The Problem With Profit as the Only Motive for Corporate America
Capitalism doesn't work if the only goal is to maximize the profits of the shareholders.
Corporate America is ultimately motivated by maximizing profits and this ethic is destructive for all parties involved.
Once again I was reading Better Capitalism, and I was given some clarity into the ethic of corporate America.
As I touched on in my other post: “Plantation Economics: a Fishbowl Many Don't Know We Live in”, our current system is “plantationlike”, meaning that there is no mutual partnership involved between the “employees” and the “employers”.
Essentially, the benefits the business reaps from the workers is more of a one way street, rather than a system that is ethically sound that benefits all parties involved.
Long-term, pursing profits as the primary motive is destructive for all parities (even those at the top).
The Reality
Right now America is run by corporations that have the primary goal of maximizing their profits by any means necessary.
You may think this is a little dramatic, but this is the reality. Let me pull the example of the company PG&E (Pacific Gas and Electric Company) from the book.
PG&E experienced a dramatic increase in their stock price (over 500%) spanning a roughly 17 year period from 2002 to 2018. Good right? For the shareholders of the present this was good, but not for the shareholders of the future. A dramatic decline in share price was inbound.
Unfortunately, the sole motivation of PG&E’s business ethic was to reap maximum profits even at the expense of neglecting their own electrical equipment that caused “The Camp Fire”, the worst wildfire in California’s history.
By January of 2019, the share price of PG&E dropped to “$7.23/share, a 32% decrease from the November 2002 price”.
Because of PG&E’s neglect to maintain their electrical equipment they were charged with 84 accounts of involuntary manslaughter and billions in damages.
All the parties involved: those in leadership, those employed, and those who had stake in the company all lost tremendous amounts of money, property, and unfortunately, lives.
The Main Idea
Increasing profits, as the primary goal of a business, doesn’t draw out long-term benefits for all parties involved.
Don’t divorce capitalism and ethics.