One concern on the alignment of executive compensation is that it’s especially hard to get executives to care about what happens after they die, unless their perpetual bonds go to their heirs, unlike a regular pension. Even then, they or their heirs can sell those bonds, no? At least in the US, we have laws setting time limits on constraints about how heirs can use or dispose of property left to them.
And if an eternal company’s growth is slow by necessity, then the smart move would be investing the proceeds from perpetual bonds in a diverse portfolio of market-traded faster-growth companies. I understand this is something university endowments sometimes do to get around restrictions on how some funds can be used.
When I look at the world’s actually existing very old companies, I think the end state for an eternal company might look something like Sumitomo Group: diversified enough to survive systemic and idiosyncratic shifts to any subset of its interests, interdependent enough for mutual support to survive downturns and finance needed changes internally, and willing to divest parts of itself when needed. (Kinda like the world’s oldest trees (and largest funghi), that have many above-ground bodies that die all the time, but interconnected wide-spanning root systems and shared DNA.) A lot of long-lived companies are (or at least were) family businesses motivated to preserve intergenerational wealth, like Merck.
Do we, or should we expect to, see any signs that these kinds of companies ae unusually motivated to reduce existential risks?
One concern on the alignment of executive compensation is that it’s especially hard to get executives to care about what happens after they die, unless their perpetual bonds go to their heirs, unlike a regular pension. Even then, they or their heirs can sell those bonds, no? At least in the US, we have laws setting time limits on constraints about how heirs can use or dispose of property left to them.
This is a good point, but I think empirically people don’t really divest/diversify their inheritance? This is something that could be tested. In theory the perpetual bonds of a large eternal company should be some of the safest assets to hold, similar to U.S. bonds. So I don’t think most people will want to sell these for other assets.
When I look at the world’s actually existing very old companies, [...] Do we, or should we expect to, see any signs that these kinds of companies ae unusually motivated to reduce existential risks?
Possibly. I’m not sure we should look at what long-lasting companies do now, since we can’t be sure that they will continue to last long (maybe by now the management has gone bad). It would probably be better to look at how long-lasting companies behaved in the past.
One concern on the alignment of executive compensation is that it’s especially hard to get executives to care about what happens after they die, unless their perpetual bonds go to their heirs, unlike a regular pension. Even then, they or their heirs can sell those bonds, no? At least in the US, we have laws setting time limits on constraints about how heirs can use or dispose of property left to them.
And if an eternal company’s growth is slow by necessity, then the smart move would be investing the proceeds from perpetual bonds in a diverse portfolio of market-traded faster-growth companies. I understand this is something university endowments sometimes do to get around restrictions on how some funds can be used.
When I look at the world’s actually existing very old companies, I think the end state for an eternal company might look something like Sumitomo Group: diversified enough to survive systemic and idiosyncratic shifts to any subset of its interests, interdependent enough for mutual support to survive downturns and finance needed changes internally, and willing to divest parts of itself when needed. (Kinda like the world’s oldest trees (and largest funghi), that have many above-ground bodies that die all the time, but interconnected wide-spanning root systems and shared DNA.) A lot of long-lived companies are (or at least were) family businesses motivated to preserve intergenerational wealth, like Merck.
Do we, or should we expect to, see any signs that these kinds of companies ae unusually motivated to reduce existential risks?
This is a good point, but I think empirically people don’t really divest/diversify their inheritance? This is something that could be tested. In theory the perpetual bonds of a large eternal company should be some of the safest assets to hold, similar to U.S. bonds. So I don’t think most people will want to sell these for other assets.
Possibly. I’m not sure we should look at what long-lasting companies do now, since we can’t be sure that they will continue to last long (maybe by now the management has gone bad). It would probably be better to look at how long-lasting companies behaved in the past.