6 ms·

warren correctly identifies a current problem with our collective understanding of corporate governance, but i’m not sure adding a federal oversight organizatio

warren correctly identifies a current problem with our collective understanding of corporate governance, but i’m not sure adding a federal oversight organization is the right solution. states are the canonical governmental unit in the US, so it makes sense that they manage corporate charters. the federal government should be primarily concerned with interstate and international affairs. one could argue that corps are interstate and international organizations, but that’s only because we’ve allowed them to be. there are benefits to megacorps, like cheaper products, but there are also costs, like wage depression. but i still think the primary problem is size, not corporate charters. solve the size problem and all the ills that warren addresses would go away along with it. so, (1) get rid of corporate welfare (like debt tax shields), (2) cancel corporate personhood (remove corporate money from politics), and (3) instill a more progressive tax system (with more effort to account for externalities).

eldavido 8y ago
> but there are also costs, like wage depression. Do you have a source for this? The conventional wisdom is that larger firms are more productive, and tend to pay more as a result.
- clairity 8y ago
  there was an article posted right here on hn yesterday about wage depression. from my vantage point, conventional wisdom is quite the opposite of yours (e.g., walmart employees on food stamps). larger firms are more productive through a variety of mechanisms, not least of which is pricing power in the labor market. economies of scale and scope (like process standardization and automation) is a primary reason firms are more productive, and also has the added effect of putting downward pressure on labor costs.
  - eldavido 8y ago
    I'm not sure why people blame Wal-Mart if their employees take food stamps. This is really the fault of poorly-written policy. It blows my mind why people blame Wal-Mart and not the folks who developed the legislation of those policies. That aside, I'm sorry but you're just wrong about this. The data is pretty unequivocal: larger firms have more scope for investments in process, technology, and tools that lets them operate more efficiently. In the example of Wal-Mart, they run an ultra-efficient supply chain that minimizes breakage, makes sure popular goods are available for purchase, etc. Whereas half the time when I go into a non-chain grocery, they're out of, or otherwise not stocking the thing I want, they're closed, the item isn't in the right place on the shelf, it's hidden in the "back room", a supplier is late, or there's some other problem. Sure, some of this is due to bargaining power, but Wal-Mart also operates at a scale where they can afford to invest billions in sophisticated merchandising systems. As software people, we should understand what a difference this stuff makes to business. Small firms pay worse because they simply don't make as much, given the same level of sales, as large firms do. The argument is a complete strawman. Lower, less-efficient firms don't have the gross profits (price - cost of goods sold) to be able to afford higher wages, even if they wanted to.
    - telchar 8y ago
      The problem is that Wal-Mart doesn't pay a living wage. Are you suggesting instead that the problem is that it's possible for people earning below a living wage to get public assistance?
    - will_brown 8y ago
      >It blows my mind why people blame Wal-Mart and not the folks who developed the legislation of those policies. Because Wal-Mart has the profits to be able to afford to pay full time workers a living wage, but instead of paying a living wage to all full time employees they scoop the profits, and shift that gap to taxpayers. I think most people agree, that if an employer has the profits to pay full time employees enough so they employees are not eligible for food stamps the employer has that obligation. Where the profits exist, businesses should be required to reimburse the government/tax payers for at least the cost of food stamps. Why should tax payers subsidize the food for employees, and their families, of public companies when the profits exist? The worst part is Wal-Mart publicly claims they can’t afford to pay their employees a living wage to the extent they won’t be eligible for food stamps...well it’s simple math walmart profits less the total amount of benefits the employees take...wow the money is there.
      - sokoloff 8y ago
        > I think most people agree, that if an employer has the profits to pay full time employees enough so they employees are not eligible for food stamps the employer has that obligation. I'm not so sure that most people agree. (For example, I do not.) It seems that if most people agreed, we might be closer to a world where it was policy or law (another form of conditional minimum wage, perhaps).
        eldavido 8y ago
        Thank you, this is exactly my point. I don't buy the concept of "living wage" but that's not even what's at issue. I just think it's folly to blame Wal-Mart employees for availing themselves of a legally available social benefit program. I don't care where a person is politically. The private sector's job is profit maximization, not social welfare. There's this growing school of thought in the US that thinks it's the private sector's duty to "Take care of people". I'm not sure how we got it into our head that that should be the responsibility of private businesses. We have a government for that. It seems absolutely bonkers to start messing with the fundamental machinery of corporate law if the goal is social welfare. It's like seeing the thermostat is broken in the house, so we take a wrench to the engine of the car. It makes no sense to me whatsoever.
s73v3r_ 8y ago
One huge problem with the idea of having the states do this: there will be a race to the bottom, much like there was with banking and credit cards, where these companies will rush to base themselves out of whatever states are willing to gut their consumer protection and corporate oversight laws the most.
- clairity 8y ago
  this is a good point, but i think that's a symptom of the problem. fixing money in politics can help address this issue. currently, the balance of power between state governments and corporations is out of wack, and allows corporations to pull such shenanigans. states that fall for short-term thinking (like giving factories tax-free deals) will continue to fall behind, but with reforms like these, the people can start holding their politicians accountable for crappy deals that don't really benefit the citizenry.
  - throwawayjava 8y ago
    > but i think that's a symptom of the problem. fixing money in politics can help address this issue I don't think this solves the problem at all. You don't need to be in the pocket of big corporations to want to have their high-paying jobs in your state. Most of the cities and counties that give TIFs to walmart et al. are not in the pocket. They're just behaving rationally given the structural incentives they're being dealt.
  - dragonwriter 8y ago
    > fixing money in politics can help address this issue. The Warren proposal addresses corporate money in politics. It's not a total solution, perhaps, but it's also more concrete than most alternatives, and doesn't rely on either abolishing the defining feature of the corporate form or tossing out core political speech protections of the First Amendment, which are problems of the alternatives that aren't so vague as to be meaningless.
  - s73v3r_ 8y ago
    While it may be a symptom, and I'm 10,000% on board with getting money out of politics, I would still be entirely against leaving that kind of regulation to the states before any of that happens.
dragonwriter 8y ago
> states are the canonical governmental unit in the US, No, they aren't. They are no more canonical than the federal government. > the federal government should be primarily concerned with interstate and international affairs. While it may not be a perfect test, the applicability standard in Warren's proposal does a good job, IMO, of limiting applicability to corporations that are significant players in interstate and international commerce, not businesses that are primarily of concern for their state of origin. > cancel corporate personhood Juridical personhood is the central defining feature of the corporate form; “cancel corporate personhood” means “abolish corporations”.
- clairity 8y ago
  > "Juridical personhood is the central defining feature of the corporate form; 'cancel corporate personhood' means 'abolish corporations'." if we remove corporate personhood, will businesspeople then all of the sudden become less motivated to create companies and incorporate them so they have the opportunity to make money? i'm quite skeptical of such a claim. the corporate veil is unnecessary, just like the capital gains tax advantage, for promoting business. it's only encouraged bad behavior and protected incumbents, rather than supporting new innovation.
  - dragonwriter 8y ago
    > if we remove corporate personhood, will businesspeople then all of the sudden become less motivated to create companies and incorporate them so they have the opportunity to make money? Incorporation doesn't create the opportunity to make money—or even the opportunity to combine with others to do that—partnerships can do both. Incorporation is special because it creates a separate legal person—corporate personhood—who is the target of legal action against the business enterprise, and for whose liabilities the investors have limited legal accountability.
    - InitialLastName 8y ago
      > Incorporation is special because it creates a separate legal person—corporate personhood—who is the target of legal action against the business enterprise, and for whose liabilities the investors have limited legal accountability. Part of the issue is that these separate "persons" aren't actually able to be held accountable. When corporations do something illegal by, say, killing people out of neglect, they aren't imprisoned (shut down temporarily) or executed (dissolved).

eldavido 8y ago

> but there are also costs, like wage depression. Do you have a source for this? The conventional wisdom is that larger firms are more productive, and tend to pay more as a result.

clairity 8y ago
there was an article posted right here on hn yesterday about wage depression. from my vantage point, conventional wisdom is quite the opposite of yours (e.g., walmart employees on food stamps). larger firms are more productive through a variety of mechanisms, not least of which is pricing power in the labor market. economies of scale and scope (like process standardization and automation) is a primary reason firms are more productive, and also has the added effect of putting downward pressure on labor costs.
- eldavido 8y ago
  I'm not sure why people blame Wal-Mart if their employees take food stamps. This is really the fault of poorly-written policy. It blows my mind why people blame Wal-Mart and not the folks who developed the legislation of those policies. That aside, I'm sorry but you're just wrong about this. The data is pretty unequivocal: larger firms have more scope for investments in process, technology, and tools that lets them operate more efficiently. In the example of Wal-Mart, they run an ultra-efficient supply chain that minimizes breakage, makes sure popular goods are available for purchase, etc. Whereas half the time when I go into a non-chain grocery, they're out of, or otherwise not stocking the thing I want, they're closed, the item isn't in the right place on the shelf, it's hidden in the "back room", a supplier is late, or there's some other problem. Sure, some of this is due to bargaining power, but Wal-Mart also operates at a scale where they can afford to invest billions in sophisticated merchandising systems. As software people, we should understand what a difference this stuff makes to business. Small firms pay worse because they simply don't make as much, given the same level of sales, as large firms do. The argument is a complete strawman. Lower, less-efficient firms don't have the gross profits (price - cost of goods sold) to be able to afford higher wages, even if they wanted to.
  - telchar 8y ago
    The problem is that Wal-Mart doesn't pay a living wage. Are you suggesting instead that the problem is that it's possible for people earning below a living wage to get public assistance?
  - will_brown 8y ago
    >It blows my mind why people blame Wal-Mart and not the folks who developed the legislation of those policies. Because Wal-Mart has the profits to be able to afford to pay full time workers a living wage, but instead of paying a living wage to all full time employees they scoop the profits, and shift that gap to taxpayers. I think most people agree, that if an employer has the profits to pay full time employees enough so they employees are not eligible for food stamps the employer has that obligation. Where the profits exist, businesses should be required to reimburse the government/tax payers for at least the cost of food stamps. Why should tax payers subsidize the food for employees, and their families, of public companies when the profits exist? The worst part is Wal-Mart publicly claims they can’t afford to pay their employees a living wage to the extent they won’t be eligible for food stamps...well it’s simple math walmart profits less the total amount of benefits the employees take...wow the money is there.
    - sokoloff 8y ago
      > I think most people agree, that if an employer has the profits to pay full time employees enough so they employees are not eligible for food stamps the employer has that obligation. I'm not so sure that most people agree. (For example, I do not.) It seems that if most people agreed, we might be closer to a world where it was policy or law (another form of conditional minimum wage, perhaps).
      - eldavido 8y ago
        Thank you, this is exactly my point. I don't buy the concept of "living wage" but that's not even what's at issue. I just think it's folly to blame Wal-Mart employees for availing themselves of a legally available social benefit program. I don't care where a person is politically. The private sector's job is profit maximization, not social welfare. There's this growing school of thought in the US that thinks it's the private sector's duty to "Take care of people". I'm not sure how we got it into our head that that should be the responsibility of private businesses. We have a government for that. It seems absolutely bonkers to start messing with the fundamental machinery of corporate law if the goal is social welfare. It's like seeing the thermostat is broken in the house, so we take a wrench to the engine of the car. It makes no sense to me whatsoever.

s73v3r_ 8y ago

One huge problem with the idea of having the states do this: there will be a race to the bottom, much like there was with banking and credit cards, where these companies will rush to base themselves out of whatever states are willing to gut their consumer protection and corporate oversight laws the most.

clairity 8y ago
this is a good point, but i think that's a symptom of the problem. fixing money in politics can help address this issue. currently, the balance of power between state governments and corporations is out of wack, and allows corporations to pull such shenanigans. states that fall for short-term thinking (like giving factories tax-free deals) will continue to fall behind, but with reforms like these, the people can start holding their politicians accountable for crappy deals that don't really benefit the citizenry.
- throwawayjava 8y ago
  > but i think that's a symptom of the problem. fixing money in politics can help address this issue I don't think this solves the problem at all. You don't need to be in the pocket of big corporations to want to have their high-paying jobs in your state. Most of the cities and counties that give TIFs to walmart et al. are not in the pocket. They're just behaving rationally given the structural incentives they're being dealt.
- dragonwriter 8y ago
  > fixing money in politics can help address this issue. The Warren proposal addresses corporate money in politics. It's not a total solution, perhaps, but it's also more concrete than most alternatives, and doesn't rely on either abolishing the defining feature of the corporate form or tossing out core political speech protections of the First Amendment, which are problems of the alternatives that aren't so vague as to be meaningless.
- s73v3r_ 8y ago
  While it may be a symptom, and I'm 10,000% on board with getting money out of politics, I would still be entirely against leaving that kind of regulation to the states before any of that happens.

dragonwriter 8y ago

> states are the canonical governmental unit in the US, No, they aren't. They are no more canonical than the federal government. > the federal government should be primarily concerned with interstate and international affairs. While it may not be a perfect test, the applicability standard in Warren's proposal does a good job, IMO, of limiting applicability to corporations that are significant players in interstate and international commerce, not businesses that are primarily of concern for their state of origin. > cancel corporate personhood Juridical personhood is the central defining feature of the corporate form; “cancel corporate personhood” means “abolish corporations”.

clairity 8y ago
> "Juridical personhood is the central defining feature of the corporate form; 'cancel corporate personhood' means 'abolish corporations'." if we remove corporate personhood, will businesspeople then all of the sudden become less motivated to create companies and incorporate them so they have the opportunity to make money? i'm quite skeptical of such a claim. the corporate veil is unnecessary, just like the capital gains tax advantage, for promoting business. it's only encouraged bad behavior and protected incumbents, rather than supporting new innovation.
- dragonwriter 8y ago
  > if we remove corporate personhood, will businesspeople then all of the sudden become less motivated to create companies and incorporate them so they have the opportunity to make money? Incorporation doesn't create the opportunity to make money—or even the opportunity to combine with others to do that—partnerships can do both. Incorporation is special because it creates a separate legal person—corporate personhood—who is the target of legal action against the business enterprise, and for whose liabilities the investors have limited legal accountability.
  - InitialLastName 8y ago
    > Incorporation is special because it creates a separate legal person—corporate personhood—who is the target of legal action against the business enterprise, and for whose liabilities the investors have limited legal accountability. Part of the issue is that these separate "persons" aren't actually able to be held accountable. When corporations do something illegal by, say, killing people out of neglect, they aren't imprisoned (shut down temporarily) or executed (dissolved).