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The Keynes quote is funny, giving the number of people that define their selves as Keynesians, and being Keynes dead long ago. As some people had already stated, MBAs are not the problem, if you go to a good MBA you will have good teachers, and those people have very clear in their mind all those economic fallacies and more. Ethics are the problem. The problem is the fact that somebody could enter a company, increase the short term benefits, but destroy the company long term, and get out rich, and nobody going after them. HP(last CEO got at least 5Million) , GM(what are 50 Billion these days anyway?, nobody lost their seat), Golmand Sachs, buying bankrupt states CDS(enormously profitable while it does not break, the bill is payed by taxpayers when it breaks)... E.g if Google decides to "monetize" all the info they have over me overnight they will increase their profit a lot (x5 or x10), but I will start looking after other companies search. As everything I use uses their services it will have to be a slow, progressive change, while the genius MBA graduate could declare victory and retire rich at 30, but it will make people spit at hearing the word Google. Another example, there was a time in witch SCO was a serious software company, but some guy decided to make himself rich while destroying the company, and now the name have a different meaning. |
is not necessarily a problem. There are many companies that should do this, but instead try to continue existing (mainly so the CEO/etc can keep their job).
The goal of most companies is to increase shareholder value. Shareholders, like most people, get more value out of money right now than money in the future. If a company has good short term profits, but their future prospects are not great, shareholder value can be increased by making shareholders a lot of money now and going out of business.
The shareholders would then be free to invest the money in other companies with better prospects.
In my opinion, Microsoft is a good example of a company that should do this. It's highly unlikely that shareholders would have chosen to invest in Bing were Bing a separate company. Rather, they would probably have preferred to invest the money in Google, Facebook and other such companies, or perhaps even diversified out of technology. But due to a misplaced desire of corporate executives for Microsoft to continue existing, shareholder value was not maximized.
(Admittedly, taxes complicate this picture, and encourage investment within a company rather than outside a company. But that's somewhat tangential to the main point.)