Stop Economic Cannibalism!
That capitalism, whose mission is making money on money, rather than job growth, now dominates the American economy because of the stock market’s power to richly reward or severely punish companies based on small changes in quarterly earnings per share (e.p.s.). Enormous stock options are the coupling device between the stock market and CEOs that results in a feeding frenzy in compensation, sacrifice of profitable, long-term growth programs for short-term earnings, and the “downsizing” of millions of workers, treated as disposable cost commodities.
The solution to this economic cannibalism is deceptively simple. Wage earners should demand that money managers change the way companies are measured from short-term earnings per share to a three-year running average of sales growth, profits, and cash flow, compared to managements’ predictions. Accountability for sales shifts attention to long-term growth; and focus on cash flow against predictions assures integrity in the numbers. For example, this cash flow discipline would have identified the cancer at Enron early enough to minimize the damage to jobs and pensions.