In a WSJ op-ed today, Senator Elizabeth Warren wrote that:
The Accountable Capitalism Act restores the idea that giant American corporations should look out for American interests. Corporations with more than $1 billion in annual revenue would be required to get a federal corporate charter. The new charter requires corporate directors to consider the interests of all major corporate stakeholders—not only shareholders—in company decisions. Shareholders could sue if they believed directors weren’t fulfilling those obligations.
My bill also would give workers a stronger voice in corporate decision-making at large companies. Employees would elect at least 40% of directors. At least 75% of directors and shareholders would need to approve before a corporation could make any political expenditures. To address self-serving financial incentives in corporate management, directors and officers would not be allowed to sell company shares within five years of receiving them—or within three years of a company stock buyback.'
Let's be clear, none of these are new ideas. They are either academic utopian schemes or failed European governance models. There are very good reasons none of these dusty relics of eons of progressive corporate thought have made it into law. In this series of posts, I will explore some of the main reasons.
Some posts on specific issues:
- It would federalize a major chunk of corporate law despite reams of evidence that allocating regulatory authority over corporate governance to the states is superior to putting authority at the federal level.
- It would reverse the shareholder maximization norm, which despite its problems has served investors and society well.
- The enforcement mechanism doesn't make sense, even from her perspective.
- It is mandatory rather than permissive.
- Employee involvement in corporate decision making is counterproductive.
- It's blatantly intended defund the GOP in favor of Democrats and simultaneously give shareholders power they neither need nor ought to possess.
