Vox: Elizabeth Warren has a plan to save capitalism

[Cooked Crack]

Quote

The Accountable Capitalism Act — real citizenship for corporate persons

The conceit tying together Warren’s ideas is that if corporations are going to have the legal rights of persons, they should be expected to act like decent citizens who uphold their fair share of the social contract and not act like sociopaths whose sole obligation is profitability — as is currently conventional in American business thinking.

Warren wants to create an Office of Corporate Citizenship inside the Department of Commerce and require any corporation with revenue over $1 billion — only a few thousand companies, but a large share of overall employment and economic activity — to obtain a federal charter of corporate citizenship.

 

The charter tells company directors to consider the interests of all relevant stakeholders — shareholders, but also customers, employees, and the communities in which the company operates — when making decisions. That could concretely shift the outcome of some shareholder lawsuits but is aimed more broadly at shifting American business culture out of its current shareholders-first framework and back toward something more like the broad ethic of social responsibility that took hold during WWII and continued for several decades

Quote

More concretely, citizen corporations would be required to allow their workers to elect 40 percent of the membership of their board of directors.

Warren also tacks on a couple of more modest ideas. One is to limit corporate executives’ ability to sell shares of stock that they receive as pay — requiring that such shares be held for at least five years after they were received, and at least three years after a share buyback. The aim is to disincentivize stock-based compensation in general as well as the use of share buybacks as a tactic for executives to maximize their one pay.

The other proposal is to require corporate political activity to be authorized specifically by both 75 percent of shareholders and 75 percent of board members (some of whom would be worker representatives under the full bill), to ensure that corporate political activity truly represents a consensus among stakeholders, rather than C-suite class solidarity.

https://www.vox.com/2018/8/15/17683022/elizabeth-warren-accountable-capitalism-corporations

[Kilmer17]

I think Warren needs a dictionary to look up the definition of capitalism.

[HOF44]

I like where she's going with it.  Corporations once took pride in their communities and what they brought to them.  Thats all gone.  

[PleaseBlitz]

I like the underlying idea, however, this reads to me like an attempt to shift the conversation to the left rather than something that could actually be implemented as she describes.  That said, I think it's a great idea that if we are going to treat corporations as legal persons, they should get both the benefits and consequences of that treatment.  

[Popeman38]

Yeah, this line kinda invalidates a great deal of what the article is trying to say:

Quote

Instead of advocating for expensive new social programs like free college or health care, she’s introducing a bill Wednesday, the Accountable Capitalism Act, that would redistribute trillions of dollars from rich executives and shareholders to the middle class — without costing a dime.

And if anyone thinks that wouldn't cost a dime, well there is a bridge and all....

 

Look, I agree with much the article has to say. But this goes beyond corporations. If, as a consumer, you can buy a good for cheaper from a foreign company vs an American company, the majority will buy from the cheaper source. None of what is discussed in this article would have any impact on a foreign company.  And any large corporation would be smart, and making the correct business decision, to relocate corporate HQs if this came to pass.

[Popeman38]

14 minutes ago, PleaseBlitz said:

I like the underlying idea, however, this reads to me like an attempt to shift the conversation to the left rather than something that could actually be implemented as she describes.  That said, I think it's a great idea that if we are going to treat corporations as legal persons, they should get both the benefits and consequences of that treatment.  

Absolutely. 

[zoony]

From the quoted part of the article at least, these all seem like good ideas.  There is a problem in this country with a complete lack of accountability from those who, lets face it,  run this country

[bearrock]

Warren probably has a much better chance of pushing through reforms like this if she presents it without the philosophical justifications (that will sound wacko and too lefty to many).

 

- giving workers significant representation on the board.  Sounds like a good idea.

- moratorium on stock sale for highly compensated executives.  Again, a good idea to stop corporations from focusing on short term, market moving strategies.  Forcing executives to focus on long term health of the company sounds like a winner to me.

- I don't know about the political activity idea, except to say that shareholders have to wake up and exercise their rights more.  Same with voting in America.  If you don't care enough to participate, why would you expect to like the results? 

[Going Commando]

Bigger political picture here is that Warren is differentiating herself from Bernie because she's probably going to run for president in 2020 and he's a potential opponent.

[Larry]

41 minutes ago, zoony said:

From the quoted part of the article at least, these all seem like good ideas.  There is a problem in this country with a complete lack of accountability from those who, lets face it,  run this country

 

Yeah, I have to say that I've been disturbed for years (shut up!  That's not a diagnosis.) at the posters in here who seem to believe that the phrase "fiduciary responsibility" is a magic talisman that says that when people work for a corporation, not only should they have no morals whatsoever, that it's actually a crime for them to even consider them. 

 

Now having said that?  This bill sounds a lot more like a conversation starter than something that should actually be legislated. (Not that I have a problem starting the conversation). 

[Destino]

I think this conversation needs to happen because the current system, especially where it interacts with Wall St. and stock price, maybe doesn't benefit the US as much as it could.  I worry about unintended consequences however, and I'm interested in knowing who helped write these proposed changes.  Shareholder responsibility isn't perfect but it does result in executives being accountable to someone.  Changing it to a more broadly defined stakeholder responsibility might end up allowing those executives to pursue their own self interest more than the current system, but with fewer options for holding them accountable.  How do you prove an executive acted wrongly when they could use evidence of any benefit to anyone, or even the environment, to justify any decision?     

 

I'm also not sure I trust Elizabeth Warren.  I can't shake the image of her celebrating Wells Fargo agreeing to pay a 185 million dollar fine after committing what must be one of the largest acts of fraud in US history.  185 million is nothing to a bank that takes in more than 5 billion in net profits per quarter.  Somewhere along the line we, as a country, have come to accept financial settlements as justice when the powerful get caught hurting people.  That needs to change. 

[JCB]

Made me think of this article from a few years ago:

 

http://prospect.org/article/when-shareholder-capitalism-came-town

[zoony]

1 hour ago, Destino said:

I think this conversation needs to happen because the current system, especially where it interacts with Wall St. and stock price, maybe doesn't benefit the US as much as it could. 

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done”

-Keynes

1 hour ago, Destino said:

worry about unintended consequences however, and I'm interested in knowing who helped write these proposed changes.  Shareholder responsibility isn't perfect but it does result in executives being accountable to someone.  Changing it to a more broadly defined stakeholder responsibility might end up allowing those executives to pursue their own self interest more than the current system, but with fewer options for holding them accountable

Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone

-(also)Keynes

 

the real problem with corporate reform in the US is that it is a global game nowadays.  Unless China and Germany are doing the same things, youre really just putting US Industry at a disadvantage.

 

take a sever economic downturn, for instance.  Companies HAVE to shed jobs in order to stay afloat.  However 40 percent of the Board is beholden to the employees.  Thats a problem.

 

i think there are other more realistic actions that can and should be taken.  One of the biggest is Executive compensation in public corporations.  It is a problem.  If you are going to get the benefit of limited liability, you should also forfeit big paydays.  Period.  CEOs of even mid level companies making 50 million plus is absolutely vomit inducing.  Want to make 50 million?  Keep your company private.

 

the 2nd and most long overdue is that ceos should not be allowed to also sit on the board or especially not be chairman of the board.  That is a bigtime problem.

 

 

 

 

[skins4eva]

So let me get this straight--we introduce a level of unnecessary governmental bureaucracy into the mix and require companies to get a federal charter after they've been formed or incorporated in a particular state?  Given that corporations and partnerships and every other type of company or issuer are creatures of state law, we would be introducing a whole host of unnecessary and ill advised uncertainty into the mix.  

 

This is really one of the worst ideas I've seen in a long time from a politician, and that's saying something.  To the extent that executive comp is an issue, we've taken steps to address it by disclosing the ratios in 34 Act documents like 10-Ks and Qs.  The bottom line is that she's trying to undue about 500 years of common law.  Directors have duties to shareholders.  They have a fiduciary duty comprised of a duty of care and loyalty.  We can encourage companies to do "the right thing" through tax incentives and by a recognition among business leaders that there's more to life than meeting quarterly earnings.  That change has already begun.  There's no need to involve the federal government this, and it will absolutely make things worse.   

[Burgold]

I like Warren and think she's actually a really smart economic wonk. She attacks things like a professor or a researcher and that appeals to me. She is, without question, left. More, I think her heart and usually her head are in the right place.

 

The biggest thing going against her is probably the reason I like her best. She's boring. She's serious. She's careful and studious. She just lacks the charisma and fire needed to get things done. I guess what I'm saying is that Elizabeth Warren would probably be a great Secretary of... but I don't think she's the person you put on the podium to drive interest and sell your story. She's Radar O'Reilly. She gets it done and glues it all together, but she's not the headline or star of the show.

[bearrock]

 

31 minutes ago, skins4eva said:

So let me get this straight--we introduce a level of unnecessary governmental bureaucracy into the mix and require companies to get a federal charter after they've been formed or incorporated in a particular state?  Given that corporations and partnerships and every other type of company or issuer are creatures of state law, we would be introducing a whole host of unnecessary and ill advised uncertainty into the mix.  

 

This is really one of the worst ideas I've seen in a long time from a politician, and that's saying something.  To the extent that executive comp is an issue, we've taken steps to address it by disclosing the ratios in 34 Act documents like 10-Ks and Qs.  The bottom line is that she's trying to undue about 500 years of common law.  Directors have duties to shareholders.  They have a fiduciary duty comprised of a duty of care and loyalty.  We can encourage companies to do "the right thing" through tax incentives and by a recognition among business leaders that there's more to life than meeting quarterly earnings.  That change has already begun.  There's no need to involve the federal government this, and it will absolutely make things worse.   

 

You can come up with various ways of implementing the proposals, but obviously corporations are already subject to both state and federal regulations.  Call it federal corporate charter, federal corporate citizenship, new SEC regulations, new qualifications for corporate federal tax treatment, whatever, I think the focus should be on the regulations being discussed rather than the particular way those regulations would be imposed.

 

Would you agree with the position that corporate executives must weigh long term and short term gains of the corporation?  I think most would.  Would you agree that disclosure of exec comp and fiduciary duties have not curbed the increasing focus on short term returns?  That executives are using more and more tactics to increase the immediate profit margin, which usually coincides with their own benefit?  Would a delay in the ability to sell stocks by those executives shift the focus from short term prospects to long term prospects?  Whether you think Warren's proposals merit serious consideration probably depends on your answer to the above questions.  I think lot of people would share the concerns that Sen. Warren is trying to address.

 

Is you position that fed gov't should not get involved based on your belief that the end results desired by the Warren's proposals will happen without government intervention anyway?  That's seems to be the suggestion at the end of your post.

 

 

23 minutes ago, Burgold said:

I like Warren and think she's actually a really smart economic wonk. She attacks things like a professor or a researcher and that appeals to me. She is, without question, left. More, I think her heart and usually her head are in the right place.

 

The biggest thing going against her is probably the reason I like her best. She's boring. She's serious. She's careful and studious. She just lacks the charisma and fire needed to get things done. I guess what I'm saying is that Elizabeth Warren would probably be a great Secretary of... but I don't think she's the person you put on the podium to drive interest and sell your story. She's Radar O'Reilly. She gets it done and glues it all together, but she's not the headline or star of the show.

 

One of the most interesting pieces in Wapo I read recently was Jennifer Rubin's column describing Elizabeth Warren's responses to Rubin's previous column.

 

https://www.washingtonpost.com/blogs/right-turn/wp/2018/07/27/sen-elizabeth-warren-responds-to-our-invitation-to-discuss-policy-part-1/?utm_term=.73b58e0a0d92

 

Quote

On Wednesday, I put to Sen. Elizabeth Warren (D-Mass.) policy questions about the economy, free markets and regulation. Unprompted, she composed and sent to me detailed responses. “Thanks for raising these questions — they’re good ones and go to the heart of some of the biggest economic problems facing our country,” she wrote back. ” I took a stab at answering them below.”

Cynics will say, “She’s running!” If so, we should welcome some serious discussion of major issues. At the onset, I will make three observations.

 

First, it’s refreshing to get substantive, thoughtful answers from someone who may have presidential aspirations. It is easy to forget what serious public servants should sound like.

 

Second, Warren is clearly on the progressive end of the scale, championing tariffs if needed, an increase in the minimum wage and more financial regulations. What is intriguing, however, is that she presents these as correctives to market failure. We can debate whether her prescriptions are appropriate. But she’s not attacking capitalism per se, nor the importance of functioning markets.

 

And third, her emphasis on market concentration and monopolies has been echoed by conservatives and moderates. (“In recent years, large technology companies have been investigated for colluding with a secret agreement not to hire one another’s best workers; fined billions of dollars for unfairly favoring certain services on their platforms over other rivals; and been accused of mishandling sensitive consumer information or of obtaining new customers under false pretenses,” wrote Bill Kristol and Bill Galston in their New Center policy proposals. “Government can’t be expected to sit idly by if the size and power of certain companies begin threatening the vigorous competition and innovation upon which any healthy economy depends.”)

 

I would like detailed dialogue in written format to be more common among reporters and political candidates and between candidates themselves.  How much information can you package in a 30 second ad anyway? 

[Kilmer17]

I think the more fascinating debate moving forward is where the D and R will stand on things like tariffs, and global trade agreements etc.  The norms have been scrambled.

[PleaseBlitz]

2 hours ago, Destino said:

  

 

I'm also not sure I trust Elizabeth Warren.  I can't shake the image of her celebrating Wells Fargo agreeing to pay a 185 million dollar fine after committing what must be one of the largest acts of fraud in US history.  185 million is nothing to a bank that takes in more than 5 billion in net profits per quarter.  Somewhere along the line we, as a country, have come to accept financial settlements as justice when the powerful get caught hurting people.  That needs to change. 

 

Pretty sure it was a billion dollar fine.  Which is significant, even if you are WF's size.  
 

That being said, I like Warren in the "influencer" role because she really does know financial policy, but I'm not sure I really trust her on most other topics.  She's got plenty of time to convince me otherwise. 

[skinsmarydu]

3 hours ago, stevemcqueen1 said:

Bigger political picture here is that Warren is differentiating herself from Bernie because she's probably going to run for president in 2020 and he's a potential opponent.

Just an fyi: He said yesterday on MSNBC that he would not accept the Democrat party nomination. 

[Springfield]

Looks at the letter behind her name and the letter behind both houses of Congress and concludes that this has no earthly chance of happening.

[twa]

3 minutes ago, skinsmarydu said:

Just an fyi: He said yesterday on MSNBC that he would not accept the Democrat party nomination. 

 

did he say he was running 3rd party?

[Destino]

26 minutes ago, PleaseBlitz said:

Pretty sure it was a billion dollar fine.  Which is significant, even if you are WF's size.  
 

That being said, I like Warren in the "influencer" role because she really does know financial policy, but I'm not sure I really trust her on most other topics.  She's got plenty of time to convince me otherwise. 

I thought the billion dollar fine come later after more Wells Fargo fraud was uncovered.  They've been in trouble a lot recently. 

 

Also, a billion is certainly large enough to be significant, but just how significant is relative.  1 billion to Wells Fargo is like fining a person making 100k a year, 5,000 dollars (1/5th of quarterly).  It's not nothing, but it's not going to hurt too bad.  What if they do it again?  And again?  Is there a point at which the hammer has to fall or do we just treat continued fraud as a chance add a little more cash to the the governments accounts?

 

[skinsmarydu]

17 minutes ago, twa said:

 

did he say he was running 3rd party?

He did not. 

Thinking back on it, he may have meant the position of Speaker. 

My attention may have been split between here and there. ?

[PleaseBlitz]

10 minutes ago, Destino said:

I thought the billion dollar fine come later after more Wells Fargo fraud was uncovered.  They've been in trouble a lot recently. 

 

Well you didn't specify.   And yea, WF has been on the receiving end of multiple gigantic fines.  The one with the most press was about them opening fake accounts for people b/c their sales force got paid more if they opened more accounts.  That was the one where John Stumpf got grilled in front of Congress (and Warren did some excellent grandstanding) and ultimately lost his job (appropriately).  But, in terms of actual harm to consumers, the consequences of the fake account scandal were not huge and therefore the fine wasn't massive.

 

But once that happened, every regulator in the country dug into their practices.  The billion dollar one (the biggest in the CFPB's history and maybe any financial agency's history outside of the SEC) was for adding unnecessary costs to mortgages and car loans.  

 

10 minutes ago, Destino said:

 

Also, a billion is certainly large enough to be significant, but just how significant is relative.  1 billion to Wells Fargo is like fining a person making 100k a year, 5,000 dollars (1/5th of quarterly).  It's not nothing, but it's not going to hurt too bad.  What if they do it again?  And again?  Is there a point at which the hammer has to fall or do we just treat continued fraud as a chance add a little more cash to the the governments accounts?

 

 

I think the thing that really hurts Wells is not the money, but the reputational damage.  Both in terms of customers going elsewhere and regulators scrutinizing them much more closely than everyone else.  

 

I'm not crying for Wells here.  They deserve everything that has happened.  But your original comment that Warren cheered something that you deemed not worthy of cheering just struck me as weird.

 

[bearrock]

Off topic, but why anyone would still bank with WF is beyond me.  I closed all my accounts with them and refinanced my mortgage away from them.