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What's wrong is that an obsession with a very narrow view of "shareholder value" has led companies to put "maximizing current earnings growth" ahead of another critical priority in a healthy economy:
The happiness and well-being of employees.
What those who obsess exclusively about profits forget is that one company's wages (costs) are other companies' revenues.
If American companies were willing to trade off some of their current earnings growth to make investments in wage increases and hiring, American workers would have more money to spend. And as American workers spent more money, the economy would begin to grow more quickly again. And the growing economy would help the companies begin to grow more quickly again. And so on.
But, instead, U.S. companies have become obsessed with generating near-term profits at the expense of paying their employees more, making capital investments, and investing in future growth.
This may help make their shareholders temporarily richer.
But it doesn't make the economy healthier.
And, ultimately, as with any ecosystem that gets out of whack, it's bad for the whole ecosystem.
par·a·site [par-uh-sahyt] Show IPA noun 1. an organism that lives on or in an organism of another species, known as the host, from the body of which it obtains nutriment. 2. a person who receives support, advantage, or the like, from another or others without giving any useful or proper return, as one who lives on the hospitality of others. 3. (in ancient Greece) a person who received free meals in return for amusing or impudent conversation, flattering remarks, etc. sym·bi·o·sis (smb-ss, -b-) n. pl. sym·bi·o·ses (-sz) 1. Biology A close, prolonged association between two or more different organisms of different species that may, but does not necessarily, benefit each member. 2. A relationship of mutual benefit or dependence.
Our current economic model runs as follows.
A business takes as much as possible, as often as possible, while always giving back the least amount possible in all situations.
Which of the above definitions does this model fit?
Originally posted by Asktheanimals
What this insane profit-driven madness fails to take in to account is the fact that if you can't pay your employees a living wage they can longer be consumers.
There's not enough wealthy to keep these companies in business.
We'll all reap the benefits of corporate wisdom before it's all said and done.