We Cannot Allow This to Continue ...

[mike_c]

20. there is an excellent essay about this topic by Neil Irwin of the WaPo...

...from last year: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/09/how-the-cult-of-shareholder-value-wrecked-american-business/

For too many corporations, “maximizing shareholder value” has also provided justification for bamboozling customers, squeezing suppliers and employees, avoiding taxes and leaving communities in the lurch. For any one profit-maximizing company, such behavior may be perfectly rational. But when competition forces all companies to behave in this fashion, it’s hardly clear that society is better off.

Take the simple example of outsourcing production overseas. Certainly it makes sense for any one company to aggressively pursue such a strategy. But when every company does it, so many American workers wind up losing their jobs or having their pay cut that they can no longer buy even the cheaper goods produced overseas. The companies may also find that government no longer has sufficient tax revenue to educate workers or invest in the roads and ports and airports through which their goods are delivered to market.

Economists have a name for such unintended spillover effects — negative externalities — and normally the right fix is some form of government action. But one of the hallmarks of the era of shareholder capitalism is that every tax and every regulation is reflexively opposed by the business community as an assault on profits and shareholder value. By this logic, not only must corporations commit themselves to putting shareholders first — society is expected to do so as well.