Like an airline peanuts joke, what’s the deal with Democrats and socialism these days? Ostensibly, the days of Reagan Democrats and civil libertarians are long gone. The time has arrived when the Democrats adopt the “socialism or bust” mantra and progressive names like Senator Elizabeth Warren (D-MA), Senator Kamala Harris (D-CA), and political upstart Alexandria Ocasio-Cortez become the faces of the party. Should they eventually attain the keys to power, this can only spell real socialism for the rest of the country, a frightening prospect.
Writing in The Wall Street Journal, Senator Warren, who is the first Native American to be elected to the Senate (wait, isn’t she?), unveiled new legislation called the “Accountable Capitalism Act.” The bill would make billion-dollar corporations adhere to a federal charter that mandates these entities to follow federal government requirements.
According to Warren, corporations “have ignored the interests of all but a tiny slice of Americans,” and now it is up to the state to ensure the Amazons and the Walmarts of the world start focusing on everyone else, not just shareholders.
How does the potential 2020 presidential contender aim to get big business to “answer to employees and other stakeholders”? The only way a socialist knows how: more government.
Under her bill, the federal charter would require company directors to consider the interest of employees and the community where the company is situated. Warren further demands that 40% of a corporation’s directors be chosen by employees. Here is the worst part, one that derives from emotion and not logic: the bill would institute statutory restrictions on how executives are compensated.
She told CNBC:
“Let’s change the compensation structure for the CEOs to say that the CEOs will not be permitted to juice the [stock] price, and then once they juice the price, make a quick sale, make a bazillion dollars, and keep emphasizing the incentives.”
CEO pay has been something Warren, and other progressives, have griped over for years. In March 2018, Warren disapproved of Wells Fargo CEO and president Tim Sloan receiving a 36% pay raise from the board of directors. Despite this private decision having nothing to do with her or the government, the senator expressed her disapproval. The left has expressed feigned outrage over executive compensation, noting the gap in pay between some CEOs and workers, but if you take the 250,000 CEOs nationwide, who earn about $200,000 a year, and compare them with workers, then the gap is tiny.
So, what’s the problem with Warren’s plan?
Crony Capitalism and Big Government
Let’s say, for argument’s sake, that Warren has good but misguided intentions with her initiative – we all know where good intentions lead us to. The fallout of her bill will only enable crony capitalism and grow the size of the state because that’s what regulation does.
Regulation begets regulation, and government begets government.
Warren’s suggestion will need to create new rules and those rules will need to be enforced by another bureaucratic monstrosity like the Consumer Financial Protection Bureau (CFPB). Like any other regulation, they will be long, intricate, and expensive. Meanwhile, with more red tape, large corporations that are thinking about moving their operations to the U.S. might reconsider, which means no jobs, no community growth, and no opportunities.
The corporations that want to curtail the system will use their lobbying tools and influence in Washington to avoid the federal charter or receive some sort of exemption. This means that some corporations will bear the brunt of civil servants.
Rather than facilitate productivity in Corporate America, such as slashing taxes and removing burdensome red tape, Warren wants to take the easy way out to gain some political capital. Warren also wants to construct an environment that she, should she become president in 2020 or 2024, will control.
Remember, that’s what socialists yearn for: Power.
Interestingly enough, the crony capitalist policy prescriptions she recommends will breed something that the left thinks President Donald Trump is guilty of engaging in: Fascism.
In addition to that, the National Review’s Kevin Williamson had another apt description for the idea: “It is unconstitutional, unethical, immoral, irresponsible, and — not to put too fine a point on it — utterly bonkers.”
Why Hate Shareholders?
For years, the left has vilified shareholders. Shareholders are typically viewed as greedy old white men who hold shares in a large corporation or small-cap firm and receive quarterly dividends without getting their hands dirty.
While a considerable portion of shareholders in America today are of the distinguished gray variety, many investors, whether they own 10 or 1,000, are average folk who want their money to work for them.
The retired widow who invested in Acme International for 50 years receiving a quarterly dividend payment of $1,500 to cover her monthly living expenses. The 30-year-old father of three who will use his dividend one day to help put his kids through college. The poor boy from The Bronx who invested his earnings from his summer jobs into a stock that he bets will boost its dividend as the share price climbs 23% in a 12-month timespan. And, yes, those teachers’ pensions.
Through her $6 million retirement funds, Warren is an indirect shareholder, too. These indexed mutual funds invest in hundreds of different companies, so if she thinks that even one of these companies is not being socially responsible, then she should sell her stake and donate it to the Treasury or a charity.
Simply put: Shareholders are diverse, and they are not doing anything morally wrong. Likewise, corporations are not committing a cardinal sin by appeasing investors.
Elizabeth Warren is a Busybody
We have all had the unfortunate occasion to know or even reside next to a busybody. Typically, a lonely senior with too much time on her hands, she will inform the local authorities of an unlicensed lemonade stand being operated by a bunch of kids. Or, she will contact city hall because her neighbor hasn’t mowed the lawn all summer. Or, she will sign a petition to prohibit street hockey in her neighborhood.
This is what Senator Warren is: A busybody – and nobody likes a busybody.
In the end, perhaps that’s what politicians really are. They are a bunch of busybodies who always need something to do to justify their existence, so they will seek out a supposed problem, apply the wrong remedy, and then breed resentment and disdain among the public because people are banned from having fun and leading their lives. Senator Warren, just leave us alone, will you?