[rollei_list] Re: OT: Politics
- From: Gene Johnson <genej2ster@xxxxxxxxx>
- To: rollei_list@xxxxxxxxxxxxx
- Date: Sun, 26 Dec 2010 00:21:09 -0800
I didn't know about the Ford decision, but that makes sense. Corporations
then will make products wherever it will create the greatest profit. It
seems to me then, that in the long run, Americans can either continue to
trade freely with the developing world and accept that our wages and
standard of living will fall until some kind of equilibrium is reached and
American workers are able to compete for manufacturing jobs again, or the
developed world can start erecting trade barriers to reduce the
profitability of having products manufactured in China and elsewhere. I
haven't really heard anyone talking about that so I wonder if I've missed
something.
On Sat, Dec 25, 2010 at 8:42 PM, Marc James Small <marcsmall@xxxxxxxxxxx>wrote:
> At 11:41 PM 12/24/2010, Gene Johnson wrote:
>
>> Interesting viewpoint. I've been thinking a lot about how this all works
>> (and doesn't) lately and I'm coming to some unexpected conclusions. I think
>> you're spot on about poorly regulated corporations being a major problem. I
>> don't blame them for being amoral and greedy. They're supposed to be, or
>> rather, we should expect them to be.
>>
>
>
> Ever since the Ford Decision in the early 1920's, it has been the law in
> the United States that a corporation's officers have a fiduciary duty to
> produce a maximum of profits. At that time, Ford wanted to produce the
> Model T for, I believe $500 and the corporate board sued him on the grounds
> that the market would bear a sales price of $750. (I may be off on my
> figures, but that is the ball park.) The Court agreed with the Ford Board
> and against Henry Ford, so he responded by buying the company back and
> marketing the Model T at $500 and making a much bigger pile than he would
> have made from selling them at $750 due to the increased volume of sales.
>
> So, the law in the US obligates corporations to produce the maximum profits
> they are capable of producing. Failure to do so is a breach of a fiduciary
> duty owed to the shareholders and each Director can be held liable to both
> civil and criminal penalties. (I am a Director for a privately held company
> and, trust me, when the owner wants to edge up to this rule, I have to
> remind her of the fiduciary duty she owes herself, and she has always come
> around to agree with my position.)
>
> You might not like this holding but, then, no legislature in the US has
> ever attempted to overturn it. Corporations have a fiduciary duty to their
> shareholders to make the most money they can for distribution to their
> shareholders. Makes sense to me but, then, I see some value in this
> provision. In Europe, this is not the rule, but, then, European
> corporations often operate at a higher profit margin than do US corporations
> -- look to Carl Zeiss as one example, now that they are through the swamp
> caused them by the government mandate that they absorb the old CZJ entities.
> (Notice how easily I return to a close-to-topic matter?)
>
> Marc
>
>
>
> msmall@xxxxxxxxxxxx
> Cha robh bàs fir gun ghràs fir!
>
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