Former CEO of Young & Rubicam calls business leaders to solve income inequality
Rutgers School of Management and Labor relations, in partnership with Rutgers Business School recently co-sponsored a thought-provoking lecture by Peter Georgescu, former CEO of Young & Rubicam and author of Capitalists Arise!
Georgescu argued that the current version of capitalism is damaging the long-term viability of businesses and has helped create a vast, unequal America in socio-economic terms. He said that business leaders are uniquely positioned to fight income inequality to the mutual benefit of their companies and to society.
Georgescu presented evidence that income inequality has led to 60% of the U.S. population borrowing and going deeper into debt each month just to eat and to pay their bills. He further articulated the harm from diminished access to education and opportunity. “We rank highest for immobility and inequality among developed nations,” he said.
“In the late 1970s free market capitalism shifted to focus solely on rewarding shareholders’ demand for maximum, short-term returns,” he said, “and away from all their stakeholders—employees, customers, society, and the environment.”
Georgescu said “ironically, case studies demonstrate that if businesses pay a fair wage, build up the business instead of just the stock price, and consider including employees in profit sharing and stock ownership, shareholders will do even better.”
According to Georgescu, “‘Just’ companies profit 30% more than ‘unjust’ companies. In the long run, businesses can thrive only when society is healthy and strong.”
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