Comment by roenxi | Hacker News Reader

Comment by roenxi | Hacker News Reader

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> In some cases I think the answer is to strip investors of control. They are the ones allegedly pushing short term profits at the expense of the long term.

Hopefully this was a very fleeting thought; when it comes to ideas about changing corporate structure you couldn't really come up with a worse one. It is a complete violation of the skin-in-the-game principle that has so successfully propelled capitalist society for more than 200 years.

If management aren't accountable to the wishes of people who have proven they can preserve or grow piles of money, there will be economic waste on a colossal scale compared to what we have now. Corporate management would be overwhelmed by fast talking con men.

Turn your attention instead to the forces that are making short term decisions the better ones. I'm no expert, but if short-term thinking has been going on for a long-term time then something is more fundamentally wrong than "gee, people with money must just be stupid!". People don't seem to like accepting quite how rationally intelligent markets are - the only thing markets have been shown not to do well is make sacrifices for moral reasons.

> the only thing markets have been shown not to do well is make sacrifices for moral reasons.

Even reading this claim in the narrow context of the article it seems too broad. John Cassidy has written an insightful book “How markets fail“ that explains when markets do not generate optimal or desirable outcomes.

> People don't seem to like accepting quite how rationally intelligent markets are

Because it is wishful thinking?

Where would the rational intelligence of stock markets be right now without the trillions of dollars in shares bought up directly by central banks and sovereign wealth funds or by corporations using essentially free money provided by central banks?

Last time I checked none of the economic theories about optimal markets included massive state interventions to help markets find the optimal price.

Its is currently successfully propelling humanity over the edge, it got us all the beautiful places of the world- shortterm thinking is currently the modus operandi in Africa, the middle east, haiti- every hellhole on earth operation manual starts with "lets just figure this out short-term".

There is short-term thinking encoded into religion on this planet. Short term thinking in the end even extinguishes your beloved capitalism. If there is one thing we need less, its this. And if there is one thing, build to overcome short term thinking its abstract entity's like cooperation's and goverments. The individual is bound to fail here.

So yes, you have a valid point here, but instead of providing a solution, you just regress and suggest we go back to the drawing board and wing it while there?

It was a partly fleeting thought. Most people but into a company because they believe in what it is doing, it the people running it. Most investors do not try to exert control over companies. They buy in based on an opinion about what they're buying.

But when does 'short-term' become 'long-term'?

If i make good (short-term) decisions each quarter, then won't that just add up to be a good decision after 4 quarters? If it turns out that the 'good' decision last quarter turned out to be bad _this_ quarter, then you'd make a change to fix it for _this_ quarter_.

Rather than plan out a 10 year plan, which you can't possibly predict in advance what may happen.

Buying lots of nice things on a credit card and racking up debt is a wonderful short-term strategy. At some point the mistakes you make in the short-term cripple you in the long-term. That's what all these efforts are trying to address. How do we make things that are costly long-term costly in the short-term as well?

Commodore is a wonderful example of how a number of "good" short term decisions turned into long term disasters.

E.g. one (of many) factor in Commodores decline and failure was that they at one point made a "brilliant" move of undercutting the competition in a way that drove massive sales while costing them dis-proportionally little in lost revenues from all of the hardware already in their channel.

Unfortunately it did that by cutting the feet under their dealer network by going mass market retailers and cutting the RRP in public, without giving retailers advance warning, and without giving their dealers rebates on product in their channel that had not yet been sold.

As a result their results looked good for a little while, but they bred so much resentment in their dealer network that it still haunted them years later when they suddenly badly needed that dealer network to push out the Amiga, which was released at a price point where the mass market discount retailers weren't suitable.

It took years for the total cost of that stunt to be visible, and even then it's hard to account for the total impact to the company even now, decades later.

It's not an easy problem.

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