Kicking the “Short-Termism” Habit

By CSRwire Contributing Writer Bill Baue of Sea Change Media

“A failure of responsibility.” That’s what President Obama called the events that came to a head in the market meltdown a year ago, in his speech at Federal Hall in the heart of Wall Street this Monday. He placed accountability in Washington for ignoring “problems -- including structural problems in our financial system.”

Obama cited the proposed Consumer Financial Protection Agency and other measures to fulfill his promise that “we will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.” He also identified his audience of Wall Streeters as culpable in the failure, and told them, “You don't have to wait for a law to overhaul your pay system so that folks are rewarded for long-term performance instead of short-term gains.”

Last week, the Aspen Institute Business & Society Program issued a blueprint for shifting from this system of “quick kills” and “short term gains” to more responsible financial stewardship focused on long-term value. The first remarkable aspect of the statement is its achievement of consensus amongst self-proclaimed “strange bedfellows” spanning the political spectrum. The Corporate Values Strategy Group (CVSG), convened in 2004 to draft the 2007 Aspen Principles on Long-Term Value Creation, spans from organized labor’s Richard Trumka, Secretary-Treasurer of AFL-CIO more conservative voices such as financial wizards John Bogle of Vanguard and Warren Buffett of Berkshire Hathaway.

The statement reflects this remarkable reconciliation of the diversity of perspectives through the linguistic tension encompassing progressive ideas through more conservative language. Take the title, for example: Overcoming Short-termism: A Call for a More Responsible Approach to Investment and Business Management. The notion of prioritizing the long-term is embedded in the term “sustainability,” a word closely associated with progressivism due to its commitments to environmental stewardship and social justice (though it has certainly been embraced by conservatives as well.) Significantly, the group chose not to frame its work around this term, availing itself of being embraced by a broader audience while still espousing tenets consistent with core sustainability commitments.

The statement proposes three key leverage points for countering shareholder short-termism (the one particular example of market short-termism it chose to focus on.) The first fulcrum, using “market incentives to encourage patient capital,” also exemplifies a kind of linguistic gymnastics. The term “patient capital” similarly embeds a transformative idea in seemingly mild language. The term serves as a signpost to the progressive Slow Money movement, sown by former Investors Circle Chair Woody Tasch from the seeds of Italy’s Slow Food movement, that harvested a Time Magazine story last week.

The Aspen Institute statement illustrates how to bridge political divides linguistically without forcing adherents to surrender their convictions – a lesson even President Obama could benefit from.