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Companies Shouldnt Be Accountable Only to Shareholders
Key Excerpts from Article on Website of Wall Street Journal
Posted: August 27th, 2018
https://www.wsj.com/articles/companies-shouldnt-be-accountab...
Corporate profits are booming, but average wages havent budged. In the early 1980s, large American companies sent less than half their earnings to shareholders, spending the rest on their employees and other priorities. But between 2007 and 2016, large American companies dedicated 93% of their earnings to shareholders. Because the wealthiest 10% of U.S. households own 84% of American-held shares, the obsession with maximizing shareholder returns effectively means Americas biggest companies have dedicated themselves to making the rich even richer. In the four decades after World War II, shareholders on net contributed more than $250 billion to U.S. companies. But since 1985 they have extracted almost $7 trillion. Thats trillions of dollars in profits that might otherwise have been reinvested in the workers who helped produce them. Before shareholder value maximization ideology took hold, wages and productivity grew at roughly the same rate. But since the early 1980s, real wages have stagnated even as productivity has continued to rise. Workers arent getting what theyve earned. Companies also are setting themselves up to fail. Retained earnings were once the foundation for long-term investments. But from 1990 to 2015, nonfinancial U.S. companies invested trillions less than projected, funneling earnings to shareholders instead. This underinvestment handcuffs U.S. enterprise and bestows an advantage on foreign competitors. We should insist on a new deal.
Note: The above was written by Sen. Elizabeth Warren in conjunction with her introduction of the "Accountable Capitalism Act". For more along these lines, see concise summaries of deeply revealing news articles on corporate corruption and income inequality.
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