Searching for the Moon

Shannon Clark's rambles and conversations on food, geeks, San Francisco and occasionally economics

The Blog Cooperative –

Posted by shannonclark on July 14, 2003

The Blog Cooperative –

While I have some serious questions about this model for business – mostly in that I do not think that all people are equal when you are talking business – perhaps (and I mostly agree with this) a good position for representative government, but even there you usually do not have literally “all people are equal”.

Rather, in any democracy there is usually some minimums set around what a “person” is – i.e. usually a “citizen of the country”, a “resident of the local area”, above a certain age, having taken action to indicate an interest in participating (i.e. registering to vote).

Further, typically voting is a right, not a requirement, and as a right is something which the society can and does take away (i.e. in the US, people convicted of a felony often lose the right to vote as well).

Thus, even in politics it is not “all people are equal” – but rather, it is a group of people to which any particular individual may (or may not) belong, then within that group all people have the same number of votes (typically one on any given issue, though this is not the case in some methods of voting) and all votes are of the same type and value.

In the corporate world, for example, this is not always the case. Some stock holders can have different types of stock which grant different voting rights (or none at all in some cases).

More crucially, I have a philosophical problem with an economic system (which a business, even a co-op should be at some level almost by definition) which does not contain a recognition that contributions towards results will differ, and does not provide incentives and structures to support people of different abilities, interests, needs, and goals.

I can and do see a value to supporting the members of a business who are not directly producing revenue, however, everyone in a business should contribute towards the business, over time if more is taken out of a business than the business pulls in, the business will soon cease to be.

There are usually people in any business whose contributions are not readily apparent – that is, they are not immediately delivering more revenue than they are costing the company. Some of these people are truly excess and in many cases the company would be better off either redeploying them or firing them, however many of these people are involved in longer term aspects of the business. Some in setting up the infrastructure and underpinnings for the business, others in research into the future of the company, and others by helping the company avoid risks in the future (this last category can be the hardest at times to see the return – in the best case their work is never fully tested, they manage to contain and minimize the risk. Good illustrations of this might be cases where the risks in a business were poorly managed, resulting in cases such as Barings Bank which declared bancruptcy).

Thus, when it comes to business ventures I want to be careful that the businesses I get involved in are ones where I can see both how I can contribute, how the business with get revenue, and that my share of that revenue and future profits will bear some understandable relationship to my contributions. I know that I can be very active, that I can provide very useful and valuable insights and work, and that in the past I have worked on projects where my personal return was vastly lower than that of the company. (i.e. one case where I personally brought into the company about 10x my salary)


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