Gyroscopic Investing

MachineGhost wrote:

https://www.youtube.com/watch?v=YPFpkdiwG4Y wrote:Alex Edmans talks about the long-term impacts of social responsibility and challenges the idea that caring for society is at the expense of profit.

Alex is a Professor of Finance at London Business School. Alex graduated top of his class from Oxford University and then worked for Morgan Stanley in investment banking (London) and fixed income sales and trading (NYC). After a PhD in Finance from MIT Sloan as a Fulbright Scholar, he joined Wharton, where he was granted tenure and won 14 teaching awards in six years.

Libertarian666 wrote: Then I suggest he start a business that is "socially responsible" and make a ton of money!

Stewardship wrote:

Libertarian666 wrote: Then I suggest he start a business that is "socially responsible" and make a ton of money!

^This

MachineGhost wrote: There's thousands of "socially responsible" businesses already and they outperform the S&P 500.

With all due respect, the core problem is there are still too many people like technonovelist and Stewardship (and China) that are stuck in the year 1970 with Friedmanism ideology.  Hello, that was 45 years ago!!!  Time to evolve.

MachineGhost wrote:

Stewardship wrote:

Libertarian666 wrote: Then I suggest he start a business that is "socially responsible" and make a ton of money!

^This

There's thousands of "socially responsible" businesses already and they outperform the S&P 500.

With all due respect, the core problem is there are still too many people like technonovelist and Stewardship (and China) that are stuck in the year 1970 with Friedmanism ideology.  Hello, that was 45 years ago!!!  Time to evolve.

Pointedstick wrote: Can you provide some examples of what you mean by "socially responsible" businesses?

Libertarian666 wrote: I have no idea what "Friedmanism ideology" is. Please elaborate.

MachineGhost wrote:

Libertarian666 wrote: I have no idea what "Friedmanism ideology" is. Please elaborate.

http://www.colorado.edu/studentgroups/l ... iness.html

moda0306 wrote: If social responsibility is a true obligation (such as, say, not polluting), then nobody's going to necessarily make a profit by doing it, but arguably ought to be required anyway.  I don't make a profit by not killing my neighbors.  I simply don't get killed in self-defense nor arrested.

If it is not a true obligation, then we don't have to have a real moralizing, "market vs gov't" conversation about it, as it's nothing more than a polite request by people to behave a certain way.

MachineGhost wrote:

Stewardship wrote:

Libertarian666 wrote: Then I suggest he start a business that is "socially responsible" and make a ton of money!

^This

There's thousands of "socially responsible" businesses already and they outperform the S&P 500.

With all due respect, the core problem is there are still too many people like technonovelist and Stewardship (and China) that are stuck in the year 1970 with Friedmanism ideology.  Hello, that was 45 years ago!!!  Time to evolve.

Stewardship wrote: When confronted with the following choices:

A.  Be socially responsible and more profitable
B.  Be socially irresponsible and less profitable,

A business would typically choose A.  Do you disagree?  If so, why?

MachineGhost wrote:

Stewardship wrote: When confronted with the following choices:

A.  Be socially responsible and more profitable
B.  Be socially irresponsible and less profitable,

A business would typically choose A.  Do you disagree?  If so, why?

That's a trick question because you're assuming B is less profitable and also widely evident at the same time.  Imagine yourself as a Chinese business manager employing sweatshop labor that doesn't live in a culture of liberal "social responsibility" social pressure.  Subsequently, you won't literally perceive how A can possibly be profitable if you ever had an occasion to think about it, and will stick with the path of least resistance which is B and will be more profitable (up until that time you are forced to pay for your negative externalities by legislation or decree).  It's all relative to ideology, thinking skills, perceptions and accounting.  We've gotten away with a lot of negative social externalities in the USA for so long because the negative costs are not fully accounted for under the ideology of Randism/Friedmanism/Rothbardism.  The challenge now is to bring those negative costs out of the dark and fully account for them on the balance sheet.  Markets cannot work their social justice in the absence of transparency.

And in the real world, there are co-dependent stakeholders, not singular shareholders.  It "takes a village" and all that jazz.

MachineGhost wrote: That's a trick question because you're assuming B is less profitable and also widely evident at the same time.  Imagine yourself as a Chinese business manager employing sweatshop labor that doesn't live in a culture of liberal "social responsibility" social pressure.  Subsequently, you won't literally perceive how A can possibly be profitable if you ever had an occasion to think about it, and will stick with the path of least resistance which is B and will be more profitable (up until that time you are forced to pay for your negative externalities by legislation or decree).  It's all relative to ideology, thinking skills, perceptions and accounting.

MachineGhost wrote:We've gotten away with a lot of negative social externalities in the USA for so long because the negative costs are not fully accounted for under the ideology of Randism/Friedmanism/Rothbardism.  The challenge now is to bring those negative costs out of the dark and fully account for them on the balance sheet.  Markets cannot work their social justice in the absence of transparency.

And in the real world, there are co-dependent stakeholders, not singular shareholders.  It "takes a village" and all that jazz.

Stewardship wrote:

MachineGhost wrote: That's a trick question because you're assuming B is less profitable and also widely evident at the same time.  Imagine yourself as a Chinese business manager employing sweatshop labor that doesn't live in a culture of liberal "social responsibility" social pressure.  Subsequently, you won't literally perceive how A can possibly be profitable if you ever had an occasion to think about it, and will stick with the path of least resistance which is B and will be more profitable (up until that time you are forced to pay for your negative externalities by legislation or decree).  It's all relative to ideology, thinking skills, perceptions and accounting.

So some businesses may choose to be socially irresponsible and less profitable because they don't know any better (not because businesses are inherently evil.)  No disagreement here.  That leaves room for someone who does know better to make a ton of money, as Libertarian666 pointed out.  Ah the beauty of competition!

MachineGhost wrote:We've gotten away with a lot of negative social externalities in the USA for so long because the negative costs are not fully accounted for under the ideology of Randism/Friedmanism/Rothbardism.  The challenge now is to bring those negative costs out of the dark and fully account for them on the balance sheet.  Markets cannot work their social justice in the absence of transparency.

And in the real world, there are co-dependent stakeholders, not singular shareholders.  It "takes a village" and all that jazz.

Not following you here.  From my perspective, the negative costs are not fully accounted for except under the so-called ideology of Randism/Friedmanism/Rothbardism.

Stewardship wrote: So some businesses may choose to be socially irresponsible and less profitable because they don't know any better (not because businesses are inherently evil.)  No disagreement here.  That leaves room for someone who does know better to make a ton of money, as Libertarian666 pointed out.  Ah the beauty of competition!

Stewardship wrote: Not following you here.  From my perspective, the negative costs are not fully accounted for except under the so-called ideology of Randism/Friedmanism/Rothbardism.

moda0306 wrote:Who said social responsibility creates profits?  The problem is, and the main reason we even talk about social responsibility, is that it is MORE profitable to not be socially responsible.

MachineGhost wrote: No, businesses that are socially irresponsible are more profitable up until that point in time that society evolves and decrees that they're greedy evil capitalists and they need to be restricted and/or penalized for their negative externality-inducing behaviors.

MachineGhost wrote:Why would anyone in their right mind willingly include a cost that lowers their profit if they can [extra]legally get away with it?  That is "laissez-faire" in practical terms.

The Millennials and Generation Z place much much more importance on the "social responsibility" of businesses, enough that if older businesses continue to ignore these generations, then they will lose market share and profits.  But, this is by an entirely different mechanism than legislative fiat.  We're still in the transition period.

Even in China, there are now protests over dog meat festivals and one even got shut down in 2011.  So we may not have to wait decades for society to evolve from allowing greedy evil capitalists to do what they damn well please to society, employees, animals and the environment.

MachineGhost wrote:
In the absence of an authority or government, what mechanism is there to force profit-seeking businesses to account for these [extra]legal negative externalities on the balance sheet and why hasn't it been done before now???

Maybe you mean that enfabled "invisible hand"?  Well, that's where ideology meets the rubber road of pragmatism.  The "invisible hand" is reactive not preventive.  I don't know about you, but I rather not wake up every day after the fact and then try to undo all the damage and hold the actors legally responsible while I'm drinking toxic water, eating toxic food, breathing polluted air and driving a car that explodes with the touch of a pin.  Cronyism and power will always exist in any system and you as a bottom-ranking individual will always be at a huge disadvantage.  The "invisible hand" is just not enough of stick to force evil greedy capitalist businesses to be a force for social good.  Remember, they are evil and greedy.  They don't care about "social responsibility" so long as millions of others are forced to buy the product/service from them (like say, clean water); all the better if they have a de facto or de jure monopoly!  And they go out of their way to threaten or kill any competition to their profit.  Heck, reminds me of Microsoft a bit, but I digress.

Ultimately, the point of "social responsibility" is to get these greedy evil capitalists to reform or get out of the business of being in the business of business.  What's wrong with that?

Stewardship wrote: So you call for "legislative fiat" because the free market isn't fast enough for you?

Stewardship wrote: These are common misconceptions about "Randism/Friedmanism/Rothbardism."  For one thing, not one of them advocated for anarchy.  I believe they all advocated a means for obtaining restitution for damages.  Also when you start talking about force, monopoly, threatening, and killing, you start talking more about government than business.  A business has never forced me to do anything or threatened me.  Government has many times.  Crony capitalism is made possible by the state, by definition.  Finally, mega-corporations that would normally fail to new businesses in a free market are actually protected by government and your legislative fiat.