As Ronald Reagan sagaciously commented years back, we all should tremble if we ever hear the words, “I’m from the government, and I’m here to help.” A corollary to this wisdom is that anytime a politician proposes to “fix” anything the assured result is going to be a bigger problem – often one requiring more governmental “help”. (Recall Ted Kennedy forwarding legislation to fix the broken HMO system, the very system he fought into implementation.)
In frighteningly similar fashion we now have Senator Elizabeth Warren stepping up to repair what she regards as a “broken” capitalism system we operate by. That system currently has a booming stock market, evaporating unemployment, and a GDP operating over 4% — when Trump was mocked it could ever rise above 3%. But Warren will “fix” this. In a clear bid to establish herself for the 2020 general election it seems Warren has gone full Ocasio, trying to out-Sanders the Bernie bot with a crackpot socialism proposal.
I am breaking no news to suggest a socialist-leaning Democrat has a problematic grasp on economics, but her proposal is as frightening as it is outlandishly ludicrous. It sounds like the ravings of a cartoon arch villain, except it arrives from a standing Senator who submitted an actual bill. Employing thought-crime prolix, it is dubbed The Accountable Capitalism Act, and the proposals carried therein are laughably inept.
As Warren laid out in The Wall Street Journal (irony in itself) her plan is to compel America’s largest corporations to be burdened with more governmental payouts, lorded over by the creation of a new bureaucracy, which will dole out corrective redistribution to the middle and lower classes. Her basis is that, since companies are now legally granted rights as persons, they need to be coerced into being good citizens.
Over at Vox Matt Yglesias — that outlet’s version of the imbalanced thinker Paul Krugman — cheerleads this proposal, without the slightest bit of critical thought. He is all on board, and even alludes to the Marxist underpinnings of her thought process here.
The new energy on the left is all about making government bigger and bolder, an ideal driven by a burgeoning movement toward democratic socialism. It’s inspired likely 2020 Democratic contenders to draw battle lines around how far they’d go to change the role of government in American life.
Sure, this should end well. Warren’s plan is to start up The Office of United States Corporations, inside the Department of Commerce. It will take authority over any corporations with revenue in excess of $1 billion, and those companies will be required to sign on to a “Federal Charter of Corporate Citizenship”. This department, of course, will be run by an appointed leadership, not an elected one.
Inept politicians, who cannot produce a balanced budget, will be in charge of our country’s largest multinationals. (Sure we are heading towards an economic iceberg, but we’re making great time!) The language and proposals she is forwarding are so inept as to be mirth-inducing.
Being targeted are CEOs, who are “wrongly” directing corporate profits to shareholders, instead of to social programs favored by genius politicians who never worked in the corporate sector. That Warren does not grasp that shareholders are actually owners, who invested into these companies in order to realize a profit, is only the start of her ineptitude.
It has been said this program will redistribute trillions of dollars from these companies, “without costing a dime”. Sure, collecting money forcibly is not a cost…upon the collectors. But that is money being extracted out of the economy, and she does not see the folly in her thinking. If shareholders are denied their rightful dividends the next step is those investors will go elsewhere.
Since she has brilliantly applied a defined threshold — that $1 billion revenue mark — some companies are likely to see that confiscatory future and take steps to avoid growing into that realm. It may make more sense to splinter into other companies, than to become burdened with Warren’s revenue drainage pipe.
One of the other requirements is that the boardroom of these companies must have 40% of its representation elected by the workers. With unions fading from import we see a proposed end-around to retain the “workers paradise” ethos of socialism. This is another doomed proposal. Think of Ben Franklin’s axiom that a republic is imperiled when the citizenry decides to vote itself into prosperity; a corporation is a microcosm, and its failure is assured when the workers can put wages above revenues.
She also wants to pass a rule that executives receiving stock as payment cannot sell shares for five years. This control over personal property/finances is regarded as a disincentive to the practice of stock compensation. Lost on the economic genius is that these stock payouts are in fact positive compensations. A CEO is encouraged to see the company perform well, as it means his portfolio grows, likewise any employees who own company stock. You know, those evil shareholders?
Her next laughable requirement involves corporate political activity. The Accountable Corporation Act would require a three-quarters company approval before any company engaged in political activity. That is seventy five percent approval by the Board, AND the shareholders. The near impossibility of that consensus would nearly eliminate political donations. However this would not be a political loss for the leftists, as they are already confiscating those trillions for their pet social projects.
This all of course is merely the newest concept to bring America closer to the European hybridized socialism. She fails to grasp that our middle class possesses far more corporate stocks today, via retirement plans and private investments. This proposal is expected to devalue stocks by 40-45%. So we are going to handicap our economy in order to financially burden the very people she is claiming to be helping. But more important, the government will be able to exert even greater control over the economy, which is soaring but that they declare needs repair.
That is the same government that has eternally operated with annual deficits, run a medical care program into the ground that required the creation of an even worse program, and has a federal retirement pyramid scheme that has operated in the red for generations. Anyone thinking giving these same minds control over the largest corporations on the planet is a great idea would be better off investing in one-way airline tickets to the European Utopia of their choosing.