"The Fed has pumped $4 trillion of money into the markets, but we are still in the longest, slowest recovery of the post‑war era.
I believe that the reason for that is that our system of market capitalism is broken. The capital markets and Wall Street are no longer serving business or the Main Street economy that you and I live in.
But only 15 percent of all the money flowing through financial institutions today ends up in businesses. The rest of it is staying within the closed loop of the market itself. It’s being traded.
It seems amply evident that the right thing to do is to focus your company on the business of business, and not the business of financialization. However, all of the incentives, and all of the policy, seem to be pushing companies in the opposite direction. It’s almost as if you can’t blame them for doing what they do, because that’s how they’re being incented.
Right. One of the things I wanted to do in this book was get away from a culture of blaming the bankers, blaming the CEOs, blaming the one percent. I cover these people on a daily basis. Nobody’s venal here. They really are doing what they’re incentivized to do. It’s just that over the long haul, it doesn’t happen to work.
One of the most telling statistics that I came across in researching the book was a difference in how much investment a company made in CapEx, R&D, factories, and in worker training when you compared private companies with similar public ones. The private companies made twice the investments into the real economy as public companies did.
Private companies are out there investing under the same tax and regulatory frameworks. They see plenty of opportunities. But the public markets make it impossible for CEOs to take these long-term decisions."
“Industrialism has changed from creating value to extracting value. Need to find new models.” @EskoKilpi #OSFest16— Paul Mackay (@pmackay) May 20, 2016