This proposal would effectively make the federal government the Executive Chairman of a board. It's too radical and won't go anywhere, even with Democrats. It reads like establishing progressive bona fides.
No, it would make the federal government the public chartering authority of large corps, which was a role states have had and used to take more seriously than they do now.
> It's too radical and won't go anywhere, even with Democrats
It's true that the neoliberal wing of the party that has been dominant since the early 1990s won't like to much, but the neoliberal wing recently has seen a number of incumbent office holders go down to primary challengers from the progressive wing. The neoliberal wing’s support in the Democratic electorate isn't nearly as strong as their current strength in office would suggest, and some of them are no doubt starting to realize that.
> It reads like establishing progressive bona fides.
Whatever else it is, it's definitely part of both setting g the ground for platform debates and establishing personal position leading in to 2020.
What would make that Constitutional? It's not an enumerated power.
The prime minister of Lower Saxony is also part of the board. No share holder can vote more than 20% even if they own more. Only the prime minister can vote 20,2%
The entire system of corporate governance is designed to be honest in emissions tests? There are many goals in corporate governance, with integrity (if that's what the parent is referring to) being only one of them, and one failure at one company on one item (emissions testing) under one of the goals tells us nothing about the system's effectiveness.
The standard isn't perfection, of course, but performance relative to alternatives. Germany is known to be relatively corruption-free with excellent corporate governance. But are there better systems you can suggest? Ways to improve it?
Finally, if by productivity you mean income, I think it raises other issues: Productivity for who? It would be expected that governance models which favor shareholders generate more benefits for shareholders, and those which favor workers or other stakeholders would generate more benefits for them. It's circular to say: 1) the definition of productivity is shareholder income, 2) systems that favor shareholders are therefore more productive.
Japan is actually exceptionally not productive. The Japanese people have a reputation for industriousness, but their businesses are actually managed quite poorly. You can see this in their GDP (per capita) growth. Let's look at some plots:
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end=2017...
These are all the countries we're talking about. Japan's GDP has been flat for a couple of decades now. Since the mid-90s, when they misinterpreted their credit expansion as evidence of their success and over-leveraged themselves buying foreign assets they couldn't afford. Germany has been more responsible, but you can see quite clearly that their productivity growth has been spiky, unstable, and plateauing for the last few years. Yes, overall their GDP per capita is quite high, as is Japan's, but I would attribute that more to a cultural bent towards work ethic and education, to generate consistent growth takes innovation, and innovation requires more than an educated populace and work ethic. It requires a friendly regulatory environment and an incentive structure that rewards people for innovating.
On the other hand, look at the US and China. Those are almost impossibly smooth curves. Ya, China is still much lower in absolute terms, but their growth is steady and substantial (notably, since the introduction of capitalist reforms). China is still very much a mixed economy, but you have to look at what they regulate, and how. The Chinese government doesn't regulate their labor market very much, and they certainly don't attempt to impose any sort of co-determination with workers. They want Chinese companies to align themselves with the interest of China as a country (which generally means censorship, and sometimes arbitrarily telling them to stay out of or get into certain markets). But they don't try to tip the scales in favor of labor over capital, at least not in terms of decision making about the businesses themselves.
Now, this is all a fine narrative i've constructed, but it's really quite difficult to prove something like this. There's lots of confounding variables, and lots of stuff going on. China and the US both have much larger populations, for instance. China does have some labor regulations that I would consider draconian and a drag on productivity (you have to give 30 days of notice to fire someone, you can only fire people for certain legally specified reasons, and you have to pay severance). But in my view at least, that's a substantially smaller drag than something like work councils, but it's important to state that it is really hard to prove these things.
A possibly better measure of productivity is something called 'Total Factor Productivity'. Which sort of says: take the stuff your country produced, subtract the stuff it bought and the difference is your total factor productivity, i.e. how much value is your labor force adding to stuff. Here are the plots for the countries in question:
https://fred.stlouisfed.org/graph/?g=lbGq
In this chart, actually China isn't even growing. Only the US is. This might be due to weakness of their currency, but i'm not sure. It's complicated.
In summary, I think growth is super important, it really does lift people out of poverty, and I think these sorts of regulations will stifle it. When people look at say, Jeff Bezos being worth 160 billion, they think: How is that fair? We should take some of that money and give it to the poor and needy. But most of these attempts to do that aren't going to end up taking Bezos's money and giving it to anyone. They're just going to delete it from the world. The operation isn't a move, it's an erase.
Again, this statement assumes the conclusion of the debate. A drag on whom? You assume anything that costs shareholders is a drag, but the question we are discussing is just that: how important are the shareholders vis a vis workers and other stakeholders? (Also, shareholders don't live on an island - if society around them doesn't improve it will hurt their company too.)
In an economic sense, aggregate output is a poor measure of individual welfare. If you put Bezos and 9 people without homes in a room, the per capita income and wealth would be in the billions, but that does little good for the 9 people. The important economic numbers are individuals'; that's why inequality or distribution measures matter.
> When people look at say, Jeff Bezos being worth 160 billion, they think: How is that fair? We should take some of that money and give it to the poor and needy.
I don't hear anyone saying that. What they say is that conditions (laws, etc.) that result in massive benefits to only a tiny number of powerful people are bad conditions, and that we should change those laws, etc. so that more people benefit. They also say, we should invest more in the future and in the country as a whole, including in education and healthcare, and that will benefit everyone - rather than that tiny number of people putting more wealth (and power) in their pockets.
> Japan is actually exceptionally not productive
> [Japan's] GDP per capita is quite high
> I would attribute that more to a cultural bent ...
GDP per capita is usually the definition of productivity, output per input. Japan's productivity remains exceptional, even though it's growing slowly. We could discuss cultural bents, but we really don't know. We do know that they are exceptionally productive, at a rate over 400% of China's productivity, and Germany is even more productive, as are Northern European countries that, generally speaking, tilt even further from shareholder capitalism.
A drag on productivity. We're talking about productivity.
> In an economic sense, aggregate output is a poor measure of individual welfare. If you put Bezos and 9 people without homes in a room, the per capita income and wealth would be in the billions
Sure, but that's not the point of measuring productivity. The argument i'm making has two steps:
1. Productivity growth is reduced via these policies. I think the data i've provided offers at least some evidence for that.
2. When you reduce productivity growth, you harm everyone, in the medium to long term. Yes, if you take all the money and redistribute it equally today, more people will be better off than they were. You will increase the utility points of the universe. For today. But in 20 years? The society that didn't redistribute all the wealth will be better off.
> I don't hear anyone saying that. What they say is that conditions (laws, etc.) that result in massive benefits to only a tiny number of powerful people are bad conditions, and that we should change those laws, etc. so that more people benefit.
Those are equivalent statements, except that the version you're suggesting is just a bit worse for everyone than actually just taking his money and redistributing it. The policies you're proposing will actually stunt growth, long term. Stunting growth long term harms everyone, for the rest of time.
> GDP per capita is usually the definition of productivity, output per input. Japan's productivity remains exceptional, even though it's growing slowly
Ya, but it's growth that creates progress. Improving productivity is how we lifted billions of people out of poverty over the last century. We didn't do it by redistributing wealth. We didn't do it by slowing down growth. We did it by making a pie so big that even if you only have a tiny slice, you're still doing pretty well. And the bigger the pie gets, the smaller the slice you'll need to have a very comfortable life. This is the promise of capitalism.
Think about all the things that used to be the purview of the rich alone. Transportation, safety, healthcare, clean food, clean water, shelter, banking, access to information and education. All of that is the result of compound economic growth caused and created by capitalism.
> We do know that they are exceptionally productive, at a rate over 400% of China's productivity, and Germany is even more productive, as are Northern European countries that, generally speaking, tilt even further from shareholder capitalism.
Again, growth is the only thing that matters. If you want to predict civil unrest, social problems, revolutions and unhappiness generally, you look at the derivative of productivity, not productivity itself.
I think (and I may be wrong) you are assuming that "captialism" == the rules of the last 30ish years, that they are somehow optimal for productivity, and that therefore any change to them must yield something suboptimal. But they are just some options among very many (including the options before Reagan) and much of the U.S. economy isn't technically 'capitalism' anyway.
> We did it by making a pie so big that even if you only have a tiny slice
That's not especially accurate; income distribution inequality was much lower for most of U.S. history than it is today. Also, if you look at the actual history, the U.S. was much more highly regulated, had much higher tax rates, and provided more benefits to its citizens (such as better education) during the period of its highest growth, roughly the 50s and 60s. The U.S. constantly expanded services to its citizens throughout the 20th century.
I'm defining capitalism as essentially private property rights + contract enforcement. I'm not a libertarian absolutist, I think there's room for quite a few regulations. But i'm, in general, skeptical of them by default. I think that externality pricing (e.g. if you damage public property such as the environment, you ought to pay at least enough to fix it) is extremely important, and I think that the way 'natural property' (such as land) has been distributed is highly unequitable, and we'd be much better off with a [Land Value Tax](https://en.wikipedia.org/wiki/Land_value_tax) to replace most of the forms of taxation that we have now as a way of at least partially offsetting that inequitability, while maintaining ideal economic efficiency.
I'm also a believer in a strong social safety net, but one designed from an economic perspective, to minimize efficiency loss. I'm no expert, but I think it ought to have essentially two components: raise the minimum standard of living (via either a universal basic income, or a government jobs guarantee) and some form of "rare high cost variance smoothing insurance" (mostly thinking of health here, but other things too, potentially). That is, health insurance that pays only for extreme (cost-wise) events. Healthcare is a complicated issue though due to the fact that incentives get weird and misaligned with cost reduction in various places (it may be worthwhile to make checkups free, because it will reduce the probability of say, cancer progressing to a later stage where care will be more expensive, but if people pay for it themselves, they won't go as often, and it'll end up costing society more). So, I accept that there are quite good arguments for fully socialized healthcare, but I think there are also strong arguments on the other side, though they usually aren't very well articulated in the common media.
> That's not especially accurate; income distribution inequality was much lower for most of U.S. history than it is today. Also, if you look at the actual history, the U.S. was much more highly regulated, had much higher tax rates, and provided more benefits to its citizens (such as better education) during the period of its highest growth, roughly the 50s and 60s. The U.S. constantly expanded services to its citizens throughout the 20th century.
I'm not sure how that conflicts with the statement of mine that you quoted. We absolutely achieved what we have today by growing the economy. You are right that we also provided many social services. And i'm all for that. I'm not really sure why people focus so much on inequality. Inequality can increase simply because the top goes up. Does it make you worse off if someone else is richer? When Jeff Bezos' fortune increases by 10 billion, are you and I poorer? I suppose in some emotional sense, maybe, but that doesn't really seem relevant to policy. I see no problem with inequality, per se. It'd be easy to eliminate inequality: kill the rich and burn their money. But would anyone be better off for it?
> I think there are also strong arguments on the other side, though they usually aren't very well articulated in the common media.
I'm a little surprised to read that! The arguments for the other side are not only well articulated, they have won the day for generations.
> I'm not really sure why people focus so much on inequality. Inequality can increase simply because the top goes up. Does it make you worse off if someone else is richer?
It's not that someone else is richer (a common false stereotype spread by people on the right about people on the left, that they are crazy people who hate the rich and want to make everyone poor). The problem is that a great number of people are not benefiting, and if they aren't benefiting then what is the point? It also doesn't make them better off that Bezos is richer.
In the end, the goal is helping individuals, not aggregate money in the economy. The latter tends to help the former, but not without careful policy.
Ah, yes, you're right. This is the crux of our disagreement. So, I believe in the strong social safety net for two reasons:
1. It is fundamentally ethical to raise the minimum standard of living.
2. It also allows us to remove the pseudo-safety nets from corporate governance. I want to give people a UBI so that they don't have to work, and then eliminate the minimum wage. If Amazon wants to pay people $2/hour to stock shelves and not give them bathroom breaks, that's great. If those people have meaningful options, then they're free to make that choice for themselves, and either nobody will work for them, or if people do, they truly will be ok with that arrangement.
I want to empower workers by giving them options, rather than by refereeing companies. The sort of utopian vision that I have is one where everyone receives cash payments such that they can live decently without working, and has some form of variance smoothing for e.g. healthcare, so that they are not tethered to their jobs in any way. Then we'd have a truly competitive market in labor, where companies really compete to keep people, because people have meaningful options.
I think that kind of economy would be insanely productive. It'd be easy for someone to quit their job and start their own business, because there'd be very little risk to doing so. There'd be less friction in starting and operating a business, because it'd require less government oversight.
> It's not that someone else is richer (a common false stereotype spread by people on the right about people on the left, that they are crazy people who hate the rich and want to make everyone poor). The problem is that a great number of people are not benefiting, and if they aren't benefiting then what is the point? It also doesn't make them better off that Bezos is richer.
Ya, so I think that gets to it. It's not about inequality of state it's about inequality of growth. I would prefer to let Bezos get rich by whatever extreme form of capitalism he wants, and then tax him to pay for a safety net.
In other words: Bezos is really good at making money. So let's let him do it. Giving workers input into that process is just going to make him worse at it. He'll make less money. Let's let him make all the money, and then find a way to share in the profits ex-post.
That's very interesting. Denmark, IIRC, does or recently did have a similar political deal between employers and employees: Low restrictions on the labor market in return for high unemployment insurance. The effects were similar to what you describe: Employees with more freedom, not being tied to jobs, able to take risks, and a much more liquid labor market. (If you're interested, I think the article was in Foreign Affairs maybe five years ago, but no promises.)
I've always liked that concept but didn't think of taking it to the extent that you're suggesting. I'd still put some limits on it, but that's a very interesting idea. Thanks.
I'll add that I'd define the safety net as providing food, shelter, healthcare, and all the education they can make use of (with something like a GPA minimum to prevent waste of that resource). At this point in history, with the incredible wealth of advanced economies, nobody should face shortages of those things.
Good talking to you.
How? There is nothing in the proposal that puts a government entity on the board. Corporations are already subject to the law and regulations, of course, so changing rules doesn't effectively change the role of government.
And, I guarantee, the Office of United States Corporations will be able to change the corporation's charter and direction via guidance, regulation, and oversight without the board's assent (or consent).
"Executive Chairman" is just the closest role I could come up with, but it's more like dictator or decider. Its "vote" is the only one that matters. (I'm sure there'll be some sort of administrative law court with the DoC that'll serve as appeal but it's got the same problems that all ALCs face.)
> I guarantee, the Office of United States Corporations will be able to change the corporation's charter and direction via guidance, regulation, and oversight without the board's assent (or consent).
Could you provide a substantial basis for this prediction?
If it already has that authority, then what is this law that Warren is proposing? My understanding is that it's a whole new sort of authority. Although there is a pending law in California that gives it the power to regulate board constitution, government is not currently able to do what the act allows.
Or are you saying that there are laws that govern corporations therefore the government can do anything arbitrarily? If so, that's not really how things work.
> Could you provide a substantial basis for this prediction?
I suspect that I couldn't offer anything that you would accept. "General public benefit" is the one that most obviously suggests future malleability à la the "general welfare" clause of the Constitution.
To be clear, absence of evidence isn't evidence of absence, but I'm just looking for what I can learn. If someone can't cite chapter and verse on HN, it doesn't make their point wrong, just temporarily inconclusive.
> If it already has that authority, then what is this law that Warren is proposing?
I'm not sure what you mean. Are you saying that government does not have authority to regulate corporate behavior? My point is that they obviously do, and that a change in the rules is not a change in the fundamental power.
Okay, I guess I've been burned in too many discussions by disingenuous people so I was reading in a motive that wasn't there.
For a great example, think of the broadcast licenses and the FCC. Initially, they were just registrations to allocate spectrum. Over time, policies were put in place like the Fairness Doctrine, which added actual content requirements; diversity ownership; or diffusion of ownership requirements. This was all done through the renewal process, which is probably the mechanism by which the rechartering would occur.
> I'm not sure what you mean. Are you saying that government does not have authority to regulate corporate behavior? My point is that they obviously do, and that a change in the rules is not a change in the fundamental power.
The American government does not have the authority to regulate corporate behavior in the manner that Warren is proposing. That is why she is proposing this law.
You're saying that government has this power, which is true because "government" can do anything to anyone anytime. The twentieth century has demonstrated the limitlessness of government power.
But that's an equivocation. We're discussing the American government, which cannot do anything to anyone anytime.