The Wall Street Journal is shocked – shocked – that a few shareholders can redirect a company’s goals. The economic myth has been that wise investors – like our wise and mature electorate – will inevitably lead corporations into the best and most productive economic and social goals.
Further, that paragons of virtue sitting on the “board” will make the right decisions to aid all the “stakeholders” – investors, employees, the public, the original owners. But, of course, that is not true and never has been.
For one thing, in “public” corporations, “investors” are really speculators, seeking to make vast returns on often highly leveraged stock positions. Since the days of canals and railroads – if not before – the only goal is to raise the stock price. If that requires looting a company’s assets, destroying its business, “downsizing” old employees – so be it. Dynamic free enterprise capitalism at work we are told.
Or just nasty people out for a quick buck. And even they often have little control over a business unless they manage to pack the boardroom. The little “investors” who put money in stocks rarely understand this.
Does it really work? Kinda. Wealth is produced, especially in the beginning. Some large firms – “too big to fail” – become in effect bureaucratic outposts of government.
But that isn’t how they teach it in books.
HuntingtonHarborThoughts 