Elizabeth Warren’s Bill Is for Everyone Who Is Tired of the Rich Getting Richer

Elizabeth Warren, a person who is definitely not running for president in 2020, has authored an op-ed in The Wall Street Journal entitled "Corporations Shouldn't Be Accountable Only to Shareholders." It is the sort of thesis statement that qualifies as "radical" and "aspirational" in a country in which the wealthiest 10 percent own nearly 85 percent of domestically-owned stock shares, but is, by any objective measure, a reasonable assertion that gets squeezed out of mainstream political discourse by the aforementioned wealthiest 10 percent of Americans, all of whom have a vested interest in convincing you that an economic model that has made them fabulously rich is, in fact, actually good for everyone.

Warren's piece is a companion to the Accountable Capitalism Act, which she introduced in the Senate on Wednesday. As she explains, the American brand of capitalism is premised on the rule that corporate executives are custodians who are responsible solely to investors. This means that the only relevant question in the corporate decision-making process is whether a given course of action is likely to deliver a return on investment. Other considerations—such as, for example, whether an alternative will eliminate jobs, or hasten the destruction of the planet, or do anything else that is unrelated to profits but is very, very relevant to the millions and billions of people whose lives are affected by what corporations do—are, legally speaking, literally irrelevant. Executives who foolishly stray outside the scope of this mandate can face termination, lawsuits, or both.

The results are as grim as you'd intuit: What American corporations do today is give money to stockholders, because that is how executives keep their jobs and earn their incentive-based pay. In the ten-year period between 2007 and 2016, Warren says, large companies have dedicated 93 percent of earnings to shareholders, and since 1985, they have extracted some $7 trillion from the U.S. economy. It is not a coincidence that the most common business headlines over the past few decades are ones that report massive layoffs, or shifts to lower-cost production facilities overseas, or bare-knuckle union-squashing campaigns, or the ruthless elimination of pension plans and other benefits: The people in charge are rewarded for delivering value to rich people. Once they've stripped the car for parts, they have no choice but to start hacking into the chassis and selling it off as scrap.

Watch:

How Well Do You Really Know the Electoral College?

This is all the product of an affirmative policy choice, and her bill has the audacity to present a different way forward. It would require the largest domestic corporations to obtain a federal charter that obligates boards to consider the interests of "all major corporate stakeholders." It would place additional restrictions on political expenditures, and require that at least 40 percent of board seats be filled by individuals chosen by employees. Federal charters would supersede conflicting directives in your standard Delaware-issued charters, creating for the very first time a legal duty of corporate executives to give a shit about not only the kajillionaires who own shares of the company, but also about regular people who are responsible for making the company go. GROUND-BREAKING STUFF, I know.

This is not to suggest that Warren's bill is some half-measure solution, or to downplay its expected impact. If enacted into law, it would upend the American economy as we know it. Vox estimates that the bill would cause trillions of dollars to vanish into thin air, which is always the point in Paul Ryan's nightmares at which he wakes up screaming and drenched in sweat.

The point, instead, is that the American economy as we know it is stupid, and the fealty that most politicians and all corporations show to it is driven by greed, fear, or some combination thereof. Nearly all of the value this bill would extinguish is held by hilariously rich people, for whom the reductions in their respective investment portfolios might require them to, like, sell one of their several beachfront compounds. The proposal is "bold" only because we have grown accustomed to a system that is cruel to almost everyone, but that nonetheless protects itself from reformers by screaming that every tiny incursion on laissez-faire capitalism would constitute an irreversible leap into the communist abyss. Reserving a minority of board seats for employee-elected representatives is not a bloodless coup. It is an acknowledgement that the status quo of reserving zero board seats for employee-elected representatives is no longer tenable.

Zero, incidentally, is also the Accountable Capitalism Act's chance of becoming law in the next six months. Even if Democrats were to somehow take control of the House and earn a filibuster-proof supermajority in the Senate in November—a sequence of events that is a Paperclip Twitter pipe dream—the bill is still probably too ambitious for the party's centrist types to support.

Again, though, this reluctance is a function of the constituency to which most sitting legislators feel most responsible: wealthy donors who fund reelection campaigns. As Vox notes, recent polling data indicates that among voters—even those who who live in red states and congressional districts, and even those who lean Republican—proposals to transfer wealth and power from shareholders to employees are very popular. Elizabeth Warren isn't really trying to persuade her colleagues on Capitol Hill that her ideas are good. Her colleagues on Capitol Hill aren't the ones who decide presidential elections.