Sen. Warren's 'Accountable Capitalism Act' - Accountable to Whom?

P. Gardner Goldsmith | August 16, 2018

Liberals love to label those they disagree with as "fascist", but now one of their own, Massachusetts Senator Elizabeth Warren is putting put forth an effort that ventures deep into the realm of government authoritarianism.

But, so as not to be misunderstood, let’s stress the political-economic definition before we study the latest evidence.

Fascism is the nominal – in name only – ownership of private business that is operated solely with the permission of, and under the command of, the state. This form of political-economy was the plaything of people like Italy’s Benito Mussolini, and Germany’s Adolf Hitler, and is a form of collectivism that is not far from socialism in that it prohibits the actual, real ownership of private property and places it under the direction of the state. Socialism and fascism differ in that socialist collectivism avoids the awkward silence at effete dinner parties when a politician tells a businessperson that his company is “private” even as the politician also tells him how to run it (see: Obamacare, OSHA, Minimum Wage, FDA, USDA, Dodd-Frank, Sarbanes-Oxley, FCC, and many more).

The US has a combination of fascist economics and a socialist redistribution of wealth political structure – all while politicians like Liz Warren promote more and tell us it’s “for the people” in the “land of the free.”

Warren’s new bill is a perfect example. It’s called the “Accountable Capitalism Act”. And when one asks, “Accountable to whom?” one sees how clearly fascistic she is.

That's because she wants businesses accountable to politicians, not consumers, to operate according to political diktat, not voluntary exchange and private property rights.

And such a belief is… Fascism.

Under Warren’s glorious proposal, she and her government pals would compel corporations with more than $1 billion in annual earnings (not net profits) to get “chartered” by the federal government. As Scott Shackford notes for Reason:

This charter would obligate these companies to consider all "stakeholders," not just shareholders, when making decisions. The bill would also require these corporations to permit employees to elect 40 percent of the company's board of directors; a super majority of 75 percent of directors and shareholders would have to approve political donations. (Gee, I wonder if somebody will propose something similar for unions?) Shareholders would be permitted to sue the company if they felt its actions were driven purely by profit and did not reflect the desires of its many "stakeholders."

Warren’s Phibes-like acidic attack on freedom of association and freedom of contract is given a fuzzy, Rousseauian mask of “concern for equality” in her Wall Street Journal piece promoting it.

First, she says:

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… Before “shareholder value maximization” ideology took hold, wages and productivity grew at roughly the same rate. But since the early 1980s, real wages have stagnated even as productivity has continued to rise. Workers aren’t getting what they’ve earned.

But Warren’s phrasing about “wages” since “the early ‘80s” utilizes a popular form of misdirection. It’s not only not specific as to when in the “early ‘80s” she means, as this chart indicates, her numbers about real wages are simply incorrect.

Furthermore, as Shackford observes, her supposed point about “$7 trillion in profits that might have been reinvested in workers” is not only incredibly elitist, it assiduously avoids acknowledgment of important facts:

That number may look huge when presented this way, but it breaks down to $233 billion a year when calculated over 30 years. The United States' total Gross Domestic Product for 2016 was more than $18 trillion… Furthermore, Warren's argument assumes that because the money didn't get "reinvested" back into workers—in the form of, say, increased wages—those workers did not benefit from whatever it was that money did instead…

Like, say, non-monetary compensation, such as health insurance.

Strangely, Warren doesn’t mention in her fuzzy fascist math that an already onerous mandate called Obamacare has already extracted billions from workers.

But please, Senator, preach to us about workers getting fleeced.

She also doesn't mention that the money made by shareholders doesn't sublimate. It gets reinvested into new ventures, ventures that, as amazing as it might be for her to discover it, actually employ new people and help drive up earnings.

Regardless of these facts, Warren suggests that it will be beneficial for companies to do as she tells them and “reinvest” in their workers – you know, the workers she is now going to give even more power over the company than their voluntary contracts and freedom to work elsewhere would already allow.

If it is such a good idea to “reinvest” based on her preference, why force it on businesses? Better yet, why not start her own company to try it?

Be it Warren's praise of the bureaucratic and unconstitutional “Dodd-Frank” and “Sarbanes-Oxley” financial mandates that not only haven’t protected consumers, but have cost businesses billions and had disastrous unintended consequences, favoring big corporations over smaller ones, or her support for the Obamacare law, she has no fear promoting collectivist ideology. And it appears she is more than willing to manipulate statistics to get her way.

Think about this as a final point. In her Wall Street Journal screed, Warren complains that the richest 10-percent of Americans own 84-percent of US-held stocks.

But this assiduously avoids the reality that an ageing Baby-Boomer generation would naturally have acquired more assets, capital, and stocks as their early investments accrued. Of course the wealthier – and far older – Americans will own the most. It’s foolish and misleading to portray that as somehow anything other than natural.

What isn’t natural is the use of force to get one’s way, and Mrs. Warren is a big fan of government aggression. Her new proposal simply removes the mask and says, “We politicians will tell you how to operate.”

That’s fascism, plain and simple.

And Mussolini would undoubtedly applaud.