“The U.S. economy is fragile because of a failure of its leading corporations to make sufficient investments in innovation and job creation [during this] new age of global competition”, Lazonick wrote in a 2010 paper. “Even the most innovative sectors of the U.S. economy have become highly financialized [his italics], with the allocation of corporate resources being driven by the ideology of ‘maximizing shareholder value.’” Lazonick argues that financialization occurs when corporate executives focus on boosting share prices and distributing “value” to shareholders, especially in the form of stock repurchases, at the expense of investment in innovation and the creation of jobs. This exacerbates inequity and instability and restricts the potential for economic growth in the States, he says. “Despite the financial meltdown of 2008, there are scant signs in the 2010s of institutional changes that will constrain the destructive behaviour of financialized corporations.
I expected to learn about wrongdoings by players in the Canadian banking industry, but I got so much more. This book covers stories on the corrupt regulatory bodies that operate in each province, the decimation of the manufacturing sector, the fact that Canada is a haven for bank fraud and where the country fits in the 2008 banking crisis, and the misuse of funds by investment outfits, among other juicy topics.
Reading through the chapter on international conglomerates buying manufacturing companies just to run them into the ground made me feel ill. Ditto for the chapter on Nortel and how their spiral down into insolvency was of their own doing- management was promised bonuses based on short-term gains accomplished by whatever means possible, which led to dubious accounting practices.
Fun fact: Conrad Black was never charged in Canada for any of his crimes. It seems as though the regulatory system is designed to offload a variety of white collar crime to our neighbours to the south.