Publicly Traded Corporations

Is the publicly owned nature of the large corporations a significant part of the economic crises? Historically corporations used to be owned by a single family or by a small group of investors. This type of ownership results in very different motivations of the management.

The management of large publicly traded corporations is motivated almost entirely by the stock price. This results in CEOs and boards often doing anything it takes to push the price higher and higher. The future of the company can often get shortchanged relative to get rich quick schemes that look good to the wall street gurus and the groupthink of following the latest "hot" idea.

When the corporation is owned by a single family or small group of investors, the motivations are much longer term. Since the corporation is the main source of wealth for the entire family, they are motivated to invest in the long term health of the company and strongly motivated against get rich quick schemes. On the other hand nepotism is a significant problem. As is the inevitable problem of succession: the founder may be a business genius, his offspring may be good, their offspring may be good as well, but sooner or later the main shareholder is going to be an idiot.

So which set of management problems is worse for the global economy?

Well reasoned argument, and I agree with your points. I'd add though that the main problem with big corporations is the bonus system for CEOs and senior management.
A simple example was in one of our biggest banks a few years ago the CEO and management's bonus was solely determined by the annual bottom line. They busily closed down the small country branches that were just breaking even or making a small profit, and sold off the real estate to make a once only profit. These branches actually fed the long term growth of the bank, thus the bank's market share later went backwards over a five year period. Meanwhile the CEO and cronies had left with their loot.
On the other side our country's biggest bus line was family owned and the eventual idiot took over. It is now owned by a once smaller competitor.
I don't think there is any perfect answer, although sensible government regulation can curb some of the excesses. Possibly only offer regen to ethical and competent executives?
A sad postscript is that most big charities are now indistinguishable to other corporations, and I wonder if the widow making a $10 donation is aware that it won't even buy the polish for the CEO's corporate jet.

In general, the consequence of short-termism is that a wave of companies go through a boom-period then go bust, while more moderate and responsible companies continue to thrive. One weakness of the current system, indirectly highlighted by Daryl's post, is that it's possible for senior management to "surf" from one company to another - boosting profits in the short term, then moving on to another industry before the crash, so, while corporations suffer, the individuals behind it can mostly avoid the negative consequences of their decisions...

Behind it all, you have the greed of the vast majority of people who chase after money without counting the cost - cheap jeans without considering how they're produced; high interest bank-accounts without wondering where the money comes from... TANSTAAFL is an important lesson...