The attitude of Owen Young, who was GE Chairman between 1922 and 1939 (and returned in 1942-45), went something like this: “[S]tockholders are confined to a maximum return equivalent to a risk premium. The remaining profit stays in the enterprise, is paid out in higher wages, or is passed on to the customer.” The aforementioned Jack Welch, on the other hand, considered “the shareholder as king—the residual claimant, entitled to the [whole] pot of earnings.”
This single-minded philosophy has been enormously destructive for everyone who isn’t a shareholder, whether they be wage earners, customers, the environment, communities, etc. In this form of management, economic gains go solely to the shareholders—many of whom are only short-term investors—rather than being distributed among all stakeholders, particularly employees, as was common throughout the 20th century. For shareholders and executives, workers are expendable and people are little more than potential consumers (or debtors).
Of course, whether this philosophy has undermined the moral fabric of America is subjective; but one doesn’t have to be a socialist to recognize that it leads to the kind of greed and fraudulent behavior that helped cause the 2008-09 financial crisis.
Source: http://www.alternet.org/tea-party-and-right/bernie-sanders-vs-plutocracy-why-general-electrics-ceo-lashing-out-democratic
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