Left holding the ...

Is it really that simple? Well, yes, in fact, it is. There are many ideas that we encounter every day that are however they are because we made them that way or we have allowed them to become that way. Let me take a common business example:

We all know what a "shareholder" is: someone who owns a share (or shares) in a business. We also know what a stakeholder is: someone who has a vested interest in a business. Simple enough. Now the question: who decided, when, and how that shareholders are more important than stakeholders? Is there some inexorable, immutable law of economics that dictates such, or did we just make it up? I think it's obvious, we made it up. So let's take a closer look at this pair of ideas:

I think it is reasonable to maintain that all shareholders are stakeholders, but not all stakeholders are shareholders. The moment someone wants to build a nuclear waste disposal facility in my backyard, I have a vested interest in that business' business, whether I own any of its shares or not. As I tried to make clear quite a while ago (Stock Market 101a and Stock Market 101b), if you just bought some paper in the market, you've neither invested, nor are you really an owner, you're just a stockholder, a speculator, and as such, you are more interested in how much you will earn when you turn over the stock. The future of the company and the results of its activities are not your primary concern, as they are for the people trying to run the business and those that are directly affected by its actions.

This is the reason that the idea of "shareholder value" is so perverse. Yes, technically you own shares, but the reason for the business' existence isn't your prime concern. Stakeholders - folks who are directly affected by each and every action of that company - are much more involved, and for that very reason, should be considered much more important.

How did this get turned around? Good question, but we can see that it is the way it is for no other reason that we allowed it to get that way. I'm not against anybody buying or selling shares, as long as they realize that their true role in the economy has little to do directly with the business itself. And, as far as I'm concerned, they should be treated accordingly.

If we made it up, then we should be allowed to change it ... but we can never change ideas alone.