Minutes of Prof. Paul Bracken Meeting
Prof. Paul Bracken
All big corporations in the world followed the growth of big government in every country of the world except one, the U.S. Here big corporations were responsible for the growth of bigger government because something was needed to rein in their power and stop harmful practices, but this didn’t occur until the early 1900s. Consequently, U.S. corporations don’t share the respect for government that other corporations around the world have.
In the 1950s and 60s trade unions were strong and doing what they could to push government towards a workers’ socialism form of society like Europe. But in the 70s the wheels came off this approach when President Reagan placed a cap on government growth. This enabled corporations to try new innovations that limited the influence of government on their activities. The new model was shareholder capitalism. This meant that there would be cuts in corporate welfare such as defined contribution pensions taking the place of defined benefit pensions and reductions in provided health care. Adding to this were overseas relocations to obtain lower tax rates and the further reduction in the work force because of technology advances.
These changes have caused a backlash, which has generated a lot of anti-business sentiment. But there is also the shift in power from the government to K Street with its lobbyists, lawyers and non-profits.
There are several views on the future of corporations. One suggests that corporations will moderate their capitalism and provide more for workers and the public. Others believe that there will be fewer and fewer high paying jobs with the best going to graduates of elite schools. Inevitably, corporations that survive will be very flexible in their approach. Constant change will be a by-word to success. And for the time being the role of government will keep shrinking.
Q. What about corporate misbehavior?
A. I’m opposed to it. But it has a long history and it is unlikely there will be more regulation to stem it.
Q. What can be done to implement a corporate culture of ethical behavior as well as seeking profits?
A. Most CEOs don’t know what their underlings are doing because they rose up in a specialty area of the company. We need more generalists like the generals in the military who can see more of the entire picture.
Q. Will consolidation continue?
A. The pendulum will swing back and forth, but for the time being there will be more consolidation.
Q. What can be done to incentivize companies to put more into the country’s infrastructure?
A. Right now companies want to maximize profits and are doing so by moving to better tax venues.
Q. How are students being prepared for changes?
A. Many business schools are reducing the time it takes for an MBA from two years to one and liberal arts are being replaced with business courses.
Q. Isn’t there a need for increased regulation of the pharmaceutical industry?
A. It won’t be touched except in response to specific situations that generate a lot of public pressure.
Q. What has Amazon wrought?
A. It has disrupted American business and other companies like Walmart are trying to catch up.
Q. What will it take for the Affordable Care Act to be successful?
A. There will be major consolidations of the companies underlying it to cut back on costs, but such actions will have nothing to do with health.
Q. How can cultures be changed to emphasize ethical behavior?
A. There is too much pressure to reach targets to allow for this. Plus, it is too complicated for boards of directors.
Q. How can employees get more power?
A. Scarcity of needed skills will provide for more wages and power to desirable workers.
Q. Will the high rate of mergers and acquisitions continue?
A. Yes. The availability of cheap money and the desire to get into venues with better tax rates will drive it for the foreseeable future.