Wednesday, August 22, 2018

Accountable Capitalism Act

Presidential hopeful Senator Elizabeth Warren has offered the Accountable Capitalism Act. She will likely continue using it as a campaign plank as long as she feels that a majority of voters view it as touchy-feely good. The Act’s major features are shown in Wikipedia and the WSJ.

Firstly, note the misleading, presumptuous headline in Warren’s WSJ op-ed. A corporation -- according to her – is not at all accountable to customers, employees, suppliers, bondholders, communities where the business is located, or governments. While true in a very narrow sense – they don’t vote on the corporate board or major changes like shareholders do – it is mostly blatantly false. The corporation is very much accountable to the others in other ways.

Others have commented on it, mostly unfavorable. The Tracinski Letter compares what the Act would create to neo-feudalism. Replace the feudal king and his lords with a bunch of politicians and bureaucrats, and the resulting structure is similar.

At CNBC the Act is described as more crony capitalism, channeling Karl Marx, and a “slippery slope” towards more government intervention. It’s also pointed out that contra Warren’s title state incorporation laws in many states already contain propositions to recognize all stakeholders, not just shareholders.

NationalReview portrays the Act as Warren’s plan to nationalize everything. That is hyperbole, but Warren’s greed and lust for power is not.

The most naive article I have seen so far is at Vox. The author defends the Act, attacking the National Review article as unhinged and seizes on the National Review correspondent’s charge of nationalization. The author’s assertion that Warren isn’t proposing nationalizing any business is narrowly true but mostly blatantly false. Nationalization means government taking ownership and control. Warren doesn’t propose government ownership, but she does propose far more political control, which the author “sweeps under the rug” by ignoring it.

Moving on to my own comments, what more exactly does Warren propose? Who exactly is she proposing to represent consumers, e.g. the millions of people who shop at Walmart, or buy from Amazon and Apple, or use Google and Facebook? Who exactly is she proposing to represent them, the community, and the environment, if not a horde of politicians, bureaucrats or political appointees?

She desires to reduce the political power and influence of corporations, but shows no such desire regarding unions. If requiring 75% of shareholders and directors approve any political spending by a corporation, then why not require 75% of union members approve any political spending by a union?

Of course, rarely are politicians like Warren frank about how much power they want. It’s a trial balloon, and her proposal is only a first step. Later, when what’s put in place will have failed to produce the desired result, they will advocate even more power-grabbing.

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