Did Charlie Munger advocate for 'shareholder primacy'? What was his view on the role of employees and society?

Charlie Munger's View on "Shareholder Primacy"

Hey, that's an interesting question! I follow Munger's ideas closely since he’s shared so much practical wisdom on investing and business alongside Buffett over the years. Simply put, Charlie Munger isn’t a hardline "shareholder primacy" advocate. He doesn’t fully endorse putting shareholder interests above all else—especially short-term profit chasing. Instead, he emphasizes long-term growth, balancing the needs of all stakeholders, including employees and society. Let me break it down step by step, like we’re chatting.

Does Munger Advocate "Shareholder Primacy"?

Munger certainly values shareholders—he is an investor, after all. But he doesn’t believe companies should focus solely on shareholders while ignoring others. He’s criticized the extreme "shareholder value maximization" model because it often sacrifices long-term health for short-term gains. For example, layoffs, squeezing suppliers, or ignoring environmental issues might boost stock prices temporarily but destroy the company over time.

Munger’s philosophy leans toward "sustainable shareholder value." At Berkshire Hathaway, he and Buffett rarely play the quarterly earnings game. They care more about what the company will look like decades later. Munger once said a great company should function like an ecosystem: when everyone benefits, shareholders truly profit.

How Does He View Employees’ Role?

Munger places huge importance on employees. He sees them not as tools but as key to a company’s success. Take Costco, which he deeply admires: they pay higher wages and offer better benefits, resulting in low turnover, high productivity, and customer satisfaction—ultimately making shareholders rich. This beats companies that exploit low-paid workers.

Munger believes treating employees well fosters loyalty and effort, translating into competitive advantage. Conversely, prioritizing shareholders while mistreating staff backfires eventually. He’s even argued that excessive CEO pay is harmful, as it breeds resentment and hurts morale. In short, to Munger, employees are part of a company’s "moat"—the foundation of lasting strength.

How Does He View Society’s Role?

Munger isn’t just about profits; he has a strong sense of social responsibility. He argues companies owe something to society because they’re part of it. For instance, he supports environmental protection and fair competition while criticizing firms that profit by lobbying governments—calling it unethical.

His "multidisciplinary mindset" includes psychology, economics, and sociology. He warns that companies ignoring social impact—like polluting or fueling inequality—will pay the price through fines, reputational damage, or societal rejection. Conversely, investing in communities or driving innovation creates more stable, enduring returns for shareholders.

My Takeaway

Based on Munger’s books and interviews (Poor Charlie’s Almanack, for example), he’s more of a "stakeholder balancer." Shareholders matter, but not exclusively; employees and society must also be nurtured for enduring success. This stands in stark contrast to Wall Street’s short-termism. If you want to dive deeper, check out his speeches or books—they’re packed with relatable examples. Feel free to ask more!