Langer and the White House

[zooropa]

Re: Langer and the White House

If we assume normal fiduciary responsibility, the managers of the company have already maximized that profit by maintaining a balance between costs (such as labor) and revenue. A change in law forces--and note well the word, forces--the managers to re-balance their company because of their fiduciary responsibility to the owners.

1 - 'fiduciary duty to maximize profits' taken at face value justifies violating every law that may be profitably violated. If there is no higher responsibility than maximizing profits, then why should a company handicap itself by obeying the law of the land, if the law may be profitably violated? If Smithfield Foods can dump ammonia into the Big Sioux River on a daily basis, knowing that they will rarely be caught and/or fined, and that the fines will not exceed the cost savings in the dumping, then Smithfield has a FIDUCIARY RESPONSIBILITY to dump ammonia.

And if they don't, then you've already started to qualify 'fiduciary duty' to such an extent as to render it meaningless outside a larger philosophical context which involves a higher responsibility to obey legally mandated protections for workers and the environment which, in turn, brings you around to an open question of how a company's 'fiduciary duty' mandates only ONE course of action on the hypothetical law in question.

And if that is the case, then who are you to declare the proper balance between fiduciary duty and the other responsibilities of a business?

2 - 'ultimate responsibility of the lawmakers' This is an interesting notion. Are you speaking in a philosophical sense or in a legal sense? If the law requires me to pay higher taxes, and I decide not to feed my kids in order to pay these higher taxes without sacrificing any of my preferred amusements, then are the 'lawmakers ultimately responsible' for my starving kids? Should they also be arrested? Could I raise this defense in court?

Or is this another instance where you are presenting something which requires qualification as though it were an absolute truth?

And if this statement requires qualification, then what is your authority to declare the nature and character of the qualification?

3 - 'causing a death spiral sending the company completely out of business.'

Please.

Observe what happens when I change a noun in your line of reasoning:

Second: regardless of what the managers "choose" do in response to the competition, it is a NOT an action that they would have taken absent the presence of the competition. It is NOT a "reasonable choice"--it is a coerced action.

How is a 'law' different from 'competition'? If 'lawmakers' are ultimately responsible for whatever a company does in response to a law, then is it not functionally equivalent to assert that a competing business is 'ultimately responsible' for whatever a company does in response to competition?

And if there is a difference, than what is it? Is it merely ideology?

[filbert]

Re: Langer and the White House

I barely know where to begin with your post.
(demonstration of that statement snipped)

Yes, I totally understand that feeling.

Now, anyway.

[goon]

Re: Langer and the White House

1 - 'fiduciary duty to maximize profits' taken at face value justifies violating every law that may be profitably violated. If there is no higher responsibility than maximizing profits, then why should a company handicap itself by obeying the law of the land, if the law may be profitably violated? If Smithfield Foods can dump ammonia into the Big Sioux River on a daily basis, knowing that they will rarely be caught and/or fined, and that the fines will not exceed the cost savings in the dumping, then Smithfield has a FIDUCIARY RESPONSIBILITY to dump ammonia.

And if they don't, then you've already started to qualify 'fiduciary duty' to such an extent as to render it meaningless outside a larger philosophical context which involves a higher responsibility to obey legally mandated protections for workers and the environment which, in turn, brings you around to an open question of how a company's 'fiduciary duty' mandates only ONE course of action on the hypothetical law in question.

And if that is the case, then who are you to declare the proper balance between fiduciary duty and the other responsibilities of a business?

2 - 'ultimate responsibility of the lawmakers' This is an interesting notion. Are you speaking in a philosophical sense or in a legal sense? If the law requires me to pay higher taxes, and I decide not to feed my kids in order to pay these higher taxes without sacrificing any of my preferred amusements, then are the 'lawmakers ultimately responsible' for my starving kids? Should they also be arrested? Could I raise this defense in court?

Or is this another instance where you are presenting something which requires qualification as though it were an absolute truth?

And if this statement requires qualification, then what is your authority to declare the nature and character of the qualification?

3 - 'causing a death spiral sending the company completely out of business.'

Please.

Observe what happens when I change a noun in your line of reasoning:



How is a 'law' different from 'competition'? If 'lawmakers' are ultimately responsible for whatever a company does in response to a law, then is it not functionally equivalent to assert that a competing business is 'ultimately responsible' for whatever a company does in response to competition?

And if there is a difference, than what is it? Is it merely ideology?

Seems how I see it is that what Filbert is saying and I might be way off base, but a business tries to maximize monies while in accordance to all applicable laws. If those laws are broken Govt can use its force. So as a law is passed to regulate what a business can and can not do, it forces change into that business in response to the law. The business did not choose on its own to change but to avoid the force of “a police/govt retaliation for not following said law, it had to change. Sure a business could not follow the law to maximize profits but that’s really not an effective way to run a business because govt can use force to put you out of business.

On your final point, a competing business can not use force to get another to comply with it. Govt can and will use force, business can not. That is the very essence of being different.

[filbert]

Re: Langer and the White House

1 - 'fiduciary duty to maximize profits' taken at face value justifies violating every law that may be profitably violated.

My difficulty in responding starts here. This is such a drastic distortion of the meaning of fiduciary responsibility that further efforts to respond are simply pointless.

[zooropa]

Re: Langer and the White House

My difficulty in responding starts here. This is such a drastic distortion of the meaning of fiduciary responsibility that further efforts to respond are simply pointless.

Did you, or did you not say: "The managers of the company have a fiduciary responsibility to the owners (assuming that they are not themselves the owners) to maximize that profit."

Now, can you please explain why that does not reduce down to "a fiduciary responsibility to maximize profit"? Is this not functionally equivalent to the phrase I used, "A fiduciary duty to maximize profits"?

How can I respond to any other definition than the definition you provide? Am I telepathic? How am I to know what your unstated assumptions are? If this is a drastic distortion, who is doing the distorting? Is it you, or is it me?

[zooropa]

Re: Langer and the White House

govt can use force to put you out of business.

Not all laws carry consequences that severe. Therefore, the question remains: Why comply with a law that can be circumvented at a lower cost? Certainly you would adhere to laws which carried a high risk to reward ratio, but where the risk is low and the savings are high, why not break the law? Is there any argument other than a moral one to be made here? And what place do morals have when money can be saved?

On your final point, a competing business can not use force to get another to comply with it. Govt can and will use force, business can not. That is the very essence of being different.

Adam Smith's 'invisible hand' is what supplies that force, and it is every bit as effective at compelling action as any government statute--in fact, it is arguably more effective.

[filbert]

Re: Langer and the White House

Did you, or did you not say: "The managers of the company have a fiduciary responsibility to the owners (assuming that they are not themselves the owners) to maximize that profit."

Now, can you please explain why that does not reduce down to "a fiduciary responsibility to maximize profit"? Is this not functionally equivalent to the phrase I used, "A fiduciary duty to maximize profits"?

How can I respond to any other definition than the definition you provide? Am I telepathic? How am I to know what your unstated assumptions are? If this is a drastic distortion, who is doing the distorting? Is it you, or is it me?

I need to know something first before I can try to answer.

What do you think 'fiduciary responsibility' means?

[zooropa]

Re: Langer and the White House

I need to know something first before I can try to answer.

What do you think 'fiduciary responsibility' means?

Does my definition matter? Am I the one who said that 'fiduciary responsibility' would 'force' a company to fire employees in response to a government law?

You invoked the concept of 'fiduciary responsibility', so how do you define it?

However, since you asked, as far as I'm concerned, fiduciary responsibilities involve managing assets for another, period.

I do not construe 'fiduciary responsibilities' as extending beyond asset management.

I do not construe obedience to laws, the ethical treatment of other human beings, or any other action as falling under the umbrella of fiduciary duty. Am I upholding a fiduciary duty by providing a meal for a sick friend?

As I see it, fiduciary duty must be compatible with the superior claims of obedience to laws and the ethical treatment of other human beings even where such may not be required by the law of the land (e.g. southeast Asian sweatshops).

In short, there are other, higher, responsibilities than the responsibility to maximize a return on assets.

For that reason, a government action (or increased competition in the marketplace) that reduces margins would not 'coerce' me to layoff workers in order to preserve margins, because I do not view the preservation of margins as being the highest or most important obligation on me as a fiduciary--or as a human being.

[boxerboy]

Re: Langer and the White House

I need to know something first before I can try to answer.

What do you think 'fiduciary responsibility' means?

Filbert, you're just too logical for some.

[filbert]

Re: Langer and the White House

Does my definition matter? Am I the one who said that 'fiduciary responsibility' would 'force' a company to fire employees in response to a government law?

You invoked the concept of 'fiduciary responsibility', so how do you define it?

However, since you asked, as far as I'm concerned, fiduciary responsibilities involve managing assets for another, period.

I do not construe 'fiduciary responsibilities' as extending beyond asset management.

I do not construe obedience to laws, the ethical treatment of other human beings, or any other action as falling under the umbrella of fiduciary duty. Am I upholding a fiduciary duty by providing a meal for a sick friend?

As I see it, fiduciary duty must be compatible with the superior claims of obedience to laws and the ethical treatment of other human beings even where such may not be required by the law of the land (e.g. southeast Asian sweatshops).

In short, there are other, higher, responsibilities than the responsibility to maximize a return on assets.

For that reason, a government action (or increased competition in the marketplace) that reduces margins would not 'coerce' me to layoff workers in order to preserve margins, because I do not view the preservation of margins as being the highest or most important obligation on me as a fiduciary--or as a human being.

There's your problem.

You are wrong.

(I will admit at this point that the term of art in law is "fiduciary duty" not "fiduciary responsibility." The words 'responsibility' and 'duty' are at least for me reasonably close to synonymous, at least in the context of a discussion board thread. But 'duty' is perhaps a somewhat stronger term, as far as I'm concerned at least, and has the advantage of being the actual term of art, so I'll use that one going forward.)

Since you ask: in short, fiduciary duty has two basic parts: the duty of loyalty (to those who have entrusted the fiduciary with responsibility) and the duty of care.

(Oh, by the way, that's not my definition. That comes from a Harvard School of Law page: http://cyber.law.harvard.edu/trusting/unit5all.html )

You seem to think that the duty of care is not a part of the fiduciary concept. It is.

Just because a company manager as a fiduciary has the duties of obedience and loyalty (ultimately to the owners) does not mean that the duty of care somehow vanishes because it's convenient for strawman arguments. And the duty of care (such as to take care to obey the laws) does not mean that the other fiduciary duties go away, either.

A company manager has a duty to maximize the profit of a company, because that's what a company is FOR--to make a profit.

(Managers of non-profit organizations have by nature of their position fiduciary duties of loyalty and of care too, by the way.)

[goon]

Re: Langer and the White House

anyone else have that scene from Billy Madison pop into their heads.....Business Ethics.

[filbert]

Re: Langer and the White House

anyone else have that scene from Billy Madison pop into their heads.....Business Ethics.

Way too many people** get their conception of business law/ethics from TV and movies . . . that's the problem, I think.


**This includes way too many people in businesses, by the way.

[zooropa]

Re: Langer and the White House

the duty of care (such as to take care to obey the laws)

So tell me: when BMW and Mercedes executives routinely paid fines to the EPA for violating the CAFE law*, did they breach their 'duty of care'? If these instances of lawbreaking are consistent with the 'duty of care', then when does disobedience to the law become a breach of the 'duty of care'? Does 'duty of care' mean 'obeying the law' in every instance.

Furthermore, I have yet to see 'maximizing profits' in any definition of 'fiduciary duty'. I see 'best interests', and 'good faith', but I do not see 'maximizing profits'.

So, if you are pleased to point out that I omitted the 'duty of care', I will return the favor by suggesting that you have added 'maximize profits'.

Further, if my assertion was a straw man**, then what of your false dilemma between 'fiduciary duty' and 'retaining employees', wherein you suggested that anything other than layoffs would constitute a breach of fiduciary duty?

*http://www.edmunds.com/autoobserver-...-the-past.html
**It's a straw man only if you believe that 'duty of care' involves obeying the law in every instance, a framing of the concept that I would expect a majority of people would disagree with, when it comes down to individual cases.

[MontanaRabbit]

Re: Langer and the White House

So tell me: when BMW and Mercedes executives routinely paid fines to the EPA for violating the CAFE law*, did they breach their 'duty of care'? If these instances of lawbreaking are consistent with the 'duty of care', then when does disobedience to the law become a breach of the 'duty of care'? Does 'duty of care' means 'obeying the law' in every instance.

Furthermore, I have yet to see 'maximizing profits' in any definition of 'fiduciary duty'. I see 'best interests', and 'good faith', but I do not see 'maximizing profits'.

So, if you are pleased to point out that I omitted the 'duty of care', I will return the favor by suggesting that you have added 'maximize profits'.

Further, if my assertion that 'fiduciary duty' is not incompatible with breaking the law is a straw man, then what of your false dilemma between 'fiduciary duty' and 'retaining employees', wherein you suggested that anything other than layoffs would constitute a breach of fiduciary duty?

*http://www.edmunds.com/autoobserver-...-the-past.html

Are you ever wrong about anything?

[zooropa]

Re: Langer and the White House

Are you ever wrong about anything?

Yes.