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It’s about more than just shareholders! Business writers are excited! Bernie Sanders supporters are gratified! Long-time members of the KJR community are wondering (1) why this is even news, and (2) how could so many commentators all miss the point so completely?

The subject is the Business Roundtable’s discovery that creating shareholder value is too cramped a metric to tell the whole story. It’s breathing new life into the ancient mantra that businesses need to create value for all their other constituencies as well — the communities in which they do business, their employees, suppliers, and even (gasp!) their customers.

The discovery fits nicely into the developing narrative that capitalism, in its unfettered, laissez faire form, often creates damage that ranges from minor inconvenience to monstrous harm and injustice.

So let’s congratulate the Business Roundtable for trying to soften the impact of the emerging backlash — for modifying its allegiance to the newly unpopular proposition that pure-play economic theory automagically defines good public policy.

But ethics predicated on fear of punishment isn’t ethics at all. To the extent this is all an attempt to placate those who see capitalism as a system that mostly looks out for someone else’s best interests, it’s a shallow and fragile change.

What matters more, as was first pointed out in this space seventeen years ago, there are bigger reasons for CEOs to reject such a puerile and shallow fiduciary philosophy as the pursuit of shareholder value.

It’s like this: Shareholder value, which is EconomistSpeak for making the price of a share of stock increase, is a poor predictor of future performance. Heck, it doesn’t even reliably describe current performance.

Why? you might ask. Answering a question with a question I might ask you in return, what does reliably describe current performance and accurately predict future performance?

Well, you might answer, steps that increase a company’s competitiveness in the marketplace are what describe current performance and accurately predict future performance. Steps like developing superior products; instituting efficiencies that let the company sell its products for less; making doing business with the company in question more convenient. Steps like that.

The steps companies have been taking to increase shareholder value aren’t just different from what it takes to be more competitive. They interfere.

Take, for example, the popular practice of using cash assets, often supplemented with borrowed money, to buy back stock. The theory is that the same assets, divided by fewer shares of outstanding stock, result in the remaining shares being more valuable.

Which they would be if the CEO and board of directors were to immediately liquidate the company. Otherwise, all buybacks do is make this money unavailable for such trivialities as product improvement and customer care.

Debt-funded stock buybacks might be the most egregious paean to the shareholder value theory of business governance, but it’s hardly the most prevalent, or the most banal. That award goes to the constellation of practices focused on artificially deferring profitable expenditures so as to “make the numbers.”

And by profitable expenditure I mean all expenditures, because any expenditure that isn’t a profitable one shouldn’t be deferred. It should be eliminated on the grounds that why would you do anything else?

For example: You need to hire a systems administrator. There are only two possibilities: The company will, in the long term, be more profitable because IT has filled this position, or it will be less profitable. If it will be more profitable, deferring the expenditure defers profit.

Imagined conversation between the CEO and board of directors:

Board: We understand you deferred some profit this quarter.

CEO: (Proudly) that’s right! And we’ve identified lots more profit we can defer in future quarters!

Board: What the hell is wrong with you?

Real-world board: Great job! Keep it up!

Much of the problem, as should be evident, is that cost reduction is easy to measure. Just about all other value creators are not. Deferring a hire, or an equipment purchase, or what-have-you reduces expenditures in easy to recognize ways. The benefits resulting from having enough staff with the right skills and equipment to do the work is, in contrast, easy to understand in principle, but devilishly hard to measure.

And as we’ve all had the tiresome mantra drilled into our heads that anything we can’t measure we can’t manage, the results are as easy to predict as they are hard to avoid.

Which leads to this conclusion: The Business Roundtable has taken a correct step.

It’s for the wrong reason, but at least it’s a step.

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Can you win?

When I was growing up (or at least older), many conversations fell into the category of Battle o’ Wits, although in the cruel light of accurate remembrance, Battle o’ Half-wits was probably the more accurate description.

Which is why, asked which threesome was funniest, my kindred spirits and I would unhesitatingly choose the Marx Brothers over the Three Stooges. Given a choice between becoming the next Groucho and the next Chuck Morris, we’d have chosen Groucho in a heartbeat.

But … Marx and Morris had this in common: It was always, for them and for us, about winning. Groucho’s “The next time I see you, remind not to talk to you,” was, psychologically, exactly equivalent to Chuck breaking an opponent’s nose.

What brought this to mind was an interchange in the Comments to last week’s column in response to my having said, “Bigots who aren’t violent and don’t incite violence aren’t dangerous. They’re merely annoying.”

The commenter’s points are that (1) verbal bigotry can do direct damage to its targets and (2) it can encourage discrimination even when it falls well short of incitement.

They’re points that deserve attention.

And so …

First and foremost, before anything else, in case this wasn’t entirely clear last week, the workplace has no place for any expression of bigotry of any kind. If you think this represents a triumph of political correctness, go ahead and think it.

But if you want to gripe about it … in the workplace … all you’re doing is announcing that you want to say something bigoted and would if you were allowed to. Which isn’t very different from saying the bigoted thing in the first place, except that you’re making us guess who you’re bigoted against.

This includes, by the way, bias against White Supremacists, a group I personally find detestable, but whose perspectives are just as legitimate and important to its devotees as my own are to me. In the workplace I’m just as responsible for keeping my views about them to myself as they are for keeping their views to themselves about … well, statistically speaking, most of this planet’s inhabitants.

Outside the workplace is another matter, where, faced with someone spouting off about one or more of the usual targets, we each have to decide how to deal with the situation.

If I’m the target, I maintain now what I maintained last week: Non-violent bigotry, and I include all bigotry that doesn’t incite, is a mere annoyance. It has to be, because if I give it any more significance than that, I’m giving the bigot power over me.

The bigot wins, and as a Groucho-ist in good standing, that would be just plain unacceptable.

That leads to the next, more uncomfortable question: Does the bigot have to lose the encounter, or is their not winning a satisfactory outcome?

Here’s where it gets complicated.

If it’s just the two of us, a Groucho-grade put-down might be personally satisfying, but it isn’t likely to cause the bigot to break down and beg me not to nail him with another one.

Quite the opposite, all I’d have accomplished is to escalate the situation. Worse, the less-verbally-skilled my opponent might be, the more likely escalation to physical violence would be, and I have nothing in common with Chuck Norris.

If the two of us have an audience, I have to weigh the possibility that humiliating my opponent could win the audience over to my side against the equally likely possibility that they’re already on my opponent’s side, at which point escalation would likely be quite unfortunate.

Here’s where I am, personally. Your mileage may vary:

Neither you nor I will persuade a single white supremacist to change his or her worldview, any more than you’ll persuade a dedicated Waterfall-oriented project manager that really, anyone who hasn’t gone full DevOps is a dinosaur who should be put out to pasture … a herbivorous dinosaur, that is, because as any Jurassic Park-goer knows, Tyrannosaurs and velociraptors don’t remain pasture-bound.

Persuasion won’t get us anywhere. Lecturing won’t get us anywhere. Neither will self-righteous indignation. What will?

Opinion: The Blues Brothers and Blazing Saddles did more to combat bigotry than all the speeches in the world. They did so by ridiculing the whole system of beliefs and its vocal proponents, making the whole business socially unacceptable.

Ridicule. We need more ridicule.

Groucho, where are you when we need you?

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