U2 - Class 9 - Sears and Ayn Rand Flashcards
ayn rand
Judgment cannot be based on whims because you must be rational in order to maintain a profit. If someone forces you to do something that is wrong. If it is the government to rescue others then the government is unethical
Price gouging and Covid
If the government wants to crack down on loan operations with high interest rates, is that a violation?
From lenders POV, you can increase rate to stay in business
sears’ downfall
CEO runs Sears like a hedge fund
Decentralized company too much and harassed/abused employees
Weird narcissist
Thought investing approach would work for a retail company
Delegation of leadership was to dozens of other companies
Everything was its owns business
Sears had 30+ businesses
Eddie Lampert
He bought Sears and K-Mart. Owns 55%.
Killed Sears
sears story
“Lampert runs Sears like a hedge fund portfolio, with dozens of autonomous businesses competing for his attention and money. An outspoken advocate of free-market economics and fan of the novelist Ayn Rand, he created the model because he expected the invisible hand of the market to drive better results. If the company’s leaders were told to act selfishly, he argued, they would run their divisions in a rational manner, boosting overall performance.“ (Bloomberg Businessweek, July 11, 2013)
“[T]here were more than 30 slots to fill at the head of each unit. Executives jostled for the roles, each eager to run his or her own multibillion-dollar business.”
“Because Sears had to hire and promote dozens of chief financial officers and chief marketing officers, personnel expenses shot up.”
“Individual business units started to focus solely on their own profitability and stopped caring about the welfare of the company as a whole.” (Bloomberg Businessweek, July 11, 2013)
rand vs sears: sears
Selfishness:
Change order and not help with reorganization for structure.
Didn’t want to hire new people so they had people reorganize themselves.
Rationality:
People were not rational in thinking Sears was doing better than it was
Irrational to think economy would save them based off assumptions
Irrational to think investing strategies would work for retail
Competition and Cooperation:
Created competition within branches as they fought for a spot to market
rand vs sears: rand - your ethical obligation is to be rich and successful not that you follow her and become rich
Being selfish will promote survival
Key is to be rational and it is the ultimate ethical guideline
Competition is good in the free market because it promotes individual selfishness
Cooperation is possible because people receive what they deserve and will not take what they earn - these are traders
discussion question 1: What went wrong at Sears? Was it Rand’s idea or Lampert’s execution?
His execution of it.
discussion question 2: Why does Rand believe that the invisible hand of the free market is ethically justified?
It promises a better world if people are simply allowed to pursue their own self-interest without regard to the impact of their actions on others. After all, others are simply pursuing their own self-interest as well.
discussion question 3: Why does Shikha Dalmia argue in the Forbes article that Rand failed to recognize that human beings have “an innate need to see others prosper”?
Other people like to see other people thrive not be miserable
discussion question 4: Why does Dalmia argue that only young people follow Rand and as they get older, Rand gets harder to take? Do you agree?
When you’re younger you focus on yourself but as you age you start to focus on others
objectivism (all)
Objectivism is a theory that pushes American values to the limit. Values capitalism, free markets, people must be alone to develop themselves
–> Bottom line: be rational, think hard, don’t let emotions dictate your actions, be all you can be so you can be the hest over your lifetime
Big decision rule in Objectivism (Two parts of her rule):
- Be rational
- Americans can be sloppy as they think emotions give us reason to change how we interact with others
- She proposed that only way humans know things about position is through reasoning
- Primary obligation of human is to be rational at all time - Be all that you can be
- Build yourself into the best human you can be
- What would be best for me in the long run to develop myself
Pros
- Reinforces personal responsibility
- Rand wanted people to not be moochers
- Each human must have the responsibility for themselves so they can develop themselves so they can be responsible for both pros and cons in their life
- Virtuous thing for people who have large capabilities who exercised them to their fullest to also help others who are trying with what they have
Cons
- Individualistic and judgmental
- Self-centered theory
- Needs more community orientation
- Too judgmental because it is quick to say you’re not behaving this way so I won’t help you
- “You’re not pulling your own weight”
Management by Black Belt
- This small company and the founder wanted competitive and independent people
- We want people who will work their hardest
- He was founding his business with Rand’s principles
- Firm became lucrative
- Low turnover rate
- Judgmental and rational and competitive and productive
objectivism - background info
Ethical decision rule #4 Objectivism
- Rand (Russian) - created objectivism
- Spent time US talking about american values
- Convince us that we have a wonderful system
- Founding values and treasure our history
Objectivism is a theory that pushes American values to the limit. Values capitalism, free markets, people must be alone to develop themselves
–> Bottom line: be rational, think hard, don’t let emotions dictate your actions, be all you can be so you can be the hest over your lifetime
