Wednesday, March 18, 2015

What Corporations Are For

In the Washington Post, Harold Meyerson writes on the question of wage stagnation and concludes:
At the root of our great pay stagnation is the appropriation by major investors of the funds that used to go to businesses' research, modernization, expansion and workers.
This perpetuates a common misunderstanding of for-profit corporations. There may be an issue of long-term thinking in business, reflecting our national attention span, but "appropriation" is not the problem. Shareholders (the above-demonized investors), not (non-investor) workers, are the actual owners of corporations. Earnings belong to them as a matter of right. The only reason to spend profits to increase research or salaries is if it creates more value for the shareholders than paying a dividend. This could include improved employee performance or retention, as with Wal-Mart's recent announcement, but workers simply do not get to direct profits to their own pockets except through shared ownership as investors.

Corporations exist to make money for their investors.

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