Joe Nocera has an important column in the Times today about the cult of “shareholder value” and its impact on American capitalism over the past 30 years. Starting with T. Boone Pickens, and accelerating with privaty equity firms like Bain Capital, a simple idea took hold of corporate America: the most important function of a company was to produce as many profits as possible for its shareholders. What could be more simple than that?
But what happened was that the necessity for long-term stewardship and planning quickly fell by the wayside. Executive salaries–especially in the form of stock options–exploded. Research and Development departments withered (no short term profits there). Now, Nocera writes, there’s the beginning of an academic backlash. It’s about time, but I wonder what impact it will have on our gone-amok culture of quick-draw profit-taking.
Which is where Romney comes in: I’m far more interested in whether he thinks the culture of shareholder value has gone overboard than I am in the layoffs that accompanied Bain takeovers. I’d like to hear him talk about corporate stewardship, about long-term planning–because the enterprise he’s angling to run, the United States of America, needs long-term planning far more than it needs a short-term fix. If we’re going to have a the “serious” discussion of issues he claims to want, but has never provided, the cult of shareholder value has to be on the table.