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August 22, 2018

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Go Professor Senator Warren!

But the resistance will be vicious. Mining to Shaw again (this time the preface to The Millionairess:

What is to be done with that section of the possessors of specific talents whose talent is for moneymaking? History and daily experience teach us that if the world does not devise some plan of ruling them, they will rule the world. Now it is not desirable that they should rule the world; for the secret of moneymaking is to care for nothing else and to work at nothing else; and as the world's welfare depends on operations by which no individual can make money, whilst its ruin by war and drink and disease and drugs and debauchery is enormously profitable to moneymakers, the supremacy of the moneymaker is the destruction of the State. A society which depends on the incentive of private profit is doomed.

The doctrine of "fiduciary duty", under which public corporations must pursue shareholder value by any means not illegal or get sued for not doing so, must die. It guarantees that the most powerful entities in our economy will sociopaths who are immortal, and who have limited liability for their acts.

We're living in the consequences.

Warren's bill is an attempt to subvert the primacy of that doctrine.

Your two posts dovetail nicely, I think.

Meaning Janie's and russell's.

agreed.

not intentional, but i'm fine with serendipity.

All your links lead to the same page.

I'm not sure you are arguing for a more "conservative" design, russell, as opposed to a more historical one. As in predating the modern corporation. As in at the behest of the king or queen.

This bill would likely condemn the serious visionary to a hell of shared decision making and kissing the ring of the state. At my first cursory glance, if it's a cure, it is chemotherapy and likely to kill the host. Whatever you say about our economy, the ability to put a vision to paper, get funding and get to work is second to none. Corporations are efficient at organizing capital and moving forward. Sometimes I find that hard to believe when I interact with the big law firms that represent corporate America. But by comparison to every other country on earth, that seems to be the case. I would tinker carefully.

Germany uses a shared model with labor and is rethinking that in light of the dearth of innovative companies. Do we want to lose innovation?

And putting more power in the hands of the state? Not very conservative, IMHO. And you would give this power to Donald Trump, right? Last time I checked, he does oversee the Commerce Secretary? Didn't he already threaten corporations that would take their ball and play overseas? Hmmm.

I think there is plenty of room for change. I just don't think this is it.

I have long thought, for example,that boards and CEO's are picked from a pretty small pool of people. I rarely read the paperwork that comes in my mailbox or email regarding elections. I should. How could we get shareholders (i.e. small shareholders) more involved in actually selecting the CEO and board?

And where has the Department of Justice's Anti-Trust division been these past 20 years? I haven't heard much since Microsoft.

And why do you think labor is going to be better at picking "winners" on the board than shareholders? Is this the answer to the decline in unions?

And would the new rules for unions mirror the above?

The doctrine of "fiduciary duty", under which public corporations must pursue shareholder value by any means not illegal or get sued for not doing so, must die.

I think that would be a really bad idea. Because fiduciary responsibility is what requires the people who work for you to work for your interests. Rather than their own.

Now if you want it modified, that's worth discussing. But let's not toss the baby out with the bath water.

FYI, there's some link trouble (they all go to the same page)

All your links lead to the same page.

stupid computers.

i'll fix it tonight.

I'm not sure you are arguing for a more "conservative" design, russell, as opposed to a more historical one.

i'd say that a concept of 'conservative' that is at odds with the idea of 'historical' is not really a concept of 'conservative'.

which is more or less my point, on that point.

more about your post when i'm not at work.

thanks all!

If a corporation uses corporate resources to push a political agenda, then they are stealing from the (shareholder) owners to advance their political goals.

Any shareholder who objects to the political spending should be reimbursed for their per-share proportion of that spending, simply as a matter of property rights and obligations.

Shareholders should be able to SUE for recompense, and responsible corporate governance reforms would make the refunds mandatory and automatic.

Then tell me how many richy-rich fat-cats are going to pass up the opportunity to get some extra cash from their share ownership, GOP or not.

What pisses me off is that this reform could have been implemented YEARS ago, by a change in Delaware corporate law.

Warren's bill is an attempt to subvert the primacy of that doctrine.

Or laying the groundwork for a 2020 POTUS bid.

Some corporations are already moving towards being more socially engaged without the prodding and coercion of government:

“We believe that business is good because it creates value, it is ethical because it is based on voluntary exchange, it is noble because it can elevate our existence and it is heroic because it lifts people out of poverty and creates prosperity. Free enterprise capitalism is the most powerful system for social cooperation and human progress ever conceived. It is one of the most compelling ideas we humans have ever had. But we can aspire to even more.”
— From the Conscious Capitalist Credo

Conscious Capitalism: Elevating humanity through business

Also, the world is, on the whole, becoming a freer and wealthier place. It's increasingly easier to incorporate in places other than the US.

Elizabeth Warren’s plan to save/destroy capitalism: Vox's The Weeds

bc: This bill would likely condemn the serious visionary to a hell of shared decision making and kissing the ring of the state. At my first cursory glance, if it's a cure, it is chemotherapy and likely to kill the host. Whatever you say about our economy, the ability to put a vision to paper, get funding and get to work is second to none. Corporations are efficient at organizing capital and moving forward.

Senator Professor Warren's bill affects "large entities", which it defines as "(iii) in a taxable year, according to information provided by the entity to the Internal Revenue Service, has more than $1,000,000,000 in gross receipts".

When you already have $1B in sales, you are NOT a struggling "visionary" any more. You are milking the cow, not scraping together the resources to feed it. But numbers are always negotiable, so: would "conservatives" accept a threshold at $10B? $100B? $1T?

SPW's bill would surely apply to Verizon and might possibly stifle its "innovation". Good.

--TP

Good point, TP. It would only stifle innovation at a certain point, and that point is increasingly lower as time goes on. $1B isn't that much anymore.

So how much? Take a look at Apple in 1996 when Jobs came back and fired everyone. That would have been regulated because Apple had gross revenues of almost $10B but was losing serious money at the same time. No way Jobs could have done what he did if Warren's framework was in place. There is innovation on a large scale too.

And there are likely over 2,000 companies worldwide with gross revenues over $1B. Most of those are in America. And those companies affect a enormous swath of the economy. That is a HUGE impact on the economy if it goes south. And are foreign companies doing business in the US have regulated too? If not, watch everyone move overseas (again).

And does this supplant collective bargaining? If you give labor 40% of the board seats, the justification kind of goes out the window.

I don't see this as better. But admittedly, I almost never see government meddling in the economy as better. My local hardware store has old political cartoons on the wall. One says "Bureaucracy is the conversion of energy into sold waste." Yep.

This bill would likely condemn the serious visionary to a hell of shared decision making and kissing the ring of the state.

the state which provides Mr Visionary a place to set up shop, infrastructure to get the widgets in and out, a legal framework to operate within, probably some negotiating muscle when it comes to dealing with other countries ? that state ?

links should be good now.

bc, the common theme in your comments here is that Warren's proposals would kill innovation.

That's a big assumption.

And why do you think labor is going to be better at picking "winners" on the board than shareholders?

Better, hard to say. They are not likely to be worse. The level of shareholder engagement in board selection in the average $1B company is, I would say, neglible to nil. Employees are at least engaged in the business.

I'm also less sanguine about the indispensable role of the visionary. There are damned few companies whose visionary founders were actually good hands-on executives. It's not the same skill set.

The fundamental idea of requiring corporations to be accountable to folks beyond the circle of people who they enrich seems, to me, so sensible that it's shocking that it's even controversial.

I havent read the details but my first reaction is what does a federal charter mean? Those rules are what matters here. Are they Delaware rules, New Hampshire rules or zcalifornia? Plus what?

Then, I'm skeptical of the impact of the 40%. I think the unintended consequences would be amazing levels of support within the other directors.

what does a federal charter mean?

if I follow correctly, it has the same purpose as a state charter - making it legitimate and legal for an enterprise to engage in some activity. it's just issued and enforced by the feds rather than a state government.

Those rules are what matters here.

apparently the rules would be similar to what are currently in place for beneficial corps at the state level.

I'm skeptical of the impact of the 40%.

that seems, to me, to be the most disruptive part of the bill. disruptive in the sense of the biggest change from current procedures.

bc,

I do not take for granted that the growth of Apple, Inc. after "Jobs came back and fired everyone" was:
1) an unalloyed good for the world
2) the only way the good could have happened
3) SPW's bill would have precluded the good
To take those things for granted is to assume that history could only have happened the way it did happen.

When I contemplate the wizardry embodied in my poky 6-year-old Android phone, I am happy to acknowledge that Steve Jobs (laboring under Bill Clinton's oppressive tax regime) had something to do with the world now being chock-full of smart-ass phones that (mostly) make our lives more enjoyable. Jobs was indeed a "visionary". But he was not the only one.

"Innovation" comes in many forms, BTW. The Mortgage Backed Security, the Collateralized Debt Obligation, the Credit Default Swap, and the Automated Teller Machine were all "innovations". Not all were equally beneficial. Maybe SPW's bill would have stifled some of them, maybe not.

--TP

I almost never see government meddling in the economy as better.

FWIW, it may be useful to remember that any charter for a for-profit corporation, whether state or federal, is exactly the government meddling in the economy.

Corporate charters are an intervention, by the government, in the economy in the interest of minimizing the risks that would otherwise accrue to capital formation.

If you operate in the corporate form, you are already well into the realm of 'government meddling'. And, it's to your benefit. The government is telling everyone who contributes their capital to your enterprise that they can't come and take your house if things go south.

[F]iduciary responsibility is what requires the people who work for you to work for your interests. Rather than their own.

Exactly.

Because it's self evident that well-compensated, powerful actors must be bound within some kind of cultural/ethical/legal framework of responsibility to something other then themselves, or there is no way to ensure that the good they work for will be anything but their own.

So, granting a charter of special privileges to corporations is supposed to work to our (the public's) benefit, not just a handful of the most powerful shareholders and executives.

But that plainly won't work if they have no such responsiblity.

And that's what plans like this are trying to fix.

Now if you want it modified, that's worth discussing. But let's not toss the baby out with the bath water.

Doesn't seem like we're in any danger of that.

After all, if what you have is not a little tub of bath water, but so many dozens of industrial vats and jewel-encrusted olympic-size swimming pools that it is no longer possible to tell if there even *is* a dirty baby drowning in the middle of one of them somewhere, then it is possible to drain quite a lot of filthy water away before you're in danger of flushing the baby.

The government is telling everyone who contributes their capital to your enterprise that they can't come and take your house if things go south.

russell: I did say "almost." And limited liability is the sort of "meddling" I favor.

Rules that are universally applied, that do not require a bureaucrat to interpret and promote the free exchange of capital are one thing. Having yet another layer of bureaucracy is entirely another. I realize that what Warren proposes is somewhat a "framework." I have issues with that framework. Like this:

"(1) GENERAL PUBLIC BENEFIT.—The term “general public benefit” means a material positive impact on society resulting from the business and operations of a United States corporation, when taken as a whole."

Great, what a lovely, specific definition. Now somebody is going to determine whether Koch Industries and Google have a "general public benefit." I'm thinking that the answer may depend at least in part on political persuasion.

This is not a serious effort to reform capitalism. It is a bureaucratic morass in the making. It is red meat to the unions. It is the DNC's version of campaign finance reform. And it is amazingly short. Because we will let a bureaucrat come up with the rules! (don't get me going on admin law).

I'm all for honoring the good corporate citizens and having a conversation. If that is all this was, I'd be ok with crazy aunt Betty's foray into the world of commerce, where "making a buck" really does impact the day-to-day lives of the masses, like it or not. But this is a warren alright.

No way Jobs could have done what he did if Warren's framework was in place.

You may be right.

But until his death, many Apple employees more or less worshipped at the Church of Steve, maybe even a majority, so I suspect that a 40% employee representation on the board would have hindered him much. Might even have made the board easier to dominate.

IOW, you may be wrong.

Full disclosure: I joined Apple in 1997 and still work there. I am not on the board.

Disclaimer: I do not speak for Apple in any way.

What are the chances that a male senator with Elizabeth Warren's c.v. would be referred to as "crazy uncle Billy"?

Warren started her academic career as a lecturer at Rutgers University, Newark School of Law (1977–78). She moved to the University of Houston Law Center (1978–83), where she became Associate Dean for Academic Affairs in 1980, and obtained tenure in 1981. She taught at the University of Texas School of Law as visiting associate professor in 1981, and returned as a full professor two years later (staying 1983–87). In addition, she was a visiting professor at the University of Michigan (1985) and research associate at the Population Research Center of the University of Texas at Austin (1983–87).[38] During this period Warren used to teach at Sunday School.[39] Early in her career, Warren became a proponent of on-the-ground research based on studying how people actually respond to laws in the real world. Her work analyzing court records, and interviewing judges, lawyers, and debtors, established her as a rising star in the field of bankruptcy law.[40]

Warren joined the University of Pennsylvania Law School as a full professor in 1987 and obtained an endowed chair in 1990 (becoming William A Schnader Professor of Commercial Law). She taught for a year at Harvard Law School in 1992 as Robert Braucher Visiting Professor of Commercial Law. In 1995, Warren left Penn to become Leo Gottlieb Professor of Law at Harvard Law School.[38] As of 2011, she was the only tenured law professor at Harvard who had attended law school at an American public university.[40] Warren was a highly influential law professor. Although she published in many fields, her expertise was in bankruptcy and commercial law. In that field, only Bob Scott of Columbia and Alan Schwartz of Yale were cited more often than Warren.[41][3]

Or maybe you would call a male senator with those kinds of qualifications "crazy uncle Charlie

I'm a Machead, so I'm already within the Jobs Reality Distortion field. However, reading about some of the things he did and the way he treated others (and not giving them total credence, but also not completely discounting them either and keeping in mind that for every asshole story, there is also a story about his kindness) really makes me stop and think 'was it necessary for him to be such a dick in order to make Apple successful?' I'd like to think no, but I probably have to admit, no, it wasn't possible.

You can find tons of these pages, here's a sample

https://www.forbes.com/sites/connieguglielmo/2012/10/03/untold-stories-about-steve-jobs-friends-and-colleagues-share-their-memories/#6d309d0d6c58

IOW, you may be wrong.

Yep. You have a great point on the 40% issue there considering Apple and your inside view. But it is far from clear how the regs that inevitably come from such laws will be implemented "for the public good." Weren't there significant layoffs around then? I'll bet those employees that were on the brink wouldn't have voted for Steve.

Or maybe you would call a male senator with those kinds of qualifications "crazy uncle Charlie

Yep, if he came up with a bill like this one. And it was meant in a sort of term of endearment, hyperbole, that sort of thing. She isn't actually crazy. Why would you assume it was misogynist comment? I am an equal opportunity basher of dumb economic ideas. And not all of hers are dumb. I'm still in fact mulling over the impact of the other provisions of the law, some of which I may actually agree with, believe it or not. Just as I actually agree with some of crazy Uncle Bernie's ideas.

I'd be ok with crazy aunt Betty's foray into the world of commerce

"crazy aunt betty" has been in the world of commerce for her entire career. the senator thing is her side hustle.

there already exists a legal and administrative framework for defining, measuring, and verifying general public benefit, see also the links upthread on benefit corporation and/or the numerous available resources on the same.

Warren's proposal in a nutshell is that corps with revenue above a billion have to (a) have a federal charter and (b) comply with regs more or less like those of benefit corps.

I don't see where it's either more or less bureaucracy than what exists now, it's just different.

I'm waiting for someone to explain how it's harmful. the upsides seem pretty obvious, to me.

I’m happy to have learned about benefit corporations. I’d never heard of them before. Some brewing companies are among them, which is nice.

I'm struggling to see the upside. I will go back to, what is better about a federal charter than a state charter? If they are about the same why add a new bureaucracy?

If the employees get 40% of the seats that means 40% of the board is essentially useless, and the rest of the board wastes time making sure they are protected from them.

Its curious that somehow shareholders arent active enough but somehow thousands of employees are going to suddenly become knowledgable interested electors of board members.

The reason you have management and a board is those people dont have the knowledge to perform those functions. The primary downside is you have a less effective board. Admittedly by my criteria. Like having a strong, vibrant company that survives in all economic climates.

So, what are the obvious upsides? I cant think of one tangible upside.

Why would you assume it was misogynist comment?

bc, I don't know what's in your head and you may give others similar names, though I don't remember any at the moment. I guess since we have a currently have a moratorium on the current admin, describing people like Peter Navarro (here and here), Stephen Mnuchin, or Wilbur Ross as cloaked terms of endearment like 'the insane uncle' or 'the idiotic cousin' is probably not going to happen. Still, a comparison between those 3 and Elizabeth Warren is probably enlightening.

You may feel like something being misogynist is something that is simply confirmed or denied by the thoughts you had when you said that. I actually don't think that is the case. I'm sure that he who won't be named would claim that complementing a Hispanic Border Patrol agent's English is in no way indicative of racist views. However, racism and misogyny is not simply what is in the speaker's head, it is how those statements play out. So if 'crazy Aunt Betty' is simply your term of endearment, you may want to try and avoid it, it doesn't encourage your view to be taken seriously.

If the employees get 40% of the seats that means 40% of the board is essentially useless, and the rest of the board wastes time making sure they are protected from them.

I'm not clear how "useless" follows. Or how they could even manage to be more useless than the majority of current board members -- who are generally CEOs sitting on each others' boards, setting each others' salaries, etc.

I'm still looking at all this, so some links that came up (obviously influenced by where I stand on the political spectrum)

Kevin Drum
https://www.motherjones.com/kevin-drum/2018/08/codetermination-why-not-just-powerful-unions-instead/

To answer him, no, we can't, because unions and unionization has completely become, because of history and current politics, a zero-sum game, creating an adversarial relationship that I don't think can be erased or overlooked.

https://www.currentaffairs.org/2018/08/some-illuminating-reactions-to-elizabeth-warrens-worker-rights-plan

https://newrepublic.com/article/150695/cure-corporate-americas-selfishness

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

The Vox article has an possible answer to Marty's question, which is

It’s likely a big reason for this is cost. Most progressive ideas tend to be either cheap, but therefore small-bore and a little weird, or bold and clear but expensive, in a country that remains averse to taxation. Warren’s corporate accountability initiatives would have huge economic implications but zero budgetary cost. At a time of low levels of public trust in institutions, Warren’s proposals don’t ask anyone to have faith that government officials are going to make good use of resources.

What’s more, while the codetermination aspect of Warren’s proposal does draw inspiration from Germany, fundamentally, the pitch for the overall package is a lot closer to “Make America Great Again” than to “make America like Scandinavia.” The basic notion is that the American private sector used to operate in a better, more inclusive way before the rise of shareholder supremacy and with a couple of firm regulatory kicks we can get it to work that way again.

I don't know if Marty agrees that the current distribution of wealth in the US is problematic or not, but if Warren wants something that can be passed without arguments of huge budget dislocations, it is probably going to have to take a form like this.

This is pretty interesting
https://www.businesslaw-magazine.com/2016/09/08/the-future-of-german-codetermination/

In that codetermination was initially something only for German workers and German businesses overseas were not obligated to follow codetermination principles, something which might change

A reference came up through jstor and my institution has a subscription, though you can join and read online for free. I was surprised at all the articles from the mid 50's about codetermination.

https://www.jstor.org/action/doBasicSearch?Query=codetermination&filter=

The Warren proposals are interesting, and I think a much modified version of the rather blunt instrument proposals might be worth supporting (I don’t really entirely agree with either the arguments for or against them... the latter seeming rather weaker).
I did wonder what difference, if any,, they might make to a company like this:
https://www.newyorker.com/magazine/2018/08/27/paul-singer-doomsday-investor

lj, Short me: this proposal doesn't have any impact on wealth distribution in the US.

Tough day today, hopefully I can do longer me. Very interesting topic.

So, what are the obvious upsides? I cant think of one tangible upside.

the obvious upside I see is countering the idea that the sole and overriding purpose of the firm is maximizing shareholder value.

labor representation in corporate governance is common in many places with very strong private industry and national economies. so I don't think a harmful effect on governance is in evidence.

I'm for limits on corporate meddling in government.

I know you are busy, so if you can't answer, no worries, but does this mean that you think the wealth distribution in the US is bad?

I'm not totally clear, but the vox article has a chart and this

One intuitive way of thinking about the proposal is that under the American system of shareholder supremacy, an executive increases his pay by finding ways to squeeze workers as hard as possible — kicking out the surplus to shareholders and then watching his stock-linked compensation soar. That’s brought America to the point where CEOs make more than 300 times as much as rank-and-file workers at big companies.

Under a codetermination system, by contrast, an executive wins a pay increase by convincing shareholders and worker-representatives alike that he deserves it — something you can only do if workers are sharing in the benefits of growth. Consequently, German executives earn only about half as much as their US counterparts, even as major German firms like BMW, Bayer, Siemens, and SAP produce world-class results.

Admittedly, a bank shot, but, in answer to your question, any thing that proposes directly taking money from the 1% and redistributing to the rest through taxation or some other mechanism, is really a no-go because of the way the debate is currently set. So the reason to propose this is that it doesn't directly take that money away, but it creates a situation where it will (ideally) eventually flow to a wider range of people.

What does russell say all the time about fixing any number of ills? Pay people more - the people whose labor produces the bulk of the value that gets created. I think that's where this is supposed to be headed, as lj's 9:01 suggests.

This isn't just about inequality. Or even primarily about inequality.

The existence of essentially immortal, sociopathic-by-design entities with no accountability* is a whole set of bad problems in its own right, so we shouldn't lose sight of that. This is tackling that head on.

There's certainly some overlap though. Changes in corporate governance that reign in out of control executive compensation growth would be a huge win against income inequality all by itself. And there are probably a lot of other secondary effects too - lessened corporate power/will to lobby for skewed tax distributions and other kinds of favorable treatment, better rank and file employee compensation and employment stability, etc.


---
* Or, at best, some limited accountability to a small rentier-ish class.

This isn't just about inequality. Or even primarily about inequality.

Agreed. Externalities (negative ones, natch) and rent-seeking need addressing (likely among other things that aren't as obvious to me).

You could argue that skewed compensation is but one type of rent-seeking. The people at the top would do the same job for less, but certainly will take more if they can get it, and they can - so they do.

That the people at the bottom are willing to work for what they're now getting, even if they could or should be getting more, is a different kettle of fish, I think, because they don't have much in the way of power or choice.

Arguing that their demanding more compensation is an example of rent-seeking (assuming someone would argue that) could be logically extended to the more extreme case of slaves who get paid nothing, other than being provided the most meager of subsistence and being spared from being beaten. I'm not sure anyone wants to make that argument for slaves.

Underpaid workers aren't being physically forced to work, but they are subjected to market forces that aren't independent of internal corporate policies or external corporate influence. It's a softer form of coercion, in that the system is more or less rigged against them.

I am going to try to fit this in so bear with me as I do the numbers from memory.

Executive compensation has always been a big number, but calculating has changed over the years. First, in the early 2000's the way executive compensation was handled was changed explicitly to include a calculated value of their options that had never been included before.

Second, somewhere along the way pay versus median employee pay became this important metric, which it isn't. The company sizes of the average company a CEO runs has gone up, the average employee count has gone up, one of the ways to look at this is we now have trillion dollar market cap companies with operations all over the world. How many of those existed when we first started calculating this metric?

There are less than half the number of publicly traded companies than there was only 20 years(15, 25?) ago. The size and scope of the large companies is beig averaged across fewer companies.

All to say that I don't think the metric is the least bit meaningful as a measure over time.

To the proposed law: There is nothing in the proposal that addresses the makeup of a compensation committee, or makes the employee representatives have any actual say in the board. The assumption that these members end up with anything but a window dressing role is questionable at best. Boards only have a few actual functions: They hire the CEO and approve compensation for the other senior executives. They also advise on the compensation in the overall business plan and accept the results on a quarterly basis, and that of course is in publicly traded companies.

Does a billion dollar privately held company fall under this law, they have boards and advisory boards but not shareholders so those issues are even bigger).

Then Benefits corporations - I have read several of the things about these and for the company founders that believe in shared ownership I think they are great, it limits that owners earnings which is his decision too make.

I wouldn't buy stock in one. Period. There are an almost infinite number of decisions that can be made for social good and employee good that would make it a bad investment for me. I have to wonder how liquid the capitalization would be and how many 990 million dollar corps we would end up with after spinning out a business unit every time one approaches benefit corporation status. Same shareholders, same growing valuations, lots more companies.

And so I don't forget, this is a checklist against a standard that is purely self regulated so I still don't think it touches income distribution and if it becomes mandatory then the whole no cost argument goes completely out the window.

Which lastly, this is a new federal government bureaucracy, it will cost lots of money, it will penalize US businesses, it is the worst form of government intrusion with little hope of payback. Shareholders are protected uniquely because the businesses cant function without them. Everything else they can buy with the money. Employees at some point are fungible, worst case you need to train someone or, the way it really works, pay more to get and keep the uniquely qualified ones.


I have more but time presses.

Underpaid workers aren't being physically forced to work, but they are subjected to market forces that aren't independent of internal corporate policies or external corporate influence.

Over-paid executives, in contrast, and not subject to market forces in their compensation. They are part of a small cartel that sets each others' prices/income. It takes a major disaster for the corporation before they are likely to get held to the kinds of standards that the general workers are.

There are less than half the number of publicly traded companies than there was only 20 years(15, 25?) ago. The size and scope of the large companies is beig averaged across fewer companies.

And yet, with the population of CEOs and would-be CEOs at least as large, market forces have not brought down the compensation rate.

"Over-paid executives, in contrast, and not subject to market forces in their compensation. They are part of a small cartel that sets each others' prices/income.

This may be partially true for 100 executives in this country. Its completely wrong as a generalization for CEO pay. I have had to spend hours arguing with the compensation committee about pay levels, and these "cartel" members were not interested in trading off my raise for theirs.

Marty, at least half of your comment is about executive compensation. Which is not, as far as I can tell, a part of the motivation for the bill, or anything the bill addresses.

As far as labor representation on boards, it's common in many places and it appears to be perfectly effective in those places. There is evidence, for decades, from very successful and robust companies and economies, that it is at a minimum not harmful. So IMO the burden is on folks who say it's going to be harmful to explain how that's so.

It won't be the same as what we do now, that's true. And, that's more or less the point.

The half of my comment on compensation was answering lj's specific question. So, yep.


"There is evidence, for decades, from very successful and robust companies and economies, that it is at a minimum not harmful. So IMO the burden is on folks who say it's going to be harmful to explain how that's so."

ok

So, yep.

cool, got it.

Actually, my question wasn't about exec compensation, but about the inequality of distribution of wealth. This Guardian article discusses some of the measures

https://www.theguardian.com/inequality/datablog/2017/apr/26/inequality-index-where-are-the-worlds-most-unequal-countries

You said
And so I don't forget, this is a checklist against a standard that is purely self regulated so I still don't think it touches income distribution and if it becomes mandatory then the whole no cost argument goes completely out the window.

So, simple question, do you think that income distribution needs to be changed or not? Not trying to catch you out, but I can't tell if you think it is just fine or you think it is a problem.

What wj said. I don't think that CEO salaries are truly subject to market forces. There appears to be a somewhat inbred group from which board members and executives are chosen. To that extent, board members from outside the group would be welcome. But 40% seems to be a fairly transparent way to shift the landscape of labor bargaining in favor of labor.

And what the Count said about corporate intrusion into government. I recognize that as an issue. I don't have a problem addressing that.

If this bill attempted to use market forces to address compensation, shareholder participation, and "corporate meddling," that would be one thing. My biggest issue is the absolute vagueness of what constitutes "good." And the fact that some government bureaucrat gets to decide that. And there is this rosy-colored glasses way of looking at corporations post-WWII. Did I miss something? I don't recall corporations acting in the "public good" per se in the 50's. Shoot, by the 60's we had the Military Industrial Complex, right?

lj: comparing some snark of mine to Trump's rants is, well, hyperbole itself and guilt by association and seems to me to be a greater affront that calling someone "crazy" as a humorous (but admittedly not very funny) way of addressing an issue. Ad hominem, yes, and off the cuff too. But in response, it appears my gender was assumed (not by you) and offense taken. And if I'm not taken seriously, well, on that simple point I wasn't expecting to be taken seriously I guess. Plus, yo hablo el idioma, pues, so that particular comparison doesn't apply to me.

This is a little off topic AFAICT, but:

First, in the early 2000's the way executive compensation was handled was changed explicitly to include a calculated value of their options that had never been included before.

Which was a *response* to the fact that options were by then being used as compensation to an unprecedented degree.

It's a red herring as far as somehow calling into doubt the reality of an accelerating inflation in executive pay ratios. AFAIK, historical comparisons which account for Black-Scholes value in the older numbers show pretty much the same trend.

Second, somewhere along the way pay versus median employee pay became this important metric, which it isn't.

How not?

The company sizes of the average company a CEO runs has gone up, the average employee count has gone up,

Neither of which seems to me to have much to do with how much a manager should earn. It's not like, e.g., the hours they work scales with market cap or something - pretty sure they top out at 24 hours in a day same as the rest of us.

I'll grant Marty this: C-level compensation, purely as a matter of some number of dollars in aggregate, isn't a big percentage of total compensation. Changing that, just in terms of the number of dollars, isn't really going to do much for employees at large if you assume some percentage of those dollars get redistributed to lower-level employees.

The bigger problem is how they manage to make that much money, as in, what incentives are tied to that money. There's too much juicing the numbers in the shorter term without considering the longer-term health of the company. When the sh*t finally hits the fan, you take your golden parachute and move on to the next gig or enjoy a very comfortable retirement.

"Neither of which seems to me to have much to do with how much a manager should earn. It's not like, e.g., the hours they work scales with market cap or something - pretty sure they top out at 24 hours in a day same as the rest of us."

Except the point is that even CEO pay has some correlation to the responsibilities. As there have been fewer CEO's with broader responsibility fewer people can manage that size organization effectively. So their pay logically goes up, particularly at some percentage of revenue or net income.

Except the point is that even CEO pay has some correlation to the responsibilities.

Some correlation, sure.

But consider the level of responsibilities, vs the compensation, of the average general officer in the military. Not to mention, for example, the President. Yet their pay is neither anything like that of the typical CEO, not the same multiples of those working for them. So I have a problem with the thesis that large responsibility necessary does, or should, lead to massive remuneration.

There's too much juicing the numbers in the shorter term without considering the longer-term health of the company. When the sh*t finally hits the fan, you take your golden parachute and move on to the next gig or enjoy a very comfortable retirement.

Right. Or, broadening things from just CEOs, there's the whole 'private equity' phenomenon, where you take over, liquidate everything -- even the stuff that *is* nailed down -- then pocket the cash and get out while the getting is good.

The inevitable bankruptcy a couple years later when the firm hits a temporary rough patch and has no assets or safety margin to fall back on... Well, it won't be your problem. (See, e.g., essentially the entire retail sector.)

Several articles on Warren's plan have alluded to this sort of thing. The fact is, existing incentives around corporate leadership and governance apparently aren't really even good for *corporations*, let alone employees, customers, the public, etc.

As there have been fewer CEO's with broader responsibility fewer people can manage that size organization effectively.

You'd expect there to be some empirical data to back that up though, and I don't think there is.

Even if we posit that fewer people are capable of managing a billion dollar company than a million dollar company, there are still plenty of candidates capable of doing the job. (And not much evidence that the most effective of those are the best paid or the most likely to be selected for a given post.)

But I'm skeptical that managerial complexity correlates to size very strongly in the first place, whether measured in dollars or employees.

It's not as if the job of a president with 1000 stores/factories/whatever units is 10 times as complex as one with 100, or 100 time harder than one with 10*.

On the contrary, the larger enterprises may be simpler in some ways (brute force can serve where smaller players require guile and wit).

However, what DOES change reliably with larger firms is the size of the pot that can be skimmed from...

--------
* Obviously the organizational structure and degree of delegation changes at different scales. But that's exactly the point: delegation scales so that the complexity presented to individual managers doesn't have to. Otherwise, multi-billion dollar enterprises with hundreds of thousands of employees really would require unimaginable superhumans as leaders. (They don't.)

"There is evidence, for decades, from very successful and robust companies and economies, that it is at a minimum not harmful. So IMO the burden is on folks who say it's going to be harmful to explain how that's so."

With respect, it seems to me that the burden is, as almost always is, on the proponent. First, to demonstrate a compelling need, then to demonstrate specifically why the legislation will address that compelling need and then to address the valid concerns about unintended and undesirable consequences, as well as the entirely foreseeable if not certain uptick in crony capitalism.

I'd like to know which countries are similar to the US and have more vibrant, creative, productive economies under this proposed regime.

Finally, the managers of Amtrack, the Postal Service and the VA do not have a track record that inspires confidence. Why can we expect something different from this?

I'd like to know which countries are similar to the US and have more vibrant, creative, productive economies under this proposed regime.

First, the bar here (at least as raised by me) is not "more vibrant". It's "vibrant". My interest is in countering the claim that employee representation on corporate boards will necessarily be counter-productive.

Nations with (a) employee representation on boards and (b) robust economies and corporations include Denmark, Finland, France, Germany, the Netherlands, Norway, and Sweden.

If GDP per capita can be used as a proxy for "robust economy", those nations rank 10, 12, 14, 8, 5, 3, and 7, respectively, out of 45 sovereign states in Europe.

I'm unclear on the relevance of Amtrak et al. The bill does not propose nationalization of industry.

the Postal Service and the VA do not have a track record that inspires confidence


the USPS is literally the best postal service in the world.

https://foreignpolicy.com/2013/02/07/the-worlds-best-post-offices/

"There's too much juicing the numbers in the shorter term without considering the longer-term health of the company. "

This is really not the norm. It really doesn't happen in most companies. Sure there are examples, and a lot more where conscientious CEO's do the best they can to do a good job building a sustainable company.

A different evaluation:

The World's Best Postal Services

Sure there are examples, and a lot more where conscientious CEO's do the best they can to do a good job building a sustainable company.

That's dubious. But even if it's true, I'm not sure how that's responsive.

It's kind of like objecting to a proposal for stricter driver's license requirements or something by saying "sure there are examples of negligent drivers who shouldn't be on the road, but there are also a lot of conscientious drivers who take good driving seriously."

Obviously the latter kind of driver isn't the problem. That's true.

But there *is* still a problem out there. One higher standards might help to reduce. And drivers that are already meeting a high standard, however many there are, don't have anything to worry about.

I have a mixed reaction here. There are some other things that would be more useful, IMO.

I guess the motivation for federal charters is that it makes it easier to regulate the companies. They don't get to hide behind the most lenient state laws they can find.

That makes a lot of sense. The notion that these national/multi-national companies ought to be controlled by the rules of a small state rather than the federal government is silly.

I'm not sure the 40% idea is so great, as I'm not sure how it would work in practicer what the precise goal, other than nebulous "worker participation" is. I'd rather see some degree of protection for the interests of employees, especially the who have worked in the same place for years.

I think vastly simplifying the process of running for a board seat - including having the corporation treat incumbents and challengers equally, might improve governance greatly, as would easier proxy access for shareholder resolutions.

Along that line, there is one thing I think Warren should add to her bill. Institutions that invest for others, like mutual funds, should be required to represent the interests of their fundholders, as opposed to sucking up to management.

Political expenditures are tricky. First, there needs to be disclosure. Given that, I think lobbying expenses an be justified on the grounds that certain government actions are obviously favorable for the corporation.

But support for candidates or parties, direct or indirect, is a different matter. Any such support will obviously displease a substantial percentage of the company's shareholders. There are enormous principal/agent conflicts here. That said, the "What about the NYT" argument is not entirely invalid IMO. The solution may be that direct public statements of support are OK, but contributions are not.


It's kind of like objecting to a proposal for stricter driver's license requirements or something by saying "sure there are examples of negligent drivers who shouldn't be on the road, but there are also a lot of conscientious drivers who take good driving seriously."

Don't be so milquetoast about it. Let's go straight to murder. Murder isn't the norm. A very small percentage of people are murderers - hardly any, in fact. Why subject all these non-murderers to laws against murder? What's the point?

More seriously, we're getting overly focused on CEO compensation (he says to the guy who originally made the point that this isn't just about inequality).

What does an ordinary worker get paid? If his labour can readily be replaced by someone else's, he gets paid what the next guy is willing to accept, plus perhaps a bit more if he's more conveniently located. If the next guy is in China, what he's willing to accept will be not very much by US standards. Which is why manufacturing wages have stagnated.

What does a top CEO get paid? He gets paid what the next guy does, plus more for how much better the compensation committee thinks he'll be for the company. For a large enough company, a tiny improvement in company performance is worth a huge amount of compensation. Which is what the CEO's of big companies get.

None of this has got much to do with what they deserve, it's just market forces. If you don't like market forces, vote for a different economic order. Or else for measures, like a citizen's income, which soften their effect.

Why is this needed? What demonstrable problem do we have that requires this remedy?

None of this has got much to do with what they deserve, it's just market forces.

Just market forces? As in, that mythical "free market" we always hear about, where the law of supply and demand puts everything right where it should be for optimal economic effect, as nature intended? Neat!

I actually didn't read your original as really being about CEO compensation, or not about income inequality anyway.

The kinds of decisions CEOs make -- and where the incentives to make certain kinds of decisions come from -- seems like very much one of the key issues swirling around corporate governance reform.

I mean, I'm sure Marty's right that there are many executives out there who try their best to make their companies sustainable in the long term, and maybe even work to make them responsible, ethical corporate citizens.

But I imagine there are even more that, even if they might like to be that kind of leader in the abstract, feel that their hands are tied to some degree by a perceived obligation to run every decision through the "maximize shareholder value" filter. Extravagant bonus packages just make that an even easier decision to make.

What demonstrable problem do we have that requires this remedy?

shareholder value is orthogonal to worker and societal concerns.

This is one of those "if you have to ask, you'll never know" situations, I think.

What demonstrable problem do we have that requires this remedy?

If you can honestly look out over the current state of corporate influence over politics, treatment of workers (domestically and globally), treatment of the environment, treatment of customers, or about a billion other things and not see any "demonstrable problems"....

Well, I'm not sure it's within my power at that point to make you see them.

What demonstrable problem do we have that requires this remedy?

shareholder value is orthogonal to worker and societal concerns.

Yes.

Also, as regards the "employees are fungible" concept, if I ever hear somebody I work for talk like that, I'm gonna spruce up my resume and start looking around. For all kinds of reasons, not least of which is that I will realize I'm working for a bonehead.

People are not fungible. Money is fungible. Money exists to be fungible.

None of this has got much to do with what they deserve, it's just market forces.

I understand this to be the ideal. But I'm having trouble squaring it with reality. To take just one example, we had a CEO hired in one of the Silicon Valley firms, at the usual wildly high compensation package. After essentially destroying the company, the CEO leaves . . . with a multi-hundred million dollar golden parachute. (And moved on to a, fortunately failed, campaign for the Senate from California.)

If that really is the free market at work, then the market has far more serious problems than I think it does.

What does a top CEO get paid? He gets paid what the next guy does, plus more for how much better the compensation committee thinks he'll be for the company.

I'm trying to figure out what the compensation committee's more or less completely subjective and imaginary guesstimate of a new hire's impressiveness has to do with "market forces".

I'm also trying to figure out why this shouldn't make just as much sense:

"What does a top CEO janitor get paid? He gets paid what the next guy does, plus more for how much better the compensation committee thinks he'll be for the company."

Presumably it could work the same way, right? If you get 20 applicants for your janitor position, you should pick the best one, then tack on a few more dollars per hour based on how much better they are then second best.

Yet in practice, what is actually done is to pick a more or less arbitrary wage that's judged by the HR dept to be in line with what other janitors get paid in the area, advertise that rate, and pick one of the schmoes that applies.

Most companies stick with that approach pretty stubbornly even if they get no applicants. They just keep posting the same wage until they get whatever bottom rank janitor is willing to take the work.

There was (maybe still is) an interesting phenomenon where reporters go out and talk to various industrial companies, and then come back and write stories about the "shortage of skilled machinists" or whatever. Usually there's a nice tie in to the hollowing out of industrial and vocational education programs in American high schools, etc., etc.

Which is all very nice.

But the interesting thing is that if you look deeper, you realize that the companies doing all this complaining are not reacting the way you'd expect. These companies, so desperate year after year for machinists, are not increasing the offered salaries. (Nor are they lowering their experience requirements and spending money to expand on the job training programs.)

So it turns out what they actually mean is that there's a shortage of skilled machinists at below market wages.

Which. Duh.

And yet, despite an abject lack of applicants, despite the objective bottom line benefits even a very well-paid skilled worker would be bringing to the company, none of them are out there adopting the tried and true CEO hiring committee strategy for compensation determination of valuable, hard to find employees.

Sort of makes you wonder if "market forces" really has as much sway out there in the real world as you'd expect.

Somehow, I don't think the selective application of these two very different approaches to salary determination has anything to do with "market forces".

I think in this case the phrase we're looking for is "cultural forces"...

I've been talking about this sort of stuff with a friend of mine who is a business school professor (Ph.D. and a hard quant type). I asked him for articles that get to the heart of this paradigm shift that going on that's pushing back against Friedman's "The Social Responsibility of Business is to Increase its Profits."

He recommended Drucker's "Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility" (which is tied up behind institutional firewalls or I'd share) and This Piece and accompanying interviews at the Harvard Business Review.

This is not some recent pipe dream of a topic, the Drucker article is from 1984. The housing crash and Climate Change (or "Everything Change," as Atwood call it) have been putting pressure on the Friedman view within many B school's curricula.

What demonstrable problem do we have that requires this remedy?

shareholder value is orthogonal to worker and societal concerns.

Yes.

This is not immediately self-evident nor is it entirely clear. What is meant, more specifically by this, and what do business owners owe society that is different from what everyone else owes society?

It seems to me the impetus for something of this nature is "we don't think large companies are as socially and employee-responsible as they ought to be". Ok, what would you change and what can you show that makes your cure better than the current disease?

what do business owners owe society that is different from what everyone else owes society?

nothing. they owe society exactly nothing other than what everyone else owes society.

that's the point.

Nous cites Friedman's article. The discussion around that is worth browsing, as your (or anyone's) time allows.

nothing. they owe society exactly nothing other than what everyone else owes society.

that's the point.

It has been a long day, a long week and a long two months, so I'm a bit punchy. I'm not seeing a reason to regulate larger companies. No one has provided that reason. IMO, there ought to be a number of well thought out reasons, fully explained, fully justified and fully supported by evidence before turning private enterprises over to gov't regulation.

This is particularly true for the larger enterprises. What are they doing in particular that merits this attention?

what do business owners owe society that is different from what everyone else owes society?

There are at least a couple different answers to this from slightly different perspectives:

1. We don't expect *more* from corporations (note: not organizationally the same as "business owners"), but we shouldn't expect *less* either.

For example, we generally expect individual human people to be good. To help little old ladies cross the street, e.g., even if it makes you late for work. Or to return a lost wallet without taking the cash.

Certainly we expect people not to be sociopathic money grubbers, trampling over everything else just to chase a buck.

And yet, that's pretty much exactly the implication of Friedman's "the social responsibility of business is to increase profits".

This reform is aimed at bringing (at least some) corporate citizenship up to the same sort of generally socially expected responsibility level that individuals have.

2. It's not really so much an "owes" framework as it is a "is this a reasonable requirement in exchange for the privileges" framework.

For example, we don't really find it onerous if a library grants you book check out privileges, but also says you can only check out 10 at a time and must return them in a timely manner and in good condition.

We don't think it's onerous when the DMV gives you a license to drive, but requires that you pass a couple tests first, meet some basic requirements like having vision sufficient to read road signs, and requires you to obey sensible rules of the road that make it safe and usable for everyone, not just you.

So why should it be onerous to obey similar rules of the road in exchange for a business license?

2 1/2. Another way to put that: "with great power comes great responsibility".

Limited liability corporations are incredibly powerful forms of organization. They can be engines of great benefit, or great harm. In exchange for the privilege of wielding that power, it doesn't seem unreasonable to establish a framework around their use that maximizes the public good they create, and minimizes the harm.

(And if you don't like it, nobody's forcing you to incorporate one...)

This is particularly true for the larger enterprises. What are they doing in particular that merits this attention?

More and more powerfully the same things, good and bad, that smaller ones would do.

That said, I think the arbitrary market cap thing might be the least justifiable part of this. Maybe there's a specific justification for that that I haven't seen, but I'm assuming it's just expediency as much as anything.

And better some than none, if that's the tradeoff, but I'd ideally want to see this extended to all corporations, of any size. Or at least anyone doing business across state lines, say.

Try reading that Harvard Business Review piece on sustainability, McKTX. That's a big part of all of this.

Climate change is sort of the elephant in the room here.

You can draw a pretty straight line, in my opinion, from the philosophy expressed by "the social responsibility of business is to increase profits" to "let's cover up these internal scientific findings about global warming and also hire those tobacco guys to drag this thing out politically for as long as possible".

I mean, if "all that matters is profits" is not the justification for those actions, then there isn't one at all.

But it's clearly not a very good justification, or one we should be encouraging/excusing. Hence the need to remove it from play.

I sure could use some opioids right about now!

What are they doing in particular that merits this attention?

i've had my own long and frustrating day, so I'll let other folks reply.

just didn't want you to think I was being unresponsive.

I don't want to accuse anyone of not reading links, cause I know that all of you do...

but Nigel's link (reposted here)

https://www.newyorker.com/magazine/2018/08/27/paul-singer-doomsday-investor

is a good example of how the system is destroying itself. However, it is very difficult, especially in a system that holds up shareholder value as the ultimate good, to do anything that would directly address something like that. However, I see Warren's proposals as a start towards changing the conversation. Doesn't mean that this is what she is thinking, but the theory of shareholder value needs to be reined in imho.

Russell, in the original post, linked to the group blog naked capitalism, here's another post by a different author that I think is interesting

https://www.nakedcapitalism.com/2018/08/elizabeth-warrens-proposal-co-determination-really-second-new-deal.html

The last is a request, as my google-fu is not enough. Is there a list of the companies that would come under Warren's bill?

Worth noting in the discussion here as well -- that third bullet point up top seems to me to be a direct response to the Citizens United decision, but using the Supreme Court's own reasoning in Janus to unbalance and throw it.

Is there a list of the companies that would come under Warren's bill?

Seems like this might be an approximation, right? I count 555 with more than 1 billion in sales.

IMO, there ought to be a number of well thought out reasons, fully explained, fully justified and fully supported by evidence before turning private enterprises over to gov't regulation.

Maybe we should revisit the fact that certain "private enterprises" including corporations, LLC's, and other state chartered entities, are STATE CHARTERED ENTITIES. As such they are created by government, and regulated by government. So that's the first thing.

As to the link that nous posted, maybe I should be pledging allegiance to Patagonia.

Seriously, as corporations become more and more powerful, and are taking on national defense obligatons (with Microsoft protecting elections, and Eric Prince [gag] attempting to coopt the military), we're going down the road of corporations replacing government. I don't want to see that happen, but we might as well start choosing our corporate "country."

Thanks Jack, interesting list. It's interesting that everyone uses Apple as the exemplar.

Speaking of corporations, does anyone know if this is accurate? I think it might be, because I know an asylum seeker who attempted to mail something using FedEx, presenting cash, and was told no because she didn't have an ID. I thought, when I heard it, that it was some racist desk clerk. If it's policy, this is frightening.

I intend to find out, although I won't be able to pursue it until next week. Lawsuit.

FedEx Office Imposes Photo ID Policy in Response to Austin Bombings

Seriously, as corporations become more and more powerful, and are taking on national defense obligatons (with Microsoft protecting elections, and Eric Prince [gag] attempting to coopt the military), we're going down the road of corporations replacing government. I don't want to see that happen, but we might as well start choosing our corporate "country."

This is the future we thought we would have back in the 80s when I was reading and playing (tabletop RPG) cyberpunk. It's Zaibatsu feudalism.

Cyberpunk was moribund for a long time with the rise of internet utopianism in the 90s and 00s, but the corporate dystopia has been making a comeback. Richard Morgan's Market Forces was on the leading edge of the return and Paolo Bacigalupi's The Windup Girl and The Water Knife take the whole scenario straight into climate crisis and disaster capitalism.

Nous, you're so ahead of me. So much to learn.

Responding to CharlesWT: The asylum seeker I know about was sending court papers to an attorney in her home country. So it wasn't really a package as much as an envelope with sheets of paper. This could have been sent by someone with a credit card, or an account, in a FedEx dropbox. In other words, anybody who had a card.

If the policy that is explained in your link was a temporary one in a specific geographic area, in order to solve a particular crime, maybe (???) it's understandable. But this person doesn't live anywhere near Texas, and she was mailing papers to a destination out of the country.

I will not be using FedEx until I'm satisfied that it's not discriminating against undocumented people.

Doesn't mean that this is what she is thinking, but the theory of shareholder value needs to be reined in imho

if i'm not mistaken, the theory of maximizing shareholder value as the primary mission and responsibility of corps is warren's main target.

upthread, Marty offers his opinion that high executive compensation in justified by the size if modern corps.

that leads me to ask - should corps be that large?

I cannot recommend this book enough to someone who wants to learn about how one idiosyncratic idea of Friedman's has so polluted the US business community with its noxious effects:
https://www.amazon.com/Shareholder-Value-Myth-Shareholders-Corporations/dp/1605098132/ref=sr_1_2?ie=UTF8&qid=1535078723&sr=8-2&keywords=the+shareholder+value+myth

if i'm not mistaken, the theory of maximizing shareholder value as the primary mission and responsibility of corps is warren's main target.

A lot of articles have started with 'this is the start of Warren's 2020 campaign' and crap like that and I just said that I don't know what is in her head cause I want to talk about what she proposed. While I'm happy to take statements from her at facevalue, I think there are people here who are not ready to do that.

With any politician, of any persuasion, electoral considerations can be in play. But regardless of why that particular politician is pushing it, it's still worth considering the merits of the actual proposal.

Even wonderful politicians can get something wrong. And even the worst political actor on the planet can occasionally get something right. Witness the AG standing up today and telling the President that the Justice Department was not there for political purposes. I've got very little use for Sessions, but he got that one right.

One problem not yet mentioned (or I overlooked it) is that employees getting on the board can quickly become part of the corrupt self-dealing.
Think of the union bosses the right loves to complain about. Over here in Germany I get the impression that this is a real problem (and some of the larger unions are among the most employee-unfriendly organisation there are).

So, I think the basic idea has merit but it has to be safeguarded against such factors.

Btw, I am daydreaming about rules like:
The leadership of companies with dangerous work environemnts are obliged to be physically present in the area likely to get hit in case of catastrophic emergencies.
E.g. coal executives have to have their offices inside the least safe mine they run. If you are responsible for a nuclear power plant, you have to take residence at the site. And of course you will be obliged to sleep under the bridges (and in front of the dams) whose maintenance is your responsibility. ;-)

if i'm not mistaken, the theory of maximizing shareholder value as the primary mission and responsibility of corps is warren's main target.

...While I'm happy to take statements from her at facevalue...

The title of the WSJ op-id is "Companies Shouldn’t Be Accountable Only to Shareholders".

That was my first clue...

:)

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