Shareholder Creed: Someone is finally recognizing the damage

Finally someone is recognizing the damage of the insistence of the primacy of shareholder value over everything else. It took someone who is both a shareholder and a former employee to say that maybe, just maybe, we are doing great damage. The New York Times article, "Penalize Companies That Export Jobs", provides a good insider's perspective on the issue of globalization and jobs. His company gave the reason that suppliers were moving to Mexico and that the company needed to be close to them. The author also brought up the topic of NAFTA.

But he also says

...I have to admit to a growing sense of guilt in unwittingly helping to foster this job exodus. In pursuing returns, are shareholders putting pressure on executives to slash costs by exporting good-paying jobs to developing nations?

The core problem is that shareholder returns - and executive rewards - became the paramount goals of corporations in the 1980s, as Hedrick Smith reported in his 2012 book "Who Stole the American Dream?" Instead of rolling some of the profits back into building their industries and educating workers, executives began cutting costs and jobs to improve their bottom lines...

The author, Michael Riordan, brings up some really important points: 1) shareholders have been putting too much pressure for bottom line results; 2) since 1980s, the emphasis has been on shareholder values; and 3) corporations no longer invest in their workers. So today, everything is about the shareholder and this shareholder mantra can lead to bad behavior, such as shown by the bad boy of the pharmaceuticals, Martin Shkreli. His excuse for jacking up the price of a drug from $13.50 to $750 was that he had to provide value to the shareholders. That is the same line of thought that led companies to cut training expenses: it was thought that training did not provide value. And now today, these executives complain that their people are not prepared for the future and that they can't find employees with the right skills. In the meantime, folks are trying to upgrade their skills in the face of declining wages, longer work hours and increasingly expensive tuitions.

As a solution, the author suggests penalizing corporations that export jobs. I think that is a good "quick" solution, but I fear that we need to do more. We need to change the minds and hearts of business people to turn their focus away from shareholder value to something bigger. I don't know what exactly but maybe providing value to society as a whole. This kind of change would take years, if not decades, to accomplish. It would involve changing university level education, especially Harvard, and changing Wall Street. Yes, it would be difficult in the face of the lure of money. But with climate change (driven by the greed of oil companies) and increasing inequalities, we have to do something before society and the world crack apart in revolutions.

So yes, let's start by penalizing companies that export jobs.