Below are my thoughts in the form of a commentary. This crisis is the opportunity to rethink the fundamentals of the economy... should it be based on greed or the broader good?...
I applaud President Obama's pragmatic and honest approach to jump starting our economy, but he is also missing a bigger opportunity. I have no doubt we can get this economy on track and growing again. But is that good enough? No. We have an opportunity and an obligation to remake the economic system even better.
The fundamentals of our old economy pushed us to extremes in search of profit. Yet we know that extremes do not work in the long term. Communism, the extreme form of government intervention, doesn't work. And we're learning the hard way that unchecked capitalism doesn't work either. With a single purpose - that of profit above all else - 'all else' gets brushed to the side. Yet 'all else' is what makes up the real world and our quality of life.
Let's examine one simple, yet fundamental change: Short term profit for shareholders, versus long-term benefit for stakeholders.
Examples... Target's 4th quarter earnings were down 41%, but they we're still profitable, then laid off600 workers in Minneapolis alone. Caterpillar completes sixth consecutive year of record sales and revenues with 2008, but in anticipation of a recession, cuts 20,000 jobs. So the shareholder's future profit may increase a fraction, but it's a disaster for the overall economy. And because corporations aren't designed to serve the broader economy/society, the shareholder's profit will now drop with the rest of the economy.
This is all due to a fundamental singularity of corporate purpose: to earn and distribute taxable business earnings to shareholders.
Yet by considering stakeholders (such as employees, local communities and the environment) and not just shareholders in its incorporation, actions would inherently lean towards stronger, sustainable growth.
For too long, citizens have been asked to abide by civic responsibilities, while corporations have been given a pass. It's time to demand corporate citizenry as well. Not with self-policing bodies, but with one simple change in the incorporation articles. We - the people - hold the rights to incorporation for every corporate charter, and we can revoke them as well.
Imagine if even national banks had dual and equal purpose: to make a profit for shareholders and to strengthen local communities where their branches are located? How different might American look today?
In this great experiment of a nation, why would we rebuild our economy in the image of the false idol economy of 2005? This is our opportunity to reinvent and improve. Let's be truly bold and one day look back at this time in our history with pride that citizens took control over our battered economy and fixed it ourselves.
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