The argument that shareholders are business owners is based at best on a lack of understanding of law, business, and history. In the worst case, it is driven by greed, power, and a desire to protect corporate governance, which has destroyed most of the United States for about 40 years.
Why, you might ask, the question of who owns the company is so important? Because the center of the dispute between the two versions of capitalism is dispute. One party believes that it is necessary to protect the interests of shareholders first. The other party felt the pain of prioritizing other stakeholders in the company, including its employees, customers, and communities.
In fact, shareholders will almost certainly do well in any version of capitalism. For those who want to protect the status quo, change is always difficult and threatening, even if they don’t pay any price. But I think there is a problem with the status quo. The current version of capitalism provides good services to shareholders. However, the facts have proved to be disastrous for the vast majority of American people and are not conducive to the competitiveness of the United States on the global stage, especially In our country. Competing with China’s economy. In addition, it is now proving to be a great threat to our democracy. Therefore, we must decisively get rid of shareholder capitalism in the most urgent way.
The defense of the status quo (shareholder-first governance) is increasingly based on the logic that shareholders are the true owners of the company and therefore have the right to demand what is in their best interests.
But before we blindly insist on this idea, we must examine these versions of capitalism and the country’s experience with each version; and why the issue of corporate ownership has become an important (if not core) consideration.
Capitalism and its many forms of government
Today’s intense debate in the United States is actually between two forms of capitalism. Not from capitalism itself, it is still the most powerful economic engine in human history. Only capitalism can obtain the necessary resources, including capital, labor, and a sustainable supply chain, and adhere to the principles of prudent risk-taking, wise distribution of incentives and rewards, and the commitment to long-term practical investment can become an outstanding talent. Inanimate engine. It has no ethical or moral elements. This is why governance and participation rules have become so important. Crucially, governance determines the beneficiaries of this amazing capitalist engine. In China, given China’s intentions, the engine of capitalism is playing an outstanding role. There, the main beneficiary of most value creation is the Communist government. In some Nordic countries, capitalism rewards shareholders and uses tax incentives to provide citizens with free education and/or free healthcare for government programs. Most areas of Europe, through taxation, have a very complete social safety net. But the engine is still mainly free enterprise capitalism.
Shareholder First Capitalism
In the United States, the governance of the past 40 years has clearly focused on giving shareholders priority over any other stakeholders in the company. This is the concept of shareholder supremacy that every CEO and chairman of the board knows: the purpose of a company is to maximize short-term shareholder value. Recently, some people think this is fair because shareholders own the company. In the past four years, other stakeholders have become secondary: customers, workers, the company itself, suppliers, communities, the planet. Even in this system, the engine of capitalism works very well. As expected, it brings short-term shareholder value to unimaginable wealth and prosperity. Other stakeholders are deprived and exploited. And the guardian of this government became the financial world, which enforced the system in a radical and brutal way. As long as this shareholder requirement is met, CEOs and other executives of major companies will be corrupted by equally unimaginable compensation. If they can’t or won’t, they will be fired immediately.
If the CEO and board of directors try to deviate from this strict behavior, the company will be punished by the financial community, which has the right to depress the price of the company on the stock market. Before the pandemic, Bank of America downgraded Chipotle’s stock rating because an analyst believed that the company paid employees too high salaries. As a result, the company’s price dropped by 3%. When American Airlines announced a salary increase for its pilots and flight attendants, Wall Street punished the company and lowered its stock price by 5%. The message to the market is clear: workers must be squeezed and profits belong to shareholders. Therefore, for 40 years, the wages of workers have been relatively stable, often staying below inflation.
Finally, in the past decade, shareholder supremacy has increased the intensity of activists who act as terrorists, blackmail and intimidate CEOs and corporate boards. Historically, activists have served the business community very well. They often work with management to help increase value creation. Sometimes, their purpose of taking over the company is to hold shares and take advantage of the inherent value creation, but they have not performed well before. But this group of new radicals adopted a different strategy. They take over the company, take cash, cut research and development, fire as many people as possible in the shortest amount of time, change the company after going public, or sell the body to a strategic buyer. It’s all in the name of maximizing short-term value. Recently, they don’t even have to take over the business. If the target company does not “voluntarily” provide additional short-term value, but at the expense of all other stakeholders, they will buy into the target company and threaten to run their standard game.
Another cruel strategy to promote shareholder value is the tax-saving practice of share buybacks. It has created trillions of dollars to benefit today’s

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