This is not a uniquely Chinese problem - we have the same problem right here in the US...
In Tim Oreilly's book 'WTF? What's the future and why it's up to us' (1), he talks quite a bit about the emergence of the idea of corporations focussing on maximizing shareholder value over actually productivity (true societal/economic value).
It's the same philosophy that drives the standard massively inflated corporate 'leader' comoensation packages - even when some leaders are severely incompetant. This Wash. Post article describes it a bit (2), but Tim pinpoints the origin to a specific conference talk (can't remember who/when exactly, but the shift occured sometime in early 80's). It's why founders/early invvestors can achieve massive payouts by selling a company even when they've never achieved a profit and ultimately fail - because they're paid in 'smart money' vice cash from profits ('dumb money' - how the worker bee's are paid). It's why companies will continue to opt for short-term gains by displacing workforce with automation versus investing in the long term health of a comoany by training their workforce to be more efficient working in conjunction with automation.
Trust me, I believe in large compensation/payouts for talent, but I think that the talent should be measured in true contribution to the health of the economy - which is distinct from the percieved value of a share.
HN: Can we please start focussing on building truely productive companies again?
> talent should be measured in true contribution to the health of the economy - which is distinct from the percieved value of a share
Most measures of economic health focus on total production. If two societies go head to head, long-run total production will predict both military success and the rate of technological advancement.
Companies can ultimately fail even after going public. Later investors pay earlier investors, founders, or other shareholders by definition. There is nothing smart or dumb about either. Employees have options for liquidating there shares as well in the secondary markets.
> Companies can ultimately fail even after going public. Later investors pay earlier investors, founders, or other shareholders by definition. There is nothing smart or dumb about either.
Smart Money = compensation via shares. It's "smart" because it generally grows quickly in value based on the companies pefformance, versus the dollar which only grows in value when the overall economy (standard of living) improves.
Dumb Money = compensation in cash.
Executive/early investor compensation via smart money really only became the norm when the government started to crack down on massive corporate salaries (1). i.e. massive "dumb money" payouts.
> Employees have options for liquidating there shares as well in the secondary markets.
Not all companies pay employees (especially those in lower tier roles/hired after a companies founding) in smart money. For instance, my company currently only pays in dumb money (no stock) below the VP level. About 7 years ago, we used to be employee owned, and we recieved/could purchase shares (technically smart money). They matched our 401K's with these shares. However, these shares were VERY different from the shares issued to corporate leadership. We were not allowed to liquidate until 5 years after leaving the company. When the company started to tank, the share dropped from $20 to virtually zero and corporate officers liquidated their shares quickly. Ultimately, the employee stock was dissolved completely when the company was sold. I personally lost $100K. The ex-CEO committed suicide this year - I'm assuming from guilt.
i am sorry for your monetary loss and your ceo's family. But, it sounds like you would have been better off with dumb money, than smart shares... remember you can purchase smart shares with dumb money, and you can sell smart shares for dumb money on the secondary markets, via forward contracts if there are some restrictions...
In Tim Oreilly's book 'WTF? What's the future and why it's up to us' (1), he talks quite a bit about the emergence of the idea of corporations focussing on maximizing shareholder value over actually productivity (true societal/economic value).
It's the same philosophy that drives the standard massively inflated corporate 'leader' comoensation packages - even when some leaders are severely incompetant. This Wash. Post article describes it a bit (2), but Tim pinpoints the origin to a specific conference talk (can't remember who/when exactly, but the shift occured sometime in early 80's). It's why founders/early invvestors can achieve massive payouts by selling a company even when they've never achieved a profit and ultimately fail - because they're paid in 'smart money' vice cash from profits ('dumb money' - how the worker bee's are paid). It's why companies will continue to opt for short-term gains by displacing workforce with automation versus investing in the long term health of a comoany by training their workforce to be more efficient working in conjunction with automation.
Trust me, I believe in large compensation/payouts for talent, but I think that the talent should be measured in true contribution to the health of the economy - which is distinct from the percieved value of a share.
HN: Can we please start focussing on building truely productive companies again?
1. https://www.oreilly.com/tim/wtf-book.html 2. https://www.washingtonpost.com/business/economy/businesses-f...