Sen. Elizabeth Warren hates capitalism and has never made an effort to hide it. Now she’s taken that hatred a step further and introduced a bill (pdf.) that would literally nationalize all the things. The government must step in and tell CEOs how to run their companies.
Warren penned an op-ed in The Wall Street Journal about her “Accountable Capitalism Act” to sell it to the public. She gushes over how the bill would help workers and give more power to them.
That sounds familiar…*cough*VladimirLenin*cough*
In reality, the bill gives more power to the government because Warren’s bill tells a company EXACTLY how it should run. In other words, capitalism is accountable to the government, not the people or workers. Reason summed it up:
Warren’s “Accountable Capitalism Act” would require that corporations that earn more than $1 billion in revenue a year (note “revenue,” not “profits”) would need a federal “charter” in order to operate. 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.”
If your business does not do this, then the business faces a penalty “that is not less than $50,000 and not more than $100,000 for each day that such representation is not in compliance with those requirements.”
Like Scott Shackford at Reason, my eyebrows raised when I read revenue in the bill and not profits because I have noticed that revenue tends to be higher than profit. Yes, there is a difference between the two. From Investopedia:
Revenue is the total amount of income generated by the sale of goods or services related to the company’s primary operations. Revenue is often referred to as the top line because it sits at the top of the income statement. The revenue number is the income a company generates before any expenses are taken out.—Profit, typically called net profit or the bottom line, is the amount of income that remains after accounting for all expenses, debts, additional income streams and operating costs. The bottom line is also referred to as net income on the income statement.
Take a look at Amazon’s revenue and profit:
To keep a company growing it must evolve, which is why Amazon decided “to invest in growth over profits for the long term, and the market has rewarded that decision.”
I remember the left freaking out over President Donald Trump’s tax reform because they insisted that the companies would hand over those breaks to the shareholders. Warren forgets this blog I wrote in May because data showed that the 130 companies in the S&P 500 have increased capital spending by 39%, which is the fastest rate in seven years. Returns to shareholders has only grown by 16%.
Warren hates that some companies have set “themselves up to fail.” THEN FAIL. I know it’s a TV show, but Ron Swanson is a genius:
“The government should not prop up a failed business. That would be like giving food to a mortally wounded animal instead of slitting its throat and properly utilizing its meat and pelt.”—“The free market is a jungle, it’s beautiful and brutal and should be left alone. When a business fails it dies and a new better business takes its place. Just let business be business and government be government.”
Why is Warren complaining about wages? According to the July jobs report, wages are up 2.7% from a year ago and went up by 0.3% from June to $27.05. The economy keeps adding more jobs and unemployment is at a historic low.
The middle class has shrunk so much because people keep moving up the ladder, not down. Pew Research Center in December 2015 published this report about the shrinking middle class, but look at what I emphasized:
Based on the definition used in this report, the share of American adults living in middle-income households has fallen from 61% in 1971 to 50% in 2015. The share living in the upper-income tier rose from 14% to 21% over the same period. Meanwhile, the share in the lower-income tier increased from 25% to 29%. Notably, the 7 percentage point increase in the share at the top is nearly double the 4 percentage point increase at the bottom.
The economy is growing. Businesses are looking out for American interests because without the consumer, the business would not exist.
This is the ultimate government picks winners and losers, not the consumer. The interests of the government will tell a business how to operate, therefore could stymie growth and production, but also innovation. The only way to evolve is to take risks and trial & error. But if Warren and her cronies don’t approve, they will shut you down.
In other words, it won’t matter what “American interests” are or what the consumer wants. If the government doesn’t like it, it won’t happen.
CLICK HERE FOR FULL VERSION OF THIS STORY
