A lot of depressing stuff is happening in our world and in our country, in our companies and even in our families. It’s overwhelming and exhausting because things that are going wrong suck up the time and energy that we would all prefer to spend on positive, hopeful, forward-looking projects.
That’s why last week’s roundtable discussion hosted by the U.S. Securities & Exchange Commission was so encouraging. The topic of discussion was the impact of “short-termism” on capital markets and whether the SEC, a regulator of publicly traded companies, should change its reporting requirements in response. Streamed live on the internet, it was a cordial, collegial, data-driven discussion of what Larry Fink, CEO of uberinvestor BlackRock, has called “quarterly earnings hysteria.”
There was clear consensus that short-term thinking that suffocates long-range planning and investment is a real problem recognized by the vast majority of public company executives, if no consensus yet on ways the SEC could improve the reporting environment. It seems safe to say that there are segments of the investing industry that profit from frequent injections of data and would not want to give that up, even if most companies and the economy in general would be healthier if long-term planning and goals were rewarded like short-term earnings gimmicks and stock-buybacks. (As we’ve often noted, every regulation is a business opportunity for someone.)
Short-termism is not, of course, peculiar to publicly traded companies. The picture on the front page of this issue shows the dramatic result of neglected infrastructure — although, to be fair, May’s floods might have overwhelmed even a well-maintained levee. This issue is full of infrastructure stories, and there is a common theme: how to pay for things that everyone wants when no one wants to pay. Someone somewhere is going to invest in the future and reap the benefits. It will be even more depressing if Arkansas is left on the sidelines.