Z, Blue,
Why A Mutual HOA is much more socialistic than IBM?
A share company has a very large degree of information of how well its doing: as much as it gets, actually. By simply looking at the price of its shares it can determine whether capital is attracted or not to the company. In such circumstances management has immediate feedback of its performance and can act accordingly.
The company is owned by shareholders, but they relinquish their right to day-to-day manage IBM and retain just the right of exit as their tool of making sure the company is well oiled. Decisions are made by management with 1) the power do to as it pleases, 2) the means to know whether its doing ill or good and 3) the incentive to make sure it does good.
A mutual company, on the other hand, has no feedback at all on how well its doing.
Does profit mean anything when your client are your owners/ not at all! A mutual cannot calculate!
The only feedback the mutual will get is the rent it can charge. But unlike profit, rent mean nothing for a mutual. Its owners gain nothing when rents go up, and neither do they loose anything if they go down. Thus, even if some rudimentary feedback exists, the mutual has no incentive at all to act according to the feedback!
The mutual will be an assembly of guys trying to maximize their subjective values by voting alone. We all know how well that went for socialist countries and Israeli kibbutzim.
A single owner HOA, on the other hand (or a shares HOA, for that matter) has both the means to calculate how well its doing, and the incentive to act*.* As things stand I really see no reason at all why, among two similar HOAs, anyone would chose the Mutual. It is my belief that such HOAs would cease to exist in a fully free market.