Unfortunately, short-termism is not only a problem in public companies, where share prices are at the mercy of the stock markets. A willingness to gamble long-term reputation and growth for a short-term valuation boost is now a hallmark of private companies in Silicon Valley as well. The ethos of move fast and break things, which has defined a generation of startups, is not the mantra of long-term investors.
The causes of short-term behaviour in private markets mirror the story in public markets. Ownership of America's privately held companies has shifted away from long-term operators, like family-owned businesses, to third-party investors - venture capital and private equity firms like SoftBank and TPG. Since mid-2009 investors have allocated US$5.8 trillion to global private equity alone.
In private markets, BlackRock now offers a fund that intends to invest in businesses"up to forever". It is driven by the idea that, over time, financial value and stakeholder values converge. With no requirement to sell the businesses they own, such funds create a powerful alignment between owners, employees and customers.
Milton Friedman, who popularised the notion of shareholder primacy and pursuit of profit, once lamented that business leaders are often"incredibly shortsighted and muddle-headed in matters that are outside their businesses but affect the possible survival of business in general". Mr Friedman was right. The modern economy is not working for too many people, who have begun to equate short-term thinking with free-market capitalism and have had enough of both.
Ryan Beck is a recent graduate of the Stanford School of Business. Amit Seru is a professor of finance at the Stanford Graduate School of Business and a senior fellow at the Hoover Institution.