Warren’s corporate governance scheme, cont’d

General incorporation laws were a huge 19th century advance, replacing favoritism-riddled corporate chartering at official pleasure with automatic operation of legal right. Sen. Elizabeth Warren’s corporate governance scheme would risk taking us back to the bad old days. I’ve got a new post at Cato, channeling Richard Epstein and other commentators on the topic. Earlier here, and some extended critique of the “stakeholder” idea in this 2002 piece by Norman Barry.

One Comment

  • The concept of “stakeholders” is a blatant effort to politicize businesses and alter their purpose. It would allow a handful of vocal advocates to force a business to take on tasks not related to profitability. And who would decide which stakeholders get to have such a big impact? There are already a vast number of nonprofits doing “good deeds” as well as government programs. Burdening corporations with non-business duties (using only organic or recycled inputs, serving special populations, creating unprofitable products) will just drive them out of business. Her aversion to “shareholders” is so strange–these are the owners and many shareholders are actually pension funds or 401k accounts.
    Corporations are already striving to serve people by trying to do things faster and cheaper as well as by introducing new and improved products on a daily basis. Does Warren think a government meddled company could make an iPhone? hah