The Folly of a $-Centric Universe

Michael Levin argues cites Milton Friedman and Michael Jensen to support an argument that wealth maximization provides investors and executives with apparently the only clear means of setting priorities they really need.

McDonalds Corporation should treat cattle and chickens humanely if doing so will sell more sandwiches profitably, not because PETA says so.

Serious investors have grown frustrated and tired with the increasing number of socially-responsible activist efforts that they need to consider at annual meetings. (The Folly of Socially-Responsible Activist Investing, TAI: The Activist Investor, 11/7/2011)

Nonsense. Shareowners have every right to be concerned with the ethics of the companies they invest in, just as they should be concerned about the ethics of companies they work for and the civil governments they elect.

One of the fastest growing issues being placed on proxies is that of political contributions. Shareowners want to know that the companies they own aren’t working at cross purposes with their own values. Why invest in a company that spends its profits by contributing to politicians bent on obfuscating global warming or denying the “theory” of evolution?

If companies are not required to disclose such contributions by law, then we must require them to do so through private ordering until such time comes when we can change the law.

Mr. Levin is plain wrong. The whole world does not revolve around squeezing every last drop out of investments, even if it might kill us or our grandchildren. Sure, shareowners want a good return on investments but we shouldn’t have to justify everything in financial terms. Slavery is wrong, even if it is profitable and the chances of getting caught are zero.

However, I would agree with what I hope is an implicit point of Levin’s post — much of the effort that is put into socially responsible proxy proposal activism would be better spent on corporate governance measures, such as generating and supporting majority voting or proxy access proposals.

Trying to influence corporations to “do the right thing” through precatory proposals is like trying to run the government by letter writing campaigns. Instead of focusing on the symptoms, more should focus on the real cure… electing better representatives to corporate boards.

Can’t elect better representatives because there is only one slate to vote for? Nominate your own candidates. Can’t nominate your own candidates because the rules don’t allow it? Change the rules. Can’t change the rules because the Chamber and BRT essentially control the court? Change the rules one corporation at a time through private ordering, until we can change the governing institutions.

How can we do that? Shareowners need to band together to make our voices heard through our individual investments and through our institutional intermediaries. Sites like,, and will help empower investors. Be a joiner. Yes, money is a very strong force but it isn’t a force of nature like gravity. Money and much of what surrounds it is socially constructed.

Levine says “McDonalds Corporation should treat cattle and chickens humanely if doing so will sell more sandwiches profitably, not because PETA says so.” On many issues there is no PETA with the clout to boycott McDonalds.

It is only more profitable to treat cattle and chickens humanely if there is human will to make it so. Shareowners can’t be writing proxy proposals on every issue that might arise. That’s why we elect directors to represent us. When we actually do elect directors to represent us, we might at least stay with the curve, instead of falling so far behind. For the latest development with regard to electing directors, see the USPX Model Shareowner Proposal for Proxy Access.

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