In her Washington Post column Megan McArdle touches on the subject I mentioned the other day, Elizabeth Warren’s proposal to force companies to put labor union representation on their company boards:
It is the dream of practically every American to be their own boss. Sen. Elizabeth Warren (D-Mass.) is offering a plan to make that a reality — sort of — for many workers by requiring firms with more than $1 billion in revenue to acquire a federal charter and fill at least 40 percent of their board seats with employee representatives.
The idea, known as co-determination, is already reality in Germany and Scandinavia. And as socialists talking of “democratic workplaces†surge in popularity, apparently it’s gaining traction here.
She continues by pointing out a few things:
- The conditions in Germany and Sweden are different than those that prevail here.
- Employee ownership has a spotty record here.
- Unions are actually in competition with one another which complicates things.
A few more issues with the proposal that have been mentioned here:
- The workers may not want the responsibility that comes with control via the Board of Directors.
- Ownership bears risk and workers may not have an appetite for risk.
and one damning problem that I don’t believe has been mentioned: Sen. Warren’s plan is probably an uncompensated “taking”, something prohibited by the Constitution.
As I’ve said before, I’m completely in favor of workers having more say in how companies are run but I think that control should be accomplished through ownership. Having skin in the game is a necessity. It also bears mentioning that one size need not fit all. Some workers may elect to shoulder more responsibility; others may not. They would have the freedom to choose.
I leave with one question. Why don’t workers in the U. S. have some sort of rights interest in their jobs? We are practically unique in the world in the dominance of “at will employment” here. In other countries employers may fire for cause but not just because they feel like it. And Canada, Australia, and New Zealand are not exactly socialist hellholes.
Since when has Senator Warren and the other birds she flocks with give a damn about scraps of paper authored by dead white males who weren’t as woke and progressive as they are? Except when they can read their own beliefs and policies in it? The Constitution is just so yesterday! Thanks, Woodrow Wilson, for carefully and patronizingly explaining to us plebes that we’re too stupid and ignorant to run our own affairs despite our having down it for how many years before you.
As corporations are by design a creature of the state, and have been far more strictly controlled by governments in early American history, there’s no issue of principle to prevent the requirement of a federal charter or worker representation. Corporations were routinely required to obtain charters subject to revocation at any time.
I do think there is a tremendous need for corporate governance reform, but I’m not convinced that this particular scheme would be good or wise. I think the problems with it are many: It seeks primarily to increase the power of current unions, it arbitrarily sets a $1billion cutoff (Why $1 billion? That’s only 600-700 US corporations total) and it doesn’t change the fundamental incentives in the system.
Well before Marx, American workers in Massachusetts wrote about their experiences under industrialization. One group called the Lowell Girls wrote:
The problem with Warren’s bill is it doesn’t go nearly far enough. Private tyrannies have no place among a free people.
Neither do public tyrannies.
As I hope I have made clear I have no objections to workers being owners. I think they should be encouraged. I do have an objection to expropriating property on the basis of the labor theory of value.