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Comment Of The Day
Jeff Jarvis posted a comment on my blog yesterday and reblogged it.
You can see the entire debate here.
I totally agree with Jeff when he says:
“I believe the Internet should be a force for political freedom, not repression. People have the right to seek and receive information and to express their peaceful beliefs online without fear or interference. I call on governments to stop the unwarranted restriction of freedom of expression on the Internet – and on companies to stop helping them do it.”
I am sure Terry Semel feels the same way too Jeff.
The question, though, is whether playing by the rules of a goverment like China who censors its people does more harm than good.
I am still with Terry Semel on this one. Yahoo! leaving China is worse than staying and living with censorship.
Comments (8) | Posted June 5, 2006 in Venture Capital and Technology
Comments
censorship? how about torture and murder?
Posted by: steve | Jun 5, 2006 9:49:22 AM
I don´t understand this debate. Surely Semel is running a business, not a charity, therefore is accountable to his stakeholders for results.
So, being in China makes sense if it adds to the bottom line, if it helps Yahoo! compete in the global market etc... all the rest is just noise.
How do you think Semel would fare if he would announce to Wall Street something like "we abandoning X billions of $ of potential profits because we don´t agree with the human rights policies of China", especially after everyone else is there?
As I said, the key is: he has a mandate from his shareholders, not from Amnesty International, and he has to maximise value for them.
Posted by: Giordano | Jun 5, 2006 3:16:46 PM
giordano, are you joking? or are you seriously saying we cannot be successful, responsible capitalists without earnestly supplying bullets to the architects of tianamen square, or xyklon-b gas to the operators of auschwitz, or branding irons, whips and chains to slave owners? if the latter, i suppose you also oppose child labor laws -- heck, let the market decide whether 8 year olds can work in coal mines. and while we're at it, those pesty FDA regulations are wildly cutting into the profits of pharmaceutical companies, but presumably folks like you won't mind trying any new drug without regulation or testing as long as "it adds to the bottom line"?
bleccch.
Posted by: steve | Jun 5, 2006 7:59:03 PM
Steve, I'm not joking, and my company does business in China without any problem. We have offices there and naturally follow the rules that everyone has to follow. If every company would follow your lead, not doing business there, millions of people would starve. Would that be better?
Apart from that, the moment you list your company in a stock market, you relinquish moral control of that company... you can't manage for your believes or quirks, you have to manage to maximise shareholders value.
You talk about child labor... do you know that those children, without those sources of income, would be starving? I know, its a tough issue, but whats better, millions of starving children or millions of children working in sweatshops?
We dont live in Neverland... the holier than thou approach doesnt work in real life. Sometimes, improve things you have to get your hands dirty.
Finally, to answer in place of Mr. Semel, no, I would not have done business to Nazi Germany. Comparing Nazi Germany to present-day China is just preposterous, even if just for the sake of rethoric.
Posted by: Giordano | Jun 5, 2006 9:29:01 PM
> Apart from that, the moment you list your
> company in a stock market, you relinquish
> moral control of that company... you can't
> manage for your believes or quirks, you have
> to manage to maximise shareholders value.
This is bogus. Company managers have a broad mandate to maximize shareholder value, but that doesn't mean, say, Ben & Jerry's always has to use the low-cost provider. If someone could point me to a single example of a CEO getting sued for refusing to do business with China, then I'll reconsider.
I support Yahoo's decision to do business in China, but I don't believe they *have* to be there because of some hand-wavy idea about maximizing shareholder value. Companies can have principles that preclude doing business there.
(I've done business in China in the past and will do so in the future.)
Posted by: Derek Scruggs | Jun 7, 2006 10:21:49 AM
Hi Derek,
when you say:
>This is bogus. Company managers have a broad >mandate to maximize shareholder value, but >that doesn't mean, say, Ben & Jerry's always >has to use the low-cost provider.
Since when saving money on every transaction is considered "maximizing value for shareholders"? IF Ben & Jerry chose the low cost provider, they will stop to be Ben & Jerry, people would stop buying their ice cream, their stock price would fall etc... they would minimize shareholders value :)
And when you say:
>If someone could point me to a single >example of a CEO getting sued for refusing >to do business with China, then I'll >reconsider.
Can you point me to a single exemple of the CEO of a listed company refusing to do business with China on moral grounds? Maybe they exist, but I don´t know of any, which makes difficult for them to get sued.
Cheers,
Giordano
Posted by: Giordano | Jun 7, 2006 4:10:02 PM
> Can you point me to a single exemple of the > CEO of a listed company refusing to do
> business with China on moral grounds?
No, but there are plenty who won't work with Myannmar, South Africa during apartheid, North Korea and other outcasts.
With South Africa in particular, there were sharehold resolutations and lawsuits *explicitly forbidding* them from doing business with that regime.
I've never met or read about a CEO who tries to make the argument that they have to do business with China or any other country or face a lawsuit. This argument is a red herring.
And given how hard it is to start a business of any kind, whether a startup or launching operatiions in a new market, it would be trivially easy to argue in court that the venture would likely fail and thus hurt shareholder value.
I started a company in China and it failed. All they have to do is put me on the witness stand and I'll tell the jury how difficult it can be to succeed there. But they don't need me because thousands of others had the same experience.
Again, I support doing business with China, but I believe this line of argument is a dead end.
Posted by: Derek Scruggs | Jun 8, 2006 8:58:01 AM
I think Giordano's first comment on this Comment of the Day pretty much hit it (ummm, not so sure on the 2nd comment - with the 'all of China starves to death' rhetoric). We're talking about business, here. [Like Iverson 'talkin bout practice, man - practice'.]
Everyone needs to disabuse themselves of the notion that corporations have any role to play in society other than generating lots of money for their stockholders. Chomsky said it best in 'the Corporation':
Intro Voice 1: What is a corporation?Intro Voice 2: It is under the law, a legal person.
Chomsky: These are a special kind of person who have no moral conscience - designed, by law, to be concerned only for their stockholders.
And this clip addresses the 'institutional' analysis of corporations. Really, it's out of Semel's hands once he signs up to be part of that Corporation. Once he signs on the dotted line, he becomes part of that institution. He can always choose to quit, or change things from the inside, but as Giordano and Chomsky have made clear, Semel is responsible to his stockholders. If he ever decides to shirk that responsibility, he could be held responsible civily and/or criminally.
It doesn't have to be like this, of course, but that is the way it is right now. Arguing about Semel's virtuousness, or that of Page/Brin/Schmidt or anyone else, is pointless. We need to address the institution that is a corporation.
When Caterpillar sells bulldozers to Israel so they can raze peoples' houses, they're probably not doing it because they want to build up their personal 'terror' resumes for everyone at the company - they're doing it because they're a corporation and they need to make money that's what corporation do to make money - sell products/services. Caterpillar is not even going to stop after Israel uses one of Caterpillar's armored bulldozers to run over and kill an American. IBM and the Nazis. History is rife with examples of corporations harming Americans and non-Americans alike. And it continues today. None of this should be surprising to anyone.
As I think I said in my previous comment on this topic, the sooner we realize the destructive nature of the institution that is a corporation, the better off we'll all be. There is no such thing as a 'greedy' corporation - corporations are what they are, and that's it. Describing a corporation as 'greedy' makes about as much sense as describing a hurricane as 'windy'.
Posted by: Peter | Jun 11, 2006 12:48:04 AM
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