Re:On Resigning from Google
by chipotle_coyote on Saturday February 08, 2020 @01:28AM
(#22274311)
Friedman explicitly argued that a company has no social responsibility other than "to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game." I don't think he was endorsing bad behavior, per se, but he was condemning any behavior that could be considered "good" but even modestly value-reducing.
There are certainly some economists who might argue that indeed it's become nonsense excuses, including The Economist, which wrote in 2016 that shareholder value theory had become "a license for bad conduct, including skimping on investment, exorbitant pay, high leverage, silly takeovers, accounting shenanigans and a craze for share buy-backs."
(Also, apparently I had the year wrong -- Friedman wrote in 1970, not 1975.)
"within the rules of the game" is a big qualification.
I think whether that is a sufficient qualification depends on whether you are trying to break down or eliminate most of the "rules of the game" or instead make them better.
Lots of ideas make sense by themselves and then become toxic when combined with others.
If you are flexible enough about what "maximizing shareholder value" means, then it's not an endorsement of any behavior anyone disapproves of. You could say the real issue is just that people do bad stuff and say that it is maximizing value.
Corporations often say they have to do stuff to maximize shareholder value, but they also often say they have to act in the worst possible way permitted by law, because that is the standard the law sets. That is, without referencing shareholder value. Maybe it's all just nonsense excuses by people who do bad stuff?
Bondholders (as well as employees and others) come before shareholders in bankruptcy, so it seems like in a very concrete way, maximizing shareholder value is not a feature of it and never has been.