Monday, 23 June 2014

Democracy, Corporatism & the Treadmill of Maximizing Shareholder Returns

Democracy is not in the cards for corporatists. The pandering, sensationalism and distraction techniques are correlated with the rules of the game being skewed in favour of the interests of the publicly traded corporations, or so they think. The power and influence pendulum has swung too far to the right due to tax laws which changed back in the 70s.

Corporations dictate public policy-making and what stories make headlines because profit maximization is their be all and end all. They don’t all do it because they are immoral, but because the corporate tax laws are such, that there is no other choice. Once you are on the treadmill of maximizing shareholder return, you just have to exploit every resource and market you can and work your PR engine to mitigate public discontent. It is sort of a ‘be careful what you wish for’ type scenario. This is what happens when blind faith in an overly simplistic trickle down/ free market economics strategy becomes the soothing sound byte that inoculates the minds of constituents for far too long.

Roger Martin author of Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL, has the backstory and a solution worth studying.

Ironically, putting shareholder returns ahead of customer satisfaction is simply moronic for both individuals and corporations in the long run. The basic problem is the definition of “long-run” in the minds of the public has gone from decades to days, or even minutes. Knee jerk impulse rules the day.