Long-term capitalism is one of our most foundational topics. We investigate how we might instantiate a variation of capitalism that optimizes over longer time horizons that a quarter, which is the form of capitalism that dominates the public market.
Michelle Green, founding employee, President Emeritus, Board member and Interim CEO of the Long Term Stock Exchange joins us for this foundational conversation. We discuss long-term capitalism at a macro level and delineate how policy makers, investors, and business leaders can put in place measures to institutionalize long-term decision making.
Outline of the episode:
- What long-term capitalism isn't [3:23]
- Drivers of the emergence of quarterly capitalism [4:58]
- Defining long-term capitalism [7:29]
- Trends relating to long-term capitalism [9:57]
- Narratives vs. reality [11:29]
- Drivers of the decline in pubic companies over the past 30 years [13:51]
- Post-pandemic trends in stakeholder capitalism and ESG [16:14]
- Buybacks, short-termism, and extraction [17:58]
- Policy measures to address buybacks [20:07]
- Other policy approaches for long-term capitalism [24:22]
- Long-term capitalism and corporate governance [26:00]
- How companies can incentivize long-term investment [29:02]
- Long Term Stock Exchange (LTSE) [36:21]
- Parallels between LTSE and certification [39:59]
- Information dynamics and the signalling value of LTSE [40:46]
- LTSE's choice to be a principles vs. standards based exchange [41:27]
- LTSE's five principles [43:40]
- Principle one: stakeholders [43:45]
- Principle two: strategy [46:15]
- Principle three: compensation [47:04]
- Principle three: Board of Directors [48:17]
- Principle three: investors [48:40]
- Establishing a research base for long-term capitalism [49:54]
- LTSE's ecosystem level approach [51:37]
- What Michelle is seeing in the current moment [54:10]
- LTSE and the technology industry [58:11]
- Limitations to the LTSE's success [1:00:08]
- Alignment with long-term capitalism and social objectives [1:04:57]
Resources:
- Denizen's research summary on long-term capitalism
- Michelle's TED Talk on the Long Term Stock Exchange
- Principles of Corporate Governance, Business Roundtable 2016
- "Short Termism Is Harming The Economy" Warren Buffet and Jamie Dimon, Wall Street Journal June 2018
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