Corporate America

admin — Sun, 07 Mar 2010 20:53:09 +0000

There are many problems with society today. The economy is in poor condition and may not improve soon enough for many, myself included. As I see it, much of the problem is with the corporate mentality.

A business needs capital to grow and prosper. The major corporations depend on selling stock, shares in the company, as a major source of the needed operating capital. This plan is good. It can raise the capital that the company needs to expand their operations and grow the business. It can supply a steady source of income for the investors if the company is well managed and produces the desired results.

There were many great advances in our society that were funded in this way. The railroads, production and distribution of electricity, and the telephone system are all examples of industries built through investments of private funds.

The problem that I see with this is that Corporate America has lost sight of the real purpose of the stock market. Instead of issuing stock to raise capital for a specific purpose, using the capital for that purpose, and then retiring the stock corporations look to their public offering to raise capital and depending on how much they raise they then make plans on how to use the money.

When a corporation issues stock they have a duty to the stock holders to perform and to make money. Many corporations make decisions based on how much money can be made in the short run instead of taking the long view and building a lasting economic base. Much of this is due to the speculation in the stock market. If a company does not produce immediate results on a significant scale their stock will not sell well.

There are many ventures that are started specifically with the hope of bringing them to the point that they can make and IPO. Many of these ventures do not fulfill a specific need. Their only reason for existence is to make enough of a splash to attract investment capital. The person or group that pulls this off successfully will reap great financial benefits at the cost of society.

I believe that the free enterprise system is the best social and economic system. I think that it is time to return to fiscal responsibility and follow the basic tenets under which this country was founded. Speculation should not be a driving force of our economy. The corporations need to recognize that they have the responsibility to be good citizens as well as being profitable. If this means that the margin profit is a bit lower so be it.

Words from the SoapBox » Fiscal Responsibility

Corporate America

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