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More Builders and Fewer Traders
Report

More Builders and Fewer Traders

A Growth Strategy for the American Economy

William A. Galston and Elaine C. Kamarck
Brookings Institution, 2015
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Editorial Rating

9

Qualities

  • Analytical
  • Scientific
  • Eye Opening

Recommendation

The short-term mentality that drives American businesses and investors has negative long-term implications for the US economy. CEOs, focused on meeting this-quarter’s goals, engage in shareholder friendly activities such as buying back shares and boosting dividends while neglecting long-term value creation and growth. This noteworthy study from governance experts William A. Galston and Elaine C. Kamarck puts a magnifying glass to the potentially disastrous consequences of America’s “corporate short-termism.” getAbstract recommends this eye-opening report to corporate decision makers, board directors and policy makers.

Summary

America’s economy is far from vibrant: Annual growth has not reached 3% since 2005, and those at the higher end of the income ladder are reaping most of the rewards. For everyone else, stagnant or falling wages, increasing income inequality, and a contracting middle class are the new reality. Experts often cite the roles of globalization, trade agreements and IT in the loss of manufacturing jobs as the main culprits behind sluggish growth and pay. But forces that promote “short-term gains over long-term growth” are also at work:

  • “Stock buybacks and dividends” – In 1981, 248 of S&P 500 companies...

About the Authors

William A. Galston and Elaine C. Kamarck work on the Brookings Institution’s Governance Studies Program.

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