Maximizing shareholder value is not working. It's driving so many short term decisions that we seem to be destroying our collective futures. It's the tragedy of the common all over again.
The tragedy of the common occurs when a society shares a "common" resource. Common grazing areas for sheep are classic examples. Problems arise because each individual member of the society has no marginal cost for using the common. Thus it is in each individual member's best interest to add one more sheep to the common. But, once enough individuals do that, the common becomes overgrazed and less valuable to the entire society.
We're seeing this play out with the push to maximize shareholder value. While it's in the best interest of each individual shareholder to cut costs and extract as much value as possible from each individual enterprise over the short term, you can't ever cut your way to growth. So once enough individual enterprises do this, we kill growth and end up in the situation we're in.
One answer is to re-focus our efforts on maximizing long-term shareholder value. That might encourage some investment in things with longer-term benefits so we can start growing again.
