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Geoff Lee

It beggars belief

17 posts in this topic

Last week shopping in my local supermarket I read on the front page of the Daily Express that Phil Bentley, Chief Executive of British Gas was leaving the company with a payoff worth up to £13million. Today I was in there again and read in the Daily Record that Ian Marchant, the Chief Executive of the energy provider, Scottish and Southern, is leaving their employment later this year with an even bigger payoff worth up to £15million.

Now if these two people had spent the last couple of years working hard to reduce the cost of everybody's heating bills then those obscene amounts of money, would be one thing. But their time has been spent in making decisions that have resulted in the cost of gas and electric almost doubling in price.

Good for the shareholders who are enjoying high profits, bad for most householders many of us now moving into fuel poverty.

So Bentley and Marchant and others in a privileged position like them can say to each other "We are all in this together" and the rest of us can also say to each other that "We are all in this together".

But only a fool would believe that the whole lot of us are all in the same thing together.

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Whilst I see where you are coming from, they are paid by their shareholders to generate a profit, and increase the value of their respective companies, which they appear to have been successful at. Whether this is moral or not is a different question, and perhaps really ought to be one as to whether utilities should be nationalised or not.

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Try buying a newspaper instead of just reading them in the supermarket,cheapskate.

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As an aside, I happen to think that priorities are often the wrong way round with regards to fuel bills. Rather than working out more and more ways to try to generate power, at an ever increasing cost, perhaps the focus should shift more towards to to get people to use less energy, by means such as better insulation, etc. A year or two ago, Kirklees council ran a scheme where they would fit loft & cavity wall insulation for free. Perhaps this should be rolled out as a national policy.

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The primary function of a company shouldn't be just to generate profit for its shareholders but to produce goods and/or provide services for its customers, if you get that right then the shareholder profit should follow. That's capitalism, in a free market. You have to do the goods and services bit better than the competition in order to drive up market share and company value. Problem is, with utility companies, there is no competition to speak of so quality of service and price to the customer don't really come into the equation. Therefore prices rise and service is poor yet profit soars.

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The primary function of a company shouldn't be just to generate profit for its shareholders but to produce goods and/or provide services for its customers, if you get that right then the shareholder profit should follow. That's capitalism, in a free market. You have to do the goods and services bit better than the competition in order to drive up market share and company value. Problem is, with utility companies, there is no competition to speak of so quality of service and price to the customer don't really come into the equation. Therefore prices rise and service is poor yet profit soars.

I'd argue that's the other way round, the primary function is to generate shareholder wealth, and the way to do that is to produce goods/services that have good customer demand.

Same outcome though, and you're quite right that in the utility market, competition is such that it is effectively run as a cartel.

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I'd argue that's the other way round, the primary function is to generate shareholder wealth, and the way to do that is to produce goods/services that have good customer demand.

Same outcome though, and you're quite right that in the utility market, competition is such that it is effectively run as a cartel.

It's not quite the same. The primary function of most good companies is to produce goods and services that customers want - the profits and shareholder value follow.

If you do it the other way around, it generally looks good in the short term, but then goes horribly wrong.

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The Financial Services Authority (FSA) has recently received a slap on the wrist from a committee of MPs for its past failings, leading to a financial crisis as well as huge losses for investors. That said, those at the top received generous bonuses and salaries whilst being immune from any comeback. I'm not sure if anything will change once the new Regulator comes into force.

Like you said, we aren't in this altogether.

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pay-graphic.jpg

I see things like this and am reminded of Yeats' The Second Coming:

Turning and turning in the widening gyre

The falcon cannot hear the falconer;

Things fall apart; the centre cannot hold;

Mere anarchy is loosed upon the world,

The blood-dimmed tide is loosed, and everywhere

The ceremony of innocence is drowned;

The best lack all conviction, while the worst

Are full of passionate intensity.

Surely some revelation is at hand;

Surely the Second Coming is at hand.

The Second Coming! Hardly are those words out

When a vast image out of Spiritus Mundi

Troubles my sight: a waste of desert sand;

A shape with lion body and the head of a man,

A gaze blank and pitiless as the sun,

Is moving its slow thighs, while all about it

Wind shadows of the indignant desert birds.

The darkness drops again but now I know

That twenty centuries of stony sleep

Were vexed to nightmare by a rocking cradle,

And what rough beast, its hour come round at last,

Slouches towards Bethlehem to be born?

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It's not quite the same. The primary function of most good companies is to produce goods and services that customers want - the profits and shareholder value follow.

If you do it the other way around, it generally looks good in the short term, but then goes horribly wrong.

The only function of a company is to extract surplus value from production (i.e profits). Everything else is peripheral.

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The only function of a company is to extract surplus value from production (i.e profits). Everything else is peripheral.

Hmmm. No.

In the real world, and this is the oddest thing, companies that try to provide a useful service or product to their customers tend to be able to extract much higher and more sustainable surplus value than those who go for the surplus value directly. Strange, but true.

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Try buying a newspaper instead of just reading them in the supermarket,cheapskate.

Would you want to be seen buying the Express?

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Hmmm. No.

In the real world, and this is the oddest thing, companies that try to provide a useful service or product to their customers tend to be able to extract much higher and more sustainable surplus value than those who go for the surplus value directly. Strange, but true.

Ah the myth of the 'good' capitalists that are about more than just profits.

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Ah the myth of the 'good' capitalists that are about more than just profits.

The "good" capitalists know that the best way to make profits is to approach the problem obliquely.

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Rugby League World - April 2017

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