Sen. Elizabeth Warren said it’s time for the federal government to use the force of law and rein in U.S. companies “dedicated … to making the rich even richer.”
An op-ed penned by the Massachusetts Democrat in The Wall Street Journal blasts American corporations, iconic free-market economist Milton Friedman and states that “don’t want to demand more” from businessmen.
Her answer: The Accountable Capitalism Act.
“Building on work by conservative economist Milton Friedman, a new theory emerged [in the 20th century] that corporate directors had only one obligation: to maximize shareholder returns,” the lawmaker wrote Tuesday. “The obsession with maximizing shareholder returns effectively means America’s biggest companies have dedicated themselves to making the rich even richer.”
The Democrat’s proposed law would essentially test Mr. Friedman’s warning in “Free to Choose,” which stated: “A society that puts equality — in the sense of equality of outcome — ahead of freedom will end up with neither equality nor freedom. The use of force to achieve equality will destroy freedom, and the force, introduced for good purposes, will end up in the hands of people who use it to promote their own interests.”
Ms. Warren’s bill, scheduled to be introduced Wednesday, seeks the following:
- “Corporations with more than $1 billion in annual revenue would be required to get a federal corporate charter.”
- “Employees would elect at least 40 percent of directors.”
- “At least 75 percent of directors and shareholders would need to approve before a corporation could make any political expenditures.”
- “Directors and officers would not be allowed to sell company shares within five years of receiving them — or within three years of a company stock buyback.”
“Corporate charters, which define the structure and obligations of U.S. companies, are an obvious tool for addressing these skewed incentives,” the senator continued. “But companies are chartered at the state level. Most states don’t want to demand more of companies, lest they incorporate elsewhere.
“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 added. “We should insist on a new deal.”
Ms. Warren’s bill comes just one month removed from an interview in which she told MSNBC that she staunchly backs the free market.
“I believe in markets right down to my toes,” she said July 19. “But I also believe markets have to have rules. Otherwise rich and powerful just keep sucking up all the value and everybody else ends up eating dirt.
Over the last year, corporate profits have soared while average wages for Americans haven’t budged. It’s been the same sad story for decades. Today I’m introducing a new bill to help return to the time when American companies & workers did well together: https://t.co/9isNoIyzoW
— Elizabeth Warren (@SenWarren) August 15, 2018
• Douglas Ernst can be reached at dernst@washingtontimes.com.
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