 Wait, so I used to ask the students, let's say you only wanted a maximum share of the wealth. Then what you do is you chain your employees to their machines and you whip them three times a day. And the students would say, whoa, whoa, no, no, no, you don't do that. I said, why? Well, A, you'd go to jail, but B, because the employees are not gonna be productive. Oh, she mean you're gonna pay them. How much are you gonna pay them? You're gonna squeeze every last dime out of them. You're gonna pay them as little as you can. Well, no, because you want them motivated. You want them excited. You want them productive. You want to maximize their productivity. So you're gonna pay them in accordance with their productivity. And you can incentivize them. You're gonna motivate them. You're gonna try to get them to be more productive, more knowledgeable, and more beneficial to shareholders. And by the way, this is not because you care in some floating way about your employees. It's because you care about making money. Of course, you also care about your employees. Why? Because they're human beings. And because you work with them, since it's a business, and the purpose of business is, as Milton Friedman said, make money. You still care about them because they help you make money. And you care about your suppliers. I used to say, yeah, so what you mean is because you only care about your oldies. You don't care about suppliers anymore because we don't believe in stakeholders, right? So you treat them really, really bad. You never pay on time and you drag it out. And everybody says, no, no, no, no, that can't be right. Because if you treat your suppliers badly, they will treat you badly. You won't get your product in time. You won't get it all. Oh, so you mean you're gonna treat your suppliers fairly. You're gonna wanna make sure that they make money and that you pay them on time because you want them to deliver on time and you want them to deliver you the best product possible. Absolutely. And you notice once you go through the stakeholders, you notice that focusing exclusively on shareholders actually makes all your other relationships better. All your other relationships healthier. You're not weighing some kind of meaningless utilitarian function. You're laser focused on one thing. Shoulder wealth maximization and as a consequence, treat employees well, treat suppliers well, treat your banks and your credit as well. You know, treat your customers obviously really well. These are all the consequences. And it's a recognition. It's a recognition of an important principle in objectivism. A recognition of the idea that there is no conflict between rational people with rational goals. If an employee is trying to maximize his life and trying to be productive and ambitious and viewing this as a career and you as his employer, you're not in conflict. You have the same goal. And you might, you know, oh, not you, you have the same goal. Your goals are consistent. Your goals are not in conflict. Your goals integrate. And this is true of self-interest. When individuals pursue their rational, long-term self-interest, it doesn't put them in conflict with one another. It's the opposite. Rational self-interest is a system, a moral system that creates harmony among rational people. What creates conflict is utilitarianism. Because if I focus on you too much and I'm not focusing on him and if I focus on him, then you feel slighted. And wait a minute. Are you waiting his views more importantly than mine? And altruism in morality and utilitarianism in morality create conflict. Socialism in politics creates conflict. Why? Because wait a minute. You're taking from me and giving to him? Why? And why to him? I want you to give to those other people over there. And that third group over there really wants the money and why? So how do you decide? Well, pressure, pounding on tables. I mean, just look at the debate right now on this inflation, whatever, Bill, right? Every little group, business groups, employee groups, environmentalists, every little group out there, they're trying to grab, they're trying to grab their little piece because it's a pie and now everybody's trying to fight over the pieces of the pie. Shockingly, that doesn't happen in a market. In a market, we transact. We can't reach agreement on a price, we walk away. But there's none of this viciousness of grabbing other people's stuff. That's what statism creates. That's the kind of system that is fundamentally a system of conflict. Capitalism is a system of harmony. All right, I've already gone an hour, almost an hour. So let me just say this and then I'll take your questions and we'll do part two tomorrow at 8 p.m. East Coast time. This conflict between stakeholder theory and shareholder wealth maximization was fought in the 80s and 90s, but the fact is that during the 80s and 90s, American business did very well. And focusing on shareholder wealth maximization and compensating managers using stock options worked phenomenally well. America saw a massive reallocation of capital from the West Belt to Silicon Valley. We saw the creation of these massive industries around technology, even the industry in which Bud works. The industry, in a sense, invented tracking. And we saw a real renaissance in American oil and gas by use of this new technology that was developed because of the profit motive to try to better utilize, try to take, spent wells and extract more from them, greedy. And stakeholder theory kind of was there always in the background, but it didn't really go anywhere because the fact is American business was doing phenomenally well. And relatively speaking, the American economy was doing well and nobody wanted to shake things up. But all of that really changed with the financial crisis. Financial crisis was deemed as the failure of capitalism. Financial crisis was deemed as a corporate failure of really everybody focusing too much in quotes on profit, too much on shareholder wealth maximization, forgetting about all the other values that were there. And the Occupy Wall Street movement, the rise in the debate over inequality. And then the big issue coming out in environmentalism, in a sense, environmentalism which had been around since the 1960s, in the 2000s, coalesced around one issue, which made it much more effective because it became one issue, all about one issue. Not about clean and clean water, but all about climate change. And what you saw in the late 2000s was an anti-capitalist, anti-corporations, anti-shareholder wealth maximization kind of coming at it from all these different directions, from the direction of environmentalism, with climate change, from the direction of culture, with DEI issues of diversity, and from the direction of social responsibility and stakeholders. And really, with the financial crisis, this opened it up to this considered attack on American business. And what had also happened is that even though we didn't see stakeholder capitalism really being affecting corporations that much during the 90s and early 2000s, students were being taught this stuff in business schools. Business ethics classes were dominated by stakeholder theory. And now these students who had studied in the 80s and 90s were becoming senior managers, were becoming CEOs, and suddenly they started caring. And one more dimension entered it, and I'll end there because I'll leave you and then we'll talk about all this next time. And the other dimension was, in a sense, an innovation. Somebody, and I don't know who thought of this, but somebody thought, well, what if we become shareholders? And what if we, as shareholders, insist that they take other stakeholders into account? What if we use these big financial institutions that are being created, and by the way, being created because of the way we tax, because of the way we structure savings, because what if we use these institutions to actually force managers to change their behavior? Not by asking them to change the powder, but by forcing them to listen to us because we're now shareholders. And that has turned out to be brilliant on their part because that has turned out to be the lever that they needed in order to bring stakeholder theory right into the heart of the business. They changed the name, they call it ESG, Environment Society Governance, to capture everything. It's no longer stakeholders. We no longer care about any particular stakeholder. We no longer want a list of all the stakeholders. We are now telling you what's important. What's important is climate change. What's important is the women and minorities and everybody else have equal say on the board of directors, that's governance. And what's important is diversity, that's society. And what's important is that you don't maximize shareholder wealth. By the way, we are the shareholders now. So they have restructured the debate, and by restructuring the debate, they have captured much of the high ground and so many American businesses have fallen into this. So ESG is the latest iteration. I think it's the most powerful iteration. The way it's being applied is incredibly powerful. It's unbelievably damaging. It's unbelievably destructive. I just saw a couple of articles that are saying now with inflation and with people that consider with other things, ESG is undeclined, it doesn't matter if it declines for a few years. Ultimately, these ideas are not gonna die, and they're not gonna die as long as we accept. Sacrifice, altruism, utilitarianism, the philosophy of a king. As long as we accept those philosophical ideas that somebody else can tell us what's good for us, that we should maximize society's wellbeing or stakeholder wellbeing or environment wellbeing or whatever, as long as we accept those ideas, we keep losing and we will continue to lose, and ESG will get stronger. So all right. Thank you for listening or watching the Iran book show. If you'd like to support the show, we make it as easy as possible for you to trade with me. You get value from listening, you get value from watching, show your appreciation. 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