Anchor ads are not supported on this page.

4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs

Obama denounces companies for off-shore inversion

Corporations would be well advised to please, not screw, the public.

Some politicians tell us corporations are people. Yeah — greedy people. Two years ago, one poll showed that 83 percent of people — real people — believe that companies should pursue their business goals while trying to improve society and the environment.

And some persuasive studies indicate that companies might even enhance their long-term profits and prospects if they spent more money on improving the world they operate in.

But statistics show that corporations are not doing much for society or our quality of living. A Pew Research poll last year indicated that 80 percent of middle-class adults partially blamed big business for middle-class woes.

According to various studies of philanthropy, individuals make 72 percent of charitable donations and corporations a mere 5 to 6 percent. Companies give about 0.12 percent of their revenues to charity, and below 1 percent of pretax profits — less than half of the percentage they gave in the 1980s.

One study more than a decade ago showed that the poor — households making less than $20,000 a year — gave 4.6 percent of their income to charity. Those earning $50,000 to $100,000 gave 2.5 percent.

Unfortunately, companies often give to charities when they want public support for their own profit-making activities. According to the blog CorpWatch, when the city council of Washington DC passed a bill demanding that big-box retailers like Walmart pay a living wage to employees ($12.50 an hour, almost 50 percent higher than the minimum wage at the time), the company set up food banks for the poor and warned the mayor that if he didn’t veto the bill, Walmart’s charitable contributions would be jeopardized.

Sponsored
Sponsored

Enlightened self-interest is fine, but companies shouldn’t make selfish interests so obvious.

Arthur Lipper

Chief executives of large companies bring home about 330 times more than the average worker makes — up from around 50 times more 30 years ago. From 2009 to 2012, as the economy improved moderately, incomes of the richest 1 percent shot up 31 percent while incomes of the 99 percent grew by a measly 0.4 percent — less than half a percent.

Alan Greenspan

“It is clear to me that we are headed into a confrontation between classes in the U.S.,” says Arthur Lipper III of Del Mar, entrepreneur and scion of a famous Wall Street family. A few top executives are aware of a pending income and wealth inequality crisis. Even former Federal Reserve chairman Alan Greenspan fears it. But companies continue taking actions that nettle the public.

The latest is the so-called inversion. More and more companies are attempting to buy a foreign concern, then pretend they are moving their headquarters to the low-tax nation, boosting profits and executive pay. This is similar to the widespread practice of corporations parking profits in low-tax countries. Multinational companies have almost $2 trillion reposing outside the United States to dodge taxes, according to Bloomberg News.

Barack Obama

President Obama has denounced the inversion tax ploy as essentially unpatriotic. Laws passed by Congress permit it. “I don’t care if it’s legal — it’s wrong,” said Obama.

Milton Friedman

He is right. Capitalism’s woes escalated in the 1980s, when companies increasingly adopted the idea that a board of directors’ only constituency is shareholders — not employees, communities, the environment, vendors, customers. The late, great economist Milton Friedman espoused the view that a company’s only job is to maximize profits. This was one time Friedman was wrong.

Unfortunately, this greed worship (“only profits matter”) became embedded in influential court decisions and is taught in business schools. Today, too many companies focus on Wall Street’s reaction to earnings in the upcoming quarter, not on the long term. This, in turn, has led to many accounting frauds.

“There can be no question that managements are focused on pleasing investors and therefore frequently make decisions which are short-term biased,” says Lipper.

James Hamilton

“The way to get ahead is to be sure you’re trying to do the right thing morally,” says economics professor James Hamilton of the University of California San Diego. Ultimately, it’s “just good business” to treat employees and customers well, he says. “Too many MBAs these days seem to have forgotten it.”

In May of 2012, two Harvard professors and one from the London Business School published a study comparing financial results of 90 companies that by 1993 adopted environmental and social policies with 90 companies that adopted almost no such policies. The former were called “high sustainability” and the latter “low sustainability” firms.

The researchers attempted to eliminate so-called greenwashing, or espousing environmental policies for public relations and advertising purposes. (Cock an eyebrow at all those ads in which oil companies boast of their environmental commitment.)

The study noted that companies basing executive compensation on short-term, Wall Street–pleasing results may be sacrificing long-term performance.

The bottom line is that, according to this study, the high-sustainability companies outperform the low-sustainability ones in such measures as return on assets and return on shareholders’ investment. In short, doing good can lead to doing well.

However, the study quotes scholars who take the opposite view. One business researcher says that companies that try to address environmental and social issues could be “eliminated by competitors who choose not to be civic minded.”

Jim Welsh

James Welsh, San Diego County–based portfolio manager for San Francisco’s Forward Investing, tends to be skeptical of do-goodism. He looks askance at the study showing high-sustainability firms doing better than others.

“It could have been written by somebody with a liberal bent,” he says. Welsh acknowledges that a company’s pursuit of environmental and social policies could “result in people buying [the company’s] products,” and thus could be defensible.

All told, however, Welsh points out that when investment analysts study a company, they are more likely to focus on such factors as “the balance sheet, how innovative the company is, the quality of management. I would assume that taking care of other constituencies [such as the community and employees] is not in the top five” of analysts’ concerns.

Both Lipper and Hamilton feel that companies taking care of other constituencies are actually best serving the long-term interests of the shareholders.

Here's something you might be interested in.
Submit a free classified
or view all
Previous article

Taco Taco Poway still has 99-cent fish tacos

Tacotopia prizewinner is well known among Powegians
Next Article

Will L.A. Times crowd out San Diego U-T at Riverside printing plant?

Will Toni Atkins stand back from anti-SDG&E initiative?

Some politicians tell us corporations are people. Yeah — greedy people. Two years ago, one poll showed that 83 percent of people — real people — believe that companies should pursue their business goals while trying to improve society and the environment.

And some persuasive studies indicate that companies might even enhance their long-term profits and prospects if they spent more money on improving the world they operate in.

But statistics show that corporations are not doing much for society or our quality of living. A Pew Research poll last year indicated that 80 percent of middle-class adults partially blamed big business for middle-class woes.

According to various studies of philanthropy, individuals make 72 percent of charitable donations and corporations a mere 5 to 6 percent. Companies give about 0.12 percent of their revenues to charity, and below 1 percent of pretax profits — less than half of the percentage they gave in the 1980s.

One study more than a decade ago showed that the poor — households making less than $20,000 a year — gave 4.6 percent of their income to charity. Those earning $50,000 to $100,000 gave 2.5 percent.

Unfortunately, companies often give to charities when they want public support for their own profit-making activities. According to the blog CorpWatch, when the city council of Washington DC passed a bill demanding that big-box retailers like Walmart pay a living wage to employees ($12.50 an hour, almost 50 percent higher than the minimum wage at the time), the company set up food banks for the poor and warned the mayor that if he didn’t veto the bill, Walmart’s charitable contributions would be jeopardized.

Sponsored
Sponsored

Enlightened self-interest is fine, but companies shouldn’t make selfish interests so obvious.

Arthur Lipper

Chief executives of large companies bring home about 330 times more than the average worker makes — up from around 50 times more 30 years ago. From 2009 to 2012, as the economy improved moderately, incomes of the richest 1 percent shot up 31 percent while incomes of the 99 percent grew by a measly 0.4 percent — less than half a percent.

Alan Greenspan

“It is clear to me that we are headed into a confrontation between classes in the U.S.,” says Arthur Lipper III of Del Mar, entrepreneur and scion of a famous Wall Street family. A few top executives are aware of a pending income and wealth inequality crisis. Even former Federal Reserve chairman Alan Greenspan fears it. But companies continue taking actions that nettle the public.

The latest is the so-called inversion. More and more companies are attempting to buy a foreign concern, then pretend they are moving their headquarters to the low-tax nation, boosting profits and executive pay. This is similar to the widespread practice of corporations parking profits in low-tax countries. Multinational companies have almost $2 trillion reposing outside the United States to dodge taxes, according to Bloomberg News.

Barack Obama

President Obama has denounced the inversion tax ploy as essentially unpatriotic. Laws passed by Congress permit it. “I don’t care if it’s legal — it’s wrong,” said Obama.

Milton Friedman

He is right. Capitalism’s woes escalated in the 1980s, when companies increasingly adopted the idea that a board of directors’ only constituency is shareholders — not employees, communities, the environment, vendors, customers. The late, great economist Milton Friedman espoused the view that a company’s only job is to maximize profits. This was one time Friedman was wrong.

Unfortunately, this greed worship (“only profits matter”) became embedded in influential court decisions and is taught in business schools. Today, too many companies focus on Wall Street’s reaction to earnings in the upcoming quarter, not on the long term. This, in turn, has led to many accounting frauds.

“There can be no question that managements are focused on pleasing investors and therefore frequently make decisions which are short-term biased,” says Lipper.

James Hamilton

“The way to get ahead is to be sure you’re trying to do the right thing morally,” says economics professor James Hamilton of the University of California San Diego. Ultimately, it’s “just good business” to treat employees and customers well, he says. “Too many MBAs these days seem to have forgotten it.”

In May of 2012, two Harvard professors and one from the London Business School published a study comparing financial results of 90 companies that by 1993 adopted environmental and social policies with 90 companies that adopted almost no such policies. The former were called “high sustainability” and the latter “low sustainability” firms.

The researchers attempted to eliminate so-called greenwashing, or espousing environmental policies for public relations and advertising purposes. (Cock an eyebrow at all those ads in which oil companies boast of their environmental commitment.)

The study noted that companies basing executive compensation on short-term, Wall Street–pleasing results may be sacrificing long-term performance.

The bottom line is that, according to this study, the high-sustainability companies outperform the low-sustainability ones in such measures as return on assets and return on shareholders’ investment. In short, doing good can lead to doing well.

However, the study quotes scholars who take the opposite view. One business researcher says that companies that try to address environmental and social issues could be “eliminated by competitors who choose not to be civic minded.”

Jim Welsh

James Welsh, San Diego County–based portfolio manager for San Francisco’s Forward Investing, tends to be skeptical of do-goodism. He looks askance at the study showing high-sustainability firms doing better than others.

“It could have been written by somebody with a liberal bent,” he says. Welsh acknowledges that a company’s pursuit of environmental and social policies could “result in people buying [the company’s] products,” and thus could be defensible.

All told, however, Welsh points out that when investment analysts study a company, they are more likely to focus on such factors as “the balance sheet, how innovative the company is, the quality of management. I would assume that taking care of other constituencies [such as the community and employees] is not in the top five” of analysts’ concerns.

Both Lipper and Hamilton feel that companies taking care of other constituencies are actually best serving the long-term interests of the shareholders.

Comments
Sponsored
Here's something you might be interested in.
Submit a free classified
or view all
Previous article

Pacific Beach – car thief's paradise

Take photos of your automobile and license plate
Next Article

Will L.A. Times crowd out San Diego U-T at Riverside printing plant?

Will Toni Atkins stand back from anti-SDG&E initiative?
Comments
Ask a Hipster — Advice you didn't know you needed Big Screen — Movie commentary Blurt — Music's inside track Booze News — San Diego spirits Classical Music — Immortal beauty Classifieds — Free and easy Cover Stories — Front-page features Drinks All Around — Bartenders' drink recipes Excerpts — Literary and spiritual excerpts Feast! — Food & drink reviews Feature Stories — Local news & stories Fishing Report — What’s getting hooked from ship and shore From the Archives — Spotlight on the past Golden Dreams — Talk of the town The Gonzo Report — Making the musical scene, or at least reporting from it Letters — Our inbox Movies@Home — Local movie buffs share favorites Movie Reviews — Our critics' picks and pans Musician Interviews — Up close with local artists Neighborhood News from Stringers — Hyperlocal news News Ticker — News & politics Obermeyer — San Diego politics illustrated Outdoors — Weekly changes in flora and fauna Overheard in San Diego — Eavesdropping illustrated Poetry — The old and the new Reader Travel — Travel section built by travelers Reading — The hunt for intellectuals Roam-O-Rama — SoCal's best hiking/biking trails San Diego Beer — Inside San Diego suds SD on the QT — Almost factual news Sheep and Goats — Places of worship Special Issues — The best of Street Style — San Diego streets have style Surf Diego — Real stories from those braving the waves Theater — On stage in San Diego this week Tin Fork — Silver spoon alternative Under the Radar — Matt Potter's undercover work Unforgettable — Long-ago San Diego Unreal Estate — San Diego's priciest pads Your Week — Daily event picks
4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
Close

Anchor ads are not supported on this page.