Editor’s Note: This post was originally published on Unreasonable.is.
By Ross Baird
“Something is profoundly wrong with the way we live today. For thirty years we have made a virtue out of the pursuit of material self-interest: indeed, this very pursuit now constitutes whatever remains of our sense of collective purpose. We know what things cost but have no idea what they are worth. We no longer ask of a judicial ruling or a legislative act: is it good? Is it fair? Is it just? Is it right? Will it help bring about a better society or a better world? Those used to be the political questions, even if they invited no easy answers. We must learn once again to pose them.”
Judt’s message: As a society, we focus nearly all of our time, attention and resources on maximizing wealth for shareholders in private companies. We know what things cost, but not what they are worth.
A close friend and collaborator once showed me a New Yorker cartoon that sums up the consequences of this scenario: a series of kids gathered in a post-apocalyptic landscape around a pyre of burning trash, with an older man in a dirty suit saying: “Yes, the planet got destroyed. But for a brief moment in time, we created wonderful value for shareholders.”
To “maximize shareholder value” is required by law in many states as a part of any investor or company manager’s fiduciary duty. The term “fiduciary” derives from the Latin “faith” — the faith an asset owner has in its stewards. In society, our fiduciaries have incredibly high standards for how the resources perform on a cost-benefit analysis — and they should. Investors managing pension fund assets are charged with the retirement accounts of firefighters and teachers, and public company CEOs recognize that the net worth of millions of people potentially depend on the stock price.
Yet, the New Yorker cartoon shows that if business leaders are not simultaneously fiduciaries for society at large, the world faces grave consequences. It’s easy to read a stock ticker; how do we begin to discuss what things are worth?Click to continue reading »