A Voter Revolt Against 'Shareholder Value' - WSJ - 0 views
www.wsj.com/...t-shareholder-value-1475621860
corporate shareholder value responsbility market fundamentalism
shared by Javier E on 08 Oct 16
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a Feb. 29 quotation from Leslie Moonves, chairman of CBS, CBS -1.76 % that sums up everything wrong with today’s media culture—and with corporate America.
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Reflecting on the Trump phenomenon at a media and technology conference, Mr. Moonves said that “It may not be good for America, but it’s damn good for CBS.”
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Mr. Moonves is saying that CBS’s only responsibility is to maximize profits, not only in its entertainment division, but also in its news operation
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He knows that what his network is doing is against the national interest. He has just enough conscience to be aware that it is “terrible,” but not nearly enough to stop doing it. It might impair shareholder value, after all.
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Mr. Moonves is suggesting that there is no difference in principle between entertainment and news. Both should be judged by the same standard—ratings. If policy speeches don’t attract large enough audiences, cut to a Trump rally.
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If the leading purveyors of broadcast journalism make no distinction between news and entertainment, then who can blame viewers for seeing no difference between entertainment and politics?
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American politicians and parties have used entertainment to draw audiences for the better part of two centuries. But there used to be countervailing forces, including prestigious broadcast news organizations. Not anymore. Once these organizations served as gatekeepers; now they are open-door enablers.
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They are all in the grip of the same misunderstanding, that their business begins and ends with maximizing shareholder value.
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It is Milton Friedman’s theory. “There is one and only one social responsibility of business,” he wrote in “Capitalism and Freedom,” “to use its resources and engage in activities designed to increase its profits.”
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during the 1970s, inflation, recession, a stagnant stock market and rising competition from abroad created an opening for Friedman’s theory, which soon dominated corporate boardrooms.
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In the name of maximizing shareholder value, corporations moved plants and jobs around the world, paid the lowest wages they could get away with, and scheduled work assignments to maintain managerial “flexibility,” whatever the consequences for workers’ families. Meanwhile, their lobbyists engineered a myriad of special interest breaks in the corporate tax code.
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Now we can see what four decades of pursuing shareholder value at the expense of everything else has yielded
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The revolt against the corporate economic agenda—free trade, a generous immigration policy, lower corporate taxes and the rest—is sweeping the country.
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As the Republican rank and file has turned against corporations and New Democrats have given ground to left-wing populists, big business has been left politically homeless.
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Its first step should be to back long-overdue proposals for improving workers’ lives and incomes. Paid family leave is an idea whose time has come; so is a catch-up increase in the federal minimum wage; so are stable and predictable schedules for part-time workers.
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Above all, corporate leaders should grasp the distinction between immediate gain and self-interest rightly understood. Pushing for the last increment of profit over the next quarter and the one after that comes at the expense of the strategies that can leave firms best positioned for the future.