The virtuous economy is completely exploded [in the US]Many companies are cutting their diversity, equity and inclusion (DEI) programs, Environment, social and government (ESG) money We Has fallen, and companies are getting calm about politics.
The disappearance of virtuous and industrial complex comes with a human and Financial costAt the same time, there is a clear winner – the concept of shareholder predominance. The popular idea by Nobel Prize winner Milton Freedman in 1970 is that corporate officials and boards have the same goal: to maximize their shareholders.
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The notion looked cruel and heartless in 2019, when the 181 CEOs of the Business Round Table in the US signed a statement re -defying the purpose of a corporation. He committed to lead his companies for the benefits of all stakeholders, customers, employees, suppliers, communities and shareholders. ” It was not clear how they will do this, and whom they would be accountable to. But who can argue with such a great-sounding goal?
Till then the ESG standard and DEI programs were already popular, but the statement indicated the purchase-in of the full private sector. Soon it seemed to be every corporate decision – from which it managed its supply chain, was weighed in relation to its declared values. It was heavyly painted in marketing, to display how a company was committed to a better world (and worthy of your business).
Finally, for the spirit of capitalism, an industry of DEI advisors, rash and HR professionals jumped. It went beyond the corporate world: Satya University became a major priority among administrators, non-profit and media.
I remember talking to a business school dean in 2022, who noted that more students were aspiring to work in DE because they also paid such jobs, monitor and difficult to stable.
By 2025, this is a bad condition. The US Inc. took a few years to realize that Milton Freedman was right: it is better for the society, economy and the lower line of the company to focus only on profits. This is not to say that the advocates of the virtuous economy did not have great objectives; It was an honest effort to make the world a fair, safe and cleaner. The problem is that the ‘stakeholder capitalism’ models put the groups in the pit equally qualified (if it is the correct word) against each other.
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For example, should a company transfer a factory from Detroit to Nashville? If this happens, the contemporary workers will suffer losses in Detroit, but non-incomplete workers will benefit. Whose interests matter more? Or consider environmental concerns: How much should consumers be ready from today in exchange for a better environment? In the future, they are the winners, today loser – whose priorities are more important?
How much weight to be put on each of these goals is a question of values. All have different values, and the value of someone is not better than another. Why this can happen when companies take a political stance, it does not promote the morale of the employee, but is divisive.
Freedman’s argument was not that values have no place in the economy. Workers have rights. There are inequality and discrimination. If companies were allowed to pursue the benefits only without regulation, some would harm the environment or take risks that we all pay.
The case for shareholder primacy does not deny any of them. It only argues that applying its values on shareholders, employees, customers or anyone else is not the job of the CEO. Representing the values of society through proper laws, regulation and taxation is the role of public authorities. If they have values, the public does not agree, voters can hold them accountable.
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Many champions of the virtuous economy are now disappointed to see US President Donald Trump to see the CEO. Instead of looking at it as a betrayal, it is better to see it as the last act of the virtuous economy. Was these CEOs pretending to care about Dei a few years ago, or were they pretending not to do now? It is impossible to say this. But if they had been stuck for business only, then none of it would have been necessary.
Moving forward, some economic and professional recurrence in the US will be necessary. With the death of a virtuous economy, some jobs are losing, some skills will prove to be less useful and many youth will need to rethink their career.
At least the population, which was likely to benefit from the virtuous economy-is very quickly adjusted for educated and relatively rich-rich-economic shocks. This is a small consolation, which has been an expensive experiment, with the benefits of the handyte. © Bloomberg