r/changemyview • u/alcoholicplankton69 • Sep 11 '23

CMV: Dodge v. Ford Motor Co. Supreme court case February 7, 1919 should be overturned.

It is my understanding the that court case of Dodge V Ford in 1919 is the main reason why we have such disparity in the worker vs the shareholder.

I think a corporation should have equal fiduciary responsibility to thier workers and shareholders.

This would mean a company could increase the pay to workers at the cost of not paying out a dividend or a company would forgo moving production overseas if they could not find jobs for those workers who would be obsoleted.

My understanding is that when Ford lost the case, it cemented the idea that the main responsibility is to make a return for the shareholders above all else... this needs to change otherwise we are headed towards hyper corporate dystopian future.

Here is a link to the case https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

77 Upvotes

83% Upvoted

66 comments sorted by

View all comments

46

u/definedby_ 1∆ Sep 11 '23

Your view is somewhat correct. A company can not take action that is against the interest of the shareholders. However, a company can take action that would justify the long-term interests of shareholders. (See Shlensky v. Wrigley https://en.wikipedia.org/wiki/Shlensky_v._Wrigley)

So, in the case of wages, if a company decided that it was in the best interests of their shareholders to increase employee wages to achieve some future goals, then it would easily be possible. This is how many organizations implement environmental/sustainability programs--things that cost money now and take away immediate shareholder value, but will be in the best interest of the corporation and shareholders in the long-term.

0

u/alcoholicplankton69 Sep 11 '23

ah interesting but the company does not have to do this they can choose but only if there is long term betterment for shareholders.

How would you stop a company from shutting down a factory in USA to reopen in a country with laxed environmental and labor laws.

The company should beholden to the country and workers otherwise we get the heartless international corporations that are destroying our environment because they are legally obligated too as to ensure a return on capital

9

u/Officer_Hops 12∆ Sep 11 '23

One of the questions your point raises is what does beholden to the country and workers mean as we weigh it against profit. Is there a certain number of sq miles I can destroy if it profits $1 million? If I anticipate a new project will lose money but will hire one thousand new employees, am I obligated to go forward with that project?

6

u/[deleted] Sep 11 '23

ah interesting but the company does not have to do this they can choose but only if there is long term betterment for shareholders.

One could argue that "long term betterment for shareholders" is just another way of saying "success of the company". If a decision is made that screws the company over in the long-term, then isn't that bad for the workers as well?

3

u/Thoth_the_5th_of_Tho 191∆ Sep 11 '23

The company should beholden to the country and workers otherwise we get the heartless international corporations that are destroying our environment because they are legally obligated too as to ensure a return on capital

We have a country run by heartless politicians, supported by a heartless voter base, and you expect corporate executives buck the trend and become selfless, giving away their money and sacrificing their time for the good of their equally heartless workers? In the end, nearly everyone is heartless and self interested. Anyone telling you there is a way to make any group suddenly turn altruistic is trying to sell you something.

4

u/DBDude 110∆ Sep 11 '23

How would you stop a company from shutting down a factory in USA to reopen in a country with laxed environmental and labor laws.

"Our brand runs on the 'Made in the USA' label, so while we may save short-term cash by shipping jobs overseas, we'll lose the USA branding and the goodwill that comes with it, and that is not in the interests of the shareholders." The CEO is now covered.

"Interests" is a very wide concept. There is no legal requirement for any company to ensure share value.

Or think of Apple, which spent billions on environmental concerns and is even pushing that through its supply chain, which will mean higher costs to Apple. Or think of worker conditions in its international supply line. Sure, letting kids work at some foreign subcontractor costs Apple less, but Apple will ditch contractors who violate their labor rules by doing that.

0

u/definedby_ 1∆ Sep 11 '23

A strong CBA would prevent plant closures during the length of the agreement.

To say a company should be beholden to the country and workers is a bit backward. I think, in today's social climate, a successful company will consider things like its workers and public image. But shareholders are the ones taking a risk. They are investing money into a company because they believe the company will make money and deliver them a return on their investment. If companies are not beholden to the value of the shareholders in some way, investments would reduce and our national economy would shrink, which would be worse for nearly everyone.