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Why C.E.O.s are rebelling against shareholder democracy

Shareholder democracy hasn’t worked, Andrew writes in his latest column. Exhibit A: Nearly 200 corporate leaders — including Tim Cook of Apple, Ginny Rometty of IBM and Jamie Dimon of JPMorgan Chase — declared yesterday that companies shouldn’t make shareholders their sole focus.

For half a century, companies were mostly run for all stakeholders, Andrew notes. (That’s how they’re still run in much of Europe.) The economist Milton Friedman helped change that by declaring that businesses should focus solely on profits.

“Layoffs increased, research and development budgets were cut, and pension programs were traded for 401(k)s” as a result, Andrew adds. “There was a rush of mergers driven by ‘cost savings’ that grabbed headlines while profits soared and dividends increased.”

“Americans mistrust companies,” writes Andrew, “to such an extent that the very idea of capitalism is now being debated on the political stage.” And populism has been embraced by both ends of the political spectrum, from President Trump to Senator Bernie Sanders.