The stock market tracks short term profits; most stock buyers are also short-termers. Profits that could have been had but were not, due to shortsighted decisions, are hard to measure and don't usually make the news. Similar for companies that slowly hollow out, or get killed by newer companies still in their market-building phases before they start turning the screws.
You can just watch it happen. Companies cut quality and ruin their reputation, or shrink from new markets due to fear of cannibalizing themselves, among other ways to sacrifice long term profit. There's a reasonable debate about how predominant it is in the economy, but not about whether it happens.
