Was poor performance punished before the 80ies? Was there too powerful countervailing forces (and how did they decline)? Was there a fear of a workers revolution? A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
IT has also had the effect of making drive-by trading possible. It also meant that share prices could be monitored minute by minute, which has an obvious short-term influence.
Previously share dealing was a more leisurely affair, and there wasn't such an obsessive interest in talking up prices with bullshit - or reorienting towards a growth maximising corporate performance landscape, if you prefer.
It's an equilibrium, of sorts: If the norm is that executives have long tenures, it becomes hard to get a slot, so a short-termist rape-and-run executive will hit a brick wall because he'll have a hard time getting new positions when he runs from the company he looted. Not because he'll have a problem being accepted into a new slot (he'll still be hired by his golfing buddies, after all) but because there are much fewer vacancies. This pressure to do a proper job while you are in the business will naturally tend to promote a long-term outlook that will in turn make it valuable to retain the executives over the long term.
On the other hand, you can get a new equilibrium in which the CEO can expect only a short tenure - in which case asset stripping becomes much more attractive as a strategy relative to real work, because the guy who benefits from his work will be the next CEO. At the same time, rape-and-run becomes more viable because there is a greater CEO turnover (so there will, at any given time, be more open slots when he has to run from the crashing company into a new top job). Obviously, this further reinforces the culture of short CEO tenures, which makes long term vision increasingly precarious.
It's entirely possible (but I won't claim to have evidence for it) that corporate culture can jump between these two states given the right (wrong?) external shocks. The Raygun Revolt may have been one such shock.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
And once it started it amassed power in the hands of a few who could finance people who promoted its spread. A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
What I'd like to do is read through the diary and comment thread in one sitting and synthesise the suggestions into a single reasonably coherent explanation (or, if that is impossible, at least make it clear which models are being proposed).
