What is the purpose of a corporation? (with William Lazonick and Lenore Palladino)

Pitchfork Economics with Nick Hanauer

Civic Ventures

Business, Government, News, Politics

4.8 • 1.5K Ratings

🗓️ 19 February 2019

⏱️ 47 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Nick, Goldy, and their guests William Lazonick and Lenore Palladino explain why "shareholder value maximization" is the world's dumbest idea. William Lazonick: Professor of economics at University of Massachusetts Lowell, visiting Professor at University of Ljubljana, professeur associé at Institut Mines-Télécom in Paris, and professorial research associate, SOAS, University of London. His book ‘Sustainable Prosperity in the New Economy? Business Organization and High-Tech Employment in the United States’ won the 2010 Schumpeter Prize, and he has written extensively on corporate profits. Twitter: @Lazonick Lenore Palladino: Senior Economist and Policy Counsel at the Roosevelt Institute, where she brings expertise to Roosevelt’s work on inequality and finance. Her research and writing focuses on financial reform, financial taxation, labor rights, and financial crises. Her publications have appeared in The Nation, The New Republic, State Tax Notes, and other venues. Twitter: @lenorepalladino Further reading: https://www.brookings.edu/research/stock-buybacks-from-retain-and-reinvest-to-downsize-and-distribute/ https://hbr.org/2014/09/profits-without-prosperity/ http://rooseveltinstitute.org/ending-shareholder-primacy-corporate-governance/ http://rooseveltinstitute.org/rewriting-rules-take-aim-stock-buybacks-and-force-companies-invest-their-workers-stop-walmart-act/ http://rooseveltinstitute.org/what-wells-fargos-40-6-billion-stock-buybacks-could-have-meant-its-employees-and-customers/ http://rooseveltinstitute.org/towards-accountable-capitalism/

Transcript

Click on a timestamp to play from that location

0:00.0	Corporations are people my friend we can raise taxes and of course they are everything
0:06.3	corporations earn ultimately goes to people so where do you think it goes? In many companies today and really across the non-financial
0:17.8	sector companies are spending upwards of 100% of their profit on shareholder payments.
0:24.7	Pick your thing that would be an investment in the middle class
0:28.6	that would allow people to thrive in the economy to grow
0:31.6	in a legit way. And it will be a de minimis proportion of the
0:36.2	amount of money that we spend annually collectively on stock buybacks.
0:40.3	You know we should have the power as a democracy to make sure that the rules that
0:45.4	govern corporate behavior serve the broader society.
0:59.4	From the offices of Civic Ventures in downtown Seattle, this is Pitch Fork Economics, with Nick Hanauer. It's like Econ 101 without all the BS. I'm David Goldstein Senior Fellow at Civic Ventures.
1:17.0	I'm Nick Hanauer, founder of Civic Ventures. So Nick, I want to talk to you about the world's dumbest idea.
1:30.5	That must be shareholder value maximization.
1:32.4	Right, so that was the title of a great piece by the investor James Monteer. He called shareholder maximization the world's dumbest idea in 30 seconds why so shareholder value maximization is the notion that
1:46.8	the only purpose of the corporation is to enrich shareholders And the idea has a long legacy that you can connect from
1:59.0	Neocolical economics and some of the underlying assumptions,
2:03.0	homoeconomicist equilibrium theory,
2:05.7	to the neoliberal economist Milton Friedman,
2:09.4	who wrote a very famous editorial in 1970 where he claimed, and I quote,
2:16.3	there is one and only one social responsibility of business
2:20.3	to use its resources and engage in activities designed to increase its profits.
2:27.0	And to be clear at the time in 1970 people thought he was crazy because that was granted limited liability by the
2:39.6	society they had a responsibility broadly back to that society.
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from Civic Ventures, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of Civic Ventures and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.