> That model is obviously totally dead, and I think the companies fired the first shot.
I'm not sure it was "companies" in general. I think a major cause was the shift in stock ownership in public companies from individuals to mutual funds and other financial institutions, over the decades after WWII.
From the standpoint of a company that actually wants to build lasting value, you want your public stock owners to be individuals, investing on long time horizons for things like their retirement. Then you can implement longer term plans and strategies without having to worry as much about immediate returns.
But if most of your stock is owned by mutual funds, then the fact that the individuals whose retirement savings are in those mutual funds are investing on a long time horizon doesn't help you; the funds themselves are looking at your short term returns, and if those don't measure up, they'll sell your stock and buy some other company's.
In short, a system that was set up with the best of intentions, to help people diversify their retirement savings and earn better average returns on them, has had the unintended consequence of putting Darwinian selection pressure on individual companies to prioritize short term returns over everything else. Which in turn has led to the demise of the "work for the company your whole career and the company will take care of you" model; no company can afford to do that in the new selective environment.
I'm not sure it was "companies" in general. I think a major cause was the shift in stock ownership in public companies from individuals to mutual funds and other financial institutions, over the decades after WWII.
From the standpoint of a company that actually wants to build lasting value, you want your public stock owners to be individuals, investing on long time horizons for things like their retirement. Then you can implement longer term plans and strategies without having to worry as much about immediate returns.
But if most of your stock is owned by mutual funds, then the fact that the individuals whose retirement savings are in those mutual funds are investing on a long time horizon doesn't help you; the funds themselves are looking at your short term returns, and if those don't measure up, they'll sell your stock and buy some other company's.
In short, a system that was set up with the best of intentions, to help people diversify their retirement savings and earn better average returns on them, has had the unintended consequence of putting Darwinian selection pressure on individual companies to prioritize short term returns over everything else. Which in turn has led to the demise of the "work for the company your whole career and the company will take care of you" model; no company can afford to do that in the new selective environment.