Regulatory Commissars

The Never-Ending War on Capitalism

Elizabeth Warren's Accountable Capitalism Act has nothing to do with capitalism or accountability.

Michael Swartz · Aug. 17, 2018

Leave it to the Left: Success by someone not dependent on government is automatically suspect and obviously an oversight of regulation. It’s greed that unfairly exploits loopholes unavailable to the average person — and closing them is the job of a senator with her eye on the White House.

Leftist heartthrob and prospective 2020 presidential candidate (even though she’s insisted there’s no interest on her part) Elizabeth Warren (D-Cherokee) was the one stepping into that breach. The senator has introduced what she calls the Accountable Capitalism Act, a measure she detailed more deeply in a Wall Street Journal op-ed this week.

Her bill hasn’t drawn any co-sponsors, and its prospects of getting through the Senate are between slim and none, but that’s not the point of the legislation. To Warren and her fellow travelers, there’s really no such thing as “too big to fail,” nor can they resist the corollary “too small to control.” But it’s much easier to pile on to the popular perception that large corporations are greedy — a perception gleefully aided by the leftist Democrats who aspire to live like the so-called “One Percent” but try to portray themselves as part of the 99%.

To throw the tofu equivalent of red meat to that crowd, Warren complains in her op-ed, “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.”

Her solution? “Corporations with more than $1 billion in annual revenue would be required to get a federal corporate charter,” she explained, “The new charter requires corporate directors to consider the interests of all major corporate stakeholders — not only shareholders — in company decisions.” She continued, “Shareholders could sue if they believed directors weren’t fulfilling those obligations.” In other words, this bill would be the Holy Grail for trial lawyers.

It’s this aspect of Warren’s proposal that rubs National Review’s Kevin Williamson the wrong way: “Warren’s proposal is dishonestly called the ‘Accountable Capitalism Act.’ Accountable to whom? you might ask. That’s a reasonable question.”

Williamson has the answer to his own rhetorical question: “The answer is — as it always is — accountable to politicians, who desire to put the assets and productivity of private businesses under political discipline for their own selfish ends. It is remarkable that people who are most keenly attuned to the self-interest of CEOs and shareholders and the ways in which that self-interest influences their decisions apparently believe that members of the House, senators, presidents, regulators, Cabinet secretaries, and agency chiefs somehow are liberated from self-interest when they take office through some kind of miracle of transcendence.”

Nor does it necessarily have to be government. Warren’s proposal leaves a low threshold of 25% plus one share to preclude corporations from proceeding with any political activity. Imagine a group of wealthy left-wingers buying up just enough of a minority interest in a conservative-leaning corporation — such as a large gun company — to put the brakes on political advocacy on their behalf. Losing their investment would be a small price to pay for eliminating a company like Remington Outdoor or Sturm Ruger.

And that’s the main point. Companies sometimes succeed in ways that aren’t politically correct, and the Left hates this with a white-hot passion. Walmart’s non-union stance is a great example, despite Big Labor’s best efforts to overcome it. Amazon is a more recent example, as Scott Shackford argues at Reason. A bill such as the “Accountable Capitalism Act” leaves a corporation two bad choices: either grow sufficiently to come under its auspices and face sanctions from saboteur stockholders, or just stay small and under the threshold, such as a regional homebuilder passing up the opportunity to advance to a national scale.

Pardon us, then, if we detect within this batty scheme — a scheme, says Shackford, in which Warren is less concerned about seeing businesses fail than about seeing them succeed in a manner more to her liking — a faint whiff of economic fascism.

Needless to say, antifa won’t be rioting against Warren’s idea anytime soon.

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