When the head of the world’s largest investment fund raises fundamental questions about U.S. corporations, we should all pay attention.

In a letter earlier this week to the Fortune 500 CEOs, BlackRock Chairman Larry Fink criticized the short-term orientation that he believes shapes too much of today’s corporate behavior. “It concerns us,” he declared, that “in the wake of the financial crisis, many companies have shied away from investing in the future growth of their companies. Too many have cut capital expenditure and even increased debt to boost dividends and increase share buybacks.” And he concluded, “When done for the wrong reasons and at the expense of capital investment, [returning cash to shareholders] can jeopardize a company’s ability to generate sustainable long-term returns.”

Fink is correct on all counts. In a new Brookings paper out today, University of Massachusetts economist William Lazonick states that the 454 companies listed continuously in the S&P 500 index between 2004 and 2013 used 51 percent of their earnings to buy back their own stock, almost all through purchases on the open market. An additional 35 percent went to dividends. “Buybacks represent a withdrawal of internally controlled finance that could be used to support investment in the company’s productive capabilities,” he said.

This is bad for the economy in two ways. As the growth of the U.S. workforce slows dramatically, economic growth will depend increasingly on improved productivity, must of which comes from raising capital investment per worker. Failing to make productivity-enhancing capital investments will doom our economy to a new normal of slow growth.

Many business leaders say that they are reluctant to make long-term investments without reasonable expectations of growing demand for their products. That brings us to the second way in which corporate short-termism is bad for the economy. Most consumer demand comes from wages. If employers refuse to share gains with their employees, growth in demand is bound to be anemic.

Although he clearly cares about his country, Fink is also acting as the steward of $4.8 trillion in investments. In an article published by McKinzie earlier this month, he warns that although the return of cash to shareholders is juicing equity markets right now, investors “will pay for it later when the ability to generate revenue in the long term dries up because of the lack of investment in the future.”

Unlike most other corporate leaders who express concerns about these developments, Fink is unwilling to rely on moral suasion alone. Because current incentives are so perverse, he argued, “It is hard for even the most dedicated CEO to buck this trend.” The constant pressure to produce quarterly results forces executives to go along—or risk losing their jobs. That pressure comes from investors who are, in Fink’s words, “renters, not owners, who are going to trade your stock as soon as they can pocket a quick gain.”

This logic leads BlackRock’s chairman to propose changing the tax code by lengthening to three years the the period needed to qualify for capital gains treatment while taxing trading gains at an even higher rate than ordinary income for investment held less than six months. To encourage truly patient capital, the capital gains rate would be stepped down to zero over a period of ten years.

Last June, Brookings senior fellow Elaine Kamarck and I published a paper laying out the rise of short-term thinking in U.S. corporations. We argued that this trend was bad for the economy, and we suggested policies that would at least slow it down and diminish its effects.

Since then, additional research on short-termism has emerged, and an increasing number of corporate leaders are expressing concern about the trajectory of U.S. firms. Last November, for example, the Boston Consulting Group documented a worrisome decline in the corporate activities and investments designed to discover and nurture future growth opportunities. This turn away from exploratory activities may not immediately affect investors, said the BCG report: in the short term, companies can maintain earnings and shareholder returns by “cutting costs, increasing dividends, and pursuing share buybacks.” (As Kamarck and I showed, this is what is happening across our economy.) But in the long run, BCG researchers found, firms that invest in exploration boost revenues and total returns far faster than do those who are content to exploit their existing lines of business and return most of their earnings to shareholders in the form of dividends and buybacks.

A few days ago, Laurence Fink, the chief executive of the world’s largest investment fund and a long-time foe of short-termism, sent a letter to the heads of S & P 500 companies and large European corporations. He noted that in the twelve months ending September 30 2015, buybacks had risen by 27 percent over the previous year, when buybacks already stood at record levels. “Today’s culture of quarterly earning hysteria,” he declared, is “totally contrary to the long-term approach we need.” And he warned corporate executives that in the absence of well-considered long-term plans for investment and growth, they would expose their firms “to the pressures on investors focused on maximizing near-term profit at the expense of long-term value.”

Many influential investors agree with Fink, and they are joining forces. On February 1, the Financial Times reported that since last summer, the world’s largest asset managers—Warren Buffett, Jamie Dimon, the chief executive of JPMorgan Chase, and the heads of BlackRock, Fidelity, Vanguard, and Capital Group, among others—have been holding secret meetings to frame proposals that would encourage longer-term investments while reducing friction with shareholders. These proposals, which are reportedly some months away from final agreement and publication, may well involve changes in boards of directors, executive compensation, and shareholder rights.

The summit participants plan to support these changes for the companies in which they invest. Given the pools of funds they control, which amount to many trillions of dollars, their coordinated action may well represent a turning-point in the struggle to reorient corporate strategy toward the long term.

Throughout the past year, we have heard paid leave debated in state houses and on the campaign trail. I am all in favor of paid leave. As I have argued elsewhere, it would enable more people, especially those in lower-paid jobs, to take time off to deal with a serious illness or the care of another family member, including a newborn child. But we shouldn’t stop with paid leave. We should also consider shortening the standard work week. Such a step would be gender neutral and would not discriminate between the very different kinds of time pressures faced by adults. It might even help to create more jobs.

The standard work week is 40 hours -- 8 hours a day for five days a week. It’s been that way for a long time. Back in 1900, the typical factory worker spent 53 hours on the job, more than a third more hours than we spend today. The Fair Labor Standards Act was passed in 1938, and set maximum hours at 40 per week. Amazingly, more than three quarters of a century after passage of the FLSA, there has been no further decline in the standard work week. Not only has the legal standard remained unchanged, but 40 hours has become the social and cultural norm.

What’s going on here? Economists predicted that as we became more prosperous we would choose to work fewer hours. That hasn’t happened. Instead we have kept on working at about the same pace as we did earlier in our history, but have poured all of the gains from productivity growth into ever-higher levels of consumption – bigger houses, more electronic gadgets, fancier cars. With increased prosperity, people are buying more and more stuff, but they don’t have any more time to enjoy it. A reduction in the standard work week would improve the quality of life, especially for those in hourly jobs who have benefitted hardly at all from economic growth in recent decades.

Two-earner couples would also benefit. Among couples between the ages of 25 and 54, the number of hours worked increased by 20 percent between 1969 and 2000, from 56 hours to 67 hours (for both husband and wife combined). As Heather Boushey notes in her new book, Finding Time, we no longer live in a world where there is a “the silent partner” in every business enterprise, the iconic “American Wife,” who takes care of the children and the millions of details of daily living. With a shorter work week, both men and women would have more time for everything from cutting the grass to cooking dinner with no presumption about who does what. Although much of the debate this year has been about work-family balance, empty nesters or singles without young children might also welcome a shorter work week. For them it would provide the chance to follow their dream of becoming an artist, a boat builder, or the creator of their own small business.

Shorter hours could have another benefit and that is more jobs for workers who would otherwise be left behind by technological change. Many economists believe that as existing jobs are replaced by machines and artificial intelligence, new jobs will be created in technical, management, and service fields. But will this happen fast enough or at sufficient scale to reemploy all those who now find themselves without decent-paying work? I doubt it. A shorter work week might help to spread the available jobs around. Germany and other European countries, along with a few U.S. states used this strategy during the Great Recession. It kept more people on the job but at shorter hours and reduced unemployment. Using a similar strategy to deal with automation and long-term joblessness, although controversial, should not be dismissed out of hand.

Of course, shorter hours can mean lower total pay. But in one typical survey published in the Monthly Labor Review, 28 percent of the respondents said they would give up a day’s pay for one fewer day of work per week. Any new movement to reduce the work week would need to be phased in slowly, with flexibility for both employers and employees to negotiate adjustments around the standard. Yet if done correctly, the transition could be accomplished with little or no reduction in wages, just smaller raises as a bigger slice of any productivity improvement was invested in more free time. When Henry Ford reduced the work week from 6 to 5 days in 1926, he did not cut wages; he assumed that both productivity and consumption would rise, and his example encouraged other employers to follow suit.

I am not talking about reducing hours for those of us who want to spend long hours at work because we enjoy it. We would still be free to work 24/7, tied to our electronic devices, and no longer knowing exactly when work begins and ends. A new hours standard would primarily affect hourly (nonexempt) employees. These are the people in the less glamourous jobs at the bottom of the ladder, many of them single parents. Right now they finish work exhausted only to come home to a “second shift” that may be equally exhausting. A reduction in the standard workweek would almost certainly improve the quality of life for these hard-pressed and overworked Americans.

By all means, let’s enact a paid leave policy, but let’s also debate some even bigger ideas – ones that could lead to greater work-life balance now, and more job opportunities in the longer run.

Editor's note: This piece originally appeared on The Washington Post's In Theory Blog.