> The US equities market value is already highly inflated. It will be coming down regardless over the next decade.
I'll take the other side of that bet if you are saying that the market will be worth less in 10 years time than it is now.
If on the other hand you are saying the market will go down sometime in the next 10 years then, we'll that's not really a statement worth making:) That's like saying I predict that it will be colder than it is today sometime in the next 10 years.
Based on current P/E ratios, the higher chances of an inverted yield curve, companies going private or not going public, and market analysis from folks like Vanguard about future returns being muted, my opinion is that most equities returns have been pulled forward, risk-adjusted returns will be comparable to bonds, and that there will both be a market pullback in the foreseeable future with total market value moving roughly sideways from today's highs for quite a while.
As a point of fact, the yield curve is not inverted (nor has it been for some time). Furthermore, forward PE ratios show returns far in excess of current government bond yields.
Already do so using LEAPS to balance out my tech and commodity investments (and anything else I feel is going to take a nose dive when the economy slows down). Feel free to take the other side of the trade in the marketplace.
Stocks are valued primarily on future earnings potential. This Act would significantly dilute the shareholder control by mandating 40% employee elected directors, and mandating they consider the interests of employees, customers, and communities in all decisions.
Imagine you have a factory in the Midwest hemorrhaging cash (or even just break even) but other profitable locations. Right now, you'd most likely shut it down and consolidate, move, or outsource that work.
Your ability to do so is impeded under this act, by employee elected directors and/or activist investors.
The result is less profit potential. Knowing that every company has to make these type of decisions (including benefits), their earning potential is reduced, and their valuations will tumble due to it.
I realize this is an unpopular opinion, but I don't necessarily view this as a bad thing in aggregate. The market's been doing great lately, and it's largely been on the backs of the working class for the benefit of people who've had the money to capitalize on it.
It's been over inflated for ages - if a shitty market is the cost for more equitable distributions of income and more humane workforce treatment, I'm game. I have the sneaking suspicion an arrangement that forces companies to focus on the long term well being of its workers (who, it's worth pointing out, don't want to deal with a job search, and such both want higher retention and for the company to not-fail) rather than short term stock price fluctuations will probably be for the better in the long run.
> cause large amounts of frivolous lawsuits
We already have that.
> She's announcing this merely to pad her resume before running in 2020. It doesn't have to be feasible, just needs to sound good.
I actually agree with this - It's definitely to grab headlines (which it did) and there's no way it's passing in the next 3 years. That said, this is pretty much straight from the Tea Party playbook, see: ACA repeals in 2012-2016. Oh well. And anyway, I'd be happy to finally have one president in the white house whose main goal isn't to cater to corporations - it's been literal generations, and looking at the current state of the general US economy and the world, not for the better.
Hah, its almost like the people who do the labor should be the ones who decide what to do with the surplus they produce, instead of people who inherit tons of wealth and choose to buy up ownership of businesses.
Elizabeth Warren has stated before that she is a capitalist. Which means that ownership of companies is held entirely by monied interests, never by workers.
This is a fantastic idea, and I can't see how anyone (other than the people who stand to lose directly) could oppose it.
All the same I know that they will. Consumers are anything but rational, and that is by design. The ultra-rich know well the value of hearts and minds, and that it's quite possible to spend money convincing (at least some) people of whatever you'd like them to believe.
Maybe it's just because I'm a pinko-European, but in the unlikely event of this succeeding, I think it could really be the start of the pendulum swinging in the right direction in global economics.
> [...] I can't see how anyone (other than the people who stand to lose directly) could oppose it.
And there you have it; the shareholders and CEO would stand to lose directly, they have a huge amount of money (and they're both national and international players; a foreign investor would give less of a shit about US workers), they're in politics (directly or paying for it), etc.
I hope this gets traction, but I'm cynical, and I'm confident the US is already an oligarchy in the pockets of those that made 7 trillion out of their 250 billion investment.
I hope we can have a civil HN discussion about this bill. I generally like Warren-style capitalism but am not sure yet what to think of this.
When an article (or comment) gets flagged, HN accounts with sufficient karma may have the opportunity to "vouch". I used that once for this article already.
This doesn't guarantee that the article will stay for long since there's an HN algo which tends to shuffle off pages with a lot of downvoting and flagging. (Which I think is a really nice feature, by the way. Thanks to the moderators for their good sense and hard work.)
ETA: And that also means that if you want to keep this discussion alive for a while, relentlessly downvoting posts which don't agree with your bent, even when civil and well-argued, is counterproductive. There are some great comments arguing against Warren right now that I hope will be rescued from the greys.
I'm a low-level manager/tech lead in a huge company and I personally think it's an awful idea. I believe this law would ultimately create people-pleasing executive leadership, moreso than they already are. I'm envisioning political campaigns at work with promises they don't keep when elected while still talking the talk.
Whenever I see posts or leftist commentary saying the stock market only benefits the ultra-rich and wealthy CEOs it shows a downright ignorant view of capital markets. Working class Americans have lots of skin in the game in the market through 401k's, retirement plans, pensions, traditional investments. The ideology that it's a rigged system for the rich to stay rich and oppress the middle and lower class is a load of nonsense.
Fifth paragraph (and nodesocket said "rich to stay rich", not just ultra-rich and ceos):
Because the wealthiest 10% of U.S. households own 84% 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.
That statement is pointing out the existence of a feedback loop in need of dampening. It's not saying the market needs to go away, or that it only benefits a minority.
To imply it's a cry that the game was designed to be rigged is a straw-man.
Got it, so you're one of those "nowhere does it state precisely what I've typed, so you're wrong. Ignore the statement that is essentially saying the same thing" literalists.
Edit: you've posted uncivilly elsewhere too, e.g. https://news.ycombinator.com/item?id=17766899. That's not allowed here, and we eventually ban accounts that do it. If you'd review the guidelines and post civilly and substantively only from now on, we'd appreciate it.
Fewer than half of Americans own any stock at all [1], including indirect holdings, like 401(k)s. So, while it may not be entirely "for the rich", most Americans have no stake in the stock market.
I would be interested to see how excluding lower class affects this percentage, only middle class and above. I suspect it would skew the percentage much higher.
I am a firm believer that the free and less regulated stock market and a smart and balanced portfolio is the best wealth creation tool Americans can tap into. The alternatives of savings accounts and CD's are laughably low yielding.
> I would be interested to see how excluding lower class affects this percentage, only middle class and above. I suspect it would skew the percentage much higher.
You say this like you think it somehow proves a point.
> I am a firm believer that the free and less regulated stock market and a smart and balanced portfolio is the best wealth creation tool Americans can tap into. The alternatives of savings accounts and CD's are laughably low yielding.
And I am a firm believer that most of these people do not have the resources or know-how to even begin doing this. Most are living paycheck to paycheck.
And I'm amused at the idea of loosening regulations on financial services industries ever has any effect other than a massive transfer of wealth from the lower classes to the wealthy.
> And I'm amused at the idea of loosening regulations on financial services industries ever has any effect other than a massive transfer of wealth from the lower classes to the wealthy.
Fair and that's the fundamental difference in our political ideology. I subscribe that the role of US government is not to transfer wealth or interfere with the free market. If I am in a room with another person and I have five dollars in my pocket and the other person has one dollar, am I suppose to give the other person two dollars to make everybody whole? The writer of this article and bill might think so.
> I subscribe that the role of US government is not to transfer wealth or interfere with the free market
That may not directly be its role, but if it isn't at -- least to some degree -- an outcome of the government's activity, then I think we're in trouble.
To a first approximation, wealth = power; and human nature being what it is, those who have wealth (and therefore power) will tend, in the absence of control/restraint from government, to use that wealth and power to gather more wealth and power for themselves, without regard for any impact (often negative) on those who have less.
Governments (in my opinion) have a responsibility to protect and help those who, for all kinds of reasons, do not have the wealth or power to adequately take care of themselves. That doesn't mean arbitrary handouts. But it does mean that a relatively larger share of centrally-managed resources should be directed towards helping those who need it most.
And so I'd expect one of the results of a well-run government to be a tendency to reverse some of the flow of wealth towards those who already have it.
Since wealth and power can be freely converted from one to the other, in order to maintain some semblance of a society where power is roughly equally distributed among the people, it is necessary to ensure that wealth is also roughly evenly shared among the people.
It takes very little sophistication or resources to set up automatic savings into an IRA, invested in index funds. We should be teaching this in High School, but we don't.
It does take a non-zero amount of money, though. Depending on your source, 49% [1], 76% [2], or 78% [3] [4] of Americans live paycheck-to-paycheck, implying that they have no savings available to be automated.
I've actually helped people out on welfare. One family had a big screen TV, everyone (even the kids) had cellphones, and so on.
Some people are poor, but some are just dumb. I wish I could fix poor, but I can't fix stupid. And there is a lot of stupid around.
I know many people who make a few hundred thousand dollars (in Texas, not silicon valley or NYC), and they live paycheck to paycheck. That's stupid, not poor.
So when I see stats like that (thank you for the links), I always wonder what the real number is - how many are poor, and how many are just stupid.
I often wonder how many of those same paycheck-to-paycheck Americans are driving leased cars, cars under 5 years old, smoking, own the latest smartphone, and/or are regularly eating/drinking out.
I get that there are people living genuinely frugally and still struggling. It may just be observational bias, but I suspect there are a lot more people struggling who are not choosing to live frugally and where that choice would help them quite a bit.
It used to be that you could do all those things, get married, have children, and still live a decent life and retire on a pension. The fact that we have to expect anyone to be perfect if they want to have savings when dedicating fully 1/2 or more of their waking hours to making someone else money is absurd.
Was it the case? Both grandfathers worked blue collar jobs (coal mining and steel milling). Obviously, they didn’t have smartphones, but they also drove cars (1 per household, often bought used, never leased) for a decade plus, didn’t have cable/Netflix, ate basically every meal at home/brown bagged lunch, grew some of their own food, made their own coffee at home, and lived in 900-1200 square feet without AC (including raising 5 kids in a 2 BR house in one case) to make ends meet.
Obviously, I didn’t study economics when I was 5, but this seemed to be the norm in that era and community and would be viewed as abnormally (perhaps unacceptably) frugal now.
To be clear, they did get married, have children, live a decent life, and retire on pensions, but they and their neighbors lived a lot more frugally than seems to be normal/accepted today.
Completely agree. Instead of complaining that it's a rigged system, empower students to learn about the power of compound interest, buying stocks, index funds, dividends, revinvestment plans. Instead academia is pushing outrage and that government should be the solution.
Obviously, excluding the lower or working class would increase the percentage, but that would further damage your claim that, "Working class Americans have lots of skin in the game." Whether or not the stock market and balanced portfolios are good wealth creation tools (I happen to believe they are too), most Americans do not take advantage of them, and therefore have no skin in the game.
It's unclear. The article specifies that the figure (from 2017) includes indirect ownership, so that probably also includes pensions that have stock holdings. Their cited government source (from 2016) reports a 51.9% figure, so it's probably somewhere around 1/2 of Americans, including retirement accounts.
That article distorts the picture. Gallup [0] has a nice survey that shows there was a big drop after the 2008 financial crises. I know people (including several millionaires) who sold out of all their stocks, and even today, won't touch the market - many of them compare it to Vegas and use the word "gambling" a lot.
Second, there are less than half of the number of public companies as there were 20 years ago [1]. So the investors are chasing a small group with a larger market capitalization. That's due to many reasons, but regulation is a big one (sarbanes-oxley, dodd-frank, etc).
Many people don't have the risk tolerance to be in the market, let alone own a single stock. What happens if that stock were Enron or Worldcom? That's a lot of risk.
> Working class Americans have lots of skin in the game in the market through 401k's, retirement plans, pensions, traditional investments.
No, they don't, this is a common misunderstanding. Including all 401ks, IRAs, directly-held stock, mutual funds, etc., the bottom 80% of Americans own less than 4% of all equities. The bottom 60% own 0.1% of all equities.[1]
I'm not convinced looking at overall percentage owernership is the right and accurate way to determine if working class Americans have skin in the game.
Of course the factory workers $30,000 in the market is going to be miniscule compared to the billionaire, but doesn't means it's not critical to the factory worker.
We were originally discussing who benefits from higher stock prices; the answer is overwhelmingly, by a huge, huge, margin, those benefits go to the top 10% of Americans by wealth.
The fact that a tiny portion of workers also own some stocks doesn't change that fact.
And the fact that $30k in a retirement account is critical to a factory worker, doesn't help your case much. That pittance will have been saved out of already-stagnant wages that have been kept down by corporate management in favor of executive pay and stock buybacks, and will be nearly worthless for retirement purposes no matter what the stock market does. All you've done is reiterate the all-too-common disaster scenario for the working class that comes from favoring shareholders over workers.
The workers' real skin in the game is their labor and the value they produce from it, which is increasingly being kept back from them. They can have everything to gain and nothing to lose by gaining mandatory representation on the board.
Your stat doesn't disprove that they "have skin in the game" at all.
First, your stat ignores pension plans. Second, the bottom 60% might only own 0.1% of all equities, but that might be 50% of their savings/pension plan. I'd call that "skin in the game".
What it proves is that if you look at a representative crowd of a 1,000 people who do have skin in the game, you will find 1 person who is working class.
That one worker? If stock prices go up he will end up perhaps 1 more month's worth of retirement savings. Meanwhile his wages are being held down and the value he creates with his labor is being spent on stock buybacks and executive pay, the benefits of which go overwhelmingly to the other 999 people.
And yes, the stat includes pension plans.
So sure, the one guy has skin in the game. His wages have been held down, and in exchange he gets a fistful of coupons that entitle him to a few bucks for every million given to capital owners.
Whenever I see someone use the word 'leftist' unironically in their opening sentence I just assume that what is coming next is a torrent of ideological rhetoric with nothing of substance to back it up.
It's usually not "leftist" anyway, it's just common sense. Workers should have some representation in their workplace since they DO ALL THE WORK. The business simply cannot exist without the workers.
Inequality declines as Union membership rises[1], aka worker representation.
Workers have a right to get paid for their work, but that’s pretty much it. They don’t have a right to influence company policies because they do not own it. Asking workers for their opinion is just politeness, but not something company necessarily has to do.
A monarch's subjects don't choose to become subjects and they typically can't leave. Workers can choose from many different employers, or become self employed.
So you support a dictatorship as long as it permits emigration? Not that monarchies actually had anything to do with that, serfdom was abolished in most places long before them.
Get rid of the workers and what do you have? A failed company. The workers are the most important part and without them the business cannot survive. The most important part of the business should have a say in the business.
You would need to replace the disgruntled opinionated workers with workers who were happy with their job. Its a tiny bit more effort but in the end the result would be the same
The discussion about this proposal will be interesting: The groups which call people "leftist" will for sure argue that the economy will be badly impacted by these changes, as they always argue with.
Germany in contrast has a rather staggering economical performance for being so "leftist", which reduces the power of the argument. Those groups will then have serious issues argumenting at all (which arguments of the same magnitude are left?).
84% of all stocks are owned by the 10% richest in America. It really does only benefit the already rich. It's ignorant to think people with 401k's or retirement plans are gaining any real money.
It's rigged for the rich because with more capital to invest you can lower your risk. Joe six pack with $50k to invest is going to be at a disadvantage against players with millions who can hedge their positions with options and diversify.
Completely false. You can get exposure to every stock in the world for like ~$80. You can buy options to hedge for as little as ~$1000(literally the same ones that billionaires would buy).
Joe six pack's biggest problem is their own ignorance.
If a poor person invests 10% of their money in the S&P500 no-load index fund, do they see different IRR than the billionaire who invests 10% of their money in the S&P500 no-load index fund?
No system has ever provided such high quality, low cost financial instruments with great liquidity and marginal trading costs accessible to anyone with a checking account.
The financial markets we have today are equitable and highly accessible. They are anything but rigged.
The fact that you can put together a sentence that says "if a poor person invests 10% of their money" betrays that you have no actual understanding of poor people economics.
I worded it that way specifically. Even if you have $10 in your pocket, you can take $1 and go invest it on Robinhood and see the same return as everyone else. That is actually pretty impressive.
Now, you have to have enough money to buy a full share of whatever company you want. So Amazon has a minimum buy-in of about $1,900. One good argument for stock splits is that it makes your stock more accessible.
I don’t know what you mean by “poor people economics” but it sounds like you think saving and investing is beyond their reach. I disagree and I think it betrays more about you than I.
There are certainly times when spending all (or even in excess of all) your annual income is a rational and smart decision. But no matter what your income level, it is always true that some years you must save money aside from paying down loans.
The market is irrelevant for a vanishingly small number of people. The market is ignored by a large percentage of people who could benefit greatly from it.
I’m well aware most people don’t have $500 in their bank account. I would argue that makes equitable market access more important.
From a reading only of the WSJ article (no additional research), I would be inclined to oppose it on Constitutional grounds, as a States' Rights issue. I see no standing that the federal government has to force all companies with $1BB in annual revenues to get a federal charter. (Feds have the power to regulate foreign/interstate commerce, so over $1BB in interstate/foreign revenue is a threshold with a chance at having Constitutional standing, though it's still a stretch from there to say the feds have the power to force specific corporate governance practices unrelated to commerce itself.)
I doubt this will go anywhere (I think it's another grandstanding issue for the Bernie-types), but if it does, I'd expect a challenge (with a reasonable chance of success) on Constitutional grounds (see Article 10).
1) As of the Great Depression (approximately), it's understood the Fed's interstate commerce regulatory authority extends to intrastate commerce, on the grounds that the economy of one state impacts the economy of adjacent states---i.e. if Idaho discounts potato sales from Idahoans to Idahoans, and as a result depresses the potato demand from the farms of neighboring states, the Federal government can intervene on what is a completely Idaho-internal policy. It is under this theory that the Fed prohibits certain drugs (even if the drugs were manufactured and sold completely in-state).
2) Given that corporations exist only as a legal construct, I'm pretty certain that the government has a great deal of lattitude in what it can compel corporations to do or refrain from doing. It's worth noting that the US law also treats corporations as people; however, it does so because of the law itself (1 U.S.C. §1); modifications to that law can alter the nature of corporations in US law.
Re 2: It's clear that some government has a great deal of latitude. The Constitutional question is whether the federal government has that latitude on a governance (not commerce) topic.
I'm inclined to agree with you, your point about constitutionality is well taken. I know we're getting into thorny political philosophy at this point, but I'd be inclined to support this bill, even if there is a good case to be made that it's unconstitutional. In my opinion, any purpose served by having a constitution is in the benefit of the people and the state, if the constitution proscribes something that would definitely benefit the state, then it is the constitution which is wrong.
Whether or not this would be ultimately beneficial, or the principle that the constitution is trying to protect here (don't interfere in the affairs of lawful citizens) is more important in the end are value judgements, and difficult ones at that. I don't doubt that if my circumstances were different I would be making an argument like yours.
> if the constitution proscribes something that would definitely benefit the state, then it is the constitution which is wrong.
We already have a process for dealing with this: amend the Constitution. But unless and until it gets amended, it is the supreme law of the land, and we can't just ignore it because we think something it currently proscribes would "benefit the state".
(I also have a problem with "benefit the state" as opposed to "benefit we the people". The state itself is established for the benefit of we the people; it is not a separate entity with separate interests apart from ours.)
> Feds have the power to regulate foreign/interstate commerce
Are there any companies with >$1bn annual revenue that do not do business outside the state that chartered them? If not, then it would seem this could fall under the 'power to regulate foreign/interstate commerce', no?
> it's still a stretch from there to say the feds have the power to force specific corporate governance practices unrelated to commerce itself
You must be joking. Supreme Court jurisprudence already says that Congress can regulate crops grown for an individual farmer's personal use as part of its power under the Commerce Clause (Wickard v. Filburn, 1942). Imposing corporate governance practices seems like small potatoes in comparison.
If I bought a share in a company fair and square, I bought that share came with a certain expectation of control. That share is my property. Giving control to people who haven't bought control fair and square is a taking of my property, and as a general heuristic, we should be extremely skeptical of taking people's property for some kind of ostensible good.
Would you support a bill forcing owners of large houses to set aside some of their space for the homeless? Would you give your squatter a vote equal to your own in matters of deciding how to arrange the furniture and paint the walls?
Well, rent-control kind of works like this. You are forced to continue renting out your property to the renter at the price they've been renting it for.
And rent control has been working great, hasn't it?
Rent control is a repulsive manipulation of the market that strangles necessary growth in the housing stock. It privileges a few undeserving people who lucked into rent controlled apartments over the interest of society at large.
There's no contradiction. My position is that society as a whole benefits when we allocate scarce resources to their most productive ends, and the system of ownership and profit optimization does just that. Adam Smith was right about the invisible hand.
I certainly think there is a contradiction. If you want to base your opinions on some grand theory that is on you. How to apply Adam Smith's theories in modern society is certainly up for debate, e.g:
This comment exemplifies a style of argumentation that's become very common. It doesn't address the central point. Instead, it reiterates the commentator's position while using FUD and misleading links to ideological blogs to create the false impression that well-established ideas are "up for debate". Climate deniers use the same schtick for the same reason.
The linked article is one of those tedious affairs that tries to deconstruct what Smith the man may have thought about contemporary mercantilist politics or something. It's not an indictment of Smith's ideas, which are timeless.
I am sick and tired of people today attempting to dismiss profound and influential ideas by pointing out that the people who formulated these ideas were complicated people.
Aren't the people prone to doing this supposed to believe in the "death of the author"?
You are the one using rhetoric like "taking of my property" and "repulsive manipulation", rhetorical questions, dictating that "there is no contradiction" and trying to bury the discussion by referring to larger theories and now even invoking climate deniers. If you don't add anything to the discussion then don't expect anything back.
If your resistance against something is motivated by a theory, then clearly what you are against exists in opposition to that theory. So by definition the theory, or at least its connection to what you are against, can't, or is very unlikely to, be well-established. At least not among the people acting against it. Which makes your argument faulty and the majority of this discussion meaningless.
I certainly think people have a greater expectation to control their living costs than they have to control companies. But that isn't even the issue.
The issue is that you say that stocks have an expectation of control regardless of justification. But then justify why there shouldn't be rent control with the same justification you were warning people against. You say your motivation for this is that, based on these theories, you agree with control over stocks, but not over rent. Which means that you are effectively saying that an expectation is only as good as its justification and not that an expectation shouldn't be affected by justifications. Leaving little practical argument left about why you can't move control away from stocks if there is a good enough justification.
Yeah, I'm never been a fan of rent control (and voted against San Mateo Measure Q), particularly its effects on market rates for newcomers.
However, recently I've been starting to realize that the market is already distorted by Prop 13, so perhaps rent control might simply even the playing field between renters and owners.
In my ideal world, Prop 13 wouldn't be a thing, and homeowners would be advocating for heavy housing development around them to keep property values low (and hence keep their tax bill from going up).
We already tax corporations. Taxation isn't surrending ownership control. It's very different, just like a property tax that funds a homeless shelter is very different from forcing someone to live with a squatter.
Slightly related, but when communists came to power in my Eastern-European country immediately after WW2 they nationalized most of the urban “big” houses and apartment-blocks. Most of the owners of those properties had to move out completely, but some of them still had the “opportunity” to still live inside a room of their now former property and the rest of the rooms were given as rentals to workers who had come mostly from the country-side. This situation lasted for 10-15 years until the regime built enough new apartment-blocks into which it moved those workers and their families.
"Society has the right to change the rules on you. The system belongs to all of us." is something the Bolshevik might have said to the Kulak as the latter was walking up the gallows.
That is not a very good argument, akin to " 'Salads are healthy' is something Hitler would say". And? Since when someone despicable uttering something invalidates what was said by contamination, taken so out of context?
My point is that arguing that "society has the right to change the rules" is not an argument that any particular rule change is a good idea. Many rule changes have been both brutal and catastrophic.
I don't think you have any idea what you're talking about. If a democracy can't repeal a law that's proven to be an error, you'll have quote a dysfunctional system.
Ex post facto (in the Constitution, at least) refers specifically passing a law making an action illegal and punishable after the fact. Actions can only be illegal according to the law in force at the time they were taken.
Yes. You are talking about taking people's property away with legal force because you don't like how they used it after they've agreed to buy it under different conditions.
> Would you support a bill forcing owners of large houses to set aside some of their space for the homeless?
I mean this is literally what property taxes are for!!! Sometimes ownership/control creates externalities that require removing some of that ownership/control for the benefit of society as a whole.
So are sales taxes, and income taxes are even worse than that. Which of those do you prefer, and for what reason beyond selfishness? Or are you one of those people who believe all taxes are bad, which is tantamount to saying all government is bad?
The corporate form is a special, ongoing, government granted privilege. You paid the issuer of that share, or a prior owner, for their interest, but part of the deal—the expectation you should have had—that it came with is that the associated privileges that go with the (essentially last place) claim on corporate assets at dissolution are subject to change by government.
Changes over time have made shareholders and management less accountable to the public interest generally as charter revocation for gross abuses has fallen into disuse, and have also shifted the balance between shareholders and management (who are, after all, employees.) Shifting the balance between shareholders and employees in a way which applies to the mass of employees rather than management as such is novel, perhaps (though labor law changes, while not specific to the corporate form of business, tend to do that, too), but isn't really different in any fundamental way from the kinds of changes to corporate power relations that have happened through legislative and judicial action throughout the whole period of existence of the corporate form.
Now, if you want to argue the specifics of this proposal, great, but arguing for an expectation-based entitlement for immutability of the privileges and power relations associated with corporate shareholding is, well, indefensible as a reasonable expectation.
> Would you support a bill forcing owners of large houses to set aside some of their space for the homeless? Would you give your squatter a vote equal to your own in matters of deciding how to arrange the furniture and paint the walls?
Quantity has a quality all its own. You can't analogize the massive scale of enormous wealth to a typical scale of a smallholding without making serious errors.
You're making those serious errors in your analogy.
If you're one of a club of billionaires whose large estates take up all the land, then yes, you should be forced to set aside space for the homeless.
Similarly, if you have massive control over the economy, you have no right to oligarchy. You need to move over and make way for democracy.
> If I bought a share in a company fair and square, I bought that share came with a certain expectation of control. That share is my property. Giving control to people who haven't bought control fair and square is a taking of my property, and as a general heuristic, we should be extremely skeptical of taking people's property for some kind of ostensible good.
Property rights aren't the highest holy, up on some sacred pedestal somewhere. They should only exist to the extent that they serve the public good.
> I bought that share came with a certain expectation of control
That control is only within the limits on the corporation itself, all within the context of the entire legal system that gives concepts like "corporation" and "shareholder" meaning.
> Would you support a bill forcing owners of large houses to set aside some of their space for the homeless?
I'll see your thought experiment and raise you one. Does share ownership entitle you to direct that the company do something illegal, or immoral? Or that any number of shareholders be able to do so? Of course not. Again, your control only applies within the limits on the company itself.
> Would you give your squatter a vote
Voters and taxpayers are not squatters. They collectively constitute the government that grants corporations certain privileges - e.g. the right to own property or bring lawsuits, even to participate in the political process since Citizens United, all under the shield of limited liability and legal accountability (a corporation can't be imprisoned). The state and its people should receive something in return for that. In the very same language of contracts that you're using, if there's not consideration on both sides then there's no contract.
Don't like the deal? Don't incorporate. Don't try to get that something for nothing. Be a sole proprietor, personally and directly liable for any ill the company does. Good luck. There's a reason others do take that sweet sweet bargain, and not because it's fair to all who are affected.
>>In the four decades after World War II, shareholders on net contributed more than $250 billion to U.S. companies. But since 1985 they have extracted almost $7 trillion. That’s trillions of dollars in profits that might otherwise have been reinvested in the workers who helped produce them.
Nonsense. So tax them more on dividends, if that's needed. Why add more lawsuits from anyone on why AT&T bought x company when "it's not good for the common good"....whatever that is.
In this case the author matters a bit. It's Elizabeth Warren, the congress woman who is putting forth a bill to "reign in" wall street.
I'm a fan of her and I like the parts of the bill that I've seen. I think we do need more regulation on wall street.
> That shift has had a tremendous effect on the economy. In the early 1980s, large American companies sent less than half their earnings to shareholders, spending the rest on their employees and other priorities. But between 2007 and 2016, large American companies dedicated 93% of their earnings to shareholders. Because the wealthiest 10% of U.S. households own 84% 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.
One of the best things I learned from becoming an engineer was the concept of feedback loops and how you need to constantly monitor and dampen them when they start to get out of control. The above certainly illustrates how the wealth gap started to increase over the past 30 years.
I'm not sure what the correct ratio of how to payout mopey to employees vs owners but you could start by looking at what ratio public hedge funds or investment banks payout(like Virtu or GS).
> In the four decades after World War II, shareholders on net contributed more than $250 billion to U.S. companies. But since 1985 they have extracted almost $7 trillion
This is just intentionally obfuscating. What percentage of the dividends paid out where reinvested automatically. What percentage of the cash paid out in stock buy backs went right back into the market, you cant' tell because in the first line she used net contributions, but int he second she only mentions the money flowing out but not the net. It actually could be net positive but that wouldn't fit her narrative.
> My bill also would give workers a stronger voice in corporate decision-making at large companies. Employees would elect at least 40% of directors.
I really like this idea. I assume the directors would be qualified people and not just a random employee.
To be honest the largest issue I see int he markets now is the dictator model where a single founder controls the voting. We've only seen this model in tech work during the bull tech market of 2004-present. 2008 was down but tech still did much better than most other asset classes.
What happens when tech has another 2001 and people want Mark Zuckerberg fired or they want Google to focus on their bread and butter instead of the moon shots that cost them money, or Snap to, well do anything to earn the valuation that they and promises that they fooled everyone with.
> I assume the directors would be qualified people and not just a random employee.
Quite the assumption, wouldn't you say? Lots of people find Trump unqualified but here we are. I think this bill would just create more populist, political leaders, only now at work instead of DC.
>In this case the author matters a bit. It's Elizabeth Warren, the congress woman who is putting forth a bill to "reign in" wall street.
The consumer advocate who used to be really productive when she didn't spend her time catering to the farther left parts of the democrat's base and playing identity politics introduces a bill that requires companies be X% controlled by the workers. Color me surprised.
I really liked her better when her primary focus was enacting laws (or at least trying) that made it harder for consumers to get screwed by predatory business practices and gave them more recourse when they did. Stuff likes this makes me not want to vote for her though. This sounds like it was purposefully half-baked to appeal to the younger socialist portion of the democratic base even though it has no hope of passing.
I like the idea of giving employees a better share of profits but I think trying to do that by putting a bunch of them on the board is heavy handed (especially when you start talking large shares like 40%) and likely to have a bunch of bad side effects.
>I really liked her better when her primary focus was enacting laws (or at least trying) that made it harder for people to get screwed by predatory business practices and gave them more recourse when they did. Stuff likes this makes me not want to vote for her though.
Giving workers power in their workplace is exactly "enacting laws that made it harder for people to get screwed by predatory business practicies".
You seem to be doing some circular thinking? Workers do literally all the work, the business cannot survive with no workers. Want to tell me why workers shouldn't have a say yet shareholders who do literally nothing except thirst for profit get all of the say?
>Giving workers power in their workplace is exactly "enacting laws that made it harder for people to get screwed..
I changed the wording from "people" to "consumers" to better reflect what her work was actually about. Not all people are consumers (in a given context), not all customers are consumers, not all customers are consumers and not all
> by predatory business practices".
"Predatory business practices" are generally understood as being directed towards consumers, customers or the competition. We have a whole different vocabulary for discussing businesses that are bad to work for. Predatory business practices are categorically different than profits not being reflected in employee compensation on a macro level and I don't think anyone is going to suggest that addressing one will have much effect on the other.
>You seem to be doing some circular thinking? Workers do literally all the work, the business cannot survive with no workers
Literally everyone in the company is a "worker", CEO included.
>Want to tell me why workers shouldn't have a say yet shareholders who do literally nothing except thirst for profit get all of the say?
Under what circumstances do truck drivers get to choose where the truck goes, what it transports, etc? The share holders own the business and get to exercise indirect control over it in a similar manner as a company telling a hired driver what to do. They get to call the shots but are
There's also the aspect of risk involved in being a shareholder.
I didn't say employees should have no say, just that 40% seems quite excessive and likely to have negative side effects.
If the worker are so important to the business, then they already have power and they don’t need directors.
My impression of similar system in France where unions attempt to represent the worker was rather bitter. They act in the interest of the union itself, not the workers.
As a worker, as was there to be part of a successful organization, yet union opposed directions that made sense for the organization based on some political agenda.
> Want to tell me why workers shouldn't have a say yet shareholders who do literally nothing except thirst for profit get all of the say?
Ignoring your hyperbole, shareholders have tangible, actual property in the form of shares in the company while the average worker does not, and they likely can be replaced rather easily. I'm not sure how simply working at a company should grant more than what the worker accepted when hired. It's not like a single worker or even a group of workers can independently create output similar to what they can at the company.
> Ignoring your hyperbole, shareholders have tangible, actual property in the form of shares in the company
Actually, shares in a company are a textbook example of intangible personal property as opposed to tangible property.
> It's not like a single worker or even a group of workers can independently create output similar to what they can at the company.
Neither can a single shareholder (or they would); laws were created to create the concept of shareholders and give them rights specifically for that reason, even though capital-providers could participate together I'm ventures by providing debt financing where the upside would be captured by the funded entrepreneur even before joint stock companies existed.
Conditioning this government-created special legal privilege for certain providers of capital on the provision of a minimum level of similar control on those providing labor to the venture only seems outlandish because of the long history of not doing it.
Senator. (While both the House of Representatives and Senate make up Congress, the labels “Congressman” and “Congresswoman” are used specifically for members of the House of Representatives.)
>American corporations exist only because the American people grant them charters.
I get what she's saying here but it's not exactly the cause. A counter-argument to this premise could take this line and re-write it as "American corporations exist only because shareholders/VC firms invested capital in them."
And while I don't disagree that CEO pay is nutso today I'm not convinced that employee-elected directors is the way to go. My initial reaction is I don't want to work under populist execs vying for employee votes; I think we get enough political speak from them as it is.
I don't think it would be bad to have an elected board member. It would provide input into decisions that have the potential to negatively impact employees.
I don't disagree with you, I just think the obvious connection between these elected directors' compensation and how well-liked they are would mean less-qualified, less-effective leaders on average.
The alternative to democracy is feudalism, which is basically what we have now. You might hold your nose and say "politics" or "populism" but this is how you as an employee can exercise power in the workplace.
I certainly prefer "populist execs vying for employee votes" to "brown nosing employees vying for exec favor".
Surely you aren't serious. Feudalism required working for the landowners near where you lived. In our society you can change jobs, start your own business, move, do freelance work, or not work at all if you so choose. I agree there are problems with the current system, but to equate it to feudalism is insanity.
Insanity? CEOs seem an awful lot like Kings to me. And everything in a company is essentially at the whim of the CEO or private owners.
>> you can change jobs
At the whim of the hiring managers and their bosses etc.
>> start your own business
At the whim of the financiers or by boostrapping yourself with the crumbs the capitalists leave to the working class.
>> move
In fact often one has to move away from one's home, community, and family to find work, because that's where the bosses decided to employ people.
>> do freelance work
Again at the whim of those who have money to pay for your services.
>> or not work at all
If you want to accept a severely reduced lifestyle with the dregs of an under-funded dehumanizing welfare state, designed to force people into employment.
This is such laughable hyperbole that I have to wonder whether you work in a skilled profession or you're just another internet commentator. The only way you could think CEOs have absolute authority over you like a king would is if you have a psychological complex.
I think you harmed your claim by elaborating. I have a tendency to do so as well. I often stop myself from replying to those who reply to me, in order to provide someone else a chance who agrees with my position to reinforce.
> A counter-argument to this premise could take this line and re-write it as "American corporations exist only because shareholders/VC firms invested capital in them."
And how on earth would that be a valid counter argument? It's patently false! Companies _do not_ require shareholder or VC investment to exist. They require people to work at the company and produce a product ("product" being the most extended notion of a company's deliverable).
We're talking $1 billion+ in sales per year corporations, per the article, most of which are public. Obviously you are correct that companies need people but I don't see "how on earth" it's invalid to suggest most companies getting $1 billion revenue/yr exist as they are because they received some kind of outside funding. Very few companies are 100% bootstrapped.
It's also a very short-sighted statement. People should probably have the freedom to incorporate a company whenever they want. We've seen the effects of the opposite and they're not pretty.
Well I don't think in their case it had much to do with democracy. But a better example might be a country like India or Japan even, where they have a ton of bureaucracy in place that makes it super hard to make any headway when trying to form a company. A lot of these were well-intentioned regulations that people would've voted in support of, but then this ends up stopping the average joe from starting a lemonade stand. An example of this in America is the requirements to become a hairdresser in New Jersey, where you have to go through hundreds of hours of training in things like chemical products when all you want to do is braid hair.
I would change it slightly, by saying that American corporations of any appreciable size exist because we grant them charters and as a result people are willing to invest in them. Without the charter (including entitlements such as limitation of liability), investment would shrink so drastically that we'd be back to mostly mom-and-pop businesses.
> it's not exactly the cause... American corporations exist only because shareholders/VC firms invested capital in them.
There's a pretty big difference. Shareholders/VC firms investing capital in them allows the company to expand faster or better allocate resources. They're helpful and make the system what it is, but they're pretty interchangeable from an abstract perspective, and corporations would still exist without them in some way shape or form - maybe different structures of ownership and liability, but they'd be there. Corporations could not, meanwhile, structurally exist as a thing or concept without the government's consent.
(side note: I acknowledge there is no world where the US decides corporations stop existing, and that in all practicality, such an event would probably not result in the actual dissolution of every single US based corporation, but I'm talking theoretically here to make a point - the Government's participation in a corporation's existence is fundamentally different from shareholder's)
> My initial reaction is I don't want to work under populist execs vying for employee votes; I think we get enough political speak from them as it is.
How is political pandering to shareholders (stock growth! dividends! profit!) fundamentally different from political pandering to workers (narrower wage gaps! livable working conditions! sick and vacation days!)? Additionally, working at one of the companies that (at least in word) tries to listen to and pander to its employees, it can be a positive, symbiotic relationship.
I think you're giving workers too little credit - most people understand fundamental economic realities, and that they're not going to get gold plated toilets, beer drinking fountains, and 7 figure entry level salaries (I'd use 6 figure entry level salaries.... but, well, that's already a thing in Silicon Valley, which in addition to the ridiculously nice working conditions many here benefit from, does quite a bit to throw the whole tone of many of these posts in pretty sharp relief =P). Mostly workers would probably just press corporations to redistribute a historically representative portion of profits to workers, improve working conditions in ways that make sense, and focus on the longer term. After all - workers will be there, ideally, 5-30ish years, while many shareholders are looking to pump the stock price as high as they can in the short term so they can jump ship before the decisions that lead to that point come home to roost.
No chance this will pass and the potential economic downstream effects could be pretty extreme, but I think there are some interesting nuggets in there that would make for good corporate stewardship ideas.
But the premise that companies are only accountable to shareholders is false (or in this case, editorialized)- companies are accountable to the government, and more recently you have companies like FB and SNAP that are only truly accountable to voting shareholders and can choose to not maximize profit for whatever reason.
Lastly, if employees are electing 40% of the directors, I would expect that to politicize the hiring process unnecessarily, and likely lead to far more unionization.
This idea that companies should be all about shareholder value is so recent, but it seems to have infected minds so thoroughly that people even assume there are laws enforcing it.
To quote the US Supreme Court: "Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not."
Aren't there? I was under the impression that shareholders can and do file lawsuits against directors and executive leadership. A cursory Google search suggests that this is true.
I was under the impression that shareholders can and do file lawsuits against directors and executive leadership. A cursory Google search suggests that this is true.
I'm certainly not suggesting that shareholders can't file lawsuits. Anyone can file lawsuits.
Do you mean lawsuits specifically because companies didn't seek to maximise shareholder value?
A cursory google search also suggests it's not true.
US Supreme Court opinion: “Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.”
and so on.
Now, it's true that laws reflect society, and if enough people believe something to be correct for long enough, the law will change. It's certainly true that in recent years we've heard more people, more loudly proclaim, that shareholder value is the whole point and should be the law. We've certainly seen legals cases exploring this. Nonetheless, companies have a number of obligations and responsibilities, and those they hold to their shareholders are but some among many.
I didn't intend to suggest specifically "maximize shareholder value." I was referring more to if directors or officers breach their duty of care they open themselves to lawsuits.
Oh, of course they do. So does everyone. If I don't do my job properly, if I have some duty of care that I breach, I open myself to legal action. So do you. So does the guy operating the pump at my local gas station.
But this seems to be going off-topic. I was talking about the myth that the law enforces shareholder value above all; not about people neglecting their duty in general. I did say "shareholder value".
Companies have always basically been about shareholder value.
The whole point of a 'company' was for investors to hire an 'Executive Officer' sailor, so he could make/rent a ship, hire a crew, buy some stuff 1/2 way around the world, come back and sell it a profit so the investors could make money.
That's it.
And there are definitely laws to protect those interests.
People mostly buy shares and found companies to make money.
There are other motivations and concerns, always ...
But if a group of people are getting together, raising money, to do something other than making money ... there are other words for those: non-profits, NGOs, clubs ...
Companies have always basically been about shareholder value.
History seems to disagree, and given that companies predate shareholders, that's not really surprising. In the early modern era, companies were about a convenient way to group together people engaged in a common business endeavour. [0]
In more modern times, shareholders are one responsibility amongst many. The idea that shareholder value is the number one priority always is new, and it's an idea that has done very well over the last three or four decades.
However, according to some, that consensus is already crumbling [1]. Perhaps we'll see the idea vanish over the next couple of decades.
>> By 1997 the Business Roundtable declared that the “principal objective of a business enterprise is to generate economic returns to its owners.”
I've never agreed with that. As a private company you can be in business for whatever reason you want. Maintaining financial viability seems to be necessary, but beyond that "profit" or return for anyone is not obviously an objective. Granted, you'll probably have trouble raising money if there's nothing in it for investors but does that mean they have to become the one and only priority?
I often think a CEO needs to state what they're doing and the investors should decide if they think the plans and objectives of the company (and those running it) are a good investment. Investors can take it or leave it - for what it is. That seems to be what Google did to some extent.
I also say that if the only goal of a company is to create returns, then every company that isn't in a higher profit industry should probably liquidate and use the money to start a hedge fund, or invest in a company that is more profitable. In other words, if your company makes small margins making some widgets, your investors would get better returns if you sell everything and invest in apple. This is a joke of course, but it makes my point. It's up to the company to define what it's objectives are, and it's up the investors to decide what they want to invest in based on those stated objectives of the companies.
> Historically, board appointed the CEO and most board members are shareholder. Having incentive aligned with the board earned you loyality of the board members and more compensation if you could trick the market into believing your fairytale and still juice out the max return.
Because if you don't like my plan you can go find a new CEO. And finding a new CEO is harder than it looks, especially in big business. CEOs should have a lot of leverage with their board, if they don't, they're cooked anyway. I have said to the external shareholders many times that their opinion of putting the business first and my opinion of putting the business first may differ because, unlike the investors, i'm responsible for the internal shareholders as well, and need to balance their views and opinions.
I support your side of the argument, but why is it the case that finding a CEO is hard? It seems a bit like becoming president: there aren't many people in the pool who have matching previous experience anyway, and it's not even clear if "similar" experience even applies (Does one company resemble the other, even in the same industry? Different stages of growth, corporate structure, business model, region of operation etc), and much of the job seems to be adapting to new conditions. It seems more about the CEO's reputation and network, is that really just it? You pay for the CEO's access to the Old Boy's Club? Wouldn't the company be better served by spreading the role across multiple people, to avoid the stigma of changing CEOs?
I think this is why it is hard. Look at the people who ran for president in 2016. A lot of people want to be president, but most voters see, among a large pool, at most one person they think would fit the bill (and I think in the last election, a lot of people thought no one did). It's really hard to make a choice in such a situation. In the case of presidential elections, it's simply a matter of procedure that one person has to be selected on a specific day. Looking for a CEO? I'm sure the temptation to keep shopping when none of the candidates look ideal is very appealing.
Hey thanks for the reply, these are excellent questions. It's hard because usually the person you want is either happily employed because they are good at their job, or retired because they were good at their job. I've been a part of 3 CEO searches for big-ish startups and it wasn't fun. There is also often a fundamental reality difference between the board, the shareholders, the employees and the world. Getting that part out of the way can sometimes in and of itself take 2-4 months depending on the company. Once you've done that, figuring out what the "type" of CEO you need can take some time, do they need public market experience, do they need a network, do they need to be technical, etc. Then you build the list, and then the job of convincing someone to take the job is often equally difficult. Re: spreading the roll across multiple people. This is what a really excellent CEO does anyway, in fact if I don't see this being done it's a massive red flag. In a great company, the CEO only has two jobs: dealing with real emergencies and being accountable to the shareholders. I think one person being held to account is extremely beneficial though, and I don't think it would be a good idea to switch it to committee, I actually think of all the things capitalism gets right, corporate structure is for the most part quite well thought out and works.
Hey! Thanks for taking my semi-snarky reply at face value. I appreciated your kind response, and learned a few things. I'll pass on your hello to Glaeser if I ever run into him :-)
> But the CEO doesn't own the company, the investors do, so why would the CEO be the one to state the goals leaving investors to "take it or leave it"?
Well, one point of the article is that these days 62% of CEO income is equity, so in most cases the CEO is also an "investor".
It does seem to me that creates a conflict of interest, in that a short-term plan to increase share price may not be in the long-term interests of the company. Yet, the CEO will likely not be around for the long haul and benefits more from short-term thinking.
I'm generally not a fan of Warren, but a good bit of this makes sense to me.
I think the most questionable part is: "At least 75% of directors and shareholders would need to approve before a corporation could make any political expenditures". That is just thrown in there with no explanation, and is likely intended to cripple Republicans by not allowing campaign contributions in almost all cases. That is likely the poison pill that will doom this legislation.
Indeed. Google short-cutted this problem by never giving a controlling majority to the shareholders. It's interesting to me that solution seems unique to only a handful of companies.
It's not clear that investors own a corporation, in the same sense that you own something like a phone or a house. The right of investors to make a claim on the resources of a corporation, or to direct its actions, are quite limited unless the investor is on the board of directors.
The corporation has duties to its shareholders--it can't defraud them, for instance--but those duties are actually quite limited. In most cases the remedy for unhappy shareholders is just to sell their stock.
The CEO doesn't own the corporation either, but the CEO can direct the resources of the corporation. In any sort of operational sense, the CEO only reports to the board of directors, not to the shareholders entire.
Investors always own corporations (via their voting power). That's what a corporation is. Some companies have different classes of investors (e.g. restricted stock that isn't traded and converts when sold) to protect against things like hostile take overs, but it doesn't change the overall structure.
If I own an object I can use it, or not use it, sell it, rent it, give it to others, throw it away and appeal to the police if a thief misappropriates it. And I must accept responsibility for its misuse and admit the right of my creditors to take
a lien on it.
But shares give their holders no right of possession and no right of use. If shareholders go to the company premises, they will more likely than not be turned away.
They have no more right than other customers to the services of the business they “own”. The company’s actions are not their responsibility, and corporate assets cannot be used to satisfy their debts.
Shareholders do not have the right to manage the company in which they hold an interest, and even their right to appoint the people who do is largely theoretical. They are entitled only to such part of the income as the directors declare as dividends, and have no right to the proceeds of the sale of corporate assets — except in the event of the liquidation of the entire company, in which case they will get what is left; not much, as a rule.
>I've never agreed with that. As a private company you can be in business for whatever reason you want.
If by 'you' you mean 'the owners' who are the share holders, then yes. What you'll find is that generally share holders do want economic returns at the cost of anything else, especially when so many of the owners each own only a tiny slice of many different businesses. Part of it is that it will be difficult for the owners to come to an agreement on anything else and so they'll go for economic returns.
There is also a selection effect concerning when executives at a company are replaced. Are owners choosing when to replace executives in such a way that selects for executives who put short term profitability over other concerns?
>> If by 'you' you mean 'the owners' who are the share holders, then yes.
NO. I guess what I mean is that the FOUNDER(s) of a company have a reason for it to exist. They get to define everything about it. If at some point they need to raise money by selling shares, they get to define what the shareholders get in return for their investment. The share holders are free to take it or leave it. This scenario was probably present in every public company at some time in its history. AFAIK no company has ever been created via IPO.
Even if a group of founders (who may also be initial private investors) creates a new company, they define a purpose. It may be to "make money doing X" or it may be "develop a better Y" just because they are into Y, Or "cure disease Z", establish a human presence on Mars, build a better search engine. Most founders probably want to make some money - otherwise we call it philanthropy - but that doesn't mean they are mutually exclusive. But in every case I think the company exists prior to 99 percent of the investment that comes after something has been defined beyond profit.
>The share holders are free to take it or leave it.
And they tend to take the offers from founders that give them voting power to decide the reason for the company to exist. If a founder wants to raise money without trading away power in the company they can try to sell such shares, but they should expect far less interest in people wanting to buy them.
Also, should we really call them shareholders or investors at that point? They are more like backers, similar to people who spend money on kickstarter.
Aye, but there's the rub. Everyone is free to divest their retirement holdings from all companies that aren't B corps. But then you have to be willing to (maybe) accept sub inflation level returns. So do you want 8-10%+ returns in your retirement holdings? This is happening exactly because businesses are being run to generate economic returns to its owners. Obviously the super large shareholders make out even better but we come along on the ride for free.
I'd like +inflation in the long term - the rub is that quarter to quarter horizons and returns at all costs lead to companies producing right up until they fall into the sea. The hedge funds and activist investors that drive them into this (super large investors) jump ship in advance, everyone who's not in the know is left to go down with it.
> I often think a CEO needs to state what they're doing and the investors should decide if they think the plans and objectives of the company (and those running it) are a good investment. Investors can take it or leave it - for what it is.
The problem with this is that a company that maximizes profits is worth $100/share and the same company with other priorities is worth $70/share -- not zero, but if you want to say "people who don't like it can sell their shares" then the bid price as soon as the change is announced is $70/share and the people who didn't consent to that will want to know who to go to for their other $30/share.
A possible solution to this is to require unanimous consent to make a change like that, so you have to buy out the dissenters ahead of time. But then you're going to have holdout problems.
The other problem without a unanimity requirement is that once the company is at $70/share, anyone can buy a majority of shares at the discounted price, change the policy back to profit maximization and then resell them for a large profit.
A better answer to all of these things is for companies not to have such diffuse ownership. It's a lot easier to convince one person or five people to do something like this and stick to it than to try to do the same thing for thousands.
And can't companies already do this? If something is in the company's charter, they do it even if it isn't strictly profit-maximizing, no?
> I also say that if the only goal of a company is to create returns, then every company that isn't in a higher profit industry should probably liquidate and use the money to start a hedge fund, or invest in a company that is more profitable.
It's not just about returns, it's about risk-adjusted returns. Companies with low margins typically also have high stability -- or lower share prices, so that the P/E ratio still reflects the level of risk.
And poorly performing companies often do get liquidated.
Exactly. Why replace one government mandate with another? Let the company decide its own objectives, instead of "must maximize returns for shareholders" or "must give employees a voice of x%". If it worked in the 80s, why wouldn't it work today?
This will just lead to more private companies that average Joe doesn't get to benefit from. Creating rules for private companies would take a refactor of our entire legal system.
Worker representation at the board level is good for companies as well because it can encourage pay restraint when the company really can't afford a pay rise. A board of very rich people telling you the company can't afford a pay rise for you is very different from some of your fellow workers saying the company can't afford a pay rise.
The German law goes a lot further than this law does though since it applies to all companies with over 500 employees.
Considering Germany is an economic powerhouse this law probably isn't harming the economy.
A Betriebsrat is certainly a very good tool to keep some balance in the power structures of a company. And German companies have done very well with this structure.
"On the assumption that the primary goal of employers is to maximise profits in the interests of shareholders, codetermination can reorient the company's goals in the interests of workers. A better balance may be struck so that the company interests are not so one sided. For unions, codetermination is part of democratising the economy. It is also a way for workers to better the terms and conditions of their contracts in an orderly and regulated way." [1]
This is a 100% match to the remarks made in the article.
Of course not but let's start somewhere. Make gradual socitital changes in all the areas needed starting with this bill. Education and housing reform would also be worthwhile.
Note that it is because Germany has the highest percent of part-time jobs, especially poor jobs or the mother in a family. The system is built in a way that it is hard to have two real full-time jobs in a family. It works pretty well in the former East Germany but in the former West, the standard is that after 4PM schools etc. are closed. This has improved in the last years, but not to the point to easily have two full time jobs.
This my experience from living 5 years in the former East and afterwards moving to the West (already 7 years).
What does that scenario look like if Germany no longer gets to free ride on the Euro at the expense of Spain, Portugal, Greece, Italy?
They get to use an artificially cheap currency (cheap for them) to drive the largest trade imbalances on earth. They're plundering the Eurozone and EU, just look at the trade surplus they have in their own economic region ($180b trade surplus just with the EU alone). Were they using their own currency, their exports would suffer immensely. How long can that destabilizing arrangement continue? Not much longer, judging by several of their fellow Eurozone nations.
Even with all of that, their median household net worth is still lower than the US.
California exports to the the rest of us mostly. Lots of food, high end manufacturing, services, and they have a huge slice of the asia-us trade logistics.
> eriously, I don't understand, what does a cheap currency (what does that even mean) have to do with trade surplus?
The way international trade works in theory is like this: when a country is running a trade surplus, demand for its currency increases, so that other countries can buy its goods. That extra demand drives up the exchange rate, which makes its goods more expensive, which drives down exports, which brings the balance of payments (exports minus imports) back into equilibrium.
What happens in the EU is that, because you have a shared currency, this balancing mechanism breaks down, and so trade imbalances between countries can only be corrected via deliberate subsidies (exactly as happens between rich and poor regions inside the US, for instance).
But, more than any other EU member, Germany has blocked this kind of policy, choosing to interpret trade imbalances in moral rather than economic terms (southern countries are too lazy, laid back, inefficient, etc).
So are you saying wealth is distributed less socially in the EU than it is in the states? I've never heard that before but it could be right, I don't know the details of how countries contribute to the EU. I certainly have heard the moral arguments from Germany, as well as from the rest of the rich EU countries.
Are poor regions in the US effectively assisted by subsidies? I feel in the EU the main problem is lack of integration, for example if I design a product here in The Netherlands, it would be a lot cheaper to set up a factory in say Poland or Spain, but I'd be hesitant to do that because of cultural and language barriers. I suppose that's less of a problem in the US, though in the US distances are greater.
> So are you saying wealth is distributed less socially in the EU than it is in the states? I've never heard that before but it could be right, I don't know the details of how countries contribute to the EU. I certainly have heard the moral arguments from Germany, as well as from the rest of the rich EU countries.
What I'm saying is that, once you remove currency mechanisms which automatically bring into equilibrium the balance of payments between EU member states, you can have permanent trade imbalances between countries. German exports remain artificially cheap within Europe because they are Euro-denominated. So Germany keeps racking up balance-of-trade surpluses, which then allow it to go into the southern countries and buy up real estate and major companies, so that they become the effective owners of the country. Obviously they have a vested interest in maintaining the current system.
> Are poor regions in the US effectively assisted by subsidies? I feel in the EU the main problem is lack of integration, for example if I design a product here in The Netherlands, it would be a lot cheaper to set up a factory in say Poland or Spain, but I'd be hesitant to do that because of cultural and language barriers. I suppose that's less of a problem in the US, though in the US distances are greater.
There are quite a lot of factories in southern Europe, because salaries are much lower, but that does not really help the southern countries much, as the profits flow back north into their parent companies' countries. Obviously over time, salaries in the south will also tend to rise, hence the enthusiasm of Germany for an open-borders policy which floods the entire European market with cheap immigrant labour, thus holding wage levels low.
Yes, it's just that Germany wasn't looked at as an economy to be emulated until relatively recently. Whether that is due to the benefits of being in the EU, I don't know.
Germany running a trade surplus because people like to buy Mercs and BMWs isn't really plunder. And if say a spaniard builds them a holiday flat on the costa in return for the Merc that's kind of a fair trade though on the accounts I think it'd show as an imbalance as property purchases
are accounted for differently to shipped goods.
> Considering Germany is an economic powerhouse this law probably isn't harming the economy.
Not only a good economy, but it still has industrial output. There are plenty of big German car companies. It's not just "services". Plenty of politicians want to "bring back those blue collar jobs"
These have poor reputations and are only getting worse.
The quality of Audi/VW and BMW are no longer the cutting edge. Their mechanical components are known to fail often and their beauty(the biggest feature) is on par with GM and Ford.
Every 15-20 years it seems like car companies get complacent and need to be affected by the market to 'wake up'.
? German components are always known to "fail often" (oftentimes without adequate maintenance), especially compared to Japanese cars (outside of Porsche). This hasn't changed much with time.
German cars have always been about luxury and performance,not beauty (that would be the italians) and they are still top of the pile. The M3/M5 are the definitive sports sedans still, the S-Class is the definitive full-size luxury sedan, and Porsche is the go to brand for performance sports offerings (look at caranddriver's website, Porsche has 0 offerings with less than 4 stars).
Breaking frequently has been a hallmark of BMWs for over twenty years.
New complicated features aren't as reliable as simpler old ways, but "breaking occasionally" and "expensive to maintain when old" aren't really turn-offs for the people who buy those cars, especially on short term leases with covered maintenance.
>Considering Germany is an economic powerhouse this law probably isn't harming the economy.
Germany is economically successful. But here is few things for you to know about it: 1. the industry taxed near to the limit. 2. Welfare is not cheap by any means. 3. Germany is an ageing country, and the amount of welfare payouts will go even further.
I not fan of idea that a company can be public, nor the form of relationships in between its owners and management that evolved in the USA: 1. I find the idea that a man owning a single share of the company can sue the management to death for doing virtually anything. 2. The subsequent dominance of extreme CYA attitudes that American managers are famous for. 3. The fact that company ownership became an extremely bureaucratised thing.
I'm a big believer that a business must have an owner. My own experience working in public companies: an omnipresent atmosphere of "ownerlessness" and people not minding "leaving things broken" for reasons that they are not paid to fix them. Without a clear "boss" around, work tend descend into being a Brownian motion. And all of that gets progressively worse closer to C-suite offices, if the company is of type that changed few generations of management.
Words of my father: "a collective ownership of business is like life in family where a woman has 10 husbands, all trying to make love to her at the same time."
>1. the industry taxed near to the limit. 2. Welfare is not cheap by any means. 3. Germany is an ageing country, and the amount of welfare payouts will go even further.
Want to explain to me how this is even a bad thing? It sounds like the Germans have solidarity for their fellow people/workers and realize everyone should be provided the basics for a peace of mind and overall better workers that can rest and enjoy life outside of work.
American capitalism doesn't have to happen everywhere. It's a system that provides for the few instead of the many, unlike Germany that provides for the many instead of the few
>Want to explain to me how this is even a bad thing?
I believe Germany can do even better if they can find ways to reduce the ratio of people in workforce to welfare recipients. Don't forget, we talk about that in the context of EU. Germany is carrying half of EU on its shoulders.
>it sounds like the Germans have solidarity for their fellow people/workers and realize everyone should be provided the basics for a peace of mind
Doing just "basics for a peace of mind" is doable with not much less, but nevertheless less money. The few developer countries in Asia can show how to do that well. My main criticism is that Germany's welfare is more expensive that that of other countries because not only direct payouts are moderately high, but welfare paid infrastructure and services are taking quite a lot too: lifts for pedestrian overpasses in the middle of nowhere, free transit ticket for people with minimal and non-mobility hampering disabilities,
access to free housing (depending on a state) for people with income that qualifies as high in countries just across the border... and on and on
Big issue with all extensive welfare systems in the West is that in them, needs of people in need are not being known by people who are entrusted with administering welfare to them. I can easily pull out many example of welfare states where people in need live miserably. When the welfare does not benefit to the person in need, what's use of it? In that case it just becomes wasted money.
With all my militant atheism, I can give high mark to welfare administrators in the gulf region. Zakat distribution by mosques is very straightforward, addressing needs of people in need in the most straightforward way.
>and overall better workers that can rest and enjoy life outside of work.
I believe a professionals can enjoy life even more if they simply get higher salaries. In that context, I believe that German labour councils serve a good role, making people understand that "they can't milk a dead cow."
It is very good when both sides can come to terms knowing how much money they can extract from the business before it kicks the bucket.
You wrote: "Germany is carrying half of EU on its shoulders." This statement is ludicrous! There is no prosperity transfer of any kind to poorer states in the EU, and a very clear wealth transfer to the center of the EU. May I suggest you read "And the weak suffer what they must" by Yannis Varoufakis?
>It's a system that provides for the few instead of the many, unlike Germany that provides for the many instead of the few
That's a silly argument. US citizens make more on average than German citizens. Both systems provide for the many (with the US arguably providing moreso for that middle of the curve).
The problem is the unfortunate people on the left side of the curve who get hit with medical bankruptcy, a loss of industry, etc. Those people get screwed in the US where there is a better safety net in Germany.
> "a collective ownership of business is like life in family where a woman has 10 husbands, all trying to make love to her at the same time."
This is an absurd and invalid metaphor. This is a typical attempt at oversimplifying and reducing complicated networks into a nonsensical scaled down version. You use different management techniques for teams of 2 vs 10 vs 50 vs 100 vs 1000 vs 10,000 vs a state vs a nation vs the world.
If there is 2 people on a development team, we can largely get by on vocal communication of goals, ideas, tasks, etc. If I'm working on a team of 100 developers, you can't possibly communicate goals, ideas and tasks effectively person to person, now you need to add bureaucracy, automated systems, layers of management, or split the 100 developers into small teams so they can have the person to person communication with team to team liaisons (or insert X strategy of the week for managing large software projects with many people).
You state the following, clearly as problems with 0 explanation:
>1. the industry taxed near to the limit.
A useless truism
>2. Welfare is not cheap by any means.
A useless truism
>3. Germany is an ageing country, and the amount of welfare payouts will go even further.
A useless truism
>1. I find the idea that a man owning a single share of the company can sue the management to death for doing virtually anything.
Please be more specific of what "virtually anything" means and please show a "virtually anything" lawsuit.
>2. The subsequent dominance of extreme CYA attitudes that American managers are famous for.
Covering your ass is an unavoidable outgrowth of large systems of people. When doing things at scale, redundancy and fail over is extremely important.
>3. The fact that company ownership became an extremely bureaucratised thing.
Bureaucracy is a necessary outgrowth of large systems of people. Yes, it sucks that you can't coordinate your team of 1000 on a whim, like you can a team of 2, but this is unavoidable at scale, do to the communication gaps between large networks of people.
> I'm a big believer that a business must have an owner. My own experience working in public companies: an omnipresent atmosphere of "ownerlessness" and people not minding "leaving things broken" for reasons that they are not paid to fix them. Without a clear "boss" around, work tend descend into being a Brownian motion. And all of that gets progressively worse closer to C-suite offices, if the company is of type that changed few generations of management.
Do to your clear lack of material understanding of large systems of people, I find this anecdote dubious.
> I'm a big believer that a business must have an owner.
Surely you are also a big believer that a country must have a king. If not, why not?
> Words of my father: "a collective ownership of business is like life in family where a woman has 10 husbands, all trying to make love to her at the same time."
Quotations aren't even arguments if they come from famous people.
>> I'm a big believer that a business must have an owner.
>Surely you are also a big believer that a country must have a king. If not, why not?
No, I believe that monarchies are weak, and risky. There might be modern day monarchs doing best for their realms, but the chance that after 3-4-5 good successions will come a man "who wrecks it all" is just too high. This is what history has demonstrated.
In case of business, the risks are not human lives. In case of a failing business, an employee is free to vote with his feet at any moment, moreover if he is valuable specialist in a competitive market. In such circumstances, business owners are compelled to do well do deter desertions. This is in big contrast to command economies dominated by state businesses. Speaking about command economies, that not necessarily assumes communists countries - just how much of F500 a decade ago were de-facto state co's? GE - with net negative tax rate, GM - needs no explanations, defence companies - being de-facto one with their states in every country, agri businesses with roots in banana republics, dozens of megabanks kept alive by financial life support from taxpayers.
Democracies elect idiots "who wreck it all" all the time. That is not the problem with monarchies. The problem with monarchies is that a monarch will promote the interests of the monarch, the nobility will promote the interests of the nobility. Only a democracy will promote the interests of everybody. That is true whether we talk about a state or a company.
> In case of a failing business, an employee is free to vote with his feet at any moment, moreover if he is valuable specialist in a competitive market.
A non-democratic economy works for certain people under certain circumstances. That is simply not enough.
Equating democratic elections, the act of freely chosing how you run your society, to what amounts to fleeing a sinking ship is beyond ridiculous. So is calling the US a command economy.
> Democracies elect idiots "who wreck it all" all the time. That is not the problem with monarchies.
It actually is a recurring problem with monarchies (and often that's how democratic republics get established); heredity is no guarantee of competency.
True, and democracy here is a big red "emergency brake" button. In a monarchy or de-facto monarchy (all states that saw multiple presidents-for-life from the same family are in that bunch as well) you have none. Only alternatives given to people in them is to start a civil war.
There's always assassination. Look a the Roman Empire - most of the truly catastrophic emperors were either assassinated, or nearly assassinated before they died of other means.
Not that I'm advocating we go back to that or anything.
Your statement seems unfair. The people elected in democracies are not somehow uniquely benevolent and socially driven. They, at least in rolling with your worldview, once again will promote their own interests first. The election aspect changes very little. Our electorate is mostly poorly informed and easily manipulated. Try answering any question by asking 130 million people, of no qualification, after exposing them to months of emotionally charged misinformation, mud slinging, and FUD -- all carried out by the best manipulators money can buy. The answers you're going to get explain how we can have a 15% approval rating for the congress that we put into office.
That said even though democracy is quite an awful system, it's probably the least awful of the alternatives. We, the people, are very unlikely to meaningfully change anything in any given election - but that power is, at least technically, there. Whereas if you have an awful monarch/dictator/life serving republic/etc then your only option is a bit messier.
After elections individual congressmen become completely invisible to nearly all of the voting public. How many voters could tell you just 5 things, positive or negative, that their congressman did during their last term? People who know nothing about what they're voting on don't suddenly become actively involved after voting.
The only reason people care about the president is because he maintains a high visibility throughout his term. Even then it's very superficial. I'd be extremely surprised if the average voter could list 5 actual effected policy decisions of Obama that they liked/disliked. Yet they will love or loath him in spite of the lack of that knowledge. The various videos demonstrating this effect are my favorite. Individuals will be surveyed on what they think of described "Obama" policies, which are actually Trump policies - or vice versa. Their view on the policy invariably has little to nothing to do with the actual policy, and everything to do with the name attached to it.
So it seems trivial to then maintain high approval ratings during the term (no one knows what you’re really up to, before during and after the term)
Presidency sees a lot of marketing from each side, so high approval ratings might be more difficult to maintain, but congress should be far less of a battleground.
If you’re correct, then theres no reason for them to have 15% approval except out of sheer laziness; just as no one questions them during the election process, no one should be questioning during the term too
Individual members of Congress have high approval readings in their districts, usually. Congress as an institution has a low approval rating, because people hate the 532 members they don't get to vote for, not the three that they do, in part because each member blames results unpopular in their district on the rest of Congress.
Democracy is not a system, it's a principle. The principle that the people rules. Today's representative democracies apply that principle very imperfectly.
The rulers don't have to be particularily benevolent to promote the people's interests if their interests and the people's interests are the same.
>Considering Germany is an economic powerhouse this law probably isn't harming the economy
US median household annual disposable PPP income is around $34,000.
German median household annual disposable PPP income is around $25,000.
Note PPP means adjusted for cost of living, so that is not hiding the difference.
There is likely some differences in household makeup, etc., but it seems unlikely that any demographic difference is going to make up for Germans having ~25% less disposable income.
So somehow the US system is generating significantly more disposable income for its people.
Being median income I have a feeling that the US median is "pulled up" significantly by the top .01% of earners in the US - I have a feeling they account for a far larger amount than the top .01% of German earners.
Also - this does not take into account additional costs such as healthcare that will pull down the US amount.
I’d have to dig into the numbers, but the wealthiest Americans get their income via capital gains and dividends, which I’m not sure would be included in those figures.
Since this is the median and not the mean, it seems that the top .01% should have no impact or bias here.
The statistic here tells us that the person right in the middle of the American income distribution makes more than the person in the middle of the German income distribution, even when disregarding the actual incomes at other points in that distribution.
It's not an average, it's a median. That is, there are as many people who have incomes higher than that as having incomes lower than that. How much higher is already inconsequential, a few may have astronomical incomes without affecting the median.
Well, it probably comes out to a wash after you subtract copays, deductibles, and other out of pocket healthcare expenses from the US after-tax income.
If you factor in all benefits, the US compensation level is drastically higher than in Germany. US healthcare is far more expensive than in Germany, nearly double in fact.
Per capita it's equal to over 20% of the median full-time wage ($50k).
I think the point was more - if you take the average American paying $1-2k for healthcare per month vs Germany's $0 for healthcare per month, then that alone wipes out the difference in compensation (ignoring the fact that they have cheaper schools, more holiday, a tighter social safety net, better transportation systems, and so on)
You know what else produces "happiness"? Morphine. Happiness never built a bridge, cured a disease, or discovered a new particle. Productivity matters more, since it leads to satisfaction with a life well-lived, and ultimately more fulfilment than "happiness". Your happiness dies with you. What you accomplish lives forever.
I don't think Germans are happier than Americans because we take more opiates. Your claim that productivity (or, for that matter anything else) is more important than happiness is plain absurd. I prefer a good life over one that ends with me jumping off a bridge I built.
You know very well that I didn't mean that Germans literally medicated themselves into happiness. (AIUI, that's more an American thing.)
My point is that a life of comfort is not the ideal to which we should aspire, and that humanity's accomplishments have not come from people who didn't want to bother exerting themselves.
As I've said previously, European social policy is basically rest-and-vest at civilization scale.
A life of comfort is very much an ideal we should aspire to. There will always be people who have the intrinsic motivation to accomplish grander things. People don't accomplish great things because they are forced to.
> My point is that a life of comfort is not the ideal to which we should aspire
You are equating a life of comfort with happiness. A lot of people have a more nuanced ways of evaluating their lives, where they value facing challenging and meaningful problems while also seeking stability and comfort.
It's why we have better adjectives to describe a good life than "happiness", i.e "fulfillment".
> humanity's accomplishments have not come from people who didn't want to bother exerting themselves.
Many of humanity's greatest breakthroughs came from people who were specifically insulated from the uncertainties of daily survival. From aristocrats experimenting with physics, to lifetime tenured monks (and later academics) who were given the day to day security to pursue lines of thought that otherwise wouldn't be considered.
Despite the oft-repeated cliche, necessity is more often the enemy of invention. Necessity serves as a pruning mechanism to select the best hypothesis of the many that were created when resources were plentiful.
That's not a great argument because happiness leads to productivity. Productivity and happiness are not mutually exclusive at all. And at the end of the day what's the point if you're not happy.
Some grand, hand wavy idea of great fulfilment somewhere down the line doesn't cut it, because you know what never built a great bridge, cured a disease, or discovered a new particle? Living with crushing debt, stagnant wages whilst working paycheck to paycheck.
Back in my day, every Philosophy 101 curriculum included John Stuart Mill, who had this to say.
"Human beings have faculties more elevated than the animal appetites, and when once made conscious of them, do not regard anything as happiness which does not include their gratification."
You're using a very narrow definition of happiness. A uselessly narrow definition IMO, and apparently for no reason but to spread bigotry. Most people wouldn't be happy knowing they hadn't achieved anything (see: Maslow's hierarchy of needs). Even the otherwise rather short-sighted "Objectivists" tacitly accept this view, with "enlightened self interest" being their phrase of choice to avoid acknowledging the origin of that thought.
Modern Germans do not lack in accomplishment. They just choose to balance goal-directed work with enjoyment of its fruits, instead of staying on the treadmill past the point of diminishing returns. Here in the US, there's a bit of a fetish about claiming to work super-long hours to satisfy a Calvinist "work is virtue" image, while actually goofing off for (at least) half of that whenever nobody's looking. That's really stupid. The European approach of actually enjoying that time with family and friends guilt-free seems smart, compared to spending it in the office neither being productive nor having fun.
> somehow the US system is generating significantly more disposable income for its people.
Then why are so many people complaining about the cost of living, housing, healthcare, education etc? Could someone remind us what is and what isn't included in "disposable"?
Primarily because people love to complain, it's the number one sport of all of humanity.
The US median cost of living is lower than in: Germany, France, UK, Australia, Sweden, Finland, Canada.
Healthcare is a very legitimate complaint. It's plainly outrageous. Even in the case where the bill is often mostly footed by an employer, that comes out of wages to one degree or another.
Housing is not a legitimate complaint (everyone doesn't live in NYC, LA, Seattle and SF). The median US costs on rent and housing are lower than any comparable disposable income nation, and you get far larger accomodations (space) in the US than the other nations.
Education is not a legitimate complaint. The US is overflowing with modestly priced, high quality in-state university choices, including quite affordable state schools. If you spend $160,000 on a shit paying degree from a tier two school for no good reason, that's on you. You don't get to bitch about doing something that dumb when you could have gotten the exact same degree for $40,000 and paid for half of it with a part-time job over four years.
> The US median cost of living is lower than in: Germany, France, UK, Australia, Sweden, Finland, Canada.
Could you please refer me to a source for cost of living comparison? I am not disputing this assertion, I have just been unable to find a good source comparing cost of living between countries.
> You don't get to bitch about doing something that dumb when you could have gotten the exact same degree for $40,000 and paid for half of it with a part-time job over four years.
$40,000 euros for a degree is still a ridiculous amount. It costs $11,000 to go to Oxford per year right now, and before the ridiculous fee increases it would be about $11,000 for a 4 year degree.
It's about $5,000 per year on average across the EU, with some countries offering free tuition. Because, hey, it turns out educating people ends up a net benefit to society!
> Housing is not a legitimate complaint (everyone doesn't live in NYC, LA, Seattle and SF). The median US costs on rent and housing are lower than any comparable disposable income nation, and you get far larger accomodations (space) in the US than the other nations.
I don't think this is accurate. Maybe it used to be, but not anymore. For example, Numbeo says:
> Rent in Germany is 30.85% lower than in United States (average data for all cities).
It would be better to find more official data, but I wasn't able to find anything for Germany.
> Education is not a legitimate complaint. The US is overflowing with modestly priced, high quality in-state university choices, including quite affordable state schools. If you spend $160,000 on a shit paying degree from a tier two school for no good reason, that's on you. You don't get to bitch about doing something that dumb when you could have gotten the exact same degree for $40,000 and paid for half of it with a part-time job over four years.
$40,000 for four years of education + living expenses? Do you think students are living out of garbage cans? $10,000/year will probably cover in-state tuition + books/fees/etc., sure, and what do you think is a reasonable cost for housing, food, transportation, etc. for a student?
Disposable income is income after tax. Europe has higher tax rates that the US, so this is to be expected. It also has better services. So what you don't see in this comparison is that in return for their higher taxes, they for example get free or cheap higher education and healthcare.
If the German government cuts funding for those two sectors, passes on the savings to people by reducing tax rates, and requires them to pay for those services out of pocket like the US, the disposable income may reach parity, but the people would probably be worse off in real terms.
They all have healthcare when they need it and have no health-related bankruptcies or anxiety over such. Having a part-time job isn’t crippling to their health and safety. Their transportation systems are cutting edge as well.
If you combine only the tangible cost benefits of healthcare and transportation availability, that should account for approximately the difference in disposable income.
>So what you don't see in this comparison is that in return for their higher taxes, they for example get free or cheap higher education and healthcare.
Household disposable income is net including those social benefits, so the complaint is incorrect. Here's the definition used in these datasets:
But in the US, kids below 15 are not counted, this means that the population is artificially set at 80% of its real number.
These PPP income are pretty hard to compare. You have so much local variability within a country that you can only really compare the same kind of family situation in the same kind of city. You also need to compare against what you get from the system. For example, in the US, a part of your revenue is in your PPP if you are not ill, but if you get a cancer, you are good for a good stack of expenses depending on your health insurance, in the EU, the health insurance will cover all the costs. If you are in Denmark, you get access to free education (you even get paid to study), in Germany education is free.
As a French who has been working/living is several countries in the EU and have friends nearly all over the world, I can say, the real factor, if you are an engineer, is where you live, that is, the cost of housing. Because the salary as an engineer will be nearly the same in the country you live but the cost of living can vary a lot.
Another thing to keep in mind is that Germany doesn't fund its own defense. (The tiny amount Germany spends is insignificant; the German airforce doesn't even bother keeping its aircraft airworthy.)
We in the US fund our defense and Germany's defense (and cover the rest of the free world too) and still end up with more post-tax income than Germany does. That's a massive productivity gap.
> We in the US fund our defense and Germany's defense (and cover the rest of the free world too)
I agree that the USA has used its military to keep a kind of pax americana. But that is not the complete story. The super expensive wars on Afghanistan and Irak didn't had anything to do with "the free world" and a lot with oil.
BTW That may have changed nowadays, but it was a very good idea that Germany had a low military budged.
Right. We're able to fight two stupid wars at the same time and provide blanket defense coverage for our allies. It's a huge financial burden. Bringing up the US's stupid expensive wars of choice just reinforces my point. We're so productive that we can afford these follies.
Your point is a valid one, but Germany has a lot of restrictions on what military force it can have. It's not necessarily a choice.
What's the point of 'bothering' to keep a token airforce airworthy when your total military personnel is capped to far below a useful amount (350,000) for any reasonable attempt at defence, and for historical reasons you are incredibly adverse to using them overseas?
Post-tax income is an irrelevant metric because higher taxes are compensated by the services they pay for. Our level of defense spending is not insignificant, yours is offensive. We don't need to outspend the rest of the world, we just need to convince Russia that invading the EU is not worth it.
1980s quality healthcare has been dropping in cost. The problem with healthcare prices today is that it covers many new advances that are still expensive.
The only fair way to compare healthcare over time is if the exact same quality of care drops in price over time.
You've chosen one data point. This may support your claim, or it may be that they are a powerhouse and thus able to afford worker representation as a luxury.
OK. I cannot help but be curious how you would differentiate the US. Please elaborate.
From your, presumably different view, what would you prescribe? Allow taking advantage of workers until those in power find enough wealth, and only then give workers a voice?
Nope. Still #1 in GDP. From 2017 [1], top 10 economies:
1. US - $19.42T GDP (25% of world GDP)
2. China - $11.8T GDP
3. Japan - $4.84T GDP
4. Germany - $3.42T GDP
5. UK - $2.5T GDP
6. India - $2.45T GDP
7. France - $2.42T GDP
8. Brazil - $2.14T GDP
9. Italy - $1.81T GDP
10. Canada - $1.6T GDP
Personally, the one that shocked me is Italy, what with the all you see about the country's debt problems, but I hear a lot of that is due to corruption and tax evasion.
But Italy’s GDP per capita is way behind Northern Europe, which doesn’t have a debt problem. The Nordic countries have a combined GDP of about 1.5 trillion with about half of Italy’s population.
Rhineland model extends to for example the Netherlands as well. Scandinavian model likewise stresses a more diverse outlook on CSR and corporate stakeholders as well. The French model is a theme on its own - more like the other two than Anglo-American, though a lot more state-centric and mired in eternal strife with unions, where the other two are more about cooperation between the different factors of production.
> And when I look at tech salaries in the EU, I'm not sure I want that. Or at least that attitude to compensation.
This the same everywhere outside the US though. Salaries are much lower as the skill ceiling tends to be much lower and there is more skilled labour available.
The US just has a huge amount of investment, a small skilled labour force and a more meritocratic outlook in general (bear in mind, even just 50 years ago, being a manager or not would depend on your family and school in the UK for example, and you wouldn't even eat with your subordinates).
I don't think worker representation would change much there, the Americans already have it so good.
I think looking at relative growth numbers is illustrative. Germany should have an easier time hitting high percentage growth than the US, starting from a lower total, but they don't. Though the rest of the continent is doing even worse.
But anyway, it makes arguments of "look how well Germany is doing" not very compelling to me.
I don't hate the idea of codetermination tbh, but I do have lots of questions about how it would work in practice.
At the very least you have to ask whether contractors get a vote, which gets you into a question if incentive and which workers are more or less aligned with a company.
Since this article specifically cites Milton Friedman, it seems apropos to consider his son David's point that if workers were interested in owning their firms it would be fairly trivial to do.
Excerpt from "The Machinery of Freedom", by David Friedman:
> The socialists who advocate such institutions do object to our present society and would probably object even more to the completely capitalist society that I would like to see develop. They claim that the ownership of the means of production by capitalists instead of by workers is inherently unjust.
> I think they are wrong. Even if they are right, there is no need for them to fight me or anyone else; there is a much easier way to achieve their objective. If a society in which firms are owned by their workers is far more attractive than one in which they are owned by stockholders, let the workers buy the firms. If the workers cannot be convinced to spend their money, it is unlikely that they will be willing to spend their blood.
> How much would it cost workers to purchase their firms? The total value of the shares of all stocks listed on the New York Stock Exchange in 1965 was $537 billion. The total wages and salaries of all private employees that year was $288.5 billion. State and federal income taxes totalled $75.2 billion. If the workers had chosen to live at the consumption standard of hippies, saving half their after-tax incomes, they could have gotten a majority share in every firm in two and a half years and bought the capitalists out, lock, stock, and barrel, in five. That is a substantial cost, but surely it is cheaper than organizing a revolution. Also less of a gamble. And, unlike a revolution, it does not have to be done all at once. The employees of one firm can buy it this decade, then use their profits to help fellow workers buy theirs later.
> When you buy stock, you pay not only for the capital assets of the firm—buildings, machines, inventory, and the like —but also for its experience, reputation, and organization. If workers really can run firms better, these are unnecessary; all they need are the physical assets. Those assets—the net working capital of all corporations in the United States in 1965—totalled $171.7 billion. The workers could buy that much and go into business for themselves with 14 months' worth of savings.
> I do not expect any of this to happen. If workers wanted to be capitalists badly enough to pay that sort of price, many would have done so already.
If workers overnight started saving half their after-tax income, effectively cutting consumption in half, what would happen to the stock price of these companies though? It would fall - so buying out the companies might take less than five years' savings - that is, if the workers don't get fired as a cost-cutting measure first!
That excerpt was definitely the stupidest fucking thing I've read this week. It's always a bit shocking to see what passes for economic analysis in libertarian circles. It really is just a bunch of old people and wannabees spinning soothing fantasies to each other.
Funnily enough it also sounds like left-wing economics. "Get the money (via taxes and redistribution) to workers so they can act more like capitalists who don't have to work"
This is, by far, the best comment in this thread. It explains clearly, with simple arithmetic, that Marx's dream is already available to labor via the machinations of capitalism.
> "More concretely, citizen corporations would be required to allow their workers to elect 40 percent of the membership of their board of directors."
This is a bold proposal, and it's worth considering what consequences it's going to have. Companies are already wary of going public these days, with many unicorns staying private longer, and some public companies even going private again. This bill would sharply accelerate the trend for one very simple reason: A privately held corporation would now be much more valuable than a public corporation. A corporation run by leaders who are 100% focused on optimizing (long-term) shareholder profits, will generate more (long-term) profits than a board that's 40% worker-elected. By definition then, as soon as a private company goes public, they can expect an immediate valuation hit.
As more and more companies go/stay private, to avoid the above hit, the accessibility of public markets becomes weakened. Right now, any average Joe from Main Street can invest his savings into Google stock, and participate somewhat in corporate success. Not so if companies decide to remain private instead.
I think the intent behind the bill is in the right place. Mega-corps are strangling our democracy (see the recent article about Intuit lobbying against tax-filing-reform), and their successes are being enjoyed primarily by the 1%. But I think we need a different solution to this problem. Higher taxes on the 1%, a stronger social safety net, campaign-finance reform, and better enforcement of anti-trust laws, would be my preferred approach for tackling the current problems.
I don't think the bill checks whether a company is private or not. Merely whether it has $1 billion in revenues or not. So it doesn't directly affect whether a company will want to go public.
>A corporation run by leaders who are 100% focused on optimizing (long-term) shareholder profits, will generate more (long-term) profits than a board that's 40% worker-elected.
The same is true with a board that's focused on short-term shareholder value. I would argue that worker representation would lean towards the long-term vs. shareholders.
The costs of healthcare and housing are far and away the largest dampers on the economy and the cause of inequality.
Shareholder accountability might be something worth looking at but it also seems like a distraction for politicians who are incapable of tackling the real issues.
Dear leftist politicians: please don't attack successful companies and sectors and stop stoking the populist fervor of your hippy base and proto-socialist newcomers and tackle the real issues of healthcare and housing costs which have proven market based solutions.
As Union membership rises, inequality declines. Worker representation is exactly what's needed. Don't ever say worker representation isn't a "real issue" because it sure is. The 'successful company' is likely successful in your viewpoint because the profits never went to the WORKERS who did ALL OF THE WORK.
The more money is spent on healthcare and housing the less people have for everything else thus exasperating inequality.
Labor unions hamper corporate options and flexibility and hopefully soon they will all be replaced by machines maybe that would finally make it clear to marxists how much of a commodity labor really is.
>The more money is spent on healthcare and housing the less people have for everything else thus exasperating inequality.
Sure, I'm not going to disagree there.
>Labor unions hamper corporate options and flexibility
So? They no longer will have the option to screw over their workers with low wages and high cost benefits and I think that's an absolute win for the lower 80-90% of the country.
Companies should have all the flexibility to restructure in order to survive tough times or pivot to follow breakthroughs otherwise all these workers won't have a job.
This is not really a great argument as it assumes workers would willingly internally vote away their own jobs, and that's likely to not happen. Nobody wants to be unemployed.
They would stand in the way of every layoff and changes they don't like, that's their mandate, unions are just another entity fighting for the status quo and another hoop a company needs to jump through.
If the costs for major expenditures were lower people will have more resources to climb the socioeconomic ladder, and we won't need to decrease the dynamism of the labor market and saddle corporations with more obligations to achieve that.
Oh and companies shouldn't pay for employee healthcare, that's a WW2 relic that only benefits health insurers by keeping costs high.
>They would stand in the way of every layoff and changes they don't like, that's their mandate, unions are just another entity fighting for the status quo and another hoop a company needs to jump through.
Good, the workers make literally all of the profit and without them the company would cease to exist or make any money. It's a hoop they should have to jump through. The system we have now is maintaining the status quo, so I think you have that backwards.
While I can't find it now, there have been articles detailing how shareholder value is down now compared to periods prior to the rise in executive pay. Naming (marketing) and focus are really two different things.
Are many companies accountable to shareholders? The large ones anyway. How many shareholders are engaged?
The money distribution has been very much to executives. From Fortune[1]:
> According to a new report on CEO pay from the Economic Policy Institute,
> chief executives at those 350 companies made $15.6 million on average in
> 2016—271 times what the typical worker earns. Though CEO compensation has
> fallen slightly in the past few years, it has increased by more than 930%
> since 1978.
This is really more an issue for public companies than private companies. Public companies tend to make decisions that favor short term gains for shareholders in the upcoming quarter. It's a give and take, they initially get a lot more money to play around with going public, but then become handcuffed to chasing profits for their shareholders.
Really though it should be up to companies to align themselves to whatever vision they have. Politicians should just stay out of it.
It will absolutely never happen in the US but similar ideas are floating around France where there is real support and likelihood of something happening before 2025. The Accountable Capitalism Act is too complicated. The remedy here is quite simple:
* Tax share buy-backs into non-existence. All the available evidence indicates that corporate buy-backs help nobody but the corporate officers who authorize them.
* Make corporate dividends into pass through transfers. In fact, consider giving corporations that pass on X% of their profits a tax break.
* Severely lower taxes on options and share-in-kind salaries. This is probably the most important thing: you want to encourage corporations to pay their workers in equity.
* Ridiculous executive compensation is a problem in theory but it doesn't really matter, frankly, how a corporation divides its income payments. The only way to generate meaningful wages and wage growth for specific workers is to strengthen those worker's negotiating power. That means stronger unions. There's a lot the government can do to support unions but a good start would be making union dues tax free. In fact the government should probably collect and distribute all union fees. It becomes a standard withholding. Codetermination where unions get board seats is also good and has worked wonders in Germany.
* A Job Guarantee is perhaps the most effective solution but is somewhat radical. But there are incremental steps that could be taken in this direction. Tax breaks on worker training et al are the first step. There was a time, believe it or not, when corporations invested heavily in their workers. Today training is regarded as pure overhead and the result are workers that are, frankly, not that useful because they are over-specialized. The government should also provide tax credits (!) for personal expenditures a worker undertakes for their own training. This goes beyond expensive college courses: workers should be encouraged to attend conferences, seminars, workshops, buy books, and donate their skills in the service of charity. (Yes tax credits for open source.) Encouraging worker training and worker re-training through generous tax breaks would go a long way towards the structural unemployment that grips much of Europe.
The massive inequality that's drowning the West isn't really a problem of of corporations abusing workers. The problem is the governments who have willingly decided to serve the corporations and abandon the workers (combined of course with the insane desire to not build new housing in their major cities). The result is the most slack labor market ever and wages that have gone nowhere for forty years while corporations hoard giant useless piles of cash.
The root problem isn't that companies are only accountable to shareholders. The root problem is that the shareholders of the large companies that are causing the income inequality the article refers to are not individuals any more; they're mutual funds and other financial institutions, i.e., other corporations.
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[ 1.5 ms ] story [ 428 ms ] threadShe's announcing this merely to pad her resume before running in 2020. It doesn't have to be feasible, just needs to sound good.
I'll take the other side of that bet if you are saying that the market will be worth less in 10 years time than it is now.
If on the other hand you are saying the market will go down sometime in the next 10 years then, we'll that's not really a statement worth making:) That's like saying I predict that it will be colder than it is today sometime in the next 10 years.
The time premium on LEAPs makes them, as I understand it, an extremely niche product to use appropriately.
Of course anyone is free to speculate, as long as you meet the option trading requirements at your brokerage.
Why would it decimate the market? This just sounds like fearmongering.
Imagine you have a factory in the Midwest hemorrhaging cash (or even just break even) but other profitable locations. Right now, you'd most likely shut it down and consolidate, move, or outsource that work.
Your ability to do so is impeded under this act, by employee elected directors and/or activist investors.
The result is less profit potential. Knowing that every company has to make these type of decisions (including benefits), their earning potential is reduced, and their valuations will tumble due to it.
I realize this is an unpopular opinion, but I don't necessarily view this as a bad thing in aggregate. The market's been doing great lately, and it's largely been on the backs of the working class for the benefit of people who've had the money to capitalize on it.
It's been over inflated for ages - if a shitty market is the cost for more equitable distributions of income and more humane workforce treatment, I'm game. I have the sneaking suspicion an arrangement that forces companies to focus on the long term well being of its workers (who, it's worth pointing out, don't want to deal with a job search, and such both want higher retention and for the company to not-fail) rather than short term stock price fluctuations will probably be for the better in the long run.
> cause large amounts of frivolous lawsuits
We already have that.
> She's announcing this merely to pad her resume before running in 2020. It doesn't have to be feasible, just needs to sound good.
I actually agree with this - It's definitely to grab headlines (which it did) and there's no way it's passing in the next 3 years. That said, this is pretty much straight from the Tea Party playbook, see: ACA repeals in 2012-2016. Oh well. And anyway, I'd be happy to finally have one president in the white house whose main goal isn't to cater to corporations - it's been literal generations, and looking at the current state of the general US economy and the world, not for the better.
Elizabeth Warren has stated before that she is a capitalist. Which means that ownership of companies is held entirely by monied interests, never by workers.
All the same I know that they will. Consumers are anything but rational, and that is by design. The ultra-rich know well the value of hearts and minds, and that it's quite possible to spend money convincing (at least some) people of whatever you'd like them to believe.
Maybe it's just because I'm a pinko-European, but in the unlikely event of this succeeding, I think it could really be the start of the pendulum swinging in the right direction in global economics.
And there you have it; the shareholders and CEO would stand to lose directly, they have a huge amount of money (and they're both national and international players; a foreign investor would give less of a shit about US workers), they're in politics (directly or paying for it), etc.
I hope this gets traction, but I'm cynical, and I'm confident the US is already an oligarchy in the pockets of those that made 7 trillion out of their 250 billion investment.
When an article (or comment) gets flagged, HN accounts with sufficient karma may have the opportunity to "vouch". I used that once for this article already.
This doesn't guarantee that the article will stay for long since there's an HN algo which tends to shuffle off pages with a lot of downvoting and flagging. (Which I think is a really nice feature, by the way. Thanks to the moderators for their good sense and hard work.)
ETA: And that also means that if you want to keep this discussion alive for a while, relentlessly downvoting posts which don't agree with your bent, even when civil and well-argued, is counterproductive. There are some great comments arguing against Warren right now that I hope will be rescued from the greys.
> Maybe it's just because I'm a pinko-European
Maybe.
Nobody has said anything of the sort here.
Nowhere is it even remotely implied that the market only benefits the ultra-rich and CEOs.
Because the wealthiest 10% of U.S. households own 84% 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.
To imply it's a cry that the game was designed to be rigged is a straw-man.
https://news.ycombinator.com/newsguidelines.html
Edit: you've posted uncivilly elsewhere too, e.g. https://news.ycombinator.com/item?id=17766899. That's not allowed here, and we eventually ban accounts that do it. If you'd review the guidelines and post civilly and substantively only from now on, we'd appreciate it.
1: https://www.washingtonpost.com/news/wonk/wp/2017/12/18/for-r...
I am a firm believer that the free and less regulated stock market and a smart and balanced portfolio is the best wealth creation tool Americans can tap into. The alternatives of savings accounts and CD's are laughably low yielding.
You say this like you think it somehow proves a point.
> I am a firm believer that the free and less regulated stock market and a smart and balanced portfolio is the best wealth creation tool Americans can tap into. The alternatives of savings accounts and CD's are laughably low yielding.
And I am a firm believer that most of these people do not have the resources or know-how to even begin doing this. Most are living paycheck to paycheck.
And I'm amused at the idea of loosening regulations on financial services industries ever has any effect other than a massive transfer of wealth from the lower classes to the wealthy.
Fair and that's the fundamental difference in our political ideology. I subscribe that the role of US government is not to transfer wealth or interfere with the free market. If I am in a room with another person and I have five dollars in my pocket and the other person has one dollar, am I suppose to give the other person two dollars to make everybody whole? The writer of this article and bill might think so.
That may not directly be its role, but if it isn't at -- least to some degree -- an outcome of the government's activity, then I think we're in trouble.
To a first approximation, wealth = power; and human nature being what it is, those who have wealth (and therefore power) will tend, in the absence of control/restraint from government, to use that wealth and power to gather more wealth and power for themselves, without regard for any impact (often negative) on those who have less.
Governments (in my opinion) have a responsibility to protect and help those who, for all kinds of reasons, do not have the wealth or power to adequately take care of themselves. That doesn't mean arbitrary handouts. But it does mean that a relatively larger share of centrally-managed resources should be directed towards helping those who need it most.
And so I'd expect one of the results of a well-run government to be a tendency to reverse some of the flow of wealth towards those who already have it.
1: https://www.gobankingrates.com/making-money/jobs/survey-grea...
2: http://www.fox19.com/story/22676408/bankratecom-finds-76-of-...
3: https://www.cnbc.com/2017/08/24/most-americans-live-paycheck...
4: https://www.cbsnews.com/news/americans-living-paycheck-to-pa...
Some people are poor, but some are just dumb. I wish I could fix poor, but I can't fix stupid. And there is a lot of stupid around.
I know many people who make a few hundred thousand dollars (in Texas, not silicon valley or NYC), and they live paycheck to paycheck. That's stupid, not poor.
So when I see stats like that (thank you for the links), I always wonder what the real number is - how many are poor, and how many are just stupid.
I get that there are people living genuinely frugally and still struggling. It may just be observational bias, but I suspect there are a lot more people struggling who are not choosing to live frugally and where that choice would help them quite a bit.
Obviously, I didn’t study economics when I was 5, but this seemed to be the norm in that era and community and would be viewed as abnormally (perhaps unacceptably) frugal now.
To be clear, they did get married, have children, live a decent life, and retire on pensions, but they and their neighbors lived a lot more frugally than seems to be normal/accepted today.
Second, there are less than half of the number of public companies as there were 20 years ago [1]. So the investors are chasing a small group with a larger market capitalization. That's due to many reasons, but regulation is a big one (sarbanes-oxley, dodd-frank, etc).
Many people don't have the risk tolerance to be in the market, let alone own a single stock. What happens if that stock were Enron or Worldcom? That's a lot of risk.
[0] https://news.gallup.com/poll/211052/stock-ownership-down-amo...
[1] https://www.bloomberg.com/view/articles/2018-04-09/where-hav...
No, they don't, this is a common misunderstanding. Including all 401ks, IRAs, directly-held stock, mutual funds, etc., the bottom 80% of Americans own less than 4% of all equities. The bottom 60% own 0.1% of all equities.[1]
[1]: https://medium.com/@MattBruenig/who-gains-from-dow-20-000-ba...
Of course the factory workers $30,000 in the market is going to be miniscule compared to the billionaire, but doesn't means it's not critical to the factory worker.
The fact that a tiny portion of workers also own some stocks doesn't change that fact.
And the fact that $30k in a retirement account is critical to a factory worker, doesn't help your case much. That pittance will have been saved out of already-stagnant wages that have been kept down by corporate management in favor of executive pay and stock buybacks, and will be nearly worthless for retirement purposes no matter what the stock market does. All you've done is reiterate the all-too-common disaster scenario for the working class that comes from favoring shareholders over workers.
The workers' real skin in the game is their labor and the value they produce from it, which is increasingly being kept back from them. They can have everything to gain and nothing to lose by gaining mandatory representation on the board.
It's everything to the factory worker, but it's a rounding error to anybody involved in making decisions that effect that factory worker's everything.
Using that definition of "skin in the game," I'm not sure what the point of the phrase is.
First, your stat ignores pension plans. Second, the bottom 60% might only own 0.1% of all equities, but that might be 50% of their savings/pension plan. I'd call that "skin in the game".
That one worker? If stock prices go up he will end up perhaps 1 more month's worth of retirement savings. Meanwhile his wages are being held down and the value he creates with his labor is being spent on stock buybacks and executive pay, the benefits of which go overwhelmingly to the other 999 people.
And yes, the stat includes pension plans.
So sure, the one guy has skin in the game. His wages have been held down, and in exchange he gets a fistful of coupons that entitle him to a few bucks for every million given to capital owners.
Wide scale elimination of pensions started in the 2000’s. Millions of people still have pensions in the US.
Inequality declines as Union membership rises[1], aka worker representation.
https://www.epi.org/news/union-membership-declines-inequalit...
https://en.wikipedia.org/wiki/Codetermination_in_Germany#Int...
I assume that a civilised discussion can still be held in the US.
It's rigged for the rich, I promise.
http://time.com/money/5054009/stock-ownership-10-percent-ric...
Joe six pack's biggest problem is their own ignorance.
No system has ever provided such high quality, low cost financial instruments with great liquidity and marginal trading costs accessible to anyone with a checking account.
The financial markets we have today are equitable and highly accessible. They are anything but rigged.
Now, you have to have enough money to buy a full share of whatever company you want. So Amazon has a minimum buy-in of about $1,900. One good argument for stock splits is that it makes your stock more accessible.
I don’t know what you mean by “poor people economics” but it sounds like you think saving and investing is beyond their reach. I disagree and I think it betrays more about you than I.
There are certainly times when spending all (or even in excess of all) your annual income is a rational and smart decision. But no matter what your income level, it is always true that some years you must save money aside from paying down loans.
The market is irrelevant for a vanishingly small number of people. The market is ignored by a large percentage of people who could benefit greatly from it.
I’m well aware most people don’t have $500 in their bank account. I would argue that makes equitable market access more important.
What? That's the key method by which people pay for their retirement. Of course they are gaining real money.
I doubt this will go anywhere (I think it's another grandstanding issue for the Bernie-types), but if it does, I'd expect a challenge (with a reasonable chance of success) on Constitutional grounds (see Article 10).
2) Given that corporations exist only as a legal construct, I'm pretty certain that the government has a great deal of lattitude in what it can compel corporations to do or refrain from doing. It's worth noting that the US law also treats corporations as people; however, it does so because of the law itself (1 U.S.C. §1); modifications to that law can alter the nature of corporations in US law.
Whether or not this would be ultimately beneficial, or the principle that the constitution is trying to protect here (don't interfere in the affairs of lawful citizens) is more important in the end are value judgements, and difficult ones at that. I don't doubt that if my circumstances were different I would be making an argument like yours.
We already have a process for dealing with this: amend the Constitution. But unless and until it gets amended, it is the supreme law of the land, and we can't just ignore it because we think something it currently proscribes would "benefit the state".
(I also have a problem with "benefit the state" as opposed to "benefit we the people". The state itself is established for the benefit of we the people; it is not a separate entity with separate interests apart from ours.)
Are there any companies with >$1bn annual revenue that do not do business outside the state that chartered them? If not, then it would seem this could fall under the 'power to regulate foreign/interstate commerce', no?
You must be joking. Supreme Court jurisprudence already says that Congress can regulate crops grown for an individual farmer's personal use as part of its power under the Commerce Clause (Wickard v. Filburn, 1942). Imposing corporate governance practices seems like small potatoes in comparison.
Would you support a bill forcing owners of large houses to set aside some of their space for the homeless? Would you give your squatter a vote equal to your own in matters of deciding how to arrange the furniture and paint the walls?
Rent control is a repulsive manipulation of the market that strangles necessary growth in the housing stock. It privileges a few undeserving people who lucked into rent controlled apartments over the interest of society at large.
https://aeon.co/essays/we-should-look-closely-at-what-adam-s...
The linked article is one of those tedious affairs that tries to deconstruct what Smith the man may have thought about contemporary mercantilist politics or something. It's not an indictment of Smith's ideas, which are timeless.
I am sick and tired of people today attempting to dismiss profound and influential ideas by pointing out that the people who formulated these ideas were complicated people.
Aren't the people prone to doing this supposed to believe in the "death of the author"?
If your resistance against something is motivated by a theory, then clearly what you are against exists in opposition to that theory. So by definition the theory, or at least its connection to what you are against, can't, or is very unlikely to, be well-established. At least not among the people acting against it. Which makes your argument faulty and the majority of this discussion meaningless.
I certainly think people have a greater expectation to control their living costs than they have to control companies. But that isn't even the issue.
The issue is that you say that stocks have an expectation of control regardless of justification. But then justify why there shouldn't be rent control with the same justification you were warning people against. You say your motivation for this is that, based on these theories, you agree with control over stocks, but not over rent. Which means that you are effectively saying that an expectation is only as good as its justification and not that an expectation shouldn't be affected by justifications. Leaving little practical argument left about why you can't move control away from stocks if there is a good enough justification.
However, recently I've been starting to realize that the market is already distorted by Prop 13, so perhaps rent control might simply even the playing field between renters and owners.
In my ideal world, Prop 13 wouldn't be a thing, and homeowners would be advocating for heavy housing development around them to keep property values low (and hence keep their tax bill from going up).
I support the idea of taxing the rich to support the less fortunate so yes, I agree with the general idea behind your bizarrely worded scenario.
This may be zero, since some companies go public with non-voting shares. https://www.ft.com/content/9595e5c4-51db-11e7-bfb8-997009366...
I don't think you have any idea what you're talking about. If a democracy can't repeal a law that's proven to be an error, you'll have quote a dysfunctional system.
Ex post facto (in the Constitution, at least) refers specifically passing a law making an action illegal and punishable after the fact. Actions can only be illegal according to the law in force at the time they were taken.
I mean this is literally what property taxes are for!!! Sometimes ownership/control creates externalities that require removing some of that ownership/control for the benefit of society as a whole.
So are sales taxes, and income taxes are even worse than that. Which of those do you prefer, and for what reason beyond selfishness? Or are you one of those people who believe all taxes are bad, which is tantamount to saying all government is bad?
Changes over time have made shareholders and management less accountable to the public interest generally as charter revocation for gross abuses has fallen into disuse, and have also shifted the balance between shareholders and management (who are, after all, employees.) Shifting the balance between shareholders and employees in a way which applies to the mass of employees rather than management as such is novel, perhaps (though labor law changes, while not specific to the corporate form of business, tend to do that, too), but isn't really different in any fundamental way from the kinds of changes to corporate power relations that have happened through legislative and judicial action throughout the whole period of existence of the corporate form.
Now, if you want to argue the specifics of this proposal, great, but arguing for an expectation-based entitlement for immutability of the privileges and power relations associated with corporate shareholding is, well, indefensible as a reasonable expectation.
Quantity has a quality all its own. You can't analogize the massive scale of enormous wealth to a typical scale of a smallholding without making serious errors.
You're making those serious errors in your analogy.
If you're one of a club of billionaires whose large estates take up all the land, then yes, you should be forced to set aside space for the homeless.
Similarly, if you have massive control over the economy, you have no right to oligarchy. You need to move over and make way for democracy.
> If I bought a share in a company fair and square, I bought that share came with a certain expectation of control. That share is my property. Giving control to people who haven't bought control fair and square is a taking of my property, and as a general heuristic, we should be extremely skeptical of taking people's property for some kind of ostensible good.
Property rights aren't the highest holy, up on some sacred pedestal somewhere. They should only exist to the extent that they serve the public good.
That control is only within the limits on the corporation itself, all within the context of the entire legal system that gives concepts like "corporation" and "shareholder" meaning.
> Would you support a bill forcing owners of large houses to set aside some of their space for the homeless?
I'll see your thought experiment and raise you one. Does share ownership entitle you to direct that the company do something illegal, or immoral? Or that any number of shareholders be able to do so? Of course not. Again, your control only applies within the limits on the company itself.
> Would you give your squatter a vote
Voters and taxpayers are not squatters. They collectively constitute the government that grants corporations certain privileges - e.g. the right to own property or bring lawsuits, even to participate in the political process since Citizens United, all under the shield of limited liability and legal accountability (a corporation can't be imprisoned). The state and its people should receive something in return for that. In the very same language of contracts that you're using, if there's not consideration on both sides then there's no contract.
Don't like the deal? Don't incorporate. Don't try to get that something for nothing. Be a sole proprietor, personally and directly liable for any ill the company does. Good luck. There's a reason others do take that sweet sweet bargain, and not because it's fair to all who are affected.
Nonsense. So tax them more on dividends, if that's needed. Why add more lawsuits from anyone on why AT&T bought x company when "it's not good for the common good"....whatever that is.
I'm a fan of her and I like the parts of the bill that I've seen. I think we do need more regulation on wall street.
> That shift has had a tremendous effect on the economy. In the early 1980s, large American companies sent less than half their earnings to shareholders, spending the rest on their employees and other priorities. But between 2007 and 2016, large American companies dedicated 93% of their earnings to shareholders. Because the wealthiest 10% of U.S. households own 84% 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.
One of the best things I learned from becoming an engineer was the concept of feedback loops and how you need to constantly monitor and dampen them when they start to get out of control. The above certainly illustrates how the wealth gap started to increase over the past 30 years.
I'm not sure what the correct ratio of how to payout mopey to employees vs owners but you could start by looking at what ratio public hedge funds or investment banks payout(like Virtu or GS).
> In the four decades after World War II, shareholders on net contributed more than $250 billion to U.S. companies. But since 1985 they have extracted almost $7 trillion
This is just intentionally obfuscating. What percentage of the dividends paid out where reinvested automatically. What percentage of the cash paid out in stock buy backs went right back into the market, you cant' tell because in the first line she used net contributions, but int he second she only mentions the money flowing out but not the net. It actually could be net positive but that wouldn't fit her narrative.
> My bill also would give workers a stronger voice in corporate decision-making at large companies. Employees would elect at least 40% of directors.
I really like this idea. I assume the directors would be qualified people and not just a random employee.
To be honest the largest issue I see int he markets now is the dictator model where a single founder controls the voting. We've only seen this model in tech work during the bull tech market of 2004-present. 2008 was down but tech still did much better than most other asset classes.
What happens when tech has another 2001 and people want Mark Zuckerberg fired or they want Google to focus on their bread and butter instead of the moon shots that cost them money, or Snap to, well do anything to earn the valuation that they and promises that they fooled everyone with.
Quite the assumption, wouldn't you say? Lots of people find Trump unqualified but here we are. I think this bill would just create more populist, political leaders, only now at work instead of DC.
The consumer advocate who used to be really productive when she didn't spend her time catering to the farther left parts of the democrat's base and playing identity politics introduces a bill that requires companies be X% controlled by the workers. Color me surprised.
I really liked her better when her primary focus was enacting laws (or at least trying) that made it harder for consumers to get screwed by predatory business practices and gave them more recourse when they did. Stuff likes this makes me not want to vote for her though. This sounds like it was purposefully half-baked to appeal to the younger socialist portion of the democratic base even though it has no hope of passing.
I like the idea of giving employees a better share of profits but I think trying to do that by putting a bunch of them on the board is heavy handed (especially when you start talking large shares like 40%) and likely to have a bunch of bad side effects.
Edit: why is this an unacceptable opinion?
Giving workers power in their workplace is exactly "enacting laws that made it harder for people to get screwed by predatory business practicies".
You seem to be doing some circular thinking? Workers do literally all the work, the business cannot survive with no workers. Want to tell me why workers shouldn't have a say yet shareholders who do literally nothing except thirst for profit get all of the say?
I changed the wording from "people" to "consumers" to better reflect what her work was actually about. Not all people are consumers (in a given context), not all customers are consumers, not all customers are consumers and not all
> by predatory business practices".
"Predatory business practices" are generally understood as being directed towards consumers, customers or the competition. We have a whole different vocabulary for discussing businesses that are bad to work for. Predatory business practices are categorically different than profits not being reflected in employee compensation on a macro level and I don't think anyone is going to suggest that addressing one will have much effect on the other.
>You seem to be doing some circular thinking? Workers do literally all the work, the business cannot survive with no workers
Literally everyone in the company is a "worker", CEO included.
>Want to tell me why workers shouldn't have a say yet shareholders who do literally nothing except thirst for profit get all of the say?
Under what circumstances do truck drivers get to choose where the truck goes, what it transports, etc? The share holders own the business and get to exercise indirect control over it in a similar manner as a company telling a hired driver what to do. They get to call the shots but are
There's also the aspect of risk involved in being a shareholder.
I didn't say employees should have no say, just that 40% seems quite excessive and likely to have negative side effects.
My impression of similar system in France where unions attempt to represent the worker was rather bitter. They act in the interest of the union itself, not the workers. As a worker, as was there to be part of a successful organization, yet union opposed directions that made sense for the organization based on some political agenda.
Ignoring your hyperbole, shareholders have tangible, actual property in the form of shares in the company while the average worker does not, and they likely can be replaced rather easily. I'm not sure how simply working at a company should grant more than what the worker accepted when hired. It's not like a single worker or even a group of workers can independently create output similar to what they can at the company.
Actually, shares in a company are a textbook example of intangible personal property as opposed to tangible property.
> It's not like a single worker or even a group of workers can independently create output similar to what they can at the company.
Neither can a single shareholder (or they would); laws were created to create the concept of shareholders and give them rights specifically for that reason, even though capital-providers could participate together I'm ventures by providing debt financing where the upside would be captured by the funded entrepreneur even before joint stock companies existed.
Conditioning this government-created special legal privilege for certain providers of capital on the provision of a minimum level of similar control on those providing labor to the venture only seems outlandish because of the long history of not doing it.
Senator. (While both the House of Representatives and Senate make up Congress, the labels “Congressman” and “Congresswoman” are used specifically for members of the House of Representatives.)
I get what she's saying here but it's not exactly the cause. A counter-argument to this premise could take this line and re-write it as "American corporations exist only because shareholders/VC firms invested capital in them."
And while I don't disagree that CEO pay is nutso today I'm not convinced that employee-elected directors is the way to go. My initial reaction is I don't want to work under populist execs vying for employee votes; I think we get enough political speak from them as it is.
The alternative to democracy is feudalism, which is basically what we have now. You might hold your nose and say "politics" or "populism" but this is how you as an employee can exercise power in the workplace.
I certainly prefer "populist execs vying for employee votes" to "brown nosing employees vying for exec favor".
>> you can change jobs
At the whim of the hiring managers and their bosses etc.
>> start your own business
At the whim of the financiers or by boostrapping yourself with the crumbs the capitalists leave to the working class.
>> move
In fact often one has to move away from one's home, community, and family to find work, because that's where the bosses decided to employ people.
>> do freelance work
Again at the whim of those who have money to pay for your services.
>> or not work at all
If you want to accept a severely reduced lifestyle with the dregs of an under-funded dehumanizing welfare state, designed to force people into employment.
I'm absolutely serious.
This is such laughable hyperbole that I have to wonder whether you work in a skilled profession or you're just another internet commentator. The only way you could think CEOs have absolute authority over you like a king would is if you have a psychological complex.
And how on earth would that be a valid counter argument? It's patently false! Companies _do not_ require shareholder or VC investment to exist. They require people to work at the company and produce a product ("product" being the most extended notion of a company's deliverable).
There's a pretty big difference. Shareholders/VC firms investing capital in them allows the company to expand faster or better allocate resources. They're helpful and make the system what it is, but they're pretty interchangeable from an abstract perspective, and corporations would still exist without them in some way shape or form - maybe different structures of ownership and liability, but they'd be there. Corporations could not, meanwhile, structurally exist as a thing or concept without the government's consent.
(side note: I acknowledge there is no world where the US decides corporations stop existing, and that in all practicality, such an event would probably not result in the actual dissolution of every single US based corporation, but I'm talking theoretically here to make a point - the Government's participation in a corporation's existence is fundamentally different from shareholder's)
> My initial reaction is I don't want to work under populist execs vying for employee votes; I think we get enough political speak from them as it is.
How is political pandering to shareholders (stock growth! dividends! profit!) fundamentally different from political pandering to workers (narrower wage gaps! livable working conditions! sick and vacation days!)? Additionally, working at one of the companies that (at least in word) tries to listen to and pander to its employees, it can be a positive, symbiotic relationship.
I think you're giving workers too little credit - most people understand fundamental economic realities, and that they're not going to get gold plated toilets, beer drinking fountains, and 7 figure entry level salaries (I'd use 6 figure entry level salaries.... but, well, that's already a thing in Silicon Valley, which in addition to the ridiculously nice working conditions many here benefit from, does quite a bit to throw the whole tone of many of these posts in pretty sharp relief =P). Mostly workers would probably just press corporations to redistribute a historically representative portion of profits to workers, improve working conditions in ways that make sense, and focus on the longer term. After all - workers will be there, ideally, 5-30ish years, while many shareholders are looking to pump the stock price as high as they can in the short term so they can jump ship before the decisions that lead to that point come home to roost.
But the premise that companies are only accountable to shareholders is false (or in this case, editorialized)- companies are accountable to the government, and more recently you have companies like FB and SNAP that are only truly accountable to voting shareholders and can choose to not maximize profit for whatever reason.
Lastly, if employees are electing 40% of the directors, I would expect that to politicize the hiring process unnecessarily, and likely lead to far more unionization.
To quote the US Supreme Court: "Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not."
Aren't there? I was under the impression that shareholders can and do file lawsuits against directors and executive leadership. A cursory Google search suggests that this is true.
I'm certainly not suggesting that shareholders can't file lawsuits. Anyone can file lawsuits.
Do you mean lawsuits specifically because companies didn't seek to maximise shareholder value?
A cursory google search also suggests it's not true.
https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?arti...
US Supreme Court opinion: “Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.”
and so on.
Now, it's true that laws reflect society, and if enough people believe something to be correct for long enough, the law will change. It's certainly true that in recent years we've heard more people, more loudly proclaim, that shareholder value is the whole point and should be the law. We've certainly seen legals cases exploring this. Nonetheless, companies have a number of obligations and responsibilities, and those they hold to their shareholders are but some among many.
But this seems to be going off-topic. I was talking about the myth that the law enforces shareholder value above all; not about people neglecting their duty in general. I did say "shareholder value".
The whole point of a 'company' was for investors to hire an 'Executive Officer' sailor, so he could make/rent a ship, hire a crew, buy some stuff 1/2 way around the world, come back and sell it a profit so the investors could make money.
That's it.
And there are definitely laws to protect those interests.
People mostly buy shares and found companies to make money.
There are other motivations and concerns, always ...
But if a group of people are getting together, raising money, to do something other than making money ... there are other words for those: non-profits, NGOs, clubs ...
History seems to disagree, and given that companies predate shareholders, that's not really surprising. In the early modern era, companies were about a convenient way to group together people engaged in a common business endeavour. [0]
In more modern times, shareholders are one responsibility amongst many. The idea that shareholder value is the number one priority always is new, and it's an idea that has done very well over the last three or four decades.
However, according to some, that consensus is already crumbling [1]. Perhaps we'll see the idea vanish over the next couple of decades.
[0] https://en.wikipedia.org/wiki/Corporation
[1] https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?arti...
I've never agreed with that. As a private company you can be in business for whatever reason you want. Maintaining financial viability seems to be necessary, but beyond that "profit" or return for anyone is not obviously an objective. Granted, you'll probably have trouble raising money if there's nothing in it for investors but does that mean they have to become the one and only priority?
I often think a CEO needs to state what they're doing and the investors should decide if they think the plans and objectives of the company (and those running it) are a good investment. Investors can take it or leave it - for what it is. That seems to be what Google did to some extent.
I also say that if the only goal of a company is to create returns, then every company that isn't in a higher profit industry should probably liquidate and use the money to start a hedge fund, or invest in a company that is more profitable. In other words, if your company makes small margins making some widgets, your investors would get better returns if you sell everything and invest in apple. This is a joke of course, but it makes my point. It's up to the company to define what it's objectives are, and it's up the investors to decide what they want to invest in based on those stated objectives of the companies.
I support your side of the argument, but why is it the case that finding a CEO is hard? It seems a bit like becoming president: there aren't many people in the pool who have matching previous experience anyway, and it's not even clear if "similar" experience even applies (Does one company resemble the other, even in the same industry? Different stages of growth, corporate structure, business model, region of operation etc), and much of the job seems to be adapting to new conditions. It seems more about the CEO's reputation and network, is that really just it? You pay for the CEO's access to the Old Boy's Club? Wouldn't the company be better served by spreading the role across multiple people, to avoid the stigma of changing CEOs?
I think this is why it is hard. Look at the people who ran for president in 2016. A lot of people want to be president, but most voters see, among a large pool, at most one person they think would fit the bill (and I think in the last election, a lot of people thought no one did). It's really hard to make a choice in such a situation. In the case of presidential elections, it's simply a matter of procedure that one person has to be selected on a specific day. Looking for a CEO? I'm sure the temptation to keep shopping when none of the candidates look ideal is very appealing.
Well, one point of the article is that these days 62% of CEO income is equity, so in most cases the CEO is also an "investor".
It does seem to me that creates a conflict of interest, in that a short-term plan to increase share price may not be in the long-term interests of the company. Yet, the CEO will likely not be around for the long haul and benefits more from short-term thinking.
I'm generally not a fan of Warren, but a good bit of this makes sense to me.
I think the most questionable part is: "At least 75% of directors and shareholders would need to approve before a corporation could make any political expenditures". That is just thrown in there with no explanation, and is likely intended to cripple Republicans by not allowing campaign contributions in almost all cases. That is likely the poison pill that will doom this legislation.
The corporation has duties to its shareholders--it can't defraud them, for instance--but those duties are actually quite limited. In most cases the remedy for unhappy shareholders is just to sell their stock.
The CEO doesn't own the corporation either, but the CEO can direct the resources of the corporation. In any sort of operational sense, the CEO only reports to the board of directors, not to the shareholders entire.
For example Google has Class A - (GOOGL) and Class C - (GOOG)
The meat of the article:
If I own an object I can use it, or not use it, sell it, rent it, give it to others, throw it away and appeal to the police if a thief misappropriates it. And I must accept responsibility for its misuse and admit the right of my creditors to take a lien on it.
But shares give their holders no right of possession and no right of use. If shareholders go to the company premises, they will more likely than not be turned away.
They have no more right than other customers to the services of the business they “own”. The company’s actions are not their responsibility, and corporate assets cannot be used to satisfy their debts.
Shareholders do not have the right to manage the company in which they hold an interest, and even their right to appoint the people who do is largely theoretical. They are entitled only to such part of the income as the directors declare as dividends, and have no right to the proceeds of the sale of corporate assets — except in the event of the liquidation of the entire company, in which case they will get what is left; not much, as a rule.
Yes, you're right, our inane system of corporate profiteering at the behest of everything else _is_ an incredible and sad joke.
If by 'you' you mean 'the owners' who are the share holders, then yes. What you'll find is that generally share holders do want economic returns at the cost of anything else, especially when so many of the owners each own only a tiny slice of many different businesses. Part of it is that it will be difficult for the owners to come to an agreement on anything else and so they'll go for economic returns.
There is also a selection effect concerning when executives at a company are replaced. Are owners choosing when to replace executives in such a way that selects for executives who put short term profitability over other concerns?
NO. I guess what I mean is that the FOUNDER(s) of a company have a reason for it to exist. They get to define everything about it. If at some point they need to raise money by selling shares, they get to define what the shareholders get in return for their investment. The share holders are free to take it or leave it. This scenario was probably present in every public company at some time in its history. AFAIK no company has ever been created via IPO.
Even if a group of founders (who may also be initial private investors) creates a new company, they define a purpose. It may be to "make money doing X" or it may be "develop a better Y" just because they are into Y, Or "cure disease Z", establish a human presence on Mars, build a better search engine. Most founders probably want to make some money - otherwise we call it philanthropy - but that doesn't mean they are mutually exclusive. But in every case I think the company exists prior to 99 percent of the investment that comes after something has been defined beyond profit.
And they tend to take the offers from founders that give them voting power to decide the reason for the company to exist. If a founder wants to raise money without trading away power in the company they can try to sell such shares, but they should expect far less interest in people wanting to buy them.
Also, should we really call them shareholders or investors at that point? They are more like backers, similar to people who spend money on kickstarter.
The problem with this is that a company that maximizes profits is worth $100/share and the same company with other priorities is worth $70/share -- not zero, but if you want to say "people who don't like it can sell their shares" then the bid price as soon as the change is announced is $70/share and the people who didn't consent to that will want to know who to go to for their other $30/share.
A possible solution to this is to require unanimous consent to make a change like that, so you have to buy out the dissenters ahead of time. But then you're going to have holdout problems.
The other problem without a unanimity requirement is that once the company is at $70/share, anyone can buy a majority of shares at the discounted price, change the policy back to profit maximization and then resell them for a large profit.
A better answer to all of these things is for companies not to have such diffuse ownership. It's a lot easier to convince one person or five people to do something like this and stick to it than to try to do the same thing for thousands.
And can't companies already do this? If something is in the company's charter, they do it even if it isn't strictly profit-maximizing, no?
> I also say that if the only goal of a company is to create returns, then every company that isn't in a higher profit industry should probably liquidate and use the money to start a hedge fund, or invest in a company that is more profitable.
It's not just about returns, it's about risk-adjusted returns. Companies with low margins typically also have high stability -- or lower share prices, so that the P/E ratio still reflects the level of risk.
And poorly performing companies often do get liquidated.
[1] https://en.m.wikipedia.org/wiki/Works_council
https://en.wikipedia.org/wiki/Codetermination_in_Germany
Worker representation at the board level is good for companies as well because it can encourage pay restraint when the company really can't afford a pay rise. A board of very rich people telling you the company can't afford a pay rise for you is very different from some of your fellow workers saying the company can't afford a pay rise.
The German law goes a lot further than this law does though since it applies to all companies with over 500 employees.
Considering Germany is an economic powerhouse this law probably isn't harming the economy.
This is a 100% match to the remarks made in the article.
[1]https://en.wikipedia.org/wiki/Codetermination_in_Germany#Int...
Somehow the work gets done!
I agree. We should aim for nothing less than paradigm shift.
https://en.m.wikipedia.org/wiki/Working_time#Average_annual_...
This my experience from living 5 years in the former East and afterwards moving to the West (already 7 years).
There’s nothing here that Marx didn’t articulate ~150 yrs ago.
They get to use an artificially cheap currency (cheap for them) to drive the largest trade imbalances on earth. They're plundering the Eurozone and EU, just look at the trade surplus they have in their own economic region ($180b trade surplus just with the EU alone). Were they using their own currency, their exports would suffer immensely. How long can that destabilizing arrangement continue? Not much longer, judging by several of their fellow Eurozone nations.
Even with all of that, their median household net worth is still lower than the US.
Seriously, I don't understand, what does a cheap currency (what does that even mean) have to do with trade surplus?
The way international trade works in theory is like this: when a country is running a trade surplus, demand for its currency increases, so that other countries can buy its goods. That extra demand drives up the exchange rate, which makes its goods more expensive, which drives down exports, which brings the balance of payments (exports minus imports) back into equilibrium.
What happens in the EU is that, because you have a shared currency, this balancing mechanism breaks down, and so trade imbalances between countries can only be corrected via deliberate subsidies (exactly as happens between rich and poor regions inside the US, for instance).
But, more than any other EU member, Germany has blocked this kind of policy, choosing to interpret trade imbalances in moral rather than economic terms (southern countries are too lazy, laid back, inefficient, etc).
Are poor regions in the US effectively assisted by subsidies? I feel in the EU the main problem is lack of integration, for example if I design a product here in The Netherlands, it would be a lot cheaper to set up a factory in say Poland or Spain, but I'd be hesitant to do that because of cultural and language barriers. I suppose that's less of a problem in the US, though in the US distances are greater.
What I'm saying is that, once you remove currency mechanisms which automatically bring into equilibrium the balance of payments between EU member states, you can have permanent trade imbalances between countries. German exports remain artificially cheap within Europe because they are Euro-denominated. So Germany keeps racking up balance-of-trade surpluses, which then allow it to go into the southern countries and buy up real estate and major companies, so that they become the effective owners of the country. Obviously they have a vested interest in maintaining the current system.
> Are poor regions in the US effectively assisted by subsidies? I feel in the EU the main problem is lack of integration, for example if I design a product here in The Netherlands, it would be a lot cheaper to set up a factory in say Poland or Spain, but I'd be hesitant to do that because of cultural and language barriers. I suppose that's less of a problem in the US, though in the US distances are greater.
There are quite a lot of factories in southern Europe, because salaries are much lower, but that does not really help the southern countries much, as the profits flow back north into their parent companies' countries. Obviously over time, salaries in the south will also tend to rise, hence the enthusiasm of Germany for an open-borders policy which floods the entire European market with cheap immigrant labour, thus holding wage levels low.
Not only a good economy, but it still has industrial output. There are plenty of big German car companies. It's not just "services". Plenty of politicians want to "bring back those blue collar jobs"
Do they really, or is that a soundbite they can use to appeal to their demographic?
http://dsausa.org
”We believe that working people should run both the economy and society democratically to meet human needs, not to make profits for a few. ”
Sounds pretty similar to the thinking behind the German setup.
These have poor reputations and are only getting worse.
The quality of Audi/VW and BMW are no longer the cutting edge. Their mechanical components are known to fail often and their beauty(the biggest feature) is on par with GM and Ford.
Every 15-20 years it seems like car companies get complacent and need to be affected by the market to 'wake up'.
German cars have always been about luxury and performance,not beauty (that would be the italians) and they are still top of the pile. The M3/M5 are the definitive sports sedans still, the S-Class is the definitive full-size luxury sedan, and Porsche is the go to brand for performance sports offerings (look at caranddriver's website, Porsche has 0 offerings with less than 4 stars).
New complicated features aren't as reliable as simpler old ways, but "breaking occasionally" and "expensive to maintain when old" aren't really turn-offs for the people who buy those cars, especially on short term leases with covered maintenance.
Germany is economically successful. But here is few things for you to know about it: 1. the industry taxed near to the limit. 2. Welfare is not cheap by any means. 3. Germany is an ageing country, and the amount of welfare payouts will go even further.
I not fan of idea that a company can be public, nor the form of relationships in between its owners and management that evolved in the USA: 1. I find the idea that a man owning a single share of the company can sue the management to death for doing virtually anything. 2. The subsequent dominance of extreme CYA attitudes that American managers are famous for. 3. The fact that company ownership became an extremely bureaucratised thing.
I'm a big believer that a business must have an owner. My own experience working in public companies: an omnipresent atmosphere of "ownerlessness" and people not minding "leaving things broken" for reasons that they are not paid to fix them. Without a clear "boss" around, work tend descend into being a Brownian motion. And all of that gets progressively worse closer to C-suite offices, if the company is of type that changed few generations of management.
Words of my father: "a collective ownership of business is like life in family where a woman has 10 husbands, all trying to make love to her at the same time."
Want to explain to me how this is even a bad thing? It sounds like the Germans have solidarity for their fellow people/workers and realize everyone should be provided the basics for a peace of mind and overall better workers that can rest and enjoy life outside of work.
American capitalism doesn't have to happen everywhere. It's a system that provides for the few instead of the many, unlike Germany that provides for the many instead of the few
I believe Germany can do even better if they can find ways to reduce the ratio of people in workforce to welfare recipients. Don't forget, we talk about that in the context of EU. Germany is carrying half of EU on its shoulders.
>it sounds like the Germans have solidarity for their fellow people/workers and realize everyone should be provided the basics for a peace of mind
Doing just "basics for a peace of mind" is doable with not much less, but nevertheless less money. The few developer countries in Asia can show how to do that well. My main criticism is that Germany's welfare is more expensive that that of other countries because not only direct payouts are moderately high, but welfare paid infrastructure and services are taking quite a lot too: lifts for pedestrian overpasses in the middle of nowhere, free transit ticket for people with minimal and non-mobility hampering disabilities, access to free housing (depending on a state) for people with income that qualifies as high in countries just across the border... and on and on
Big issue with all extensive welfare systems in the West is that in them, needs of people in need are not being known by people who are entrusted with administering welfare to them. I can easily pull out many example of welfare states where people in need live miserably. When the welfare does not benefit to the person in need, what's use of it? In that case it just becomes wasted money.
With all my militant atheism, I can give high mark to welfare administrators in the gulf region. Zakat distribution by mosques is very straightforward, addressing needs of people in need in the most straightforward way.
>and overall better workers that can rest and enjoy life outside of work.
I believe a professionals can enjoy life even more if they simply get higher salaries. In that context, I believe that German labour councils serve a good role, making people understand that "they can't milk a dead cow."
It is very good when both sides can come to terms knowing how much money they can extract from the business before it kicks the bucket.
That's a silly argument. US citizens make more on average than German citizens. Both systems provide for the many (with the US arguably providing moreso for that middle of the curve).
The problem is the unfortunate people on the left side of the curve who get hit with medical bankruptcy, a loss of industry, etc. Those people get screwed in the US where there is a better safety net in Germany.
This is an absurd and invalid metaphor. This is a typical attempt at oversimplifying and reducing complicated networks into a nonsensical scaled down version. You use different management techniques for teams of 2 vs 10 vs 50 vs 100 vs 1000 vs 10,000 vs a state vs a nation vs the world.
If there is 2 people on a development team, we can largely get by on vocal communication of goals, ideas, tasks, etc. If I'm working on a team of 100 developers, you can't possibly communicate goals, ideas and tasks effectively person to person, now you need to add bureaucracy, automated systems, layers of management, or split the 100 developers into small teams so they can have the person to person communication with team to team liaisons (or insert X strategy of the week for managing large software projects with many people).
You state the following, clearly as problems with 0 explanation: >1. the industry taxed near to the limit.
A useless truism
>2. Welfare is not cheap by any means.
A useless truism
>3. Germany is an ageing country, and the amount of welfare payouts will go even further.
A useless truism
>1. I find the idea that a man owning a single share of the company can sue the management to death for doing virtually anything.
Please be more specific of what "virtually anything" means and please show a "virtually anything" lawsuit.
>2. The subsequent dominance of extreme CYA attitudes that American managers are famous for.
Covering your ass is an unavoidable outgrowth of large systems of people. When doing things at scale, redundancy and fail over is extremely important.
>3. The fact that company ownership became an extremely bureaucratised thing.
Bureaucracy is a necessary outgrowth of large systems of people. Yes, it sucks that you can't coordinate your team of 1000 on a whim, like you can a team of 2, but this is unavoidable at scale, do to the communication gaps between large networks of people.
> I'm a big believer that a business must have an owner. My own experience working in public companies: an omnipresent atmosphere of "ownerlessness" and people not minding "leaving things broken" for reasons that they are not paid to fix them. Without a clear "boss" around, work tend descend into being a Brownian motion. And all of that gets progressively worse closer to C-suite offices, if the company is of type that changed few generations of management.
Do to your clear lack of material understanding of large systems of people, I find this anecdote dubious.
Surely you are also a big believer that a country must have a king. If not, why not?
> Words of my father: "a collective ownership of business is like life in family where a woman has 10 husbands, all trying to make love to her at the same time."
Quotations aren't even arguments if they come from famous people.
>Surely you are also a big believer that a country must have a king. If not, why not?
No, I believe that monarchies are weak, and risky. There might be modern day monarchs doing best for their realms, but the chance that after 3-4-5 good successions will come a man "who wrecks it all" is just too high. This is what history has demonstrated.
In case of business, the risks are not human lives. In case of a failing business, an employee is free to vote with his feet at any moment, moreover if he is valuable specialist in a competitive market. In such circumstances, business owners are compelled to do well do deter desertions. This is in big contrast to command economies dominated by state businesses. Speaking about command economies, that not necessarily assumes communists countries - just how much of F500 a decade ago were de-facto state co's? GE - with net negative tax rate, GM - needs no explanations, defence companies - being de-facto one with their states in every country, agri businesses with roots in banana republics, dozens of megabanks kept alive by financial life support from taxpayers.
> In case of a failing business, an employee is free to vote with his feet at any moment, moreover if he is valuable specialist in a competitive market.
A non-democratic economy works for certain people under certain circumstances. That is simply not enough.
Equating democratic elections, the act of freely chosing how you run your society, to what amounts to fleeing a sinking ship is beyond ridiculous. So is calling the US a command economy.
It actually is a recurring problem with monarchies (and often that's how democratic republics get established); heredity is no guarantee of competency.
Not that I'm advocating we go back to that or anything.
That said even though democracy is quite an awful system, it's probably the least awful of the alternatives. We, the people, are very unlikely to meaningfully change anything in any given election - but that power is, at least technically, there. Whereas if you have an awful monarch/dictator/life serving republic/etc then your only option is a bit messier.
If the manipulation is completely and totally successful, then shouldn't they be able to maintain a higher approval rating than just 15%?
The only reason people care about the president is because he maintains a high visibility throughout his term. Even then it's very superficial. I'd be extremely surprised if the average voter could list 5 actual effected policy decisions of Obama that they liked/disliked. Yet they will love or loath him in spite of the lack of that knowledge. The various videos demonstrating this effect are my favorite. Individuals will be surveyed on what they think of described "Obama" policies, which are actually Trump policies - or vice versa. Their view on the policy invariably has little to nothing to do with the actual policy, and everything to do with the name attached to it.
Presidency sees a lot of marketing from each side, so high approval ratings might be more difficult to maintain, but congress should be far less of a battleground.
If you’re correct, then theres no reason for them to have 15% approval except out of sheer laziness; just as no one questions them during the election process, no one should be questioning during the term too
It sounds like we tried 100s of different things since we got rid of royality and after a lots experiments 'representative' democracy was proven best.
I think it's more the case of the new royality finding it quite comfortable and this is one of the standard FUD lines we get.
The rulers don't have to be particularily benevolent to promote the people's interests if their interests and the people's interests are the same.
> Only a democracy will promote the interests of everybody.
Doesn't the first statement contradict the second?
US median household annual disposable PPP income is around $34,000.
German median household annual disposable PPP income is around $25,000.
Note PPP means adjusted for cost of living, so that is not hiding the difference.
There is likely some differences in household makeup, etc., but it seems unlikely that any demographic difference is going to make up for Germans having ~25% less disposable income.
So somehow the US system is generating significantly more disposable income for its people.
[1] https://en.wikipedia.org/wiki/Median_income
Also - this does not take into account additional costs such as healthcare that will pull down the US amount.
The statistic here tells us that the person right in the middle of the American income distribution makes more than the person in the middle of the German income distribution, even when disregarding the actual incomes at other points in that distribution.
But household income is very tricky to measure and for example its unclear if they include health expenditure in exactly the same way
Per capita it's equal to over 20% of the median full-time wage ($50k).
My point is that a life of comfort is not the ideal to which we should aspire, and that humanity's accomplishments have not come from people who didn't want to bother exerting themselves.
As I've said previously, European social policy is basically rest-and-vest at civilization scale.
You are equating a life of comfort with happiness. A lot of people have a more nuanced ways of evaluating their lives, where they value facing challenging and meaningful problems while also seeking stability and comfort.
It's why we have better adjectives to describe a good life than "happiness", i.e "fulfillment".
> humanity's accomplishments have not come from people who didn't want to bother exerting themselves.
Many of humanity's greatest breakthroughs came from people who were specifically insulated from the uncertainties of daily survival. From aristocrats experimenting with physics, to lifetime tenured monks (and later academics) who were given the day to day security to pursue lines of thought that otherwise wouldn't be considered.
Despite the oft-repeated cliche, necessity is more often the enemy of invention. Necessity serves as a pruning mechanism to select the best hypothesis of the many that were created when resources were plentiful.
That's a fantastic way to put it. If we aren't being productive to improve happiness (directly or indirectly), then why are we doing it?
Some grand, hand wavy idea of great fulfilment somewhere down the line doesn't cut it, because you know what never built a great bridge, cured a disease, or discovered a new particle? Living with crushing debt, stagnant wages whilst working paycheck to paycheck.
Back in my day, every Philosophy 101 curriculum included John Stuart Mill, who had this to say.
"Human beings have faculties more elevated than the animal appetites, and when once made conscious of them, do not regard anything as happiness which does not include their gratification."
You're using a very narrow definition of happiness. A uselessly narrow definition IMO, and apparently for no reason but to spread bigotry. Most people wouldn't be happy knowing they hadn't achieved anything (see: Maslow's hierarchy of needs). Even the otherwise rather short-sighted "Objectivists" tacitly accept this view, with "enlightened self interest" being their phrase of choice to avoid acknowledging the origin of that thought.
Modern Germans do not lack in accomplishment. They just choose to balance goal-directed work with enjoyment of its fruits, instead of staying on the treadmill past the point of diminishing returns. Here in the US, there's a bit of a fetish about claiming to work super-long hours to satisfy a Calvinist "work is virtue" image, while actually goofing off for (at least) half of that whenever nobody's looking. That's really stupid. The European approach of actually enjoying that time with family and friends guilt-free seems smart, compared to spending it in the office neither being productive nor having fun.
Then why are so many people complaining about the cost of living, housing, healthcare, education etc? Could someone remind us what is and what isn't included in "disposable"?
The US median cost of living is lower than in: Germany, France, UK, Australia, Sweden, Finland, Canada.
Healthcare is a very legitimate complaint. It's plainly outrageous. Even in the case where the bill is often mostly footed by an employer, that comes out of wages to one degree or another.
Housing is not a legitimate complaint (everyone doesn't live in NYC, LA, Seattle and SF). The median US costs on rent and housing are lower than any comparable disposable income nation, and you get far larger accomodations (space) in the US than the other nations.
Education is not a legitimate complaint. The US is overflowing with modestly priced, high quality in-state university choices, including quite affordable state schools. If you spend $160,000 on a shit paying degree from a tier two school for no good reason, that's on you. You don't get to bitch about doing something that dumb when you could have gotten the exact same degree for $40,000 and paid for half of it with a part-time job over four years.
Could you please refer me to a source for cost of living comparison? I am not disputing this assertion, I have just been unable to find a good source comparing cost of living between countries.
$40,000 euros for a degree is still a ridiculous amount. It costs $11,000 to go to Oxford per year right now, and before the ridiculous fee increases it would be about $11,000 for a 4 year degree.
It's about $5,000 per year on average across the EU, with some countries offering free tuition. Because, hey, it turns out educating people ends up a net benefit to society!
Education benefits but degree mills whether Asia, America or Europe don't benefit much. And this is increasingly common.
I don't think this is accurate. Maybe it used to be, but not anymore. For example, Numbeo says:
> Rent in Germany is 30.85% lower than in United States (average data for all cities).
https://www.numbeo.com/cost-of-living/country_result.jsp?cou...
It would be better to find more official data, but I wasn't able to find anything for Germany.
> Education is not a legitimate complaint. The US is overflowing with modestly priced, high quality in-state university choices, including quite affordable state schools. If you spend $160,000 on a shit paying degree from a tier two school for no good reason, that's on you. You don't get to bitch about doing something that dumb when you could have gotten the exact same degree for $40,000 and paid for half of it with a part-time job over four years.
$40,000 for four years of education + living expenses? Do you think students are living out of garbage cans? $10,000/year will probably cover in-state tuition + books/fees/etc., sure, and what do you think is a reasonable cost for housing, food, transportation, etc. for a student?
[0] https://news.ycombinator.com/item?id=17766788
https://en.wikipedia.org/wiki/World_Happiness_Report#2018_Wo...
So basically Germans are equally productive, hour for hour, but have collectively chosen more free time over more purchasing power.
(Also that chart has 2016 data for the US and 2013 data for Germany, making the comparison somewhat awkward)
If the German government cuts funding for those two sectors, passes on the savings to people by reducing tax rates, and requires them to pay for those services out of pocket like the US, the disposable income may reach parity, but the people would probably be worse off in real terms.
They all have healthcare when they need it and have no health-related bankruptcies or anxiety over such. Having a part-time job isn’t crippling to their health and safety. Their transportation systems are cutting edge as well.
If you combine only the tangible cost benefits of healthcare and transportation availability, that should account for approximately the difference in disposable income.
Household disposable income is net including those social benefits, so the complaint is incorrect. Here's the definition used in these datasets:
https://data.oecd.org/hha/household-disposable-income.htm
These PPP income are pretty hard to compare. You have so much local variability within a country that you can only really compare the same kind of family situation in the same kind of city. You also need to compare against what you get from the system. For example, in the US, a part of your revenue is in your PPP if you are not ill, but if you get a cancer, you are good for a good stack of expenses depending on your health insurance, in the EU, the health insurance will cover all the costs. If you are in Denmark, you get access to free education (you even get paid to study), in Germany education is free.
As a French who has been working/living is several countries in the EU and have friends nearly all over the world, I can say, the real factor, if you are an engineer, is where you live, that is, the cost of housing. Because the salary as an engineer will be nearly the same in the country you live but the cost of living can vary a lot.
We in the US fund our defense and Germany's defense (and cover the rest of the free world too) and still end up with more post-tax income than Germany does. That's a massive productivity gap.
I agree that the USA has used its military to keep a kind of pax americana. But that is not the complete story. The super expensive wars on Afghanistan and Irak didn't had anything to do with "the free world" and a lot with oil.
BTW That may have changed nowadays, but it was a very good idea that Germany had a low military budged.
It's all about priorities.
What's the point of 'bothering' to keep a token airforce airworthy when your total military personnel is capped to far below a useful amount (350,000) for any reasonable attempt at defence, and for historical reasons you are incredibly adverse to using them overseas?
Is that like preemptive forward defense in other peoples countries?
Disposable income doesn't factor in the higher cost of healthcare (huge) or other "taxes" that aren't taken into account.
Purchasing power is a metric that needs to be adjusted by actual cost of living and quality of such living.
The only fair way to compare healthcare over time is if the exact same quality of care drops in price over time.
From your, presumably different view, what would you prescribe? Allow taking advantage of workers until those in power find enough wealth, and only then give workers a voice?
1. US - $19.42T GDP (25% of world GDP) 2. China - $11.8T GDP 3. Japan - $4.84T GDP 4. Germany - $3.42T GDP 5. UK - $2.5T GDP 6. India - $2.45T GDP 7. France - $2.42T GDP 8. Brazil - $2.14T GDP 9. Italy - $1.81T GDP 10. Canada - $1.6T GDP
Personally, the one that shocked me is Italy, what with the all you see about the country's debt problems, but I hear a lot of that is due to corruption and tax evasion.
[1] https://www.investopedia.com/articles/investing/022415/world...
Having seen piles of headlines about stagnant wage growth in Germany, I had to look up some stats, and found these links:
https://tradingeconomics.com/united-states/wage-growth https://tradingeconomics.com/germany/wage-growth
Except for 2009/10 being particularly bad in the US, wage growth seems much stronger in the US.
And when I look at tech salaries in the EU, I'm not sure I want that. Or at least that attitude to compensation.
This the same everywhere outside the US though. Salaries are much lower as the skill ceiling tends to be much lower and there is more skilled labour available.
The US just has a huge amount of investment, a small skilled labour force and a more meritocratic outlook in general (bear in mind, even just 50 years ago, being a manager or not would depend on your family and school in the UK for example, and you wouldn't even eat with your subordinates).
I don't think worker representation would change much there, the Americans already have it so good.
But anyway, it makes arguments of "look how well Germany is doing" not very compelling to me.
I don't hate the idea of codetermination tbh, but I do have lots of questions about how it would work in practice.
At the very least you have to ask whether contractors get a vote, which gets you into a question if incentive and which workers are more or less aligned with a company.
Excerpt from "The Machinery of Freedom", by David Friedman:
> The socialists who advocate such institutions do object to our present society and would probably object even more to the completely capitalist society that I would like to see develop. They claim that the ownership of the means of production by capitalists instead of by workers is inherently unjust.
> I think they are wrong. Even if they are right, there is no need for them to fight me or anyone else; there is a much easier way to achieve their objective. If a society in which firms are owned by their workers is far more attractive than one in which they are owned by stockholders, let the workers buy the firms. If the workers cannot be convinced to spend their money, it is unlikely that they will be willing to spend their blood.
> How much would it cost workers to purchase their firms? The total value of the shares of all stocks listed on the New York Stock Exchange in 1965 was $537 billion. The total wages and salaries of all private employees that year was $288.5 billion. State and federal income taxes totalled $75.2 billion. If the workers had chosen to live at the consumption standard of hippies, saving half their after-tax incomes, they could have gotten a majority share in every firm in two and a half years and bought the capitalists out, lock, stock, and barrel, in five. That is a substantial cost, but surely it is cheaper than organizing a revolution. Also less of a gamble. And, unlike a revolution, it does not have to be done all at once. The employees of one firm can buy it this decade, then use their profits to help fellow workers buy theirs later.
> When you buy stock, you pay not only for the capital assets of the firm—buildings, machines, inventory, and the like —but also for its experience, reputation, and organization. If workers really can run firms better, these are unnecessary; all they need are the physical assets. Those assets—the net working capital of all corporations in the United States in 1965—totalled $171.7 billion. The workers could buy that much and go into business for themselves with 14 months' worth of savings.
> I do not expect any of this to happen. If workers wanted to be capitalists badly enough to pay that sort of price, many would have done so already.
https://www.vox.com/2018/8/15/17683022/elizabeth-warren-acco...
And one key clause from the bill:
> "More concretely, citizen corporations would be required to allow their workers to elect 40 percent of the membership of their board of directors."
This is a bold proposal, and it's worth considering what consequences it's going to have. Companies are already wary of going public these days, with many unicorns staying private longer, and some public companies even going private again. This bill would sharply accelerate the trend for one very simple reason: A privately held corporation would now be much more valuable than a public corporation. A corporation run by leaders who are 100% focused on optimizing (long-term) shareholder profits, will generate more (long-term) profits than a board that's 40% worker-elected. By definition then, as soon as a private company goes public, they can expect an immediate valuation hit.
As more and more companies go/stay private, to avoid the above hit, the accessibility of public markets becomes weakened. Right now, any average Joe from Main Street can invest his savings into Google stock, and participate somewhat in corporate success. Not so if companies decide to remain private instead.
I think the intent behind the bill is in the right place. Mega-corps are strangling our democracy (see the recent article about Intuit lobbying against tax-filing-reform), and their successes are being enjoyed primarily by the 1%. But I think we need a different solution to this problem. Higher taxes on the 1%, a stronger social safety net, campaign-finance reform, and better enforcement of anti-trust laws, would be my preferred approach for tackling the current problems.
The same is true with a board that's focused on short-term shareholder value. I would argue that worker representation would lean towards the long-term vs. shareholders.
Shareholder accountability might be something worth looking at but it also seems like a distraction for politicians who are incapable of tackling the real issues.
Dear leftist politicians: please don't attack successful companies and sectors and stop stoking the populist fervor of your hippy base and proto-socialist newcomers and tackle the real issues of healthcare and housing costs which have proven market based solutions.
https://www.epi.org/news/union-membership-declines-inequalit...
Labor unions hamper corporate options and flexibility and hopefully soon they will all be replaced by machines maybe that would finally make it clear to marxists how much of a commodity labor really is.
Sure, I'm not going to disagree there.
>Labor unions hamper corporate options and flexibility
So? They no longer will have the option to screw over their workers with low wages and high cost benefits and I think that's an absolute win for the lower 80-90% of the country.
If the costs for major expenditures were lower people will have more resources to climb the socioeconomic ladder, and we won't need to decrease the dynamism of the labor market and saddle corporations with more obligations to achieve that.
Oh and companies shouldn't pay for employee healthcare, that's a WW2 relic that only benefits health insurers by keeping costs high.
Good, the workers make literally all of the profit and without them the company would cease to exist or make any money. It's a hoop they should have to jump through. The system we have now is maintaining the status quo, so I think you have that backwards.
Are many companies accountable to shareholders? The large ones anyway. How many shareholders are engaged?
The money distribution has been very much to executives. From Fortune[1]:
> According to a new report on CEO pay from the Economic Policy Institute, > chief executives at those 350 companies made $15.6 million on average in > 2016—271 times what the typical worker earns. Though CEO compensation has > fallen slightly in the past few years, it has increased by more than 930% > since 1978.
Theory is different from practice.
[1] http://fortune.com/2017/07/20/ceo-pay-ratio-2016/
Really though it should be up to companies to align themselves to whatever vision they have. Politicians should just stay out of it.
* Tax share buy-backs into non-existence. All the available evidence indicates that corporate buy-backs help nobody but the corporate officers who authorize them.
* Make corporate dividends into pass through transfers. In fact, consider giving corporations that pass on X% of their profits a tax break.
* Severely lower taxes on options and share-in-kind salaries. This is probably the most important thing: you want to encourage corporations to pay their workers in equity.
* Ridiculous executive compensation is a problem in theory but it doesn't really matter, frankly, how a corporation divides its income payments. The only way to generate meaningful wages and wage growth for specific workers is to strengthen those worker's negotiating power. That means stronger unions. There's a lot the government can do to support unions but a good start would be making union dues tax free. In fact the government should probably collect and distribute all union fees. It becomes a standard withholding. Codetermination where unions get board seats is also good and has worked wonders in Germany.
* A Job Guarantee is perhaps the most effective solution but is somewhat radical. But there are incremental steps that could be taken in this direction. Tax breaks on worker training et al are the first step. There was a time, believe it or not, when corporations invested heavily in their workers. Today training is regarded as pure overhead and the result are workers that are, frankly, not that useful because they are over-specialized. The government should also provide tax credits (!) for personal expenditures a worker undertakes for their own training. This goes beyond expensive college courses: workers should be encouraged to attend conferences, seminars, workshops, buy books, and donate their skills in the service of charity. (Yes tax credits for open source.) Encouraging worker training and worker re-training through generous tax breaks would go a long way towards the structural unemployment that grips much of Europe.
The massive inequality that's drowning the West isn't really a problem of of corporations abusing workers. The problem is the governments who have willingly decided to serve the corporations and abandon the workers (combined of course with the insane desire to not build new housing in their major cities). The result is the most slack labor market ever and wages that have gone nowhere for forty years while corporations hoard giant useless piles of cash.
Why would they? Wages reward work. Profits have nothing to do with this.