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?
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.