Except that this system now has a closed feedback loop that doesn't always include end-consumers as a major input.

That is, CEO/Board/stockholders/analysts reflect one another, and listen to one another, thereby manipulating the stock price of the company depending upon how happy the analyst(s) are based upon...

well, often it has relatively little to do with the company's nominal profitability/consumer satisfaction/market share, or productivity within corporate divisions. It's all speculative, and not terribly long-range in terms of the company or its customer base. That forecasting is also not very accurate-- perhaps not even as good as weather predictions in a ten day forecast. wink An extra penny of profit weighed against vanishing customer satisfaction/loyalty/reliability is just an extra penny... but it really isn't, if you looked longer term, because eventually that will be lost market share.

This actually is only recently my own opinion. I used to believe exactly what you're saying, Bostonian.

It's something that my FIL (himself a retired banking exec who lived through the S&L meltdown) has been bemoaning (okay, okay, more like ranting...) for YEARS-- that there is a huge reality and ethics breach opening ever-further in that particular analyst centric loop that controls corporate decision-making. I confess, it wasn't until after 2008 that I began to see what he was talking about-- that companies are increasingly about pandering (really, no other word is accurate) to stock analyst whims rather than making their own decisions about what might be good for the company, its employees, and its customers. He's convinced that MBA's need to start taking ethics again, and that it may well be time for additional market regulations... probably starting with firewalling off i-banking again.


I am not well-informed enough to know what the solution is, but I can certainly see that he's right about the feedback loop part of things. Not sure if that is the "cause" of any particular dysfunction, but it sure seems a little like a crazy way to run a capitalist market given my meager understanding of economics.


Schrödinger's cat walks into a bar. And doesn't.