Quote of the day:
Question: “Did the increased emphasis on “primary responsibility to the shareholders” since the mid-1980s bring about a marked change in what are considered acceptable profit margins for big American companies?… “
[DeLong gives four possible explanations… concluding that:]
“I find that I’m 30% a finance economist, 20% a Galbraithian, 20% a follower of the Summers-Shleifer “breach of trust”, and 30% a believer that the high unemployment of the Volcker disinflation was the key in its shift of power away from workers.
You will observe that I give 0% weight to the hypothesis that it was a shift in culture–a rise in the belief that managers had “primary responsibility to the shareholders”–that was responsible for the very real change that you ask about. This is a professional deformation: for 27 years I have been trained to look first at changes in technologies, resources, institutions, forms of organization, and incentives, and only after all of these have failed to give answers to throw up my hands and disappear in a “blaze of amateur sociology.”