141 thoughts on “Forbes post, “Elizabeth Warren Wants To Cut The Value Of Your Retirement Account”

  1. I think that having employees represented on corporate boards is a good thing. Corporation should not just exist for the soul Benefit of the stock holders but for all constituents in the business. And I do agree the stocks will fall and some may even fail but I’m ok with that as I think we will reverse the me me me of large stock holders and corporate management and get back to a more equitable place for all of those who are part of these corporate structures.

    1. Why don’t you ask the millions of Middle-Americans who earn between $30k-$100k, that have a large portion of their 401ks, IRAs , 403bs, and other retirement accounts invested in the market, if they’d be “okay” with the market losing 25%+ of it’s value. Unbelievable.

      1. I’m one of those people. Yes, valuations will lower but only b/c short sellers and day traders will knee jerk themselves out. Short term greed is America’s Capitalist problem. Today’s BODs are made up back slapping get alongs focused on today’s stock price/ROR, not the future.

      2. I don’t know why it is assumed stocks will drop by 25% if the employees are on the Board. Maybe some input from the employees might make the company run better and raise the stock price, making things better for everyone.
        Certainly the employees deserve to share in the wealth they help create.

      3. Corporations have done everything in their power to treat employees like trash to further their goal of “shareholder value”. There used to be a 3 legged stool of business with management, ownership and employees shared the benefits of the gains and therefore had balance. Now businesses have been rewarded for cutting the employees and their benefits out of the equation. Either that needs to be reversed as EW is attempting or to tax the corporations to pay for the benefits their employees will need to survive life. BEPS is coming and it will rightfully hit american businesses like a ton of bricks.

    2. Where you are wrong. Once these stocks fall everything connected to them including your retirement will go with it. Employee representation is a good thing but that should be with employment benefits such as better pay and benefits. As unions already do. These people that built these companies are the ones that risked everything to invest in the idea of a product or service that helps others even if they fail a CD lose all. Warren wasn’t too take that away from the risk takers and give it to the entitlements of our country. Germany didn’t do so well with these ideas during WW2. The state or government cannot run corporations. We’ll go from socialism to communism in a flash.

      1. Because you know Germany has only been running corporations this way since 1960 and they are completely communist now.

      2. I just spoke to some Germans about their country and yes they do complain about certain things but they quickly stopped complaining when I told them how much we pay for healthcare, how we don’t get family leave when we have a baby, how most of us don’t get any support for having this baby, how expensive childcare is, how our kids are getting shot and killed while they are at school, how expensive our housing is and the homelessness problems in most parts of our country. Their complaints were that there are no homeless people and that some people are taking advantage of the system and not working, I told them at least they have the opportunity to make something of themselves if they choose to, which most of them do, and that we also have the same problem here anyways. They also complained about mass rapes and this hurt to hear but at least they are voicing their concern and from the sound of it at least they have a government that hears their concerns and does something about it not fight endlessly with no results by spreading fear using with the help of stupid articles like this, based on projections from people that are the most affected by the proposed changes. Please pay attention to the rest of world around you and ask questions don’t just get scared into voting a certain way.

    3. I am one of those middle class Americans that works hard and saves for my children spouse and myself. This idea is AWFUL. Work hard and spend less than you make..which means no super fancy car and expensive meals out regularly but you have something saved for emergencies and retirement!! Hard working peoples savings should not be redistributed to the lazy individuals who choose to work little or claim disabiliyy due to morbid obesity from failure to put down the doughnut.

      1. I’m in favor of this. 25% reduction in stock market would hurt some (I would lose $100K as a millennial) but the change in governance can’t be understated.
        Tell me why JP-Morgan Chase which makes $2Billion a QUARTER can’t afford to put 10% back into their workforce…. If they did, bank tellers making $11/hour (which qualifies for government assistance if they have a child working full time) would all of a sudden make $40-50K/year. They go from being a tax “taker” to a tax “contributor”.

        This is crazy, we cheer JP Morgan Chase paying sub-par wages from the market position- but then we lament all these “poor” people on welfare. Why are we subsiding don’t corporations who make billions workforce? Guess where that $$$ goes- the $2B, it goes to shareholders of which not a small percentage are not American Citizens.

        So let’s try this- make American workers first- shareholders 2nd, I bet we’d have a lot more people able to participate in the market if that was the case.

      2. This proposal is talking about giving employees a 40% board seat in their company. I can’t believe you think this is going into welfare funds when that is so clearly not the case. Companies have a responsibility to their employees not just their shareholders.

      3. What part of this plan talks about redistribution of anyone’s money? No money is being redistributed. Reading comprehension is important.

    4. If any company or corporation wants employee input or board membership they are perfectly able to without government involvement. What’s wrong here is Government initiation, government legislation, government override and government control. THAT IS COMMUNISM PURE AND SIMPLE. Elizabeth Warren and the entire Democratic Socialist Liberal Left are wanting Government take over of every aspect of our lives, economy, property and liberties.

      1. What’s WRONG here is that the pathogen that Corporate Amerika has become will NEVER do what is in the best interest of anyone but themselves. Wells Fargo is a great example but there are too many others to list here.
        With all due respect, you seem to be so eaten up with your partisan politics that it has clouded your vision.

  2. Why would we not want all stakeholders to have a seat at the table and a voice in policy deliberations? Capitalism has created the conditions for its own demise. Time to apply different solutions.

  3. Investors put capital assets (that is, money in one form or another) into corporations. Employees put human assets (that is, time, knowledge, skills, and abilities) into the corporation. Employees receive monetary benefits in exchange for their contribution, as do shareholders (in the form of dividends and the value of the stock.)

    Which set of assets is more valuable? Why should only the capital asset contributors govern the company? Jane appears to hold that Uncle Milton was right and shareholder value is everything.

    I’m happy to see that discussed, but make your case.

  4. I think it’s one of the only good ideas she’s had. Employees should have representation on boards, maybe then the compensation of the top few on these companies would come back near reasonable. I don’t own stock as I see it as a ponzie scheme or legal gambling. Only no one really knows the odds or that the deck is stacked.

  5. A politically motivated article that lacks foundation and fails to take into account facts including but not limited to that corporations disproportionately benefit their wealthy founders and large shareholders and yet are being given huge tax breaks and incentives. For example, Amazon seeks and receives virtually a tax free status, and Jeff Bezos is one of the richest people in the world; yet he is elimination health benefits to many Whole Foods workers on January 1, 2020. Why aren’t workers’ contributions valued more equitably. Put employees on boards to more fairly distribute profits.

    1. Crazy idea! I would support 1 to 10% so they have representation on the Board but not 40%. Shareholders have invested money on management decisions while workers are salaried and take money from a company for services rendered. Many of us contribute to retirement plans that pay us with investments made over a very long period of time and while workers have a very important impact on a company they can still by stock and have a vote on issues that impact any company they wish to invest in. Warren is a communist and her radical ideas are not what this country needs.

      1. It’s hardly a radical idea that employees share in the wealth they help create. 10% would be pointless, they would be crushed by the other 90%. At least with 40%, they would have a chance.

        1. It would be the Government that came up with this crazy idea, legislating it & controlling it. If that’s not your definition of communism you don’t understand your own definition.

  6. A more obvious and more easily implemented solution is for more employees to buy shares of stock in the corporation they work for, as well as other corporations – for the sake of risk reduction through diversification. Start small, build value over time, taking the same risks being taken by the “ultra wealthy”, I.e. that if the corporations fail to earn profits they die, as does the value of the stockholders’ investments. We don’t want corporate boards to be populated by directors who haven’t already figured out this basic principle of building personal wealth.

    1. I believe she states these individuals are owners of companies through their 401k contributions and going crazy, IRA contributions (maybe). the premise of the article is that her wealth may drop because of lowly employees being considered worthy to speak up for the worker bees. SAD

    2. Corporations are paying poverty wages and your solution is to ask those employees to buy shares of the company giving more of their wages back to the owners? Wtf?

  7. It would be interesting to see how long the projected reduction in share price would endure, and at what point is that reduction offset by an increase in productivity from elsewhere (employer branding, recruiting and rentention, employee engagement, productivity, breakthrough products and services from an obscure and highly engaged employee).

  8. Warren is bringing back the tenants that were used as criteria for approval of a company to form when “corporations” were first established in the 19th century – they needed to show how they contributed to the society and not just be vehicles of profit making – gee what a concept!

  9. I like the idea of having employee representation on Boards of large corporations, BUT let’s experiment by requiring adding one at first, ok? One person provides input about the very important employee perspective.Then let’s evaluate it over a number of years. Let’s also in parallel evaluate those German companies that require larger proportions of employee Board representatives. Do they create great products and jobs?
    As is, Our corporations are able to attract investors who put in the capital to start companies and run them. It could be that having many employee board members detracts from the ability to run companies profitably, and attract capital, in which case we end up with fewer jobs in the long haul.

  10. This is the most slanted article I have read in a long time. It’s like it was written by CEOs and board members for CEOs and board members. The idea of employees on the board of companies worth over 1 billion is great. It would help look out for the employees and keep the excess of CEO pay in check.

  11. It seems to me that lost in all this discussion is the ultimate objective of any for-profit corporation: to provide for the needs and wants of customers and in doing so to earn a profit to fund the cost of doing business tomorrow. Also lost in this are the words of Nancy Pelosi: “Nobody gave me power, I had to take it.” Workers have to take the power; they need to rebuild their unions (and hopefully keep the Hoffas of the world out).

  12. I felt this article did bring up a good point about an unintended consequence of Warren’s legislation. I am also curious about how such a thing would be reinforced.

    It does stink that many may lose some value in their retirement accounts. However, many of these low income workers cannot even afford to set aside money to put towards retirement (or to start buying up stock). So this will be a non point for them.

  13. A couple thoughts;
    A cute clickbait title for the article, it worked, a mis representation of the content but catchier then, “Elizabeth Warren’s desire for a more equitable society may lead to a devaluation of corporate equities”.
    The second, the comment thread has not devolved in a pointless name calling dribble, refreshing!

  14. I don’t see the deteriorating effects of earning and stock pricing being a given if the “motivation” of corporations is adjusted. Having the world view that any change to our current system is only going to cause negative consequences neglects a look at the history of our own country. Not much longer than a hundred years ago workers had no or little say into the health and welfare of their daily lives. Children worked in factories and a living wage was often contingent on the worker spending it in the company stores. I don’t believe anyone today would call for those changes to American corporate structure to be eliminated. Having corporations being required to take more care of the natural resources of America eg. the environment, the communities in which we live and the welfare of fellow citizens (which we as Americans all own together. Right?) could be a boon for our collective good. Don’t these corporations benefit from the freedom and safety that has been fought for and died for by the citizens sons and daughters of this country? Or is it just a given that a stable government is always available? – Rich Van Welch – recovering stock broker- veteran – repentant republican.

  15. Talk about setting up a strawman by misrepresenting the facts. You should know better as a writer. I don’t see any comments made by Warren stating she wants to cut the value of our retirement accounts. That’s just plain political bashing to push an agenda.
    How about instead focus on the pros and cons, and actually title your article appropriately. If you really want to focus on the value of retirement accounts, you could pursue a title such as “Elizabeth Warren’s new proposed idea would reduce the value of retirement accounts.”

  16. Your logic has moved my support to Ms Warren. (I’ll move a few dollars from my retirement fund to her campaign right now. )
    Verne S.

  17. Just add it to the list of “takeaways” from Democrat presidential candidates. They are on record for wanting to takeaway: Your health insurance policy, your guns, your money (higher taxes), your borders, your F-150/SUV, your plastic straws, your bacon cheeseburgers, and now a material chunk of your retirement account. Good luck with that.

    1. No one is taking your cheeseburger. You shouldn’t have an F150 unless you need one. They are not taking your guns. They might want to change the way health insurance is run, but you’re not going to lose it. We need solutions, not hyperbole.

  18. Ms Bauer leftout a significant component of the value of a stock — the dividends that it may pay. In fact, a stock price may actually decrease when it pays out a dividend, but the shareholder is still getting value. One can not value a stock solely on its share price. So the distribution of the kinds of stocks that people own is an important component of the total wealth heald by any particular income stratum.

  19. Employees belong on boards to represent labor within their organization and to add another point of view, so I have no problem with that. The notion that only the rich own stocks is ludicrous. Taxing capital gains is one thing, but adding a tax to each stock transaction effectively will cost seniors hard earned money they have already been taxed on and, while it may raise revenues mostly from institutions, it punishes seniors who took time and effort to deny themselves to save for retirement as society directed them rhey should do. It doesn’t just take from the rich. And while we are raising economic issues centered around benefits, why is it no one has considered that with Medicare For All or a similar program, the only part of workers compensation insurance (WC) that is still needed with such a program is that portion that pays ongoing salaries/wages for the perminately and temporarily injured, which is the smallest cost per dollar of premium. Employer savings in eliminating WC should be passed on to the Medicare For All program.

  20. Your histrionic scare tactics are typical of Forbes. You people will do anything to try to keep all the power and capital in the hands of the 1%. #Sad
    Why did you not mention that nearly 200 CEOs of the Business Roundtable just signed a Social Responsibility pledge (I know, I know-most of them won’t keep it) that is pretty much the opposite of your pontification?

  21. If worker involvement at the board level can cut the largess of C-suite and do away with golden parachutes, that would add to Bali for stockholders.

  22. Ms. Bauer’s implicit assumption is that giving all stakeholders, rather than just executives and shareholders, a presence in corporate governance would result in a fall in profits and a lower standard of management. There is no reason to make this assumption; quite the reverse as the reference to common practice in Germany and other G7 countries bears out. Her tone throughout is instead the same tired old management riding herd on greedy labor myth that pervades American capitalism. The result is a fear-mongering piece that does nothing constructive and serves a hide-bound status quo that has repeatedly taken our economy to the brink of disaster and beyond.

  23. It’s concomitant that Shareholders currently have the right to elect all directors to a private companies Board of Directors. If the government takes any part of this right away (no different than taking part of someone’s real property away) it can only be down if the holder(s) of the right (property) are justly compensated for same; if they are not, the government would violate the Fifth (5th) Amendment to the United States Constitution.

    1. Shareholders don’t always have the right to elect all board members. Some may be assigned by a third party such as a venture capital firm or a large outside investor, depending on the original deal between the parties involved. Founders may also retain rights to assign directors to the board. Labor organizations have also gained rights to assign board members as well. There are other situations as well. So, the argument that employees being on the board takes private property from stockholders does not hold up.

      1. This gets complicated but VCs are still shareholders. Generally speaking, the could be a Shareholder’s Agreement or classes of Stock that provide certain shareholders the right to elect a certain number of directors to the Board. This is contractual between shareholders and, in fact, may, in certain circumstances deprive some shareholders from being able to vote for all Directors. The key difference, in such circumstances, is that there is NO government involvement and, therefore, no taking that violates the Fifth Amendment.

        We can get into deeper analysis, but the key points are that shareholders can agree to restrict their own ability to vote for all Directors voluntarily anytime and for whatever reasons they may wish, but if the government TAKES this right, it is taking a property right and therefore violating the takings clause of the Fifth Amendment.

        1. There is nothing in Warren’s idea that says the government is taking stocks or the rights to stocks. The idea is to establish a law that requires 40% of the board to be employees of the company representing labor. That is not taking property rights and you will never get an impartial jury to say it is. Think Union. Union representatives have been required to be on boards before as a result of negotiations between unions and management. That has never been touted as stealing private property yet your comments suggest it would be. You want to see taking private property, look at the drug confiscation laws or the bail system. Those represent a true theft of private property.

  24. Will she abide by this. Certainly if it is good for the American people it will be good for her. She is a socialist, trying to take control of the hard earned money we worked for. B.S.

  25. I think the click bait title of your piece is disgusting. Most people won’t bother to read the piece (which has nothing new in it), but your hope is, obviously, that it will form fodder for the stupid “warren is a commie” groupies. I am not a democrat, but I think such tactics do not help to educate voters. Personally, with about $5 m currently invested in small cap stocks, because I think big cap stocks suck precisely because those companies are so undemocratic, I think the change Warren advocates is long overdue. It would go a long way toward changing the shameful way corporations are behaving. In the long run, as a manager I know this, giving workers a voice in decision making is difficult at first, but once the decision is made, they become more loyal and conscientious and more productive. And it is an idea that resonates with younger voters who have to pay the bill for the sins of the past 50 years, so why fight it? If you don’t want a REAL revolution, I suggest you may, as Franklin Roosevelt did, want to adopt some of the game changing ideas. Change or die, as they say…

    1. Well well another Democrat trying to have control over other people’s money. Try first lowering taxes for everyone who earns a living wage, and then those workers you speak of can be impowered to buy stocks in whatever company they want (heck their company might ^$^%) and have the freedom to choose. I have worked for several companies that could not keep the doors open and they were run by the professional. Fix Fannie M and Freddy M and the VA. Fix all the stuff that is screwed up like what Trump is trying to do. You foolishly make all these promises and dont delivery. We are on to this crap. No broke person ever offered me employment. Tried self employment and it ain’t easy. We need to give birth to the innovative, success driven…. why do you think people want to come to this country. TAX LESS TRY THAT AND STOP FOOLISHING WASTING TAX PAYERS MONEY. Politicians becoming millionaires in office. YOU HAVE TO BE KIDDING ME!

      1. Changing the makeup of a company board isn’t a tax. And you’re right, the so called professionals don’t always know what’s right to keep the doors open. A worker who knows what is happening on the factory floor and wants the company to succeed would do better.

  26. Warren is out of her mind and everyone who supports her is as well. This will screw the middle class working American. Hey novel idea get a job.
    I struggle with how the people who call themselves democrates want to vote to screw themselves. You have to be pretty stupid. I could never understand why a military guy would vote Democrat knowing Republicans give better pay raises. Is it a requirement to have a frontal lobotomy to vote democrate?

  27. This is absolutely the worst idea I have ever heard. It will impoverish every retiree in favor of helping Elizabeth Warren’s favorite special interest group, unions, to steal other people’s hard earned money. While she talks about corruption, she neglects to mention how corrupt unions are. Thank you Jane the actuary.

    1. No it won’t. There is no reason to assume that having workers on a board will reduce profits by 25%. This idea assumes workers are stupid and do not want their company to succeed.

  28. Well well another Democrat trying to have control over other people’s money. Try first lowering taxes for everyone who earns a living wage, and then those workers you speak of can be impowered to buy stocks in whatever company they want (heck their company might ^$^%) and have the freedom to choose. I have worked for several companies that could not keep the doors open and they were run by the professional. Fix Fannie M and Freddy M and the VA. Fix all the stuff that is screwed up like what Trump is trying to do. You foolishly make all these promises and dont delivery. We are on to this crap. No broke person ever offered me employment. Tried self employment and it ain’t easy. We need to give birth to the innovative, success driven…. why do you think people want to come to this country. TAX LESS TRY THAT AND STOP FOOLISHING WASTING TAX PAYERS MONEY. Politicians becoming millionaires in office. YOU HAVE TO BE KIDDING ME!

    1. So you are good with the increased taxes you are paying due to tariffs?
      By the way this isn’t a tax. It is a change to the makeup of a corporate board. Which might result increases in profits. The writer is assuming that workers don’t want their company to do well, which is astonishing.

  29. Well Jane let’s just start with one sentence in your article. “The Board represents the interests of the share holders.” Which just might be the reason Ms. Warren wants that clause. We have seen the “interests” of the shareholders and the outcomes first hand.
    We have seen this in the bribes passed off as free speech that allows massive abuse of the environment, never ending wars, 80% plus of productivity wealth routed to the already bloated 1 and .2 percent, etc. These shareholders “interest” stumble from quarter to quarter with zero interest of what happens to John Q, his family, or well being. Your criticism if this were 1500 would be defending the King’s game from being hunted by hungrey peasants because after all, the game belongs to the King, and he has the Divine Right given to Kings by God himself. So shut up and eat your roots and gruel. Germany has this provision of worker and societal representation in their
    laws and this has been the main component of German excellence and labor stability. In fact we, the post war overseers made them write a Constitution to include good health and secure pensions as a bulwark against not just to correct the mistakes of 1918 Versailles but to make communism unattractive. And the author of these policies…FDR men. I submit to you American Conservatism coupled with raw Capitalism where the 1% keep the profits and we eat the extranalities drive people to try anuthing but the status quo. Warren’s rising popularity attests to this and the people you consciously or unconsciously represent won’t even throw the great unwashed a bone. 2020 is the correction in play and it will be historic.

  30. No one has mentioned that with employee representation wages and benefits for workers may rise giving them the opportunity to save and invest. In that case the 25% loss would likely disappear. No, it’s the “C Suite” who might lose out, hence the purpose of this article, protect the CEO’s compensation at all cost.

  31. The title of this opinion piece is extremely misleading and should be stricken. Not to mention the argument the author makes is an extreme stretch: that if 40% of board members are employees, shares would drop 25%, which would include things like retirement accounts = Elizabeth warren is coming after your retirement account??? Both Forbes and Jane the Actuary should apologize for such a ludicrous suggestion. All because one person at Vox says it “could” drop shares by 25%. This is disinformation.

    1. My sentiments exactly. I’m sure we can find prognosticators who will predict a 25% increase in value. If you did or did not favor Warren before you read this, I’m willing to bet your opinion did not change. Let’s drop this tactic of generating fear among people.

      1. If employees have 40% of seats on the board, that means they effectively own 40% of the company and can vote themselves a proportionate share of the money. I don’t see how taking away 40% of your ownership in a company doesn’t lower the value to you.

      2. The board members don’t own the company, the shareholders own the company. The board members are guiding the company to succeed .

  32. I think this represents a trade off for most workers. Their 401Ks may take a hit, but it will be balanced by higher wages, better benefits, better working conditions, and more job security as a result of worker participation on their companies’ boards.
    The big problem is that the stock market is once again in bubbleland, thanks to tax breaks targeted at the 1%. Its the inevitable result of more money being put in the hands of people who won’t circulate additional funds in the economy, but instead park it in an (effectively) finite pool of investment vehicles.

  33. Yes, the retirement accounts own the majority of the stocks. But, not mentioned is that many of these accounts are state and local govts, many of which are under funded now, not to mention the affect of a 25% value reduction of the fund. How would the govts make up the under valuation of benefit defined pension funds??? Many of these funds are the result of labor contracts. The only way, increase taxes. Bad, bad idea from Warren. It would ruin the U.S. economy. But that is socialism.

  34. The invalid assumption is that the Boards represent the shareholders. They don’t. They represent their peer cronies on other Boards and the top Corporate executives who sit on other Board with them.

    Employees have a big stake in keeping a company alive, healthy, and of value. Often they are shareholders as well, or could be through 401k, etc.

  35. If Senator Warren’s idea is such a great idea, why did the UAW sell 40 million shares of GM and give up a seat on the GM Board last year?

  36. I worked for a company for 37 years and 20 of the years the company started ESOP which helped the company and its employees. So when the company decided to bust the Union and move out of state I was forced out early retirement and accumulated $100,000 in stock. Seemed the company always frowned on idea of a employee being voted to board via proxy. To loose 25% that’s a lot of $ not to have . All board members are way to compensated for there service in my opinion. They will take your money no matter what.

  37. By your math, the total value of a corporation is in its executives and shareholders, with workers only appearing on the liabilities side of the balance sheet. Yet the most valuable corporations in the world are those whose value is primarily in the intellectual capital of their employees. As a supposed actuary, it seems you’ve missed some hidden assets.

    1. I have to agree with Ms.Weintraub. For an actuary you have a zeal for hyperbole. This headline could have just as easily read: “Elizabeth Warren endorses Business Round Table’s new definition of purpose of corporation” which is advocating for a change in the no holds barred absolutist zero sum gain mentality which is justified by the singular goal of “Increasing Share Holder Value” The new statement by that organization, which states: “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,” – could itself be restated more clearly: “We have created a monster in pursuing greed at all costs, which threatens the stability of the Democratic/Capitalism model which has served the corporate entities created in the 19th and 20th Centuries so well as to create massive gaps in wealth distribution. We need everyone’s help in reigning in this monster, starting with Trump.”

  38. I think anyone that votes for is just hanging themselves by the neck..Dont let her do this .they take that from our paychecks.its ours…cant barely live on what we Boomers get now

    1. That would probably be due to your reliance on a 401K instead of a pension plan. Or the fact that you probably don’t have a 401 K…like the majority of working Americans.

  39. Every decade at some point the stock market loses 30% + of its valuation anyway (twice in the last decade), let’s figure that into the equation before engaging in hypothetical gum gnashing about the fall of the markets because we would dare to have workers spoil the plutocrats party with some representation. The fact is since 1980, when the markets slowly began to disgard the restrictions that were put in place after the GD & Wall St Crash, they have been far more volatile anyway. God forbid you would have the average worker sitting on a board and questioning senior executives as they rewarded each other with massive stock option purchases, which have rewarded them far beyond anything they actually bring to the table and help them engage in short term thinking to boost SP at the expense sometimes of long term planning for the good of the company. The Dax in Germany maybe 25% less valuable but German workers are; better paid, have pensions unlike most US companies these days as well as investment plans, have 4 or 5 weeks paid vacation and generally have higher output because one assumes they are more contented.

  40. This is shoddy work. Statistics show that most people don’t have a 401k, or have almost no money in it. So yes, there may be some unicorns who aren’t in the wealthiest 10% who are preparing a substantial portion of their retirement to come from a 401k. But overwhelmingly, this only affects people with so much money that it won’t affect their standard of living.
    It’s also shoddy because it doesn’t consider the effect on worker benefits if the workers – the very people the article tries to claim it is protecting by raising this issue in this way – have a voice in worker benefits, outsourcing, and other issues that directly affect the worker’s quality of life.
    But I guess if you have no real solutions of your own and you don’t really understand the issues – or if you are in the wealthiest 10% and you don’t care about the working class, then this article is fair and balanced… towards and for you.

  41. Employees are employees for a reason. If employees had anything to contribute they wouldn’t be employees. Employees share of the profits come in their wages. Employees are paid in accordance to their value and contribution to the owners. Employees are expendable and can can be replaced at owners discretion. Employees can also leave by their own choice if they can benefit themselves more elsewhere.
    The Social Liberal Left wants to take away private ownership and control and put it in the hands of the Government. There would be so much Government regulation that employees would be the pawns of Government control. Elizabeth Warren wants to destroy Capitalism and replace with Communism under the disguise of giving something free to the working class.

    1. “Employees are employees for a reason. If employees had anything to contribute they wouldn’t be employees.” Wow…Ever thought about a career in Human Resources….I hear that Koch Industries is looking for the skills you bring to the table.

      1. Just because the answer doesn’t meet your standard of tactfulness doesn’t make it any less true. It always amazes me how people think business decisions should be made by anyone (employees, government, etc.) except the actual owner of the business.

    2. An incredible number of fallacies in the original article and in this reply. To Dennis, you assume that the people actually doing the work in the company to generate the valued product or services are too ignorant to make decisions on sales that typically they purchase and consume in one fashion or another, given 75% of our economy is driven by consumption. Many board members and senior leaders are exceedingly out of touch with the people buying the services and could use a reality check. Have seen several examples of this firsthand up close. To all: Two, our companies are part of our society….we are not outside and apart from it, and our decisions impact all of us. We also benefit from our physical, governance, and communications infrastructures that the govt and Americans pay for, build, and maintain. To claim that we should only maximize the value to those who own stock directly in the company is shortsighted BS economic theory that we swallowed hook, line, and sinker….yet at the same time, decry economists for being out of touch. Three, the article focuses on a small sliver to roust readership and response. How about addressing the differences in US legal and fiscal policy that artificially inflate the worth of our firms through corporate stock buy-backs, extensive M&A, and tax evasion. Four, many of these US policies are geared toward (and by) large corporations, and we as a country have cyclically repeated the error of allowing too much power to consolidate in their hands. Our forefathers envisioned a system of govt checks and balances to minimize man’s natural tendency to overreach in search of power ..this common sense is what has been lacking for years when it comes to the beliefs upon which our current economic system rests.
      That in essence is what people are seeking…checks and balances and a focus on doing what is good for America and Americans, not just the uber wealthy and powerful.

      If the best argument you can summon is to beat the fearmongerers’ drum, that “those people” want the govt to own everything, you are blinding yourself to cogent issues even senior US business leaders now recognize.

      1. Private property and private enterprise must be protected and preserved. Or let me control 40% of your bank account and assets.

    3. This isn’t communism. Also employees would have a lot to contribute to a board. They know the problems on the factory floor. They want the company to succeed.

    4. I am an Engineer/employee with 8 patents that have yielded over $10 M to my employer. I don’t feel like a replaceable pawn. I appreciate it that my company contributes generously to the communities where employees work. I have a 6-figure income and have no need for a 7 figure income. Yet, I see forces at work that are driving corporate management toward less expense and more profit despite a near 100 % increase in stock value over the past two years. I believe the CEO finger needs to be on the pulse of ALL stakeholders. Maybe not 40% of the BoD, but certainly a proportionate consideration.

  42. “if 40% of board members no longer represent the shareholders”

    This might be the biggest flaw in the article. It assumes, wrongly, that employees are themselves not vested in the company they work for and/or do not have any interest in the financial health of the company. At best, the author is taking a huge swipe at employees in order to suggest that the only people who could possibly have the company’s and shareholders’ interests at heart are corporate board members.

    1. Yes the employees on the board have an interest in the company but it would set up a big conflict of interest for them. A short sighted employee board member might make decisions that have immediate benefits for the employees while harming the long term prospects for the company.

      1. You mean you actually think that corporate board members and those in the C-suite really take the “long view?” If only…

      2. This presumes that employees are all alike, Stepford Wives, if you will. Employees are no more fungible than African Americans, women or even men, for that matter.

  43. “if 40% of board members no longer represent the shareholders”

    This might be the biggest flaw in the article. It assumes, wrongly, that employees are themselves not vested in the company they work for and/or do not have any interest in the financial health of the company. At best, the author is taking a huge swipe at employees in order to suggest that the only people who could possibly have the company’s and shareholders’ interests at heart are corporate board members.

  44. What retirement account?

    Only the rich or those who had jobs have retirement accounts. The rest of us poor and middle class are working until we drop. It’s been that way since capitalism found out economic slavery was more effective than direct slavery – when you didn’t need your slaves any more or want to feed them, you could fire them back into the pool of slaves for others to pick up and continue to exploit.

    No, sorry, the poor are going to vote for anyone who can deliver on a BASIC INCOME and ends this nonsense of living like we’re still in the middle ages or wild west, where it’s every man for themselves and the state only exploits and punishes you, but does not take care of the members of it’s own soceity.

    The rich have nothing to worry about. The rich have so much gob stopping money any dent they experience won’t impact their “lifestyle” at all.

    I’ve lived on less than $500 a year for as long as I can remember, and mostly it was credit cards that kept me alive.

  45. W. Edwards Deming (father of the quality movement) cited in his ‘7 deadly diseases’ ‘short-term thinking,’ from CEOs & boards only looking 3 months out. Many of the USA’s current predicaments have resulted from this. B Corps get it. CEOs are legally obligated to shareholders… not customers or employees. That has proved to be a deadly disease for the USA.

  46. I think Warren is on the right track, but the move to include the rank and file should be more carrot than stick. Enron never would have happened with employee knowledge before the fact.

    1. Yes but Enron is kind of a Black Swan. Their fraud and deception was so thorough that some of the brightest minds in business and finance did not figure it out for an eon.

  47. The concept of serving the public interest is hardly a new one. At the outset of the industrial age, US trade law required that ANY business that wished to incorporate, had to first establish and prove that it’s esrablishment would in fact serve the public good. As for the shareholders losing a portion of their control over the company, I would take strong exception to that concern as well. The stockholders have the right to their dividends, nothing more. And with regard to the net effect on workers retirement stocks (401k’s), the notion that their values will fall by 25% is speculative conjecture at best, and economic dog whistle fearmongering at worst. This piece was written by this “Actuarial” as a hit piece on Elizabeth Warren, and as such should be treated with the scrutiny that we would apply to any other claims of such a dubious nature. I’m not saying it’s outright propaganda, but I do know that the math involved is shaky at best.

  48. I’d gladly trade a 25% of my retirement account value at the end of my life for the quality of life improvement German workers seem to enjoy during their prime years building their families.

  49. It seems like the entire crux of the headline is based on this one sentence: “Based on these differences, Yglesias writes, “share prices could fall by 25 percent.”
    That doesn’t seem like much evidence with which to condemn Warren’s plan. As others have pointed out, it ignores many other factors.

    1. The statement about ownership of stock being the wealthiest people is intentionally misleading. Retired public employees retirement systems, at state and local levels, are heavily invested in stock market, and, due to states, cities, counties, and other government entities often not contributing the monies mandated by legislation, some of these retirement systems are barely solvent. A 25% loss would bankrupt many of them.

  50. I find Jane’s critique of the Warren proposals regarding proposed public policy action as it relates to corporate governance and retirement accounts to be almost entirely ignorant of or willfully dismissive of some very important facts and questions. So I will provide a list of these here.
    When speaking about the role labor should play in corporate governance and its possible impact on shareholder value one Jane ignores some very important facts:
    1. US economic productivity has increased dramatically over the past 30 years, yet wages for labor have remained relatively flat. Are we to accept that labor has had little or no role to play in these productivity gains and therefore the hand of the free market is right not to have had wages increase. I would like to hear the argument here.
    2. Public policy over the past 20 years has limited and restricted the power of unions and labor. Is Jane in favor of policies that strengthen and expand the hand of labor in the market? If not increasing labors influence on the boards of corporation seems like an approach worth considering.
    3. Labor has made many an array of concessions relating to total compensation in many industries (see auto, steel and coal) and yet when business improves these corporations seem unwilling to pass on a portion of these increased profits to labor (see current auto strike). This would seem to indicate an imbalance in the “free” marker where investors, management, labor and consumer are all supposed to exert real influence.
    4. I am curious to know what Jane’s position is/was on TARP and the auto bailouts in 2007-2008. Should we as a country socialize corporate losses and privatize profits. Remember that although all the TARP money was paid back the loss in home equity and salary to labor who were caught in this fraud induced housing downturn was never paid back and today countless numbers of labor have not been made whole with respect to these losses. Do the banks and corporate america get a pass on this vert negative impact on net worth of labor.
    5. Does Jane think it is good public policy for the penalties coporations pay for having an under funded pension plan, if they have one at all, costs more than the cost of borrowing money against the pension plan….thereby providing an incentive to borrow against and bankrupt guaranteed pension plans as been done repeatedly in corporate america without the knowledge of labor until it is too late? Maybe labor representation on the borad of directors would be of use in these cases.
    6. Does Jane agree with a regression social security tax system that due to a cap at approximately $130000.00 we have a situation where labor pays up 3% of their wages in SS tax while those that make an income of 260000 pay only 1.5% with the % of tax getting smaller as your income increases?
    7. Due to a separation in wealth and more of the economic gains going to top wage earners, is it good public policy to have SS tax capturing only 78-80@ of all income, because of the cap, or should we modify the cap to at least allow SS tax to capture 93% of all income as was the case in the 1970’s?
    8 Jane refers to the German system as an example of where corporate boards have labor at the table. Where is the data showing this is bad. Are retirees in Germany worse of better off on average compared to the US? Last I checked Germany had the strongest economy in western Europe, this would seem to indicate including labor on corporate boards is not destructive of share holder value.
    9. Should we continue to tax investment income at a lower rate tan we tax earned income? Is investment income of greater societal value than earned income? If the answer is yes, and since Corporations in the US have literally free access to public paid for infrastructure, public paid for courts that uphold the rule of law in the market place, a publicly funded best in the world University Research System that serves as an innovation engine for money making ideas that flow relatively freely between the public and private sector compared to most other 1st world economies, should we provide every citizen some equity stake in the private profits of corporate america, (see Alaska and pay back to Alaskans potion of oil and gas revenue, see publics role in corporate bailouts).

    The main point being that the proposals put forth by Elizabeth Warren, may in fact slow the growth of investment income, however to focus entirely on this effect is quite myopic when one considers the at time grotesque structural inequalities in the US economy and their demonstrably negative impact on the wealth and well being of labor working or retired in the current system. I would assert, public policy debates in this area need to take a larger and longer term view of how we structure the US economy, including corporate governance and tax policy on investment income in a way that expands the growth of wealth of as many people as possible over time, rewards and values labor as much as the investor class and uses metrics that do not just measure stock market growth as the only endpoint, but considers the considerable cost to the system when labor cannot afford proper healthcare, cannot afford advanced education, cannot provide for basic needs in retirement and seemingly are the hardest hit and least compensated during times of economic downturn, Not everyone can or will own a “McDonalds”, in fact as an economy we don’t want everyone to be a buisness owner or entrepreneur, we need people to “flip the burgers” so that business can operate, compete and thrive if they are innovative enough and well managed. Labor plays a large role in this positive outcome and it is way past time we think creatively about how to compensate labor for the value add.

  51. This is pure speculation ! Probably another capitalist trying to scare people into believing anything that holds the uber rich accountable and levels the playing field is going to hurt the little guy

  52. With Government intervention, regulation and political correctness the boardrooms would be so restricted it would put most corporations out of business or in full control of Government is what their intention is to start. Communism.

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