Corporate boards—often at the urging of activist investors—now spend an inordinate amount of their profits buying back their own stock and issuing dividends, leaving minimal resources for long-term investments in workers, training and innovation. We need to rewrite the rules of our economy so it works better for workers and not just those at the top. This legislation makes it clear that empowering the voices of our workers and investing in our workforce is more important than using tax breaks and corporate profits to reward shareholders with more stock buybacks. The legislation repeals the infamous SEC 10b rule.
Whatever happened to innovation in America? President Obama told us that our future depends on it. Across the political spectrum, everyone pretty much agrees that innovation is vital to prosperity.
Our information and communications systems are not up to snuff. Our infrastructure is outdated and crumbling before our eyes. Into the surprise of those conducting the study, the U. Inthe U.
William Lazonick, an expert on the history of the American business corporation, points out that the U. S has enjoyed, over its history, an extremely productive economy. The shift has happened over time, but the mechanisms of extraction have become dangerously efficient.
A giant financial sector and wealthy class are sucking money, vampire-like, out of the productive sector, where the goods, technologies and services that we want are created.
Good jobs, the health of the overall economy and society, growing incomes for the poor and middle class—all of these things have been put aside in the quest for more financial profits.
The game is unsustainable. To get the economy humming, argues Lazonick, you want to fuel the kind of growth that allows people to enjoy higher living standards.
You want an economy that is stable and allows everyone to share in prosperity. But nowadays, the executives who are running large industrial corporations like GE, Dupont, Cisco and Microsoft are focused on making as much money as they can in the short-term for shareholders, and more importantly, themselves.
Unsurprisingly, they support the policies that allow them to do this: What happens to our economy in the long-term is not really their concern. Witness the decline in the number and quality of jobs, the middle class evaporating, and the financial instability that brought about the Great Recession.
The commercial banking system was well regulated, and household savings could be channeled to businesses at fairly good rates of return. Financial institutions were relatively stable and they could help industry to produce technological advances and economic development.
Up until the s, most Americans understood and accepted the importance of the federal government in helping to jumpstart innovation through things like defense and aerospace spending. Corporations started focusing on manipulating stock prices to realize short-term gains, and conducting stock buybacks to enrich executives at the expense of research and development or investing in the skills of workers.
Wall Street banks started moving into higher margin businesses. They were no longer regulated utilities, but high-risk, high-return institutions. This destabilized their basic credit intermediation function. Up to the s the productive system dominated the financial system.
But from the s on, the balance of power was reversed. The financialization monsterThink about it: In the era of financialization, big companies like GE have turned their attention to making quick Wall Street profits instead of fabulous products.Not coincidentally, U.S.
employment relations have undergone a transformation in the past three decades. Mass plant closings eliminated millions of unionized blue-collar jobs.
Jul 18, · William Lazonick is Professor of Economics at University of Massachusetts Lowell, and President of the Academic-Industry Research Network (iridis-photo-restoration.com). Previously, Lazonick was .
iridis-photo-restoration.com - Download as PDF File .pdf), Text File .txt) or read online. The Academic-Industry Research Network Newsletter Issue 3, February Scribd is the world's largest social reading and publishing site.
William H. Lazonick Professor in Economics, Co-Director of Center for Industrial Competitiveness. William Lazonick is a professor of economics at the University of Massachusetts Lowell, where he directs the Center for Industrial Competitiveness.
Lazonick, W.H. () " The Financialization of the U.S. Corporation: What Has Been Lost. The financialization of corporate decision-making under the new paradigm has been the prime source of inequity and instability in U.S. economic performance over the past three decades.