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posted by janrinok on Friday October 11 2019, @10:07PM   Printer-friendly
from the would-it-work? dept.

The rise, fall and rise again of businesses

What's the purpose of a business? For a long time, the textbook answer to that question has been purely "to make as much money as possible for its shareholders". But business leaders – who often themselves get huge payouts from this model – are beginning to challenge this orthodoxy.

Or so it seems. The influential Business Roundtable association of top US business leaders, which includes CEOs of Apple, Boeing, Walmart and JP Morgan, made a landmark statement in August. They committed "to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders". Maximising profits, they said, would no longer be their primary goal.

For many, it was seen as an historic moment for business. Markets, however, greeted the news with a yawn. Both the Dow Jones and the S&P 500 in the US increased marginally on the day of the announcement.

[...] This brief history has us lurching back and forth between the ideas of shareholder versus stakeholder primacy that have waxed and waned over the decades. Are we doomed to pontificate on this endlessly?

As a way forward, I would advocate for a modest approach to end this interminable debate. A Hippocratic oath for corporations, based on seven principles:

1. Do no evil.

2. Pay taxes and adhere to laws and regulations.

3. Avoid interfering in politics.

4. Do not deny science.

5. Focus on core competencies and embrace competition.

6. If invested in the stakeholder model, ensure that stakeholders are represented in your governance structures.

7. If concerned about inequality, start at home.

This approach can help restore faith in corporations, protect their brands and reputation, and avoid accusations of hypocrisy, while focusing their attention on what they truly do best – producing goods or services. To paraphrase the writer Anand Giridharadas: "Avoid virtue signalling and virtuous side projects; do your day jobs more honourably."

And to quote Milton Friedman, business "should engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud".

What do you guys think ??

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  • (Score: 2) by EJ on Saturday October 12 2019, @02:07AM (2 children)

    by EJ (2452) on Saturday October 12 2019, @02:07AM (#906163)

    So, you want businesses to completely toss away all of the American values that our country was founded on? You want them to pay taxes without having political representation?

    Businesses are very often landowners. When issues like bonds come up, those affect property taxes. You think businesses should stay out of such matters that they directly have to pay for?

    The world isn't as simple as you try to make it out to be.

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  • (Score: 2, Insightful) by Anonymous Coward on Saturday October 12 2019, @02:43AM

    by Anonymous Coward on Saturday October 12 2019, @02:43AM (#906176)

    The world isn't as simple as you try to make it out to be, is all we can agree on. According to the top lobbying spenders [] are corporations, and they spend in the millions on lobbying for their best interests.
    I don't see individuals on that list. Meanwhile corporations contribute only 11% of federal tax revenue vs 47% of federal revenue coming from individuals. [].

    Lobbying is what influences policy, it is well known that it has the best return on investment. So while individual taxpayers contribute the lion's share of the federal tax revenue, they don't have much influence on policy.

  • (Score: 0) by Anonymous Coward on Saturday October 12 2019, @04:26AM

    by Anonymous Coward on Saturday October 12 2019, @04:26AM (#906232)

    Thanks for reminding me that I see a conflict between libertarianism and virtually all limited-liability corporate structures. The government should not be able to coerce me into taking pennies on the dollar from a business that has wronged me when its owner has assets I can take.

    Businesses shouldn't be people.