Business Roundtable says shareholder value is not the only goal of business. Yes, it is.

Recently the Business Roundtable, which is an organization meant “to help build a strong and sustainable economic future in the United States,” changed their mission. Historically shareholder value was the only goal. Now they say that’s not the case. They are wrong.

Last Monday almost 200 CEO’s from the largest US corporations attempted to re-define the role of business in society. They wanted to address the public’s apparent skeptical perception of business. The new statement reflects the welfare of more than just the shareholders who own the corporation.

Historically and in virtually every discussion about the goal of business, maximization of profit in the short term and maximization of shareholder wealth in the long term were essentially the only forces driving business decisions. The new statement redefines the purpose of a corporation. Now CEO’s should “commit to lead their companies for the benefit of all stakeholders — customers, employees, suppliers, communities and shareholders.”

It is interesting to note that shareholders are listed last.

This statement is terribly misguided. The sole purpose of any business should be profit and wealth maximization. In other words, shareholders welfare should be the only…