Short-Termism Poses Long-Term Drag on Growth
Noah Smith notes:
“Short-termism might
be slowing growth by holding back corporate investment. When businesses invest,
the economy grows. But big investments reduce near-term earnings, and incur
considerable uncertainty as to whether they’ll pay off. If executives of public
companies are compensated based on quarterly earnings, there’s just very little
incentive to make big expensive risky forward-looking investments -- and that
means little incentive to grow.”