Starting a new year in a more positive way.

I’ve been reading a lot of economics books over the last year. First and foremost, I needed to know whether or not my gut instincts about Corporate America were right or just isolated to my experience. The more I learned, the more I needed to read.

Many of the books that I read over the course of the last year supported my instincts about inequality and the “rent seeking” behavior of investors and leaders. Rent seeking behavior is an economics term that refers to the ways investors extract more value than they should reasonably expect from companies and assets.

Rent Seeking

Common examples include:

1/ Use of debt to repurchase stock. 

2/ Use of tax cuts to repurchase stock.

3/ Use of immigrants and offshore resources to cut labor costs.

4/ Use of management practices [ie. Cut the bottom 10%] to cut labor costs.

5/ Use of perks to increase productivity.

6/ Use of patents to prevent competition.

7/ Use of cherry picking populations and patients.

8/ Use of pricing and out-of-networking billing strategies.

9/ Use of power to gain favorable tax and regulatory policies.

10/ Use of debt to avoid income tax.

These are just a few examples but they all serve one purpose – to increase the return to investors and shareholders in the short term. If your economic theories are mainly informed by Milton Friedman’s essay, the social responsibility to business is to increase its profits, then you may think it’s all justified in the name of business.

Milton Friedman

Fifty years after Friedman’s essay, Professional Economists are weighing in on the short comings of his theories.

“Mr. Friedman’s cramped vision enhanced the power of the stock market and silenced the voice of workers, leading to profound inequality.”

What you might not realize is that Friedman’s essay was written at a time when the laws were a high bar for business. Many of the laws have subsequently been relaxed and industries deregulated. The deregulation has allowed corporations to operate in ways that no longer serve the broader purpose of business and duty to society. 

Deregulation has destabilized the markets, created bubbles that are difficult to manage with economic policy, threatened the environment, eroded public trust and have had a profoundly negative impact on the health and wellbeing of Americans. We can’t ignore or justify short term business practices that continue to sacrifice the environment and society.


I’ve been reading Unbound by Professional Economist, Heather Boushey, about how inequality constricts our economy and what we can do about it. The book is a must read because it covers many of the policies being debated in the current US election. It is very well researched and supported with data.

A few points from the book that I found interesting:

1/ Investments in Education: Investment in early childhood eduction have a positive return on investment [ROI] in about a decade.

2/ Tax Cuts: Tax cuts for corporations and the wealthiest Americans translate to an increase in the deficit. The trickle down theory does not work but giving the same level of funding to the low income class increases the market by about 5%.

3/ North vs. South: Northern states have always made more investment in education which resulted in more innovation, patents and economic growth. Comparatively, only 5% of the patents were held in the South even though the South is more populated.

Stakeholder Capitalism

Stakeholder capitalism is catching on in Corporate America. As you plan for 2021, consider rebalancing your company’s short and long term strategic initiatives and updating your corporate documents to reflect your commitment to socially responsible business practices. We can’t curb demand and reduce the cost of healthcare without addressing the rent seeking behaviors.

Why Anew?

It’s my birthday next week which is usually a time of reflection for me. I’ve spent the last year “rumbling” as Brené Brown would say. This year, I am ready to start anew too.