The "shareholders first" mantra that Megan McArdle of the Washington Post ("Hard to argue with kinder capitalism, but let me try," Opinion Exchange, Aug. 23) and others of similar view have been espousing for the last century has finally been revised by the Business Roundtable, a national organization of major corporate CEOs. Milton Friedman's theory of "shareholder über alles" vs. community benefit has always been a false choice. A corporation can be profitable and beneficial; there is a middle way. Those seeking to operate at either end of that spectrum find their businesses not as successful either through weakening focus and do-gooder distraction or by mortgaging their futures for short-term profits and stock option increases.
The Roundtable is not advocating a switch from shareholder value to community benefit, as McArdle mistakenly cautions against, but a reordering of the stakeholder priority. If you read their summary, it subtly puts the stakeholders exactly in the order they need to be: customers, employees, business partners, community, shareholders. You'll see that shareholders are at the end, but any business that delights its customers, takes good care of its employees (who, as Henry Ford recognized, are also customers), plays nice with its suppliers and benefits the community with sound building and environmental practices and ongoing local investment will find that the business's commercial success, reputation, brand value, favorable terms from business partners and enthusiastic support from the community will provide more ample growth to shareholder value. Certainly more than the current practices of manipulating the business operations and finances for next quarter's earnings and share prices.
Thanks to all the CEOs at the Roundtable for finally seeing the way and stating so out loud.
Dennis Fazio, Minneapolis
• • •
The instructive debate on shareholder vs. stakeholder theory (Opinion Exchange, Aug. 23) skips over the fundamental starting point for business ethics, that the economy has to serve the society. Indeed, the economy as a system of exchange is a constitutive element of any society. For a society to thrive, the economy has to support and provide livelihood for the whole society. A thriving society will have a distributive economy in which goods, services and prosperity reach all its members. Any discussion of the rights of owners rests on this foundation.
FRANK SCHWEIGERT, St. Paul
• • •
In Peter Zeller's counterpoint ("Article on CEO pay lacked balance, perspective," Aug. 22) on soaring CEO pay, he asserts that star CEOs are worth what they are paid. As evidence, he quotes British journalist Daniel Hannan as saying "the difference between a moderately competent CEO and a brilliant one is worth billions." This may be true, but many extensive studies have found little relation between CEO pay, CEO competence and company performance.
Corporate-governance research firm MSCI, for instance, released a study in 2016 showing little evidence between CEO pay and performance. In fact, it showed the opposite. A hundred dollars invested in the 20% of corporations with the top-paid CEOs would have grown to $265 over the study's 10-year window. Meanwhile, $100 invested in the companies overseen by the lowest-paid CEOs would have increased to $367. Other studies at Stanford, the University of Pennsylvania and New York University have come to largely the same conclusion. Each of these studies then goes on to offer possible explanations for their somewhat counterintuitive findings.
Zeller ignores this evidence, and in doing so, does a disservice to his readers.
Paul Stearns, St. Paul
THE ECONOMY
Trump critics have it wrong
An Aug. 23 letter writer suggests that Trump is leaving the next president with a recession. The writer insinuates that Trump is using "quantitative easing" as a tool to reduce the severity and duration of a recession — a recession that does not exist, and quantitative easing that is not happening. The Federal Reserve employed quantitative easing during the Obama administration, as the target federal fund rate was under 0.5% for the entire Obama presidency. As soon as Trump took office the target fund rate began increasing and has risen steadily to over 2% during Trump's time in office.
The growth of GDP and reduction in unemployment since Trump took office has been remarkable and is the opposite of a recession. It's really quite pathetic to see liberals rooting for a recession as their last gasp in taking Trump down. This approach will do nothing but ensure four more years of Trump in the White House.
Chad Hagen, Sleepy Eye, Minn.
VAPING
As youth tobacco use increases, our prevention efforts must, too
As a physician and a state senator, I was grateful to see the Star Tribune's editorial urging action to stop youth e-cigarette use in our state ("Act now to reduce risks from vaping," Aug. 16). The recent severe lung injuries in Minnesota teenagers show youth vaping is not just an epidemic, it is a public health emergency. Earlier this year, my colleagues at the Legislature debated a number of proposals that would help stop youth nicotine addiction before it starts.
One movement that is gaining momentum locally and nationally is Tobacco 21. Raising the sales age for tobacco products (including e-cigarettes) to 21 can help reduce youth tobacco use and save lives. Tobacco 21 works by keeping 18-year-olds from being a nicotine pipeline into schools and introducing it to younger teenagers. This policy is badly needed given the prevalence of vaping in school classrooms and bathrooms.
We also must fund ongoing, evidence-based prevention work such as media campaigns educating about the harms of tobacco use. Minnesota has been a leader in this area, but there are major decreases in prevention funding just around the corner. We cannot stop our state's prevention efforts just as youth tobacco rates have increased for the first time in a generation.
We can counter the efforts of the tobacco industry with bold policies, and these ideas have bipartisan legislative sponsors. I will be working to see them across the finish line next session, and I hope all Minnesotans will join me in protecting our young people.
Matt Klein, Mendota Heights
The writer is a Democratic senator in the Minnesota Legislature.
IMMIGRATION
Immigrants really do make us great
President Donald Trump's efforts to discourage immigrants from coming to the United States not only violate human rights, they ignore the extent to which our economy has benefited. A report from the New American Economy drives this point home. Here are some of their findings:
Nearly 45% of America's Fortune 500 companies had at least one founder who was an immigrant or a child of an immigrant. Case in point: Steve Jobs. His biological father came to America from Syria — one of several countries currently on the Trump administration's list from which you cannot enter the United States. Imagine the U.S. economy without Apple technology!
More than 60% of adult immigrants who were admitted to the U.S. in 2017 had a bachelor's degree or higher.
Almost 3.2 million immigrants in the U.S. run their own businesses. Revenue in 2018 from this group of companies totaled $6.1 trillion. That would make this group the third largest economy in the world if it were a country (based on GDP). These companies employ 13.5 million workers.
Trump wants to make America great again? That can't happen without the people who have risked so much to come here.
Gregory P. Olson, Eden Prairie
We want to hear from you. Send us a letter to the editor or commentary.
