Yes, Short-Termism Really Is a Problem

With Hillary Clinton’s tax proposals to encourage longer-term investing, the debate over whether American business is too fixated on the short term has moved from the dimly lit offices of earnest policy wonks into the klieg lights of U.S. primary season. Lots of commentators have jumped into the fray to declare that there is — or isn’t — a problem with short-termism, waving research studies of varying age and relevance.

Somewhat ironically, many engaging in the discussion seem to think that the issue itself has a short history. But that is far from true. Thirty years ago, no less a business guru than Peter Drucker weighed in, skewering short-termism in a Wall Street Journal editorial. “Everyone who has worked with American management can testify that the need to satisfy the pension fund manager’s quest for higher earnings next quarter, together with the panicky fear of the raider, constantly pushes top managements toward decisions they know to be costly, if not suicidal, mistakes,” he wrote.

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