EGREGIOUS GREED—ACTUALLY, IT DOES MATTER
BECAUSE IT IS A SYMPTOM OF A GENERAL GREED-DRIVEN PATTERN OF BEHAVIOR WHICH IS DOMINATING, AND UNDERMINING, U.S. BUSINESS
The evidence is piling up that the current American Business Model (ABM) is corrupt, predatory, cruel, orientated towards the short-term—and disastrous as far as most Americans are concerned.
Far from every corporation conforms to the ABM—there are some exceptionally enlightened U.S. corporations out there—but it is the prevailing ethos.
I tend to put in the word “current” in front of ABM because the American Business Model was not always this way. At one stage, it led the world, and can rightly claim a great deal of the credit for the improvement in global prosperity.
But, no more.
This business cultural change started to happen in the early 70s so has now been dragging down the U.S. economy for more than 40 years. The data illustrate this quite clearly.
Economists like to contend that a mature economy, like the U.S., cannot grow as fast as a developing one, which can leapfrog ahead on the back of developments elsewhere. For instance, countries in Africa don’t have to install a wire-based infrastructure to have telephones. They can skip all that, and leap straight to wireless cell phones (which is just what they have been doing).
Whereas, I accept this point, I don’t accept the argument that the U.S. economy cannot grow much faster than 2 percent. In fact, I have no doubt at all that 5 percent would be entirely achievable (and probably higher under the right circumstances).
Could it be sustained at that rate? It would depend a great deal on the nature of the growth. Physical resource dependent growth is clearly finite because there is a limit to such resources. But where is the limit as far as sustainable innovation is concerned?
Here, I had better add the caveat that growth in Gross Domestic Product (GDP) is a truly lousy way to measure the economic wellbeing of a nation. For instance, GDP fails to distinguish between good growth and bad growth—it merely measures economic activity. It doesn’t identify the causes of growth. A war normally results in an increase in GDP—but at the cost of much human misery and, normally, an increase in debt. But, I’m using it here—somewhat reluctantly—because it is the standard in general use. That, in itself, indicates just how badly the U.S. economy is managed (insofar as it is managed at all)..
But, in order to achieve a 5 percent growth rate, a number of fairly obvious things would have to be done. Let me stress ‘fairly obvious.’ The answers are out there and they are mostly well proven. Arguably it is time for the U.S. to swallow its pride, learn from other nations, and engage in leap-frogging for itself.
Here are just some examples of things it could do. All are fairly obvious, and all have been proven to work elsewhere.
- HAVE A STRATEGIC PLAN FOR THE ECONOMY.
- BRING WORKER RIGHTS UP TO THE SAME STANDARD AS OTHER DEVELOPED NATIONS.
- IMPLEMENT A REALISTIC MINIMUM WAGE POLICY.
- IMPLEMENT EQUAL PAY FOR BOTH SEXES.
- IMPLEMENT NEW FORMS OF CORPORATE STRUCTURE.
- IMPLEMENT A SINGLE PAYER NATIONAL HEALTH SYSTEM.
- INVEST MASSIVELY IN INFRASTRUCTURE.
- CUT BACK ON DEFENSE EXPENDITURE
- RATIONALIZE THE TAXATION SYSTEM.
- SET UP A PUBLIC BANKING SYSTEM FOCUSED ON INNOVATION, STARTUPS, SMALL BUSINESS, AND REGIONAL DEVELOPMENT.
- ENFORCE THE MONOPOLY LAWS.
- REMOVE THE INCENTIVES TO EXPORT JOBS.
- MAKE SHARE BUY-BACKS ILLEGAL.
- IMPLEMENT A RANGE OF INCENTIVES TO ELIMINATE CORPORATE CEO SHORT-TERMISM.
The U.S.’s current rather miserable economic performance is not a mystery. It is due to a deeply flawed American Business Model focused on helping the ultra-rich and their followers getting every richer—and the rest of the U.S. population paying the price.
The data are out there in profusion. The number of people reading, understanding, and responding to this evidence, seems to be in short supply.
U.S. Companies Are Dying Faster Than Ever
- by Yuval Rosenberg
- Aug. 6, 2015
- 1 min read
- original
Like just about everything else in our crazy, mixed up world, the business life cycle has sped up dramatically over the last 30 years.
The Boston Consulting Group recently published an analysis of growth patterns for 35,000 publicly listed U.S. companies since 1950. It found that — whether because of bankruptcy, mergers or other reasons — public companies have a shorter life span than ever. “In fact,” the report says, “businesses are dying at a much younger age than the people who run them.”
The average public company dies, at least as an independent publicly listed entity, after around 30 years — far shorter than it had been in the mid-1980s. “Interestingly, most types of businesses in most industries are now dying younger,” BCG’s Martin Reeves and Lisanne Pueschel wrote last month. “Only a few make it into their fifties and sixties.”
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Businesses aren’t just dying off sooner — “they are also more likely to perish at any point in time,” the report says. Almost one in 10 public companies fails each year, which is a fourfold increase since 1965.
Companies now face a roughly one in three chance of not surviving five years, up from about one in 20 a half-century ago. And those risks aren’t just in the fast-changing tech sector; they’re present across most industries and affect large companies as well as small ones, though turnover for older companies leveled off in the 2000s. “There are no safe harbors,” the report warns.
The BCG team attributes these dramatic changes to a wave of smaller and younger, venture-backed companies that went public from the mid-1980s to the late 1990s. Those companies had a much higher than average risk of failure — but the ones that survived and grew then drove up the death rate for established competitors who didn’t respond quickly enough to their new challengers. The bigger, more established companies also went on acquisition sprees, buying up smaller businesses that could help them in the new environment. That, again, meant more individual companies disappeared.
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The report offers some advice for companies and executives looking to build lasting success on their own: watch for warnings and signs of vulnerabilities, make sure your strategic approach suits your industry and business environment, look to reinvent your business continuously to keep up with changes, don’t let a focus on the short term cause you to lose long-term perspective, and know when it’s time to go: “If a company cannot achieve sustained performance, it shouldn’t persist just for the sake of it. A successful exit may be better than languishing and slowly burning up resources.”
You can see the full BCG piece here.
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