The past decade has seen unprecedented levels of wealthy elites thumbing the scales of government to advance their own interests.
“I really think that corporate and elite power is what got us here,” Roosevelt Senior Fellow Lenore Palladino points out in a Roosevelt Institute Book Club discussion of her new book Good Company: Economic Policy After Shareholder Primacy. “We may have a new class of corporate oligarchs in Elon Musk and his crew, but the underlying power of the economic elite and neoliberalism as our dominant economic ideology really is critical to understanding how we got here. And I believe it’s built in part on an edifice of shareholder primacy.”
Shareholder primacy—the corporate governance principle that a corporation’s primary goal should be to maximize value for shareholders—casts those who own the most shares as the key decision-makers for corporations and the primary beneficiaries of all corporate profits, to the detriment of workers and all other stakeholders. “It’s a theory of allocation, not innovation and production,” Palladino says.
This model, she argues, has proliferated because of a persistent myth that shareholders are always investors. In actuality, the role of the modern shareholder is extractive, prioritizing short-term profit over long-term innovation and development, and should not be confused with the productive role of the investor. The buying and trading of shares on financial markets does not contribute anything to the company whose shares are being traded and has increasingly served to concentrate resources in the hands of a few elite players.
Listen to the full conversation, including Palladino’s policy proposals to subvert the shareholder primacy model, here: Roosevelt Institute Book Club Presents: Good Company: Economic Policy After Shareholder Primacy with Lenore Palladino
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