Corporate and Union leaders issues report focusing on the importance of long-term growth
Among the conversations here have been a critique of the short-term thinking of corporations. It is no secret that a great deal of external pressure is placed on publicly traded organizations to maximize growth, especially in the short term. This methodology narrows the focus of CEO’s and contributes to the perception that things like “the environment” or a “sustainable and well-trained workforce” are mere externalities.
A few weeks ago, the front page of the Financial Times, featured a report issued by the Aspen Institute’s Business and Society Program. This initiative brought such varied interests as the AFL-CIO, Pfizer, Inc. and Council of Institutional Investors - to begin shifting investors away from quarterly earnings, and begin looking at long term health. A summary of the report as follows:
- “Companies to stop providing quarterly earnings guidance to analysts, and to not respond to analyst estimates.”
- “Corporate boards to communicate with “long-term oriented investors” on senior executive compensation.”
- “Requiring senior executives to hold stock they are given for at least some period beyond their tenure with the company, thus tying them to the long-term growth of the company.”
- “Banning senior executives from hedging the risk of stock options of long-term oriented compensation.”
- “Providing for “clawbacks,” which involve recouping senior executive compensation that was awarded based on the achievement of performance targets that were subsequently slashed or wiped out by corporate financial restatements.”
I just thought it was interesting that a dialogue is present within Corporate America is aimed a remedying what economically left leaning people would agree is a problem (chronic short-sightedness). Of course, the likelihood that an educational effort will effect the habits of hedge funds and other short term investors is another story all together, on this point I echo what Josh said, “don’t quit your day job”.
on June 28th, 2007 at 9:04 pm
This is an interesting find. And yes, no amount of education will cause those that currently benefit from the system, any system, to transform. If you are on top of the pile there is no incentive to change your relationship with the world, unless it looks like changes outside of your control are going to cause the pile to shift from underneath you.
History has shown, however, that corporations generally, and wisely I might add, seek to control the situation rather than shift according to potential and likely changes. Control is the most rational course of action. Why adjust when it is easier to keep things the way they are, a way that has been most beneficial to you? See Ford motor company business practices over the last 30 years for a good example.
Control, predictability, consistency, these are the exact things that drove our ancestors to form societies in the first place. It is much easier on the psyche, the body, the family and the society to have consistency. Row crops & domestic cattle are more stable than hunting and gathering. These consistencies allow you to plan for the future with much greater confidence and less risk of utter failure (which means in its literal sense, death).
The libertarian notion of a “free” market has never been and will never be. It is a highly unwise choice for a person to go-it-alone in the world, even if such a course of action were feasible. Corporations will also, wisely, not support such an environment (see www.taxpayer.net for some egregious examples of corporate welfare), but nobody on this blog has ever advocated a “planned” economy.
The notion of there being a choice between planned markets and free markets is the real straw man. The true choice is about whom you want to be the master. Should it be corporations as we presently know them (self-interested at the expense of family, country and God) or something else? The answer is something else. So now it’s time to make that happen. Employee-owned companies, community development corporations and their like are the new frontier. These endeavours are more democratic, require and encourage personal responsibility and are rooted in the communities they serve. An employee owned company has many incentives not to leave town, pollute its environment or screw its workers.
Libertarians yearn for a time that never was and socialists dream of a day that will never be. It’s time for both camps to drop their illusions and come back to reality.
on June 29th, 2007 at 12:41 am
Josh, thanks again for the discourse… one of the main problems I find in your arguments is your conception of a corporation as some sort of sentient being. As we all know corporations are made up of people, and corporate actions are the product of the combined actions, morals, and ideas of its constiuents (shareholders, employees, and customers.) I am not suggesting that if we’d only provide universal Kindergarten we would have solve everything. But if we can affect a dramatic alteration of the social character of our society, then we will see a radical shift in the conduct of our economic affairs, regardless of what sort of system we pursue.
Western Industrialization occured in the wake of “The Enlightenment.” People gathered in cities, and began competing with others that they had less and less in common with. While at the same time much of the dominant philosophical thought promoted, or at least entertained, the idea that it was more important to look virtuous than to actually be. Entire empires were built on this very notion, one of which eventually splintered creating the offshoot we call America. As populations grew and technology progressed it became harder to hide the immorality and hypocrisy of it all, the cultural revolution was seeded, and technology now threatens to shine the light on the skeletons in the closets. More and more people from all walks of life (including, arguably, your Freegans,) are seeing the Emperor’s New Clothes for what they really are, or aren’t.
The most important issues facing our generation today are the encroachment of government on personal and economic liberty, especially in relation to the very tools which can save us; and, the revitalization of our disintegrating social communities throughout our society, which is what I meant, and may have slighted if I refered to it solely as education.
Perhaps we can bring more focus to this discussion. Do you agree with my characterization of the important hurdles facing our generation, and by extension our burgeoning community here? If not, what do you suggest is the “roadmap” (to steal a Bush Administration fave) to a better world?
Since we’re ending our posts with sound bites this time, how about this one:
“The Greatest Trick the Devil ever pulled was convincing the world that he didn’t exist.”