In the good ol’ days, except on rare occasions, business stories were found on the business page. That is no longer the case. Take the last couple of months. Barely a week has gone by without a major business story breaking on the front page — with sufficient intrigue and readership to steal headlines from economic and political meltdown in Europe, civil unrest in Syria and a highly entertaining GOP primary battle and race for the White House.
Breaking news has featured the resignation letter of Greg Smith of Goldman Sachs and the search for MF Global’s missing $1.2 billion. The inner workings of the Murdoch empire have been off and on the front page for months, and then in late April, the New York Times blew open the investigative report on WalMex, featuring, according to the journalists and their sources, a well-orchestrated system of “facilitation” payments that were either overlooked or, possibly, even supported by, Walmart’s management, in pursuit of aggressive growth targets in Mexico.
Now we have JP Morgan Chase’s $2 billion (and counting) loss in a London trade, ostensibly made to hedge the banks position in corporate debt. As of this writing, one of the most senior women on Wall Street, who earned a cool $14 million last year as JPM Chase’s chief investment officer, is about to take the fall. Jamie Dimon has appeared on the popular Sunday morning news hour Meet the Press to call his bank “sloppy and stupid,” and the tape of his analysts call on the topic has gone viral.
These stories are indeed entertaining. They bring us up close and personal to the inner workings of doing business and staying competitive in the 21st century, even when it means getting cozy with government. Except it’s really only one story, told over and over again: Aggressive growth goals, with executives under pressure to do whatever is necessary to meet the targets.
The public markets, and the internal business decision rules and incentive systems that reflect the dominance of short-term share price as the organizing principle and key metric of business, conspire perfectly to produce the results we are getting now. What would it take to have a different result?
For inspiration, consider this antique piece of advice published by Fortune magazine, almost 70 years ago in 1944. It was authored by William Benton, founder of Benton and Bowles, and later, a U.S. senator, in his role as a member of the Committee for Economic Development — the business group that helped to both launch the Marshall Plan and absorb U.S. veterans back into the U.S. economy after the war.
“In a democracy,” Benton writes, “there is a place for private enterprise and there is a place for public enterprise, and it is necessary to clarify basic lines of division between them. The place for private enterprise should extend to the limit of the ability of private individuals better to serve the common good…”
Benton continues, “In that part of the economy where private enterprise can better serve the common good, the people, through their government, must devise and enforce rules of the game — reasonably stable rules, that will encourage private, voluntary enterprise — rules to which government itself will adhere, and which government will enforce — rules that intelligent and forward-looking men can understand and under which they can operate for the common and for their own good.” [emphasis mine.]
In other words, in setting the tone, and shaping the decisions rules and protocols for the company, one must first take into account what is right, what is appropriate, what will enhance, the commons. If you do that, you also help the business, and maybe yourself, at least over the long term.
It is convenient, today, to take certain business values for granted. In fact, they no longer seem to be about business at all. “Free enterprise” is bandied about in a way that suggests that what is good for the enterprise is good for society. But there is a bottom line for business and a bottom line for society. We are best off when they don’t get confused, or worse, conspire.
Both bottom lines are important. But they are not the same thing. Business matters. Society trumps.
Cross-posted at The Huffington Post.