American capitalism is the world’s greatest wealth-creation engine, by far. It has an unmatched entrepreneurial streak, producing the world’s greatest technologies and innovations. For all the justified hand-wringing about America’s current economic sluggishness, the U.S. has still done a lot better out of the crisis than other major rich countries.
American capitalism does have one major problem, however: short-termism.
It’s a cliché, but it’s a cliché in large part because it’s true. Companies are driven by the quarterly bottom line. CEOs are driven to boost short-term earnings at the expense of longer-term growth. And this is because investors demand a quick return, instead of investing in the long run. This absolutely stifles innovation.
via This one reform could fix the biggest problem with American capitalism – The Week.
