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    • In August, 2018, Elizabeth Warren introduced the Accountable Capitalism Act into Congress, a proposal that would significantly change corporate governance in the US. It would require large companies (>$1B revenue) to give employees 40% representation on the board of directors. Additionally, it would replace the current fiduciary responsibility to shareholders with a duty to create a general public benefit for all stakeholders including shareholders, employees, the community, the long term interest of the corporation itself and the environment. It is based on the idea that if corporations are to be treated as persons, they must be required to act as ethical members of society. It would also require that any political contributions by corporations be approved by 75% of shareholders and directors.

      It will never work, right? Well, it has worked in Germany since the mid 20th century, where it is known as Rhineland capitalism. Most other European countries require labor representation on the board at a minimum. Naturally, it is opposed by the very rich, as it will inevitably make them somewhat less rich. I'm not an economist, so I am not sure what the overall impact would be. But I would be fine with reducing corporate profits if it meant reducing economic inequality and promoting social responsibility.

      What do you think? Good idea? Bad idea? Good idea but politically impossible? I suspect the latter, but I do wonder why sensible measures that work in other successful countries never seem possible in the US.

    • Fascinating topic. It is emerging on the radar of more people in the U.S. because of the perception that Google has slowly come to place profits above values and one of the remedies may be to have employee representation on the board. 20,000 Google employees marching in the streets has given the story some oomph.

      There is an interesting article in the Harvard Business Review about employee participation on boards:

      In the U.S., a lot of status accrues to the rich and I wonder if an unspoken concern among execs is they think employees will make an issue of their compensation when they join boards.

    • I wonder if an unspoken concern among execs is they think employees will make an issue of their compensation when they join boards.

      They are almost certainly right to be concerned. It is not only the pay disparity itself, but the way that the gap is increasing over time that workers resent.

    • My understanding is congress has tried to limit CEO pay excesses by requiring that public companies report compensation of their to execs, and then limiting certain deductions companies can take.

      I asked Google for a refresh on what happened, couldn't find it, but my memory tells me that CEO compensation went up after the law that required it to be public because other CEOs saw it and could negotiate for what the others got.

      There is a form of the golden rule for tax law and compensation: those with the gold make the rules.

    You've been invited!