Shareholders’ Endless Hunger
“Much as Sears has declined in the intervening decades, so has the willingness of corporate America to share the rewards of success. Shareholders now come first and employees have been pushed to the back of the line.”
“This shift is broader than a single company’s culture, reflecting deep changes in how business is now conducted in America. Winner-take-some has evolved into winner-take-most or -all, and in many cases publicly traded companies are concentrating wealth, not spreading it. Profit-sharing and pensions are a rarity among the rank-and-file, while top executives take home an increasing share of the spoils.” New York Times, “When Sears Flourished, So Did Workers. At Amazon, It’s More Complicated”, Nelson D. Schwartz and Michael Corkery, Oct. 23, 2018
A long time ago, companies spread more of the wealth around rather than hoarding it all for its shareholders. This article describes what Sears offered as compensation back in its heyday. This was before the ‘70’s or ‘80’s, before the shareholder mantra became the driving force. After the shareholders became the main thing, the workers’ share of the wealth from productivity gains declined so that today, the owner of Amazon is the wealthiest person on the planet while a large number of its employees make less than $35,000/year.
“But its warehouses are staffed primarily by legions of lower-paid hourly employees. Of more than 2,000 workers at its fulfillment center in Carteret, N.J., all but 230 earn less than $17 an hour, or about $35,000 a year.” Ibid.
This scenario is repeated across the corporate landscape and is the picture of the sorry shape we are in. Capitalism is a wonderful thing but it would be much better if the rewards were spread around rather than concentrated in the hands of the few, and it is very dubious that those few are really that deserving of such immense wealth. Those shareholders are not the ones driving the sales and productivity of companies; it is the workers who make it happen.
“What’s happened is that shareholders’ interests have squeezed out other stakeholders,” said Arthur C. Martinez, who ran Sears during the 1990s and was credited with a turnaround. “The mantra is shareholders above all else.”
Decades ago, he said, “the people who produced or sold the product were more central than the people in the corporate suite. There was a different mind-set and it’s linked to the larger issue of income inequality.” Ibid.
Yep, what I have been saying all along: the mantra is shareholders above everything else. Capitalism needs to be adjusted so that the rewards are spread more equitably, not just flow to the shareholders. People are recognizing that the shareholder focus is harmful but I’m not sure if they are ready to make tweaks to capitalism. They are still doubling down on the whole full on free market thing and everything to the shareholders. Instead, they are focusing on the “others” as the source of their ills. Or if they are not doubling down on the free market, they are looking to totally tear it down, which I don’t think is the solution either.
Will we recognize and fix the problem before it gets too bad?
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