Wednesday, May 29, 2002

Tim Blair had this story yesterday, while I was still throttling the links system.

HOW TO STUFF YOUR COMPANY FOR FUN AND PROFIT.

This article from Alan Woods in The Australian shows the anti-business crew have found yet another way into the boardroom. This time they're calling it "corporate social responsibility". I call it time to get your money out.

As a former company director, I can tell you this: it's hard enough to make correct decisions on behalf of shareholders when the rules are known. There are more than enough regulations to protect the environment, work safety, you name it. If these regs are not sufficient, make them better.

But do not make directors responsible to something as fluid as "community responsibility". Whose community? Yours? Mine? Employees? What about the fifteen towns the product travels through to get to the store?

No responsible investor will put money into a company that does not have the welfare of the investor as the first priority in every decision. Remember, if the company goes belly up, investors are just about last in line to get their money back. Tax, employees, secured creditors, these are all in front. That's why you here about shareholders getting only a few cents in the dollar.

Who's going to tell the Board what comprises "community responsibility"? They're obviously not qualified to serve as Directors themselves, or they'd be in the job. Immediately, the quality of advice has fallen, and your superannuation (401k) with it.

"Community responsibility" will be a shifting goal that means all things to all people. When I attend a board meeting, I want to know where I stand, either as director or shareholder. And think about this: Directors who want to stay out of trouble will stay away in droves from companies like this. Who's left? People who either don't know or don't care that there is no objective measure of their performance in the job. That is, ignorant or stupid.

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