Wednesday, December 8, 2010
Enterprise to Blame for Bad U.S. Economy?
Henry Mintzberg, a professor at McGill University believes that the United States declining economic performance should not be blamed on faulty macroeconomic policies, but on the big business corporations and enterprises that place their own self-interest ahead of the market. Many CEO's of big corporations have been exploiting the system as a way to increase prices of stocks. They do so by depreciating their brand, cut investments in research and development, and altering prices by raising prices of stocks at a high enough level for the high-end executives can cash in on bonuses. Along with this, the massive lay-offs by these corporations were seen as a way to increase productivity, but according to Mintzberg it actually decreases productivity because of the lack of middle-management within these corporations and enterprises. Mintzberg also compares America's productivity to that of Canada's which in his eyes has been performing better over the last few years. He ends his piece by stating that it is not the individual, or the economy, but the economic analyst and corporate executives that are at the core of the problem. Should the United States try to reform the economy in a way that sees less power going to the big Wall Street CEO's and elites?
Subscribe to:
Post Comments (Atom)
3 comments:
this isnt really my area of expertise, but maybe if there were more regulations controlling companies the recession might not have been as bad as it was. I think that government involvement in companies is a good thing when it is to keep companies in check about the bigger consequences of their policies that they might not necessarily be thinking of...
Mr. Mintzberg throws alot of accusations around in this article without any examples or statistics to prove his points. I understand his concern with too big to fail corporations, but i think he certainly could have presented some facts with his passionate opinions. For example, he insinuates that executives and businesses knew the risk of putting so much into mortgages that were "obvious junk." When we look at what happened with the MBSs now it seems very obvious that they were indeed very risky. But, before the bubble busted only a handful of people in the world knew what was truly going on with those securities. The U.S. government even encouraged them to some extent, by pushing banks to give out mortgages to people who did not have the proper credit. I think Mr. Mintzberg may want to pump the brakes a little bit before he writes his next incriminating article.
I don't think that Wall Street is entirely to blame for the economy. Yes, the greediness across the Street was atrocious, and many of them did everything they could to maximize their wealth. However, part of the debacle lies in some of the governmental policies that somehow encouraged such activities. So, it is not true to say that enterprise was the cause of the crisis.
Post a Comment