Posen, de Rothschild: Big Business Should Be More Inclusive

Thursday, 03 Jan 2013 08:10 AM

By Dan Weil

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Big companies have an opportunity to improve the free-market system by making it a bigger tent, according to Lynn Forester de Rothschild, CEO of investment holding company E.L. Rothschild, and Adam Posen, president of the Peterson Institute for International Economics.

“One of the alarming effects of the global financial crisis has been the widespread erosion of confidence in capitalism itself,” the duo writes in The Wall Street Journal.

“[O]nly business itself can restore faith in capitalism … by taking specific steps to make capitalism more inclusive.”

Editor's Note:
Make 2013 the Year You Pay Zero Taxes

Posen and de Rothschild see three areas in which major companies can act. First, they should utilize smaller enterprises more in their supply and distribution chains.

“Second, big business can do a better job of matching workers with available jobs,” they write. That’s especially important for young workers, whose careers suffer long-term damage from unemployment.

Third, publicly held companies should shift their attention to the long term, giving their boards and investors more power at the expense of management insiders, Posen and de Rothschild say.

To be sure, when it comes to company size, small-cap shares have done just fine on the equity market lately. The Russell 2000 Index of small stocks offered a total return of 14.6 percent last year, just topping the Standard & Poor’s 500 Index at 13.4 percent.

Editor's Note: Make 2013 the Year You Pay Zero Taxes

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