VERSION OF THE BUFFET RULE : MANAGERS MUST BE OWNERS. I’ve been saying this fore

http://www.forbes.com/sites/timworstall/2013/03/01/solving-the-principal-agent-problem-apple-insists-that-executives-must-hold-company-stock/APPLE’S VERSION OF THE BUFFET RULE : MANAGERS MUST BE OWNERS.

I’ve been saying this forever. The data is pretty clearly in favor of it. And attempts to circumvent it fail.

The value of outside owners is to make sure you’re not privatizing capital in the business. The value of inside owners is to make sure you have the incentives to produce capital not privatize it. Outside non-owners, inside non-owners are I suppose fine for volunteer organizations. But otherwise Taleb’s argument holds: Skin in the game is the only insurance.

Free riding is everywhere.