Thursday, March 05, 2009
Box-o-stox
Polistra has been hammering for quite a while on the destructive qualities of the stock market. Companies that participate in stock exchanges lose their bearings; they focus solely on pleasing the shareholders instead of pleasing the customers and employees. Cost-cutting is the only goal, which leads them to use cheap overseas labor and to abandon research and development.
We see the resulting wreckage all around us.
Closely-held companies work better. A business run by its founding family, or owned by a private equity fund, is better able to focus on satisfying its employees and customers.
Polistra wonders if we can somehow broaden or democratize the private-equity holding, restore the basic purpose of selling shares to bring in capital ... but without the insanity of the Wall Street Casino. Preferred stock comes close, but it still has a variable share price which invites speculation.
Putting it simply, how do you make a stock more like a savings account?
Her idea: A fixed-price share that can't be transferred. You can return it to the company for the original price but you can't sell it to anyone else. The only thing you expect from this share is possible dividends. Both the company and the shareholder would then focus solely on the dividend, because insufficient dividends would mean more refunds.
This idea has obvious problems, but it's still closer to sanity and productivity than the current Casino.
Polistra has been hammering for quite a while on the destructive qualities of the stock market. Companies that participate in stock exchanges lose their bearings; they focus solely on pleasing the shareholders instead of pleasing the customers and employees. Cost-cutting is the only goal, which leads them to use cheap overseas labor and to abandon research and development.
We see the resulting wreckage all around us.
Closely-held companies work better. A business run by its founding family, or owned by a private equity fund, is better able to focus on satisfying its employees and customers.
Polistra wonders if we can somehow broaden or democratize the private-equity holding, restore the basic purpose of selling shares to bring in capital ... but without the insanity of the Wall Street Casino. Preferred stock comes close, but it still has a variable share price which invites speculation.
Putting it simply, how do you make a stock more like a savings account?
Her idea: A fixed-price share that can't be transferred. You can return it to the company for the original price but you can't sell it to anyone else. The only thing you expect from this share is possible dividends. Both the company and the shareholder would then focus solely on the dividend, because insufficient dividends would mean more refunds.
This idea has obvious problems, but it's still closer to sanity and productivity than the current Casino.
Labels: the broken circle
¶ 9:01 AM
