Terminator, Inc. (TERM) NYSE

Public Companies are the Terminators of the American Economy

I don't mean that in the context that public companies will kill the American Economy. What I mean is that like Arnold Schwarzenegger, who according to the movie "has only one function and will not stop until you (the target) are dead", the Public Company is a government sanctioned machine with only one function: To increase shareholder value typically through increasing profit quarter by quarter. This singular function was not established for any nefarious reason, on the contrary it is heralded as one of the few objective, pure and transparent goals in our marketplace. Since the shareholder has no say in operations, the shareholder's only motivation is for increased dividends and/or value, thereby it is the public companies moral duty to achieve those singular results. But when something has only one function, one target goal,  it ignores ALL concepts that can hinder that singular mission. In the case of the Terminator, that means ignoring laws, the health and well-being of others and even the fabric of society as it attempts to Terminate its prey. In the case of a public company that means avoiding regulations, exploiting the health and well being of employees (to the extent that lowers unnecessary costs) and weakening the fabric of society (by outsourcing jobs and minimizing tax payments).

Public Companies have long been characterized as nameless and faceless machines and my metaphor would certainly suggest support for that notion. But the truth is public companies are made up of millions of fine and decent people, the vast majority of which only have the best intentions to work hard, provide for their families and produce quality products and services in the market. Many public companies are directed by well-meaning Boards and Executive Teams who believe in philanthropy, the environment and the safety and reward of their employees. It is considered "good business" for the corporation to treat its employees, society and the world around it well in order to be sustainable in the long term. These companies require benevolent leaders at the helm like Sergey and Larry at Google but just ask another American success duo, Ben and Jerry, how the public markets accommodate benevolence without growth as they saw their ownership melt away based on the current system.

Undoubtedly hierarchical organizations like public companies can often accomplish results more rapidly than companies run by committee the same way dictatorships can set a national path and accomplish change more rapidly than democracies with legislatures or parliaments. Unfortunately, like most dictatorships, absolute power corrupts absolutely and since nothing in the public company code requires malevolence, corporations MUST adhere to their prime directive... increase profits and/or shareholder value.

Although there are some interesting alternatives such as "Benefit" or "Flexible Purpose" Corporations, I don't see these dynamics changing as public companies become more and more powerful the higher up the Dow climbs. But as the U.S. Government explores ways to deal with moral hazard and "too big to fail" policies, I would suggest that instead of rating corporations alone for their balance sheet strength, the agencies should rate the companies for what they bring to the country in terms of jobs, security, infrastructure and environmental benefits. A company that scores high in these areas can benefit from the full faith and credit of the U.S. Government and count on a "bail out" if times get tough. While public companies that focus only on growth in profit and/or share price without regard for these other benefits will be free to operate as they please, but with the understanding that if the going gets tough, they will have to get going with no support from Uncle Sam.