Category Archives: Economics

The first salvos in the 2020 Presidential election

Last week, Senator Elizabeth Warren (D-MA) introduced the Accountable Capitalism Act, a bill that would, among other things, require that certain very large corporations change the composition of the membership of their boards of directors. On Thursday, Kevin Williamson of the conservative National Review wrote a scorching article attacking Warren’s proposal, calling it, among other things, ‘batty,’ and charging that it would require the nationalization of essentially all American businesses. Matt Yglesias, one of the editors for, responded at length, calling Williamson’s article ‘unhinged,’ and questioning if he had ever read Warren’s actual proposal. The kerfluffle has been, to say the least, entertaining.

Let me admit right up front that I’m on Team Yglesias on this one.

Here’s what Warren’s proposal calls for. This proposal would only apply to businesses with over a billion dollars in assets, which would be required to apply for a federal corporate charter, not state charters as happens now. A federal charter would include these stipulations. First, corporate boards would be instructed to take into account the interests of all relevant stakeholders–not just shareholders, but communities, workers, customers–when making decisions. Currently, boards are generally instructed to consider only shareholders, the value of publicly traded stocks. Second, boards of directors would no longer be elected by shareholders only, but also 40% of them would be elected by workers. Third, executives would have to hang onto stocks received as part of their compensation for five years. Fourth, any political actions by the corporation would require approval by 75% of shareholders and board members.

Williamson says this would involve nationalizing all of American businesses. Yglesias responds that it would national zero businesses, and wouldn’t even apply to most smaller businesses. Williamson also uses a conservative slippery-slope argument, insisting this would result in the creation of a huge federal bureaucracy. Nothing like that appears in Warren’s bill. As Yglesias puts it: “I’m not sure he even read it.”

Any argument in which words like ‘deranged’ and ‘bonkers’ appear is surely entertaining, and both articles make for fun exercises in political vitriol. I’m on Yglesias’ side, though, for one main reason.

Surely corporate power is massive right now. And while capitalism is great and good and market economies rule, money is power, and big companies can surely be said to wield too much of it. Certainly corporations want to be profitable, and investors want to see a positive return on their investments. But corporate profitability is not the only national interest, nor the only natural interest. Communities want big companies to be good community citizens. Workers want to be paid a living wage. And the role of government is, it seems to me, to be an honest broker between competing interests. Not automatically side with business or labor, but work to find a balance between what they both want.

Corporations are people, we’re told. That legal fiction is in force in our society. Fair enough. We don’t want corporate ‘people’ to be vicious, selfish sociopaths (Hello, Amazon!).

In the meantime, why does there not exist a national service workers union? Why aren’t Walmart and Amazon and McDonald’s union shops? One issue in the last Presidential campaign–and I suspect in the next one as well–was the minimum wage. Bernie Sanders wants it to be fifteen dollars and hour nationally. While that’s an attractive proposal, it’s seems to be ham-handed and short sighted. After all, both wages and cost-of-living expenses differ wildly by region. Instead, how about increasing unionization? Let the workers at each company collectively bargain what their compensation will be.

And, as Yglesias also points out, the new boards of directors Warren imagines is hardly a radical proposal. What Warren is describing is called codetermination, and it’s common throughout Europe. In Denmark, any company with 35 workers has to include workers on its board. In Germany, half of the board can be workers, depending on the size of the company. Maybe there are good reasons to question whether codetermination would work here. But it’s worth studying. In short, Warren has made a proposal that is the norm in many other prosperous countries internationally, which she thinks we should try here. That’s hardly ‘batty.’

But I’m not sure this is necessarily about a Senate bill that, at least for now, will never so much as come to a Senate vote. I think it’s about 2020. I think Elizabeth Warren is going to run for President. I think this bill is her first major campaign proposal. And I think Williamson is preemptively trying to label her. Suggest she’s an extremist, suggest that her proposals are extreme and socialistic and untrustworthy. Suggest that she’s too batty to be a good President.

That’s all normal political positioning and a certain amount of rhetorical overkill is surely not unknown in major party politics. I like Elizabeth Warren a lot. I think she’s probably going to compete effectively for the Party nomination, along with Kamala Harris, Kristen Gillibrand, Corey Booker, a few others. But I like this proposal. I like the inclusion of labor in board decisions. I like requiring boards to include perspectives in addition to those of shareholders. I like codetermination. And I like a major party candidate taking a imaginative and creative solution to an important issue to launch her campaign. Team Yglesias all the way.