In Sunday’s New York Times a spirited former public official and real Republican… the principled kind, not a GOOPer…wrote in a Letter to the EDitor a brilliant explanation of why Corporations do not have a right to be endlessly greedy. He said it better than I could. Here it is:
In “Who Could Blame G.E.?” (column, April 5), Joe Nocera says America’s corporations have a fiduciary duty to maximize profit for their shareholders. Who says so? This has become the modern mantra of business-school professors and chief executives. But the corporation is not chartered by the shareholders. It is chartered by the state. The state charters corporations because it believes they may provide benefits to the society and not just to the shareholders.
It is interesting to note that as recently as the 1980s, the Business Roundtable’s chief executive mission statement asserted that the chief executive had a duty to care for customers, employees, communities and the nation (the stakeholders, in other words) as well as the shareholders.
This mission statement was changed in the mid-1990s to conform to the present shareholder value fetish. General Electric and other corporations that practice this fetish do so at their own and the country’s long-term peril.
Potomac, Md., April 5, 2011
The writer, president of the Economic Strategy Institute, a nonpartisan public policy think tank, was counselor to the secretary of commerce in the Reagan administration.