There will never be a good answer because long term results must always be in tension with near-term results. It is a delicate tension and not a balance. The problem is that the short-term has overpowered all other ideas.

I think that some of this may be due to the fact that so many people are in the stock markets, at least in America. Our retirements are almost entirely market driven, and many people have investment portfolios.

Tie to this a couple of facts about human nature. As that great philosopher, George Anderson, once said, “losing hurts twice and much as winning feels good.” (Or Prospect Theory, if you like academics.) Then there’s the problem of seeing your neighbor get richer when you don’t. (It also has a cute name which I have forgotten.)

I’m not sure what the solution will be, but it should involve some form of internal checks and balances. Perhaps letting investors choose short or long term, with long-term investors getting subsidy from the government in the form of tax incentives. You need both sides to be powerful and to constantly be battling each other.

The problem for Jaquesians is that the issue isn’t really a problem of the MAH but of the Association of shareholders.

However, many senior officers never see the output from their strategic interventions. They want to plan for the long term but get measured by fund managers on the quarterly/annual cycle.

So Executives are required to play a game that is driven not by their own the bonus performance but that of actors who are employed by others. ie fund managers. And, because of competition between fund mangers, and the willingness of investors to move to the most recently successful fund manager, each fund manager wants to be top of the WM league tables. So, each fund manager is under pressure to chase the near short term numbers rather than the long term numbers!

I believe ( actually I know) that many folk in banks were aware of the impending doom, but not its timing. However, they had to produce the dividends that their competitors were producing to maintain market share and got involved.

Of course, it can be argued that a good company chairman might help the ‘Wall Street’ folk understand why their particular company is pursuing a different approach. But not many can, and few do with any success. And if they do not produce the dividends…….

So, is this current situation just a set of examples of the natural tensions that exist in capitalism. Energies can shift from satisfying a customer to exploiting an opportunity. Maximising is easily mistaken for optimising. Globalism of communications is mistaken for globalisation of trade and finance. Managers just focus on Economy (level 1)
Efficiency (level 2)
and forget that the whole system requires Effectiveness, Emergence and Evolution.

Or is it just greed?