The "foreigners think long term and we don't" complex.

[Swamp Fox]

Foreign companies are putting competitive pressure on American firms, and that's good. And companies - American or otherwise - should not sit on piles of cash, because inflation will eat into it and money should be invested to make more money.

But that does not mean American firms are too short-sighted. (http://businessweek.com/technology/content/jun2005/tc20050620_6166_tc120.htm)

In the 1980's, commentators said that American companies only focused on the next quarter, while Japanese firms focused on the long term. Those Japanese companies are now floundering - Sony is floundering, (http://www.businessweek.com/investor/content/jun2005/pi20050621_2283_pi010.htm) Mitsubishi is a basket case, (http://www.businessweek.com/bwdaily/dnflash/mar2005/nf20050315_6676_db087.htm) so, if history is a guide, companies should focus on the next quarter and not the long term, because, as the economist, John Maynard Keynes, said, in the long run we are all dead.

It's not so simple, of course, and companies should invest for the future. But the situation is not so simple as "they think long term and we do not, so they will win."

Comments?

[Sierra Mike]

Yes. Put threads that deal with economics in the Economics section.

SM

[ethics]

Sounds like Thomas Friedman got to someone.

See my book review on this topic here: http://www.globalaffairs.org/forum/articles.php

But to the topic of long term/short term.

Let's just say that Americans ARE short term because that is inherent in our investment system. What Stock Broker meeting goes in to the thinking of 5 year returns? Nope, they want results now.

Foreign countriess, on the other hand, are not restrictive like that and are gearing for long term BECAUSE they know there's no short term now. They have to iron out many problems and issues and are shooting for a 2yr or 6yr "going public".

[Techie2000]

And then there are <a href="http://www.cfo.com/printable/article.cfm/4007436?f=options">some companies that think short term</a> and suddenly <a href="http://www.forbes.com/business/feeds/ap/2005/06/22/ap2105900.html">executives drop like flies</a>...