This is the third in a series of discussions about changes that need to be made to modern capitalism to protect the mass of humanity in advance of a full and revolutionary change to mutual aid and co-operativism. In the first, I proposed new taxation rules for corporations and in the second, I suggested changes in structure for banks; here I discuss corporate governance in more general terms. I note once again that these are just notes, eager for debate and adjustment.
The key to the improvements required for corporate governance is a constitutional amendment (or similar, depending on each national situation) stating specifically that corporations do not have the same rights as human beings; they have only the specific and particular rights granted to them by legislative or executive action.
More specific changes would include a ban on quarterly reporting and forecasting; possibly the half-yearly reports, too. This will enable a new cadre of senior executives to concentrate on managing their companies for the long-term rather than for short-term stock market speculation. The CEO of the world’s largest investment management firm, Larry Fink of BlackRock agrees that CEOs should “focus on creating long-term value instead of emphasizing quarterly targets.” This is such a fundamental and important priority that I would impose severe penalties (including mandatory jail time) on CEOs for any breach.
Loans from the taxpayer would be permissible (see the current Bombardier requests) but indulgence of this kind in state socialism would trigger a specific set of rules of governance. Until the loan has been completely repaid:
- no dividends or similar may be paid to shareholders;
- no share buy-backs or similar schemes are permitted;
- no increase in executive emoluments (of any and all kinds);
- no executive bonuses of any form.
Lay-offs totalling 5% or more of company personnel in any two-year period trigger the same rules as loans for a period of two years; this sanction shall not be concurrent with the loans’ rules. The two-year sanction for any breach of maximum lay-offs will be imposed at the end of any loan repayment.
Corporations may pay unlimited salaries and bonuses to executives, subject to sanctions not being in place. However, the portion of any emolument exceeding thirty (30) times the average non-executive wage or salary shall not be a deductible expense for purposes of determining the corporation’s taxes (in a corporation income tax situation), or shall be added to aggregate revenues (in the license scheme proposed earlier). This will assist the system to return to the Eisenhower days (for example) when profits from increased productivity were shared more equitably among all workers. Currently, CEO pay and benefits are on average more than 300+ times that of the average employee.
Bankruptcy rules for corporations must be changed to ensure that non-executive wages, salaries, and pensions are first in line for payment. Labour should not be a risk proposition. If you work, you must be paid. I believe trade suppliers should be paid next. Banks, other lenders, and investors have to bear the risks that their rewards suggest.
Finally, no corporation should be allowed to make political donations (in cash, in kind, through third-parties, etc. without limitation) without the express consent in advance of sixty percent (60%) of all shareholders both as to amount to be contributed, and to whom donated. This rule will only stay in place until we rid ourselves of politial donations altogether.
If we put these rules in place, then we will mitigate some of the worst excesses of modern capitalism. If they stay in place long enough, these changes will tend to lean us in the direction of mutual aid and co-operativism, which should be the ultimate aim.
Last night we attended a session called “Making Space For Citizens To Act on The Issues That Matter Most” at the Wosk Centre. There were about 50 people in attendance, perhaps half of them from governments of various levels; none, unsurprisingly, from City of Vancouver. The purpose of the gathering was to discuss ways in which governments and citizens can work more closely together “to co-create solutions” to the difficult problems of city-making.
The main speaker was Valerie Lammie, director of exploratory research at the Kettering Foundation, who has been city manager in Dayton and Cincinnati. She immediately noted a structural flaw in the current profession of city management; that city managers’ contracts rarely if ever encourage or incentivize work with citizens, and that citizens are these days generally considered to be consumers or clients rather than partners. This view tends to accentuate a mistrust between politicians/civil servants and the community.
I was unsure of what she was suggesting to solve this lack of cooperation. She showed a cartoon from England in which “squares” [government?] and “blobs” [citizens?] failed to cooperate until, perhaps, the “blobs” became more like small “squares”. It didn’t seem to suggest any obvious (or good) solutions to me.
The speaker asked us speak about “cooperation strategies” that had recently worked for us. A small number of “successes” were raised including — as the comedy portion of the night — someone suggesting that the Grandview-Woodland Citizens’ Assembly was the greatest thing since sliced bread. Not an opinion I share. See also.
The speaker also talked about elected/appointed citizen or neighbourhood councils and similar bodies that have been used in various cities to close the engagement gap. She was thoroughly opposed to them, claiming they “didn’t work”, mainly because, she said, over time they became mini-governments with their own engagement issues.
I disagree. There are neighbourhood councils in Portland, Edmonton, and other places that seem to work, and I would still like to try it here in Vancouver. Issues of rigidity and institutionalism can be overcome by the methods of selection at the neighbourhood level, annual turnover of membership, etc. It is worth trying.
At the end of the meeting, we were asked to discuss impediments to community engagement. This gave me the opportunity to re-state my position that governments are becoming too big and too far removed from the individual citizen. I noted that we used to have wards but now have a city-wide at-large system. On top of this we have Metro Vancouver, Translink, and other regional bodies none of which are elected. At each stage, power moves inexorably up to the top of the hierarchy, and ever further from the citizen. My position was, and is, that useful community engagement is almost impossible until power is returned to the neighbourhoods and the citizen.
All in all, I was glad to have gone to the meeting though I have few illusions that it will bring forth any solutions.