Capitalism will become more “compassionate” as a result of the coronavirus pandemic, billionaire entrepreneur Mark Cuban said Wednesday.
“I think capitalism is going to become a lot smarter and a lot more compassionate because of what we’re going through,” Cuban said on CNBC’s “Closing Bell.”
Cuban, owner of the NBA’s Dallas Mavericks, said he thinks executives will now recognize that they need to put employees first. The consequences of not doing so will be greater now than it was in the aftermath of the financial crisis, when social media was still in its nascent stage, Cuban said.
“It can’t just be about shareholders,” Cuban said. “In fact, you have to put employees ahead of shareholders.”
Shareholders will ultimately reward the companies that do so by awarding their stock a higher multiple, Cuban argued.
Cuban said investors may say, “I’ll give company A, B, or C a higher P/E ratio when I buy the stock as a reflection of the fact that they understand the longer term and it’s not just about this quarter or this year.”
Cuban has been outspoken in recent weeks as the coronavirus pandemic intensified.
Cuban has warned businesses against sending employees back into the office too soon and put pressure on Washington lawmakers to support workers who are impacted by the economic shock. He’s also said any company that receives government aid to weather the pandemic should be prevented from buying back stock.
“Compassionate capitalism”? Companies should pay their staff indefinitely to stay at home during the coronavirus outbreak? This sounds like the guy in college who was always talking about what a feminist he was and how bell hooks was his favorite author because he wanted to get laid.
Did it escape Cuban’s notice that tens of millions of Americans have been less-than-compassionately furloughed or laid off? Companies are not non-profits that feed and clothe workers out of the goodness of their hearts with other people’s money. If they can’t make money, they don’t have money for wages and benefits. This is not some fluffy emotional calculus for them.
And he thinks shareholders will reward a company for making decisions that ultimately undercut profits, let alone the ability of the company to continue as a going concern? That’s what we are talking about in the current business environment. This is not an issue like maternity leave or installing a putting green in a common space. Does he even know what “shareholder value” means?