Who Deserves the Condemnation, Again?

 

My younger son is completing his undergraduate work at a State University, which means he’s getting fed a steady diet of the Leftist worldview. It’s okay – I did my undergrad work at the same University, so I’m ready to counter some of the more egregious stuff.

Take environmentalism (yes, this blog has a management component to it – just bear with me). The main arguments he invokes when suggesting that corporations must be reigned in has to do with the scenario where some company comes in to an area, town, whatever, sets up a facility to extract or manufacture, damages the environment, and then high-tails it out before any enforcement agency can interfere or hold them accountable. This is a favorite scenario of the anti-corporate types as they argue for more oversight and restrictions on the managers of such opportunistic and greedy entities. But I have to ask: where did the notion that companies only seek to extract profits from an available market at the expense of a multitude of other concerns, the natural environment in which they operate included? 

I blame a familiar target, Generally Accepted Accounting Principles, or GAAP.

As I have previously and often asserted in this blog, there are three types of management:
•    Asset
•    Project
•    Strategic
Of these, only Asset Management has at its core the notion that the point of ALL management is to “maximize shareholder wealth.” Project Management (for the umpteenth time) seeks to deliver a specific product or service (scope) on the customers’ parameters of time and cost. Strategic Management is oriented towards garnering more market share than its competitors. Neither Project Management nor Strategic Management has anything to do with, say, the decision to rent or buy a certain piece of office equipment, or whether or not the employees are putting in “free” overtime. 

Indeed, the natural extension of the notion that the point of all management is to maximize shareholder wealth is the very scenario feared by environmentalist, or any other stakeholder who stands to lose by the corporate entity behaving in just such a fashion. Your typical Project Manager would just assume have a happy project team chasing the project’s scope; Strategic Managers are actually happier when the competitions’ workforce is noticeably demoralized. Not so the Asset Managers – as long as the Profit-and-Loss statement looks really good, their view is that their decisions and influence have delivered an environment (pun intended) where the company’s assets are pulling in more revenue than they are expending, which is always a good thing based on that philosophy. Is the company’s revenue projection headed downward? Having the employees work harder and longer (without incurring additional costs) is the obvious answer. If that doesn’t work, they will look for other areas to cut costs: training, seminars, facilities, perks – nothing is off limits, up to and including layoffs (strikethrough) reductions in force. It’s simply the way they see the business world.

And it’s not just the environment. Recently a person bought up the rights to a drug used to counter certain parasites, and increased the price 5500% (1).  While this struck the rest of the universe as an outrage, it must be pointed out that (a) it was perfectly legal, and (2) it maximized shareholder wealth. In short, any intellectually honest GAAP adherent should admit that it was a pretty clever maneuver – either that, or step up and admit that the whole “maximize shareholder wealth” meme is openly fraudulent, or at the very least hopelessly inadequate.

Any takers?
 

(1)Skeptical Raptor’s Blog, Skyrocketing Prices of an Anti-Parasitic Drug: The Facts?, retrieved from http://www.skepticalraptor.com/skepticalraptorblog.php/skyrocketing-prices-of-an-anti-parasitic-drug-the-facts/, October 25, 2015, 18:23 MDT.