industries where he picks the price and forces government bonds on the unwilling seller - bonds which will crash as the huge sucking sound of money fleeing the UK is heard. The pound will tank.inflation will kick in. Investment will be impossible to attract because investors won’t trust the rule of law. Then he’ll find that tax collection is going down not up and turn to ever more confiscatory policies. He knows it - and wants it to happen because a poor but equal society is to him better than a rich but unequal one.
Read the link I sent. It is exactly what Corbyn is in favour of -he is the ultimate Chavez fan boy. He was still praising Venezuela in 2015 ffs.
I would, because I would never do business in a way that would come up against such restrictions. It the net result would be to take people who would invest in people centric businesses, and then treat them like assets without lives attached to them, and move those people to other types of investment platforms where they could not hurt anybody but themselves, well that would be fine. There are plenty of people without cartoon dollar signs in their eyes who would be glad to run companies in a beneficent way.
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Based on Cory’s article? Whatever else Corbyn might have planned (which is different again from what he might be able to implement in the context of a parliamentary system where there’s still a lot of opposition in his own party caucus), this proposed test does not involve nationalising industries or forcing government bonds on the unwilling, nor does it come close to making a slippery slope argument anything more than a fallacious one.
I’m well aware of what’s gone on in Venezuela without having to read another recap. Corbyn’s praise for the regime is one of many reasons I don’t like him as an individual politician and why I’m glad there will be systemic constraints placed on him even as he gives Labour the push it needs away from the neoliberal consensus.
In the context of this proposed test, sure, if I believed in the business (e.g. to the point where I didn’t want to see it asset-stripped). LBO outfits aren’t targetting long-term investors when they want to buy, they’re buying enough shares from speculators and shareholders who have a (quite possibly valide) grudge against management and/or the board to gain control.
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I think Corbyn said he wanted to make it possible for workers to buy out companies before foreign investors via some kind of government loan at low interest. I think the idea is sound. What does a foreign company or investor know about UK economies and interests? It’s a similar situation Beechcraft was under in the 90s with Raytheon before it sold them to Goldman-Sachs which finally sold it to Textron. Raytheon execs didn’t know squat about commercial aircraft and Goldman-Sachs was looking to just sell the company either piecemeal or as a complete package (which it did thankfully). It’s odd how folks think publicly traded companies are magically more able to serve the common interest than cooperatives.
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Wouldn’t you- well done, take a biscuit from the jar
I don’t think ethical investing has any overlap with companies not being the target of hostile bids. You can be as ethical a company as you like but if you don’t run it properly, it fails. And when it starts to fail someone arrives and says ‘break it up. let other people run it and take the money I’m offering and invest in another ethical business.’ Without that check and balance we get British Leyland, British Steel, British Rail, British Coal. They were all rubbish and we kept pumping money in to support jobs even as Japanese car makers and Korean steel makers ate our lunch and laughed.
Same here. It’s obviously not nationalisation, though.
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I never talked about ethical investing. Thats the only corner of the table I did not make reference to. I spoke about ethical business practices, unethical business practices, and unethical investing. I’m saying the latter two must be regulated.
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They are and should be. Better than we do now - no arguement there at all.
But hostile takeovers are not unethical. They just aren’t in the interest of managers. Sometimes it’s good for employees sometimes bad. But as a strategy it is neutral. It’s about control of day,to day operations being removed from people who are not delivering results. If they were delivering results, their shares would be highly rated and they’d be making the bids with their attractive shares.
No-one is claiming they are. As the headline indicates, this is about hostile takeovers for the purpose of asset stripping. There’s a reason that vulture capitalists who do that are as despised as monopolists are.
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I never said hostile take-overs were unethical. But stripping assets, and ruining otherwise well functioning companies to maximize profit for new owners at the expense of employees and local economies - that is unethical.
It should be taxed to the degree that would make it unprofitable to undertake, essentially removing the practice as an option. Simply - if you want to gut the company the profit goes to the community, not to you.
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Right. Its not about interventionist government - thats the story that these vultures want to tell, and everybody is so brainwashed that even the victims of this describe it as over regulation by government.
This is about limiting the options of those who would act out of objectionable greed. There are plenty of places to ply your greed - too many investment platforms to list. But limits on options where they harm others in the process is a reasonable function of government, and not an over-reach in any way.
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