[TomMckenny]

The Warren law would simply reintroduce several systems that were in place by convention until the '80s.

That earlier period, by the way, was not a living hell of industry killing regulation but in fact had less consolidation. It also had higher GPD growth, lower cost of living, and more economic stability, so apparently it won't kill the economy either.

[roenxi]

But did those conventions cause all those things, or did the incentives that caused the conventions also cause all those things? Because addressing the conventions is just cargo-cult economics, we want the incentives.

The US system is massively debt based at the moment, private debt (note: private not public) went from 40% -> 80% GDP from 1970 to today. My naive perspective is that I would expect higher debt loads to cause:

* Lower GDP growth

* Higher costs of living

* Reduced economic stability

* Consolidation (because large players have more capital so can secure larger loans)

* Low real wage growth (because ability to earn by working is not as attractive because there is an option to 'earn' by borrowing)

The US ended the Brenton Woods system in the early 70s, and the consolidations really started in in around the early 80s [1]. So we know that there were some pretty major changes at the roots, of the financial system. It seems very plausible that some critical incentive changed in the late 70s (roughly lines up with Paul Volcker becoming Fed chair) and we have been seeing the ramifications ever since. That happens to coincide with the highest interest rates set under the current monetary system and the start of the current trend which is extending into the negatives [2].

[1] https://en.wikipedia.org/wiki/List_of_bank_mergers_in_the_Un...

[2] https://tradingeconomics.com/united-states/interest-rate

[TomMckenny]

Oh yes, I would never claim those differences in the board room would be the _reason_ for non-consolidation etc. That would indeed be cargo-cult. I merely meant that evidently such boardroom arrangements don't destroy an economy.

Additionally, I would intuit that it improves the employee's condition and because employees are strongly motivated to keep the company they depend on strong, their motivations align with investors to that degree while they may have additional insights. So I'm theorizing their presence will at worst do no harm.

As you imply, the American rapid rise to economic supremacy and current slow down is undoubtedly complex. I would add that initially part of it was the annihilation of productive capacity outside the US after WWII and part of it was the Keynesian stimulation that WWII forced the US to do during the war.

I just meant to say to the grandparent post that observationally Elizabeth Warren's proposal was not a threat national commerce.

[Digory]

Not really. Shareholder primacy responded to management supremacy — management was soaking up profits, making almost fraudulent promises to employees about the future, and insulating themselves from shareholder votes.

The Warren proposal purports to give employees 40% of the shareholder’s votes, and then give management a duty to act for “the public.”

Neither was present in the ‘old’ system. I can’t see that either of these steps give management or employees better long term incentives.