Thread by @jackmurphylive

Elizabeth Warren wants to meddle in corporate governance. She wants corps to:

- give employees 40% of Board Seats (take from owners)
- focus on outcomes other than profits - like social justice

which she admits will:

- evaporate trillions in wealth

vox.com/2018/8/15/1768…

Per @mattyglesias - Warren's plan will limit share buy backs, move CEO focus away from profits, and somehow make employees richer.

They both fail to realize that share buy backs mean an investor got their $ back - which they in turn, reinvest.

Vaporizing wealth is never good.

Her goal is to "save capitalism" but really its a step towards collectivism.

She wants to literally take 40% of voting rights away from the actual investors and hand them over to employees.

If customers and investors wanted this sort of thing, the market would demand it.

But of course, the markets don't want it. Investors want maximum return on their money. That's why they invest.

If investors wanted to donate to charity, they can..

Putting employees in charge of Fortune 500 companies is the ultimate counter example to "skin in the game."

We all are self interested.

Employees in charge of billion dollar companies

- without owning any of it -

would invariably lead to financial and economic decline as employees seek to maximize their incomes at expense of investment and shareholder value.

Warren and Iglesias see this move as a "budget neutral" (ie. not taxes or spending) way to solve for inequality.

And they admit, they solve for inequality by vaporizing trillions in shareholder value.

THAT SOUNDS SMART.

To be sure - rising inequality, which exploded under Obama - is alarming and a source of anger for Americans of all parties.

But one way to have fixed/prevented it would have been to let AIG / Goldman fail in 2009.

Instead, Obama bailed them out and let them skate free.

Exploding inequality drove voters to go #DemocratToDeplorable, and I address these issues in my book.

There I show you the big picture and how all of this led to Trump in 2016.

Warren's plan would hand 2020 to Trump with a bow on it!

amazon.com/dp/B07CV19ZYS/…

Think Warren will have the support of Wall Street with this plan?

How will promising to vaporize trillions in wealth AND requiring corporations to simply hand over voting rights to non owners play with the oligarchs in this country?

Not well.

Main St. + Wall St. = #MAGA2020

Want to learn to see the big picture like this? Want to tie history, philosophy, economics, feminism, and the current culture wars into one coherent understanding of the world? Want answers? Want to know you're not alone?

Buy my book - it's all in there.

amazon.com/dp/B07CV19ZYS/…

Iglesias and Warren offer up their goal is to: "eliminate the huge financial incentives that entice CEOs to flush cash out to shareholders rather than reinvest in businesses."

Where do I even start with this?

They both fail to understand incentives and the capital markets

"Flush cash out to shareholders"

Hello communists: shareholders purchase shares with the express desire to have that sweet delicious cash flushed right back to them..and then some!

This is what happens when the state gets involved in business. They bring their ignorance to law.

"Rather than reinvest in business"

CEOs can raise earnings per share (EPS) a few ways. One is to do share buy backs.

Another, reinvest in the business.

CEOs will do which ever one is financially rational, because they get paid on EPS GROWTH.

Warren wants to decide for them.

This brings me to my most important point:

CEOs whose wealth depends on them growing EPS, whose power comes from bigger valuations, whose entire professional persona stems from value creation...

Are not reinvesting in their own companies.

It doesn't make sense to them.

Corporate cash balances are off the charts. Trillions in cash sits off shore. Capital investment and innovation aren't enticing enough. Cash collects dust rather than buys new equipment, creates new tech, or solves massive problems.

This should scare us.

Ultimately, this Warren proposal will never happen and she'll never seriously put it forth as her platform.

The people it would hurt the most are aging boomers ready to cash out and retire. Vaporizing their retirement fund aint a way to get votes.

READ:

amazon.com/dp/B07CV19ZYS/…

Aging boomers with their 401k's will have a choice in #2020 -

Elect a shareholder antagonist like Warren and thus kick out their retirement year by a decade.

Or vote Trump, who they know will at least work to maximize boomer portfolios so they can retire rich.

Tough choice?

In sum - as another commenter said:

"Be wary when a Democrat says they want to save capitalism."