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High Frequency Trading and Finance's Race To Irrelevance
hype7 (239530) writes 'The Harvard Business Review is running a fascinating article on how finance is increasingly abstracting itself — and the gains it makes — away from the creation of value in the real world, and how High Frequency Trading is the most extreme version of this phenomenon yet. From the article: "High frequency trading is a different phenomenon from the increasing focus on short term returns by human investors. But they're borne from a similar mindset: one in which financial returns are the priority, independent of whether they're associated with something innovative or useful in the real world. What Lewis's book demonstrated to me isn't just how "bad" HFTs are per se, but rather, what happens when finance keeps walking down the path it seems to be set on — a path that involves abstracting itself from the creation of real-world value. The final destination? It will enter a world entirely of its own — a world in which it is fighting to capture value that is completely independent of whether any is created in the first place."'
The secondary stock market in particular (where stocks are not directly funding a company but rather being sold amongst other investors), particularly those that don’t pay dividends, all seems like a big game to me, where everyone plays by the same rules in the hopes that they are the ones to make money.
I doubt this kind of behaviour will be going away soon, regardless of how removed from actual value stocks become.
So it'll be like any other virtual world computer game (and with its currency being of similar value, which is to say, not all that much).
Dutch tulip panic in the 1700's... hell, even better example: Neil Stephenson's "System of the World" series, showed what happens when financial systems render themselves obsolete. The world moves on and financiers quickly explore new avenues, leaving the old behind. The section describing Eliza and how she made a living in Amsterdam trading percentages of non-binding stock shares is a great tutorial.
Here's to hot beer, cold women, and Glaswegian kisses for all.
So companies shuffle stocks back and forth millions of times a day and we wonder NOW what the actual productive value is?? The whole dam stock market is based upon "confidence" aka a house of cards. As I like to say "Main St. built America, Wall St. destroyed it."
There was a good reason that companies were initially prohibited from owning other companies. Greed knows no limit.
This topic has been covered before in the documentary "The Corporation"
http://hellocoolworld.com/file...
2. Birth
How the corporation came to be. Originally, corporations were set up to serve the public
good. Corporation lawyers gained rights through the US Supreme Court using the 14th
Amendment (set up to protect slaves) that gives them the rights of a person. In the last
century, the corporation is given more and more rights while people are increasingly
stripped of theirs.
3. A Legal "Person"
Having acquired rights of immortal persons, what kind of person is the corporation? By
law, the corporation can only consider the interests of their shareholders. It is legally
bound to put its bottom line before everything else, even the public good
6. The Pathology of Commerce
If we look at the corporation as a legal person, it exhibits all the characteristics of a
psychopath using a personality diagnostic checklist by the World Health Organization.
Slashdice beat them with beta.
We are all being goaded into owning stocks by low interest rates and the elimination of pensions. My fear is that mass participation *inevitably* turns the stock market into a shooting gallery for elites who have probably already moved on to something else - whatever it is that hedge funds do. That and fleecing the stock market with these high-frequency scams.
So many people are assuming returns will be similar to the 20th century, when the global population was exploding, and only elites owned stock for the most part. I have my doubts. But I have few other options.
If you have the time (and if you're at work, of course you have the time!), I recommend The Great Hargeisa Goat Bubble. One guy gets his last goat killed by an aircraft so he can claim twice its value from the airport, and it all goes wrong from there.
Hopefully it won't be to protect large banks that fuck up. Simple "don't do that" regulation will just stifle innovation, which is bad. Complex regulation will just lead to rent-seeking and regulatory capture.
So we'll probably get some combo of the worst of all three that allows lawyers, bankers, and politicians to accumulate more power and money.
Psychopath? More like a manic depressed, schizophrenic with multiple persons disorder. What we usually do is put these in asylum but i guess Wallstreet is a good name for one.
Interesting, I'd never read about the Dutch tulip panic before...
I can only speculate that at some point regular sellers and buyers will 'take their business elsewhere' because the parasitism of HFT and it's successors reaches the point that NOT using the standard markets is more cost effective.
Right now for all the money it 'makes', HFT is still a very very small amount of total margin. Either you hit diminishing returns and stability, or the system will suffer an upheaval. I've heard that there are already alternative markets being set up that ban/limit HFT.
I don't read AC A human right
Warren Buffett once suggested a 100% capital gains tax on assets held less than a year. One of the big problems we have with current markets is that short-term gains are way undertaxed. Funds are allowed to trade without paying taxes; taxes are assessed only when money comes out of the fund.
Of course the stock market is divorced from the real world. It's its own bubble, a game played by the upper 5% to enrich themselves and fuck everyone else. They don't care as long as they get their bonus.
You really think a hedge fund manager gives a crap about real-world value? The dude is making $15 million a year shuffling stocks around and skimming right off the top of everyone. He can buy a Ferrari every other week. That's your 'real world value' right there.
The elite don't care. They have burned up America, and were well paid by the taxpayers to do it. Now they are strip-mining what's left and when the country is a empty husk, ready to collapse into a third-world nation, they will get in their private jets, and fly off to their private, gated, guarded compound in Costa Rica or Belize, and live off the interest in their Bermuda bank accounts for the next 12 or 20 generations.
If telephones are outlawed, then only outlaws will have telephones.
Shouldn't be new to anyone. There's an expression, the US doesn't create products anymore, just brands.
Guess what?, China realized they don't need the US to make brands for them, and the US is stuck with the complete lack of value in anything it does.
After a public offering of new shares, what value does the stock market really add for that company? Sure, there are some things it helps with such as an approximate value that can be used for acquisitions, but once a company offers a set of shares on the market and collects the money from the buyer, those shares are essentially chips with the corporate logo to be bought and sold among gamblers in the world's biggest casino. At that point, those shares do little to create actual value in the real world.
The way I see it, you can eliminate the advantages of HFT while keeping the markets highly responsive by imposing a "clocking" scheme on exchanges. When an order is received by an exchange, it is not executed immediately but stored in a queue to wait for the next clock tick. When that comes, the order queue is shuffled into random order and then executed sequentially. Make the clock ticks wait a random period between 40ms and 50ms and any timing advantage of HFT or geography is nullified. The exchanges are still highly responsive; they just do randomized batch processing. All of the requests they receive in the previous clock period ought to be processed within the new clock period (with perhaps some occasional spill-over, in which case the new clock tick is stretched).
This problem is everywhere, not just Wall Street. That's how we got the crash in 2008 with bank betting on debts and stuff.
Business has become focused on dividends, on giving money to investors first and foremost. Products and people are secondary goals designed to increase those dividends.
But it should really be the other way around, where the industry should be catering to people first and foremost, and rewarding investors should be secondary, as an actual reward, for having a healthy company.
The HBR article notes two issues:
1. HF traders don't participate in stockholder meetings and thus their trades are divorced from steering company direction.
2. CEOs are focused on next quarter profits and, aside from a few corporate founder CEOs, are not able to have their company innovate.
The first problem is not specific to HFT. Even buy-and-hold mom and pop cannot influence a stockholder meeting because they don't own enough shares to meaningfully do so. The exception proves the rule: a bunch of Palestinian human rights defenders got together, bought some Caterpillar stock, and got a human rights issue on the agenda. Even with all that effort, the measure did not pass. And it was a large effort in coordinating. Individual stockholders usually do not organize, coordinate and campaign. (The "transaction cost" is too high.)
The second problem is caused by SEC, SOX and CEO compensation structure, not by HFT. The HBR article suggests without actually accusing that HFT is the cause.
HFT serves little purpose other than providing market liquidity (and even at that arguably harms it given the flash crash), but it's not to blame for the above two pre-existing problems of today's markets of publicly traded companies.
Thank goodness ordinary folks like you and I can count on the visionaries at the Harvard Business Review to get to the bottom of it all and educate us on how HFT is becoming increasingly divorced from providing real-world value. Who could've predicted such a development?
HFT is an example of rent seeking - where somebody is able to shave some of the economic profit from an activity without doing much of anything. In the HFT case, the US Congress put in a trading rule that caused a little bit of inefficacies in the market and HFT trading ruthless exploits that imposed inefficacies. Those inefficacies will never amount to a fraction a penny per share, but do it millions of times a day..
Think of it as a 160m dollar a day tax on investors. (the number comes from Lewis's book.)
See the historical Robber Barons as an example of rent seaking.
http://en.wikipedia.org/wiki/R...
arbitrage === extremely good. Keeps markets liquid. but it only requires a response time of seconds to minutes to be useful. high frequency trading is pure parasitism and should be abolished. Delays in order would remove a lot of it. Random delays in orders would be slightly more effective. And a trading tax would remove the low margin high volume trading. I have no idea why they don't implement this as see what happens. Could always unwind it if something unforseen results.
Some drink at the fountain of knowledge. Others just gargle.
I can't think of anything else completely abstracted away from real world value.
Corporations have more rights than people, when was the last time you saw a corporation sent to jail? even for causing someones death, you kill someone even though manslaughter you are going to jail, if you steal you will probably go to jail. if a corporation does it, they get a fine, which relative to their income is minor.
So it really is but a superlatively gushing load of gushing superlativity, then.
Well then, that saves me reading the article. NEXT!
it allowed the high frequency traders to peek at the ballots others were sending in to the newspaper before they arrived, in turn giving them the ability to cast their votes using information not yet available to the rest of the market.
Front running is not High Frequency Trading. The existence of front running is not an argument to limit "High Frequency Trading" any more than phishing is an argument to end high speed internet.
Until people can recognize the difference between front running (a biased ordering of particular market events) and high frequency trading (low latency response to available market data) then there really is no point in responding to this nonsense. Not as much fun as donning the tinfoil hat, I know...
By law, the corporation can only consider the interests of their shareholders. It is legally
bound to put its bottom line before everything else, even the public good.
There is nothing at all saying a corporation can't call out the common good in it's bylaws, mission statement, and investment perspectis.
We have been for a long time in the situation where the financial institutions are primarily extracting rents from producers rather that contributing to economic productivity. High frequency trading is simply a particularly obvious example of this. The situation is not particularly new. Those with wealth and power have always influenced the rules to their own benefit. The question is whether there are any counter-measures that effectively push people to contribute value rather than skim off value created by others.
I have often thought along these same lines. When you are investing in something because it has proven to make money in the past as opposed to knowing what the company does and have an interest in it, how can you vote.
If you can't vote, what "share holders" are all these corporations hiding their bad decisions on. They are making decisions to satisfy whom, and what criteria of satisfy are they using?
I was incensed with some corporations that made increasingly bad decisions and kept terrible CEOs in. I could only think it was because of what this author is seeing. Car guys should run car companies. Car guys should sit on the board to make sure their CEO is a car guy. You wouldn't have the budget division making sports cars and the performance division making mini-vans, and you wouldn't have the government step in and kill of both of those divisions... but now I am descending into a product loyal rant.
I've always done best in the stock market when I'm choosing companies that are clearly operating outside the common good.
What about a token passing mechanism?
For those of you not frothing at the mount, Eric Budish has an interesting critique and proposal to replace continuous-time markets with auctions every second or so. The idea is that being forced to wait for the next auction mitigates the advantages of low-latency trading.
I think he makes a very good argument.
HST isn't "capturing value". It's making money. Value includes our, well, value systems -- our relationships, our morals, our ideas of how the world should be. Money is completely amoral. The biggest lie we tell ourselves is that we'll be worth more *as humans* if we have more money, and that people without money are without value. We make countless compromises to our true values to get money, and then wonder why we aren't happy. We've gotten it quite backwards.
By law, the corporation can only consider the interests of their shareholders. It is legally
bound to put its bottom line before everything else, even the public good
Pure bullshit. There is no such legal requirement.
The main thrust of the book "Flash Boys" is that the HFTs get advance notice of your trade on one exchange, and then beat you to all the other exchanges to do the trade before you. This is not normal "first come first served", but rather a form of front-running.
From the book "Flash Boys", one of the HFT companies mentioned that they were only ever "down" one day in five years. That's not actually taking risk. That's skimming a more-or-less guaranteed tax off the top.
Thank you. I don't know why everyone keeps repeating this thing.
Thank you. I don't know why everyone keeps repeating this thing.
Well, many of our bosses keep repeating it to us, because it is a convenient excuse for their anti-social behavior. The notion, as far as I know, was first championed by that degenerate geriatric sociopath Jack Welch back in the 1980s.
I agree mostly with this article, but I have one comment on something said in the final paragraph: "But they're borne from a similar mindset: one in which financial returns are the priority, independent of whether they're associated with something innovative or useful in the real world." The main point of businesses is, and always has been and always will be, to make money. They're producing something people want or need only because that is the way to get money. Otherwise, it would be a governmental subsidy or a charity, rather than a company. I think, instead, the actual dichotomy is between short term and long term gains. The examples the author gives of CEOs that have been successful by resisting the pressure from the financial markets are of companies that did make money, lots of it. There is an interesting article by investor J. Kennon that summarizes it as impatience robbing speculators of much higher gains they could have earned by investing in the long run. So, I think it is more a problem of speculators trying to get rich quickly; investors trying to become rich, in itself, is not so problematic.
Independent of any real world value? Sounds like Bitcoin. Or maybe Bitcoin is merely a symptom of a larger problem that includes creating "value" out of so-called intellectual property like patents for obvious things and the latest media sensation. Which isn't bad as soon as we figure out how to eat bits and bytes.
And they're the reason for the 2007 mortgage crisis. They are abstract financial instruments that derive their value from the performance of another financial entity. Finance is getting increasingly distanced from real money and value, we people trade the idea of an idea of an idea of a thing.
Coming soon from Hardcourt and Knee Brace: "Buy If (i > 0 and j > 0 and F(i,j) == F(i-1,j-1) + S(Ai, Bj)) And Sell When (j > 0 and F(i,j) == F(i,j-1) + d)"
If Slashdot were chemistry it would look like this:Cadaverine
By your idiotic drivel, hammers have more rights than people too. After all, when's the last time you saw a hammer sent to jail? (incidentally, this argument is chock full of irony since there probably have been hammers and corporations effectively "sent" to "jail" in the US - see below) The fundamental problem here is that corporations don't actually commit crimes any more than any other sort of property commits crimes.
Now, I realize that the US legal system is rather dumb in this regard and actually have sent a variety of household items and assets to jail (here, seized in an illegal drug-related raid and auctioned off by the US Marshals or similar organizations) on the basis that the thing in question did commit a crime or was at least used in the commission of a crime.
The legal fiction of corporate personhood is to protect the rights of the people involved in the corporation. In the Citizens United case, the only reason why people care about corporate personhood in the first place, the McCain-Feingold campaign finance law gave unaffiliated individuals special, unconstitutional privileges over those associated with a corporation. That's why the law was repealed.
Yeah. It was a few years ago, but the last person who told me that, I made him bleed, and dared him to do anything about it, and walked away. Mod me down if you like. Talk to the human being, never to the hat.
Liberty - Security - Laziness - Pick any two.
If a poor man creates wealth without real value he is prosecuted as a con artist.
If a rich man creates wealth without real value he is called a genius.
Or at least a stock purchase must be held for at least 4 days and then any gains are 100% taxed if sold in under 4 months.
This stops flipping and incentive to do short term ordinary income gains. Stocks after all are about long term investment.
I know, I know, the BIG trading houses and HFT & DARK POOL guys would absolutely go on insane rants, but what we want is a "CAPITAL MARKET", not really a trading market.
The creation of FPGA's to sit directly on the fiber leaving the stock exchanges has utterly corrupted high frequency trading. _No one_ in their remote office can get equal notice of small changes, and those FPGA's can flip transactions repeatedly as a stock rises to its new level, buying and selling and buying and selling to everyone else, and pulling their profits out of what normal traders would see. The transaction cost is much too low, and the forgiveness time to recall an unwise transaction is much too generous.
Unfortunately, there are also inevitable phase delays and feedback loops in such systems that can destroy the value of companies, and investors, who get caught in the unplanned positive feedback. They can't be "programmed against" because programming against them would slow the transactions and lose the very profit that HFT is reaping.
Do hammers have agency? Would the sentence "A hammer builds a house" make sense? How about "Apple releases new iWhatever"? Or "US established a beachhead on D-Day"?
We think and treat corporations, nations and other institutions as living beings because they are. We treat hammers as inanimate objects because they are inert matter. Yes, a corporation requires a human to act on its behalf to do anything, but similarly you require your muscle and neural cells to act on yours, and they in turn rely on molecular machines. And the difference between the US and USSR was not that one was made of different kinds of people than the other, but rather about the structures and values and even more importantly what the structures and values embodied - the "national spirit", so to say.
The US legal system is no less fictitious than corporations are. Either they have existence and agency - effective personhood - or they don't. Which one is it?
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
The "value" of stock is by no means connected to real world revenue of the issuing corporations anymore. It's just dependent on expectations of stock traders and whether or not they have any "faith" in the paper.
So, essentially, it's not really that different from any other religion. It's lost its roots in reality long, long ago, not just since the advent of HFT. If any doubt existed, the dot.com bubble with overhyped "values" of stock of companies that never earned a single dime should've dispelled that assumption that stock value has anything to do with the real world well over a decade ago.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
There's a strong correlation between share price changes and margin loan acceleration. Most of the "growth" of the share market comes from people borrowing money to speculate, not because those companies are producing more value themselves. Of course, what goes up must come down.
09F91102 no, 455FE104 nope, F190A1E8 uh-uh, 7A5F8A09 that's not it, C87294CE no. Ah! 452F6E403CDF10714E41DFAA257D313F.
We think and treat corporations, nations and other institutions as living beings because they are.
If that statement were true (and it isn't), then there's your case for corporate personhood. But alas, corporations, nations, etc don't have agency.
High frequency trading doesn't necessarily hurt investors. Without them individuals would still be paying the ridiculous commissions stock brokers used to charge; one can argue if more can be done, but I'm not convinced computer agents are worse than people.
Adam Smith pointed out in 1776...
"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."
Sounds very much like it's heading in the same direction that politics went a couple of decades back.
The reason high frequency trading is possible in the first place is because government regulations have created enormous barriers to entry for engaging in such trading. If anybody with a fast PC and fast network connection could make these trades in cheap, open exchanges, "finance" (i.e., rich political donors in New York) wouldn't be able to gain anything more than you would at home. In different words, high frequency trading would become like bitcoin mining, something for a large number of nerds each making a few bucks.
I do hope "finance" will become irrelevant, and by "finance", I mean the group of protected and politically connected rich guys in New York. Let's not use the problems caused by regulation and government intervention to justify even more regulation and government intervention, in a vicious cycle. And don't make the mistake attributing this problem to one party or the other.
Bitcoin to me...
If everyone stuck all their cash and other non-cash funds into their mattresses, it is basic mainstream economics that we would have a huge financial depression from lack of currency for exchange. So, why do mainstream economists have trouble understanding that the same thing happens if take all that money and instead stuff it into computers in the digital equivalent of a casino frequented mostly by the wealthiest (the stock market, derivatives, currency speculation, etc.), where the money spends all its time in transactions have little relation to the real goods and services that most people spend all their money on?
My take on that was from an idea I first saw a glimmering of in "Money As Debt II":
http://paulgrignon.netfirms.co...
"Today the largest volume of money by far is changing hands in what is best described as the gambling economy... the foreign exchange market, the derivatives market and the rest of the financial instruments being played by banks and investment funds for as much profit as possible. For example, the volume of trade on the world's foreign exchange markets, in just one week, exceeds the total volume of world trade in real goods and services during an entire year. This money is in continuous play by speculators looking to make windfall profits on currency fluctuations. It exists... but only in the gambling economy."
Your tax on transactions could help with reducing the FIRE-sector casino economy by discouraging so much trading, but it does not get at the root of things like wealth concentration, since wealthy people could still just park money in cash or gold or real estate. A progressive income tax going up to 90%+ like we had in the USA decades ago, with the revenue redistributed as a basic income might help with wealth concentration. So might a wealth tax (but that is harder). Modest inflation also discourages hording money by forcing wealthy people to spend money, invest it, or lose it.
Other alternatives to keep things going despite an absence of cash for the real economy due to it being stuffed into computers include more LETS systems (alternative currency that promotes community), making what little currency there is in the real economy move faster, expanding the gift economy, improved subsistence production, and better government planning using current tax dollars.
So much of our wealth today is the product of generations of hard work by so many people including those creating inventions and other new ideas building on previous ideas, and in that sense is effectively a common inheritance. C.H. Douglas talked about with "Social Credit":
http://en.wikipedia.org/wiki/S...
A 21st century issue: the irony of technologies of abundance in the hands of those still thinking in terms of scarcity.
niggers
A legal person is an abstraction to enable entering into a contract. Many institutions, all corporations and natural persons, that is people, are all legal persons.
By law, the corporation can only consider the interests of their shareholders. It is legally
bound to put its bottom line before everything else, even the public good
If the founding contract so stipulates. Otherwise, one can open any marketing text book and see the other reality.
The government is just hating on your gains, bro.
No homo.
You can't spell "oneiromancy" without "roman".
I've thought for a while there should be 2 classes of Corporation.
1) Does real business (Manufacturing, Retailing, Services...); cannot own any part of other corporations.
2) Owns parts of type 1's; cannot do other business aside from managing shares etc. (mutual funds/investment collectives/trust funds...)
No complex ownership webs allowed. Two layers at most.
The article isn't any longer than the abstract here. There's no depth.
Then your statement "I realize that the US legal system is rather dumb in this regard and actually have sent a variety of household items and assets to jail" is nonsensical, as only things that have agency can take action (by definition). For that matter, a lot of your other posts are too, for the same reason.
Then again, you already ignored this once, so I suppose you'll do it again. It would be interesting to know what ulterior motives prompt making a claim that's at such odds with your actual demonstrated beliefs, though. Some kind of fear that agency might lead to demands of moral responsibility, perhaps?
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
When all the trees have been cut down,
when all the animals have been hunted,
when all the waters are polluted,
when all the air is unsafe to breathe,
only then will you discover you cannot eat money.
Yeah it's great article ..... but there are many people in trading who just to find out what other people wanted... like the author of the article said.
So they are becoming like the academic world.
If I buy something I have to pay a sales tax.
Companies do not pay sales tax on items that they use to make other items.
They charge a sales tax when they sell to someone.
Stocks should be reclassified as a business expense, so each transaction has a sales tax on it.
Then, you will only see trades where the expected profit is over the sales tax percentage.
The HFT where they are jumping in front of a sale, and then reselling it at the slight price rise will get squeezed out.
The final destination? It will enter a world entirely of its own — a world in which it is fighting to capture value that is completely independent of whether any is created in the first place.
I'm getting tired of these Bitcoin stories...
One of Dick's books, sorry I cannot remember the title, concerns an arms race involving entirely fictitious weapons. The financial industry seems to be approaching this level, where the activity in no way concerns real-life financial instruments.
Other than the fact that latency and frequency are different things, does this impact the validity of his main point - that front running is the real problem here?
It sounds like you just said "latency != frequency. Also, here's the exact same argument against liquidity you've heard 1000 times."
As long as your deposits are bet on those fictonal products, and the fairy tale of national debt exists, finance will never be "irrelevant".
Many corporations that exist today have "make money for the owner(s)" as their primary if not only goal.
There are however many that have other goals. They're typically nonprofits because if you're not planning to cut a check to the owner every quarter why not get tax exemption while you're at it.
What there is not is any legal prohibition against a corporation that is not intended to make money for it's owner(s). Hell, a corporation could be legally established for the stated purpose of bleeding it's owners dry (good luck getting anyone to buy stock in it but it's not illegal).
The root problem with corporate structure is the same fundamental issue that has always existed within civilization. When you put a person in charge of a thing, that person has every incentive to use that thing to their own best interests and not necessarily to the best interests of society at large. It's true of government, it's true of unions, it was true of trade guilds. It should be no surprise that it's true of corporations.
This phenomenon isn't just caused by HFT's, it is seen in regular traders as well. These traders have no knowledge about the companies they trade (and they quite frequently say as much, and how proud they are of this ignorance) and that they are "in it for short term gains" and not because they believe or support the companies themselves ... "Wall Street Athiests" is what I like to call them.
trying to find the optimal prices on exchanges as soon as the quotes lives the order matching engine ...
I like this video here worth 17 minutes of time ... talks about the limitations of how fast brain can process information .. and why machines now dominate the trade decisions ...
https://www.youtube.com/watch?...
"Give me control of a nation's money supply, and I care not who makes its laws." --Rothschild in 1744.
Casteism
Hammers don't have the right of free speech; therefore, they don't have all the rights I do. Corporations have been granted free speech, and they (and their employees) are largely immune to imprisonment from what looks to me like criminal negligence. They diffuse responsibility to prevent employees from being convicted when they kill people, and don't go to jail themselves.
Moreover, McCain-Feingold didn't give certain individuals special privileges. I can donate to a political campaign. Tim Cook can donate to a political campaign. That's fair. Thing is, the only money I can donate is mine. Cook, due to the Citizens United case, can donate Apple's funds to a political campaign (provided some other people acquiesce, of course). He's donating other people's money, and I don't see why not being able to do that gives me a special privilege over him.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
Oddly enough, Mom invested in companies that were working for the common good, and that's why I inherited as much as I did. Her picks were largely due to moral reasons, and her stocks did quite well in the 2008 crunch. (Yeah, duelling anecdotes.)
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
And "divorced from the real world"? After decades of propaganda telling ordinary people to invest in the market, why don't you ask folks who were in for retirement how "irrelevant" Wall St. and trading was to their retirement after the tech crash of 2000-2001, or after the crash of '08. How much of their savings or retirement got turned into nothing?
mark "time for the Defenestration of Wall St."
Even worse, if Cook wants to donate money, or fund a PAC, he could be doing with MY money.. If I, or my mutual funds are invested in Apple, he can use MY money to push for laws that REDUCE shareholder value and add to his own compensation.
Yea' Yea' rules of governance, board of directors, shareholder votes and all that.
But it is not really the same. Why should a publicly traded company be able to use shareholder funds at the direction of a CEO to influence politics in ways that some/many/majority/all shareholders disagree with?
And when you add PAC's and the ability to donate to them without attaching a name, and some little bit of disclosure wording magic the shareholders/public wont even KNOW what he is spending shareholder money on.
Then your statement "I realize that the US legal system is rather dumb in this regard and actually have sent a variety of household items and assets to jail" is nonsensical, as only things that have agency can take action (by definition).
Ok, why is my statement nonsensical? Just because the law in a particular country might treat hammers as having agency doesn't mean that I do. I'm not US law. Examine your logic here.
They diffuse responsibility to prevent employees from being convicted when they kill people, and don't go to jail themselves.
The law is very definite on this point - beyond a reasonable doubt. And people aren't convicted of crimes merely because they kill other people. You have to show other things like a "callous disregard for human life".
And the annoying thing is that removing corporate personhood does nothing to fix the problem of diffusion of responsibility. You're tilting at the wrong windmill.
Moreover, McCain-Feingold didn't give certain individuals special privileges.
Except that yes, it did. For example, from the majority opinion for Citizens United:
"If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech."
So I can be fined and/or jailed for advocating the political views of my corporation under McCain/Feingold while the individual wouldn't be.
Thing is, the only money I can donate is mine.
No, that isn't the law. You could give me money and I could then donate it as an individual. That was still legal under the law. I suppose we could claim that the money is now "mine" which it technically is, though the obvious expectation here is that I would donate it to the appropriate causes.
>It is legally bound to put its bottom line before everything else, even the public good
This isn't true from a legal standpoint. Corporations use this excuse for their behavior, but they are not legally bound to behave the way.
+10 BRILLIANT!
-- 29A the number of the Beast
I've always understood the limited liability company to be an invention of the Europeans to facilitate the harvesting of the wealth of the Americas, after wealthy individuals and partnerships lost their fortunes in the attempt. They appear to still be successful at the task.
Star Trek transporters are just 3d printers.
There is a "death penalty" for corporations when they are judged to be so rife with criminality that there is no hope that a new board of directors or something will straighten them out; however the only company that I know of ever to be thusly dismantled was IGFarben after WWII. And the irony is that even though all assets were stripped in 1952 and the financial entity was left to liquidate itself, pay off legal claims, etc, it continues to exist to this day, with stock still publicly traded, though it is nothing but a shell with no assets other than its stock value.
Star Trek transporters are just 3d printers.
Exactly. This concept that a corporation is forbidden to do anything that might cost the stockholders is a conservative fairy tale. Nobody seems to object when a corporation sponsors a sports or entertainment event, for instance, even though it can often be questioned whether that is the most effective use of the money.
Star Trek transporters are just 3d printers.
That is why stockholders are allowed to vote on company actions, etc. Since they have ultimate control over who makes decisions regarding corporate actions and what they do, there is no need for the government to judge whether the actions are in the stockholders' best interests or not.
Star Trek transporters are just 3d printers.
It does, however, mean that the legal system is capable of holding positions on various subjects, such as the agency of hammers, and acting according to them. So do companies, countries etc: they have goals they are trying to reach, an agenda they're pushing. Which is pretty much the definition of agency.
Your statement is nonsensical because if institutions have no agency, action cannot be ascribed to them, which you did.
Examine your own writing. You're ascribing actions to the US legal system, which implies it has agency. Indeed, an institution without agency would be completely pointless, since it couldn't do anything.
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
It does, however, mean that the legal system is capable of holding positions on various subjects, such as the agency of hammers, and acting according to them. So do companies, countries etc: they have goals they are trying to reach, an agenda they're pushing. Which is pretty much the definition of agency.
No, it means the people who use the system do. The people remain the ones with agency.
Your statement is nonsensical because if institutions have no agency, action cannot be ascribed to them, which you did.
I did no such thing.
You're ascribing actions to the US legal system, which implies it has agency.
Again, I implicitly ascribe actions to the people who maintain the system. The rules in question were created by people and enforced by people.
which you did.
Reading through your previous posts, I see you admit (in the same sense that you claim I did) that corporations don't have agency.
Yes, a corporation requires a human to act on its behalf to do anything, but similarly you require your muscle and neural cells to act on yours, and they in turn rely on molecular machines.
That is not the same at all, unless you are trying to claim that muscle and neural cells have agency. In other words, humans act in both the macroscopic case of corporations "doing anything" or the microscopic case of peoples' muscle and neural cells "acting". It remains the same fallacy of blaming the inanimate object, be it a corporation or a hammer for the actions of the people who use the object.
What are you talking about? when was the last time a hammer owned assets, lobbied politicians for changes to laws. I am fine with the directors/owners of the companies being held personally liable, to the same extent as an individual is, (i.e. jail time) for the actions of their company . The problem is in most cases no one is, just a fine, to a company that makes more money in 1 an hour (apple makes about 4 million) than you will probably make in a lifetime.
I assure you if you had a hammer, dog, sheep, whatever other entity that is considered, not human, that went around killing people, or destroying their property it would quickly be destroyed.
I never said assets where not seized, that's a type of fine, isn't it basically if the whole organization isn't a criminal one, its not going to be destroyed. Yes directors do go to jail, but unless its the directly doing it its not likely.
If we found out tomorrow, Apple was using say, slave labor (quite likely that it is) in china do you think it would anything more than a please stop doing it, and maybe a relatively small fine. What would happen to you if the police found you where using slave labor? Go directly to jail, do not pass go do not collect your 41 billion dollars per year.
I am fine with the directors/owners of the companies being held personally liable, to the same extent as an individual is, (i.e. jail time) for the actions of their company .
So how liable are you as an individual for the actions of Coca Cola or Exxon? There's a good reason we don't implement your idea. Because no one, not even a director can personally police all of the actions of the people who work for a company. Liability and responsibility without the capability for that level of liability and responsibility is not far to that person.
And as I noted earlier, a company doesn't actually "act". This is a legal fiction.
never said assets where not seized, that's a type of fine
When one speaks of "jail" for an inanimate thing, this is the only way that makes sense.
My point about killing is that, given some of the spills and explosions which occurred, I'd be looking at charges of negligent homicide at least, since many of those were due to negligence. Typically, in the accidents, nobody goes to jail and the company pays out money that typically isn't much of a deterrent. The reason doesn't matter. This isn't a matter of corporate personhood, but rather an illustration of a right that a corporation has that I don't.
McCain-Feingold didn't give me any special privilege over any other natural human beings (the protoplasmic variety). You are perfectly free to advocate the political views of your corporation, and were for a long time. There are these life-forms called "lobbyists", and they have long advocated their employers' positions in the political arena. What it did was say that corporations themselves could not donate money to campaigns, not that the CEO couldn't donate.
As I said, I can only donate my own money (in addition to money given me by others to donate, I suppose), while Tim Cook can donate his own money and Apple's money.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes