Sen. Elizabeth Warren, D-Mass., introduced the Accountable Capitalism Act in Congress on Wednesday, a bill that would give company employees power on levels that shareholders generally hold exclusively.
Warren discussed her bill in an op-ed for the Wall Street Journal on Tuesday, saying employees deserve a say in company affairs just as much as the people who actually have skin in the game, the ones who invest in the company — the shareholders.
Warren, who is seen as a likely Democratic candidate for president in 2020, wants companies that generate over $1 billion in revenue to obtain a charter from the federal government, one that would force corporations to “consider the interests of all major corporate stakeholders — not only shareholders — in company decisions. Shareholders could sue if they believed directors weren’t fulfilling those obligations.”
In addition, the proposed bill would also give employees the power to elect a whopping 40 percent of the company’s directors.
“For the past 30 years we have put the American stamp of approval on giant corporations, even as they have ignored the interests of all but a tiny slice of Americans,” she wrote. “We should insist on a new deal.”
Warren’s op-ed, entitled “Companies Shouldn’t Be Accountable Only to Shareholders,” like her bill, is ridiculous.
Of course a company’s first priority is to its shareholders; they are the ones who gave their money to the company. If a company declares bankruptcy, its first priority is to pay back its shareholders.
In contrast, employment is a two-way contract, with either party free to withdraw from their end at any time. If an employee is unhappy with his employer, he is free to leave, no questions asked. So if an employee is given power to vote for company directors and then he decides to leave, what does this accomplish? It empowers employees without giving them a monetary stake.
The natural market and employer-employee relationship — along with the regulations that protect workers from being overworked, abuse, and cheated — are fine as is. More regulation is not necessary.