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Why aren't more people clear on the concept? - Jason Lindquist
Idle ramblings of an idle mind
jlindquist
jlindquist
Why aren't more people clear on the concept?
This is pretty damned obvious, and it's pathetic that media and investors (particularly the big ones like Warren Buffet) don't beat up on this point harder. Mark Cuban shouldn't be the only one aware that CEOs don't care if their companies tank. The company fails, and the CEO gets the softest, most refreshing kick in the ass out the door you could imagine. Carly Fiorina got $42 million after she wrecked HP, allowing her the luxury of hanging out with John McCain and telling you how he's no more qualified to run a major company than she was. There is zero risk, only different magnitudes of rewards, the least of which are still off the scale. If we return to confiscatory tax rates in the upper income brackets (which I don't think is a good idea) it's going to be because we finally get sick of this shit.

Mark's right, some types of companies should not be allowed to go public. The conflict between client service and shareholder profit is too strong in fields like investment banking and health insurance. Indeed, I think health insurers shouldn't even be allowed to be private for-profit companies. Failure to commit to short-term shareholder gain will get you sued. There's no way this can ever be a good thing.

Mark also points out a big common factor between AIG, Lehman Brothers, and Merrill Lynch: all three failed companies burned enormous amounts of capital to buy back stock from shareholders earlier this year. If I blew my allowance foolishly on Monday, why should my parents bail me out on Friday?
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