Dear Andrew Ross Sorkin, what about Apple?

What if there were a company that put the greater good ahead of shareholder value?

Transcribed from the NYT’s The Daily podcast: “What American C.E.O.s Are Worried About

Host Michael Barbaro: Let’s talk about this statement and the people who put it out. I wonder what would change in the behavior of corporations if they put into practice what they’re saying here, if they actually mean it… if shareholders are just one of a dozen people he now thinks of his corporation as serving.

Sorkin: Let me give you my hopefully cynical view. There is progress here, because it changes the conversation. It provides for an allowance, if you will, for a board of directors and a CEO to say, know what? let’s raise the minimum wage. Let’s actually spend the money on this plant. Let’s increase our research and development budget. Know what, in this community maybe we should give a little bit more…

That would be the positive view of this. The negative view is that these are words on a page and nothing more.

My take: An excellent backgrounder the changing attitudes of American CEOs toward shareholder value that starts with Milton Friedman but never gets to Apple. I would have loved to hear Sorkin’s take on the company’s environmentalism, its supplier code of conduct, its sensitivity to special needs, its position on conflict minerals, its commitment to health research, etc.

See also: Sorkin’s How Shareholder Democracy Failed the People in Wednesday’s NYT.


  1. Gregg Thurman said:
    How about rewording the question as “is shareholder value enhanced by serving the greater good”.

    With the greatest (belated) respect to a fellow classmate and friend, Phil Fleming (no longer with us), when asked about his political viewpoint, he stated, “I support the position that benefits the most”. Much to my chagrin, I misunderstood his response.

    Phil was a professional political operative that worked primarily for Democrats (but not indiscriminately all of them).

    Today I am a supporter of his philosophy. I think Apple is too.

    August 21, 2019
    • David Drinkwater said:
      Gregg, I agree with your updated position. I appluad your for speaking it.

      I will try to not take sides, but I agree that “what is best for the most of us is best”.

      The majority of Americans (99%) are not 1%ers. The majority of the wealth is in the hands of the top 10%. Below, a commentary from the US Federal Reserve. Last Update: July 23, 2019

      https://www federalreserve gov/releases/z1/dataviz/dfa/distribute/chart/

      You can’t make out the “bottom 50%” and the “bottom 90%” only control about $30T out of $100T.

      This is not personal, this is just data. 90% of the people own only 30% of the wealth (0.33% wealth per person). 10% of the people own only 70% of the wealth (7% wealth per person). The math – a 20 1 ratio – is not healthy for a nation.

      I know that this is not Apple related, but it is in the direction that the discussion is going.

      PED, if you wish to delete this, please at least acknowledge a deletion.

      August 22, 2019
      • Gregg Thurman said:
        “This is not personal, this is just data. 90% of the people own only 30% of the wealth (0.33% wealth per person). 10% of the people own 70% of the wealth (7% wealth per person). The math – a 20:1 ratio – is not healthy for a nation.”

        The following is not a condemnation of any political party, it took both to pass the changes to our tax laws.

        During the 1950s through the 1970s, the US economy was held in high esteem internationally because of the size and health of its middle class.

        The middle class in the US started to shrink in the 1980s after passage of Reagon’s tax bill. With the exception of a single element, it was a good bill. The portion I refer to is the marginal rate on high-income earners and the differentiation of earned and unearned income. The top marginal rate on those in the top 10% was reduced by over half.

        If the US did not engage in deficit spending to fund unemployment, social security, disability, and a myriad of other social programs the US economy would collapse. It is those subsidies that keep the US economy growing. When the bottom 10% receive those subsidies they spend it resulting in increased economic activity that then flows uphill (trickle-down is “voodoo” economics as President Bush stated) to the top 10% where it stops flowing, instead becoming second/third homes, art collections, inflation, etc. The worst part is that the US must then borrow to fund its deficit spending from the very people that ultimately benefit from it.

        If you look at federal charts depicting the size of the middle class in the US you will see a gradual decrease in its size beginning with the Reagan tax bill. Also, the rate that money churns in the economy has fallen from about 4X to just over 2X. A $1 stimulus no longer impacts GDP by $4, the impact has been reduced to $2. Again because wealth flows uphill until it stops circulating.

        The top marginal rate was excessive before Reagan’s tax bill, but that bill reduced it far too much, especially in inheritance and capital gains, both tax categories that now enable the top tiers of earners to perpetuate the accumulation of wealth.

        As a life long capitalist and fiscal conservative, I am not in favor of socialism, but I do believe that the beneficiaries of government subsidies should be the ones that pay the highest tax rates, and those rates currently are not high enough.

        I have always believed, as an investor in new enterprises, that money gets half. The tax rate, in my opinion, on gross income above $500,000 per year (the threshold of the top 1%) should be 50% (which is below the marginal rate prior to Reagan’s tax “overhaul”) without regard to the source of income, or duration of investment. A taxpayer making $1,000,000 per year would have an effective tax rate of 25%. A $10,000,000 per year earner would have an effective tax rate of 47.5%, etc.

        Importantly, I do not believe corporations should pay taxes at all. There are only three things a corporation can do with revenue, spend it (capital improvement, R&D), spend it on employees or put it in the bank. Spending it benefits the recipient firms where it is spent (those employees then pay more taxes), the employees pay taxes and deposits are available (as loans) to others that enable economic expansion. Taxing corporations reduces the economic benefit those corporations create without generating more tax revenue.

        If this post is deemed inappropriate please feel free to delete it.

        August 22, 2019
  2. Fred Stein said:
    Sadly, so many commenting on the Business Roundtable statement treat CEOs as type. That is just wrong. If applied to any other group of people, we would see this as prejudiced, or biased, or profiling, or stereotyping.

    Worse, this shallow approach obscures the discussions we need about how to deal with globalization, AI, the digital transformation, wealth inequity/wealth creation, privacy/security and the talent economy. None of these challenges can be addressed by pulling rhetoric out of a ideological text book.

    August 21, 2019
  3. Turley Muller said:
    This isn’t a new way of thinking; it’s been taught in business schools last couple days. It’s called stakeholder theory. To maximize the value the firm, hence the wealth of the owners, it must maximize relationships with its stakeholders- employees, customers, vendors, community etc. Putting shareholders first does not mean it is coming at another’s expense. If that were the case, then shareholders are not being put first since firm value would suffer from damaging the relationships of stakeholders. If firms don’t strive to serve the greater good, it catches up to them and their value is minimized. This is especially true lately with the advent of social investing and “ESG” funds.

    I read an article not long ago where the NYT was complaining that corporations weren’t using extra cash from tax cut to invest in R&D or capital investments, like building plants. R&D is very constrained in this country due to the lack of labor. High percentage of visas go to R&D hires. because our population lacks engineers,, PhD’s, and folks trained in math and sciences. Firms would invest in new plants and infrastructure if it made sense. A quick way to go of business is making more products than demand can support, .So sure, any corporation, such as Ford could build a new plant and hire more workers but it would be closed down not long after when unsold inventory stacks up. It’s elementary to expect an increase in R&D or capital investment because of a tax cut, Corporations had no shortage of cash or access to cash, and when there are economically viable projects, they will put that cash to work. Tax cuts increased the capacity to invest, but it did not increase opportunities to invest.

    August 22, 2019

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