Elizabeth Warren and Accountable Capitalism

Written By: - Date published: 8:30 am, August 21st, 2018 - 22 comments
Categories: Abuse of power, accountability, business, capitalism, International, us politics - Tags:

U.S. Senator Elizabeth Warren has put a number of bills up that have so little chance of happening they are better viewed as policy think-pieces. Shifting corporate governance in the United States will remain really, really hard while corporations have the Supreme Court right to fund political parties.

Reversing Citizens United would now need four members of the Supreme Court to change and favour reversing that decision.

To give an idea of how this corporate funding helps tilt things, the Democratic Party recently reversed a policy decision on funders, and now takes money from oil companies again.

The Senator discusses her proposal in a firewalled Wall Street Journal from August the 14th from which I’ve provided a couple of quotes.

But having noted the high unlikelihood of Senator Warren’s bill becoming policy, here’s what she is proposing, with the bill text here:

The Accountable Capitalism Act proposes to hold U.S. corporations accountable for its responsibilities to its employees, and to end practices that exclusively make the richest Americans even richer.

Each company would require a Federal corporate charter. This charter would require corporations to consider its workers and community in company decisions. The Act would allow shareholders to sue if they conclude corporate directors have not fulfilled their obligations to all stakeholders including its employees.

How will this charter do that?

  • Employees of corporations would elect at least 40% of a corporation’s board members.
  • Corporate executives would be focussed on compensation from shareholder returns, by prohibiting them from selling company shares themselves within five years of receiving them or within three years of a company share buyback.
  • Corporations would have to receive the approval of 75% of their shareholders if they were going to spend money on a political party.
  • Company directors would be explicitly instructed to consider the interests of all relevant stakeholders – shareholders, but also customers, employees, and the communities in which the company operates – when making decisions.
  • Federal government could revoke a charter of a corporation if it is found to have a “history of egregious and related illegal conduct and has failed to take meaningful steps to address its problems.”

What Senator Warren is trying to get to is both to help slow down the share-price driven nature of business decision-making, and to extract corporations away from interfering in democracy as much. She also wants work to be better for workers: “Because the wealthiest 10 per cent of US households own 84 per cent of American-held shares, the obsession with maximising shareholder returns effectively means America’s biggest companies have dedicated themselves to making the rich even richer.”

In the very, very few strong economies in the world that have strong unions that still have worker influence in corporation decisions in the way Senator Warren intends, Germany stands out.

But most Americans have a hard time making sense of this German system of corporate governance. Germany has a fraction of the resources of the United States, and has less than one third of the population. Labour costs are higher, paid vacations are at least three times as long, and strong unions are deeply involved at all levels of the business from the local plant to the corporate boardroom. Yet German companies manage to produce internationally competitive and high quality products in key manufacturing sectors. There is a financial system with the patience to ensure that companies have the opportunity to focus on long-term strategic goals.

Of course, an arm of the United States would have to regulate and enforce all of this German-type of corporate governance, which would not be pretty.

So let’s push the boat out and say this became law.

There would be a massive crisis within business in the United States such that we haven’t seen for a wee bit.

Say, through the smoke and the mirrors of this crisis, an entire social contract were drawn up between the larger forces of capitalism and the government.

That would take quite a bit of trust in the government that it knew business, and knew how society runs, to keep it all in balance. Real Crisis and Leviathan stuff.

The natural question, before we go all socialism on Directors’ asses, is along this kind of criticism:

Who is the President of these United States? Who is the majority leader in the Senate? Who is the speaker of the House? How would you evaluate the composition of the Supreme Court, either as it stands or after President Donald Trump has the opportunity to nominate another justice or two? The power you give the Federal government will be there during Republican administrations, too. Any future populist demagogue who finds his way into the White House will have access to the same power. No one should be trusted with that kind of power.”

That’s the argument against any kind of new regulation at all: you can’t trust the public realm. Fair point now, and reasonable with such a powerful and pervasive form of regulation. But many industries are already strongly regulated, for good reason, and the sky doesn’t fall in.

Who knows, maybe the Dems take the Senate, Congress, and White House, and take out 4 Supreme Court judges, and roll it out. I suspect that the political grief that would take, would also need a revolution in income tax to persuade Joe and Janet to vote Democrat as they ground their lives through Allentown.

22 comments on “Elizabeth Warren and Accountable Capitalism ”

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  2. Andre 2
    21 August 2018 at 9:35 am

    ” … while corporations have the Supreme Court right to fund political parties.” makes it sound relatively innocuous.

    But what that’s really about is giving the very few people that own and control those corporations a bunch of ways to have additional voices and paths to influence politics that are unavailable to the rest of the population.

  3. Siobhan 3
    21 August 2018 at 10:33 am

    Maybe ‘Accountable Democracy’ would be a better start.

    But anyway, I suspect voting for board members would be about as democratic as voting for ‘school trustees’. (or, depending on where you live, Hospital Boards and District Councillors.
    The pool of people who put their hand up is usually very small and select, and reading the ballot its nigh on impossible to differentiate between candidates. If the board was to include a certain percentage of workers off ‘the shop floor’, well then that might be more interesting.

    • corodale 3.1
      22 August 2018 at 1:18 am

      Yeah, bit of a mix up, then reconnects like a web, rather than a chain. Decentralising, to avoid domainance.

  4. roy cartland 4
    21 August 2018 at 10:50 am

    “maybe the Dems take the Senate, Congress, and White House, and take out 4 Supreme Court judges”

    They’d need to take the media back as well, as the hysterics would be hugely shrill.

  5. Wayne 5
    21 August 2018 at 11:43 am

    How do the Dems take out 4 Supreme Court Justices? Shoot them? There is simply no constitutional way to do so.
    As for Senator Warren, does this policy initiative make her a proposition for the Presidency? Given how well Sanders did, maybe. Could she beat Trump? Unlikely if the US economy stays strong.

    • Ad 5.1
      21 August 2018 at 11:48 am

      “Take out” is my shorthand for retirements.

      She’d be interesting as VP, but more useful in Cabinet at Commerce.

      • Pat 5.1.1
        21 August 2018 at 12:20 pm

        https://en.wikipedia.org/wiki/List_of_United_States_Supreme_Court_Justices_by_time_in_office

        “Supreme Court justices have life tenure, and so they serve until they die, resign or retire, or are impeached and removed from office.”

        What lawyer is going to voluntarily give up US laws ultimate position?

        “The Constitution provides that justices “shall hold their offices during good behavior” (unless appointed during a Senate recess). The term “good behavior” is understood to mean justices may serve for the remainder of their lives, unless they are impeached and convicted by Congress, resign, or retire.[91] Only one justice has been impeached by the House of Representatives (Samuel Chase, March 1804), but he was acquitted in the Senate (March 1805).[92] Moves to impeach sitting justices have occurred more recently (for example, William O. Douglas was the subject of hearings twice, in 1953 and again in 1970; and Abe Fortas resigned while hearings were being organized in 1969), but they did not reach a vote in the House. No mechanism exists for removing a justice who is permanently incapacitated by illness or injury, but unable (or unwilling) to resign.[93]”

        https://en.wikipedia.org/wiki/Supreme_Court_of_the_United_States

        • Ad 5.1.1.1
          21 August 2018 at 12:30 pm

          They retire. They die. Once or twice in a US Presidential term if lucky usually. President Trump is looking exceedingly lucky in this respect.

          • Andre 5.1.1.1.1
            21 August 2018 at 1:23 pm

            Mitch McConnell’s fuckery and utter disregard of his constitutional obligations helped King Con’s luck. He’s probably also lucky his shoats and Kennedy’s offspring apparently also mingle in the same circles.

        • Andre 5.1.1.2
          21 August 2018 at 1:20 pm

          “What lawyer is going to voluntarily give up US laws ultimate position?”

          Anthony Kennedy. David Souter, John Paul Stevens, Sandra O’Connor are just the ones that did so and are still living.

          • Pat 5.1.1.2.1
            21 August 2018 at 6:44 pm

            fair call…though i would note they are the exception rather than the rule…and they had all served extensive terms.

            The implication was they could be pressured to resign.

    • Andre 5.2
      21 August 2018 at 11:53 am

      ” … take out 4 Supreme Court Justices? Shoot them?” – sending them on a hunting expedition with Dick Cheney oughta do it.

  6. RedLogix 6
    21 August 2018 at 12:34 pm

    Can’t do justice to this using Android, but absolutely on the nail Ad.

  7. AB 7
    21 August 2018 at 12:50 pm

    It will take a lot more pain and suffering and a lot more people to join the ranks of the former middle class before this sort of programme has a snowball’s chance.
    That, or a climate crisis.

  8. SaveNZ 8
    21 August 2018 at 2:32 pm

    She is defiantly on the right track. US is cannibalising itself and that is a shame, because as much as I hate many of the policies and direction of the US, when you look at other superpowers you have to wonder, what the F is going on, when the greediest, most power hungry, short term and unequal policies are being championed against the long term survival and overall welfare of their citizens.

    Also apparently only 2 companies on the US share market have survived more than 100 years without going bankrupt. So the share market is an example of really short term thinkers and them and the banking industry having so much societal weight and power is deeply disturbing to the long term survival of the US or even western thinking.

    • RedLogix 8.1
      21 August 2018 at 6:43 pm

      Also apparently only 2 companies on the US share market have survived more than 100 years without going bankrupt.

      I can think of one US brand, Allen-Bradley that dates back to the 1890’s, and several others going back almost as long. In my field alone the four dominant vendors, Siemens, Schneider Electric, Rockwell Automation and ABB are all very established entities. Short-termism can hardly be levelled at companies that have been around 80 years or more.

      What often happens is that as technologies and markets change, companies either merge or morph into something else. Bankruptcy is not the usual fate of most larger organisations.

      • SaveNZ 8.1.1
        21 August 2018 at 10:42 pm

        Siemens, Schneider Electric, and ABB are European companies. There are very few US born and bred corporations who have survived for any length of time over 100 years and so the neoliberal doctrines that business in particular the US doctrine of competition and greed is good,are just false. Corporations struggle to survive even 100 years in US yet somehow they have gained immense almost god like power and control over the US governments and people. They only reason many corporations even keep going is fake accounting and corporate welfare and not paying any taxes. Even the US banks needed propping up only a few years ago by their taxpayers!

        • corodale 8.1.1.1
          22 August 2018 at 1:23 am

          absolutally, n all big banks are continuously proped-up by QE, still running, 0% interest rates…

  9. Nic the NZer 9
    21 August 2018 at 7:10 pm

    I suspect the democrats will prove even more craven than this post indicates, and should they be elected with so much influence this whole notion will be swept under a rug (quietly).

    • joe90 9.1
      21 August 2018 at 7:14 pm

      I shouldn’t worry.

      With this sort of electoral jiggery pokery, I doubt they’ll be winning anytime soon

      A long-term problem for Democrats: a majority of the Senate now represents 18% of the country’s population.— Dave Wasserman (@Redistrict) August 20, 2018

      And, 60% of the Senate now represents just 24% of the country’s population. This penalty for Dems is on full display in 2018: https://t.co/qmCDpXQkLy— Dave Wasserman (@Redistrict) August 20, 2018

  10. Blazer 10
    21 August 2018 at 8:00 pm

    If evera country needed a viable 3rd party in politics its America.
    An alternative party that embraced the ideas of Warren,Sanders,Grayson and Nader would make some inroads into this tweedle dee, tweedle dum interchange of Rep/Dem administrations that are totally owned by Wall St.

    Like Perot when he started getting traction..I guess people just want to..live.

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