Re: Frayed Ends: Business, Economics, and Tax Policy 3.0
It's always meant profit, first and foremost. It was just in the '80's that companies like KKR became very aggressive in forcing corporate boards to actually do something about it.
Um....I loved your first post in this string; at the same time, I think that the time frame over which one measures "profit" has changed, and the range over which "profit" was measured has changed as well.
How much can a local business profit if it is located in a community that is not thriving? In that model, "profit" had both a long-term time frame and, given past restrictions on mobility, "investing in the community" often made good economic sense as well. A local business could support a local trade school that trained future employees in skills that the business would then employ several years later, for example. Or it could help people through temporary times of economic hardship with some degree of confidence that, when conditions improved, it would be rewarded with increased customer loyalty.
The time frame has become much shorter (why invest for the future when I can flip this stock in six months?) and the scope over which "profit" was measured has become far more narrow.
One might say that, while businesses have
always focused on profit, the ways in which they define and measure profit have changed.
As an aside, I would (naturally....) ascribe part of these changes to the expansion of the welfare state. Businesses used to support their communities as a form of enlightened self-interest, now that people have a "right" to be fed and housed by the government instead, there has been a form of "crowding out" so to speak: money that businesses once could afford to reinvest in the community has been taken away from them through higher taxes, the reasons they had to invest locally have become attenuated, and so businesses have responded in a perfectly understandable and predictable way to those changes.
