I have long thought that business executives ought to stick to profit maximization and pay those profits out in dividends so that the people who actually own the company can decide how they want to use their money.
There are, however, a lot of executives who disagree, and feel that they ought to use their position to promote environmentalism, social activism, and other causes they favor — with corporate funds.
Today’s Wall Street Journal reports on a particularly troubling case involving the CEO of Goldman Sachs. You can read it here.
Corporate governance shares some features with government. CEOs and politicians can both take advantage of the rational ignorance of their constituents to get away with behavior that creates personal benefits for themselves at a widely dispersed cost to others. If a Goldman Sachs shareholder is sufficiently upset, however, he can sell his stock to avoid future depradations against his wealth. Alas, we can’t do that with government.
