The Business Roundtable of 181 corporate CEO’s was unveiled as a startling new philosophy of business that subverts the interests of shareholder to the other stakeholders; employees, suppliers, customers and the community. For as long as I can remember the interest of all stakeholders has been integral to business owners and managers, and I failed to see what was new about this pronouncement.
The federal, state and local taxes paid by these businesses are already substantial and the larger they grow to more benefit the taxing authorities receive. But this revelation of the Business Roundtable seems to forget who these shareholders really are. Pension and retirement accounts are the largest shareholders.
During the bailouts of 2008 President Obama subverted the claims of GM bondholders to give greater equity stakes to the autoworkers’ union. We are to believe that bondholders were uber rich people on Wall Street, but the largest bond holder was the Indiana Teachers Union, whose investment was wiped out by Obama’s dismissal of standard bankruptcy law. One workers’ union was sacrificed to benefit another.
This action was so egregious that then governor Mitch Daniel secured a ruling from the courts that this action would not be considered precedent setting.
Obama accused critics of his decision to give control of Chrysler to the United Auto Workers Union of being “speculators.” But it turns out that many of them are pension funds representing the interests of retirees, who are being fleeced to enrich the politically better-connected UAW. “Indiana Treasurer Richard Mourdock revealed this week that his state’s police and teacher pension funds have lost millions of dollars in the Chrysler ‘restructuring.’ Indiana’s State Police Fund and Major Moves Construction Fund, which finances roads and bridges, together lost more than $1 million. And the Teacher’s Retirement Fund ‘suffered, at a minimum, a loss of $4.6 million due to the action of the Federal government,’ reports Mr. Mourdock. Far from being speculators, these funds represent retired public employees, including cops and teachers. The funds paid a premium to buy ‘secured’ status, only to discover that they were politically outranked by the United Auto Workers in the White House hierarchy. ‘In the past, to be secured meant an investor was first in line in the event of a bankruptcy and ‘non-secured’ creditors would receive value after secured-creditors were paid,
This lack of understanding of our economic structure and the important role of profit and shareholder interests should concern us all. Elizabeth Warren’s idea of a wealth tax was pandering and stunningly ignorant when she describes it as a tax on jewels and yachts. It contains the kind of stereotypes commonly associated with bigotry.
Warren Buffet is worth $100 billion and most of it is in the shares of Berkshire Hathaway which is worth over $500 billion. A three percent wealth tax would require Buffett to sell three billion dollars’ worth of his stock every year or sixty billion dollars’ worth over twenty years. This would harm not just Buffett but his shareholders as well and his shares are in many retirement portfolios. Is that sixty billion dollars going to be better allocated by Elizabeth Warren than Warren Buffet? And we are only considering the effect on one company.
The 80 plus companies Buffet and his shareholders own already pay billions in taxes before their share price ever appears in his net worth. Warren’s ideas are so poorly though through it would not be worth acknowledging were she not a leading contender to be president.
The Business Roundtable may be acknowledging the obvious but in playing to the crass perceptions of the class warriors they undermine their credibility. How many of the CEOs on the roundtable are willing to address the outsized CEO compensation for the largest corporations? How many corporations will address the impact on the economy of the excess government spending, erratic tax policies, and deficit financing.
Their compliance and subjugation to this class warfare rhetoric perpetuates the giant lie of the social justice warriors; that their wildest spending programs can be borne by a narrow band of the extremely wealthy. If the middle class understood how much their share of the bill would be, they would lose in a McGovern style landslide.