Bill Knight
column for Sept. 27, 28 or 29, 2018
After November’s election, if the
GOP retains control of the U.S. Senate, a ground-breaking proposal from U.S.
Sen. Elizabeth Warren (D-Mass.) will probably be killed. But if voters elect a
Democratic majority, the nation could get "a new New Deal."
The original New Deal helped bring
about Social Security and the National Labor Relations Act, the former
providing for old-age assistance and the latter letting workers unionize
without fear of losing their jobs. Together, they've helped some 85 percent of
seniors (railroad workers, immigrants, and some government employees don’t
receive Social Security benefits), and permitted about one-third of U.S.
workers to join unions by the 1950s. Contributing to common prosperity, they
were keys to developing the middle class.
The health and stability of the
middle and working classes have eroded in recent decades, even as the wealth
and annual incomes of corporate CEOs and the 1% have skyrocketed.
“Before ‘shareholder value
maximization’ ideology took hold, wages and productivity grew at roughly the
same rate,” Warren said. “But since the early 1980s, real wages have stagnated
even as productivity has continued to rise. Workers aren’t getting what they’ve
earned.”
So last month she took a step toward
restoring the economic standing of working and middle-class families by
introducing the Accountable Capitalism Act, which would change U.S.
corporations from entities that focus almost exclusively on maximizing
shareholder value to enterprises with the mission to benefit all corporate
stakeholders, from stockholders and workers to vendors, customers and
communities.
Its main reforms would move big
corporations' charters from states to the federal level, where charters could
be revoked; prohibit political expenditures by corporations without a
75-percent approval by boards of directors and shareholders; and require
corporations to have 40 percent of its boards elected by employees.
That last component mimics the
“co-determination” business philosophy in Germany, where companies’ boards must
be made up of half owner representatives and half worker representatives.
“There’s a fundamental problem with
our economy,” Warren said. “For decades, American workers have helped create
record corporate profits but have seen their wages hardly budge. To fix this
problem we need to end the harmful corporate obsession with maximizing
shareholder returns at all costs, which has sucked trillions of dollars away
from workers and necessary long-term investments.”
Later, writing in the Wall Street
Journal, Warren said, “Because the wealthiest 10 percent of U.S. households own
84 percent of American-held shares, the obsession with maximizing shareholder
returns effectively means America’s biggest companies have dedicated themselves
to making the rich even richer. For the past 30 years we have put the American
stamp of approval on giant corporations, even as they have ignored the
interests of all but a tiny slice of Americans. We should insist on a new deal.
“Workers aren’t getting what they’ve
earned.”
In the past, there was a bipartisan
consensus that corporations had responsibilities to workers and communities as
well as stockholders. Today, shareholders extract more funds from corporations
than the businesses devote either to investment in their operations or pay
increases for workers, according to economist William Lazonick of the
University of Massachusetts/Lowell.
There is optimism.
Harold Meyerson, editor of The
American Prospect, said, “If and when this becomes a battle for public support,
it’s a fight she can win. Even as many working-class Trump supporters voted
against ‘Right To Work’ in Missouri, many working-class Trump supporters all
across the country would support giving workers more say over corporate
decisions.”
And journalist Yves Smith, who
worked in finance for more than 30 years, said, “Even if Warren’s bill merely
winds up pressuring corporate executives and fomenting debate on ‘what are
corporations for and whose interest should they serve?’ that would be a very
salutary development.
“Forcing them to be accountable to
the communities in which they live is long overdue,” she continued. “And
contrary to what lobbyists will lead you to believe, forcing them out of their
tunnel-vision, local maximum focus will be good for investors too.”