Update 356 — 2020 Presidential Cand. Series:
Economic Agenda of Sen. Bernie Sanders
In 2016, Sen. Bernie Sanders ran for president as the progressive challenger to Hillary Clinton, an alternative for those fed up with the establishment. He almost won the nomination. Now, with over twenty Democratic contenders in the 2020 primary, many of whom are running on similar progressive policies, Sen. Sanders must be flattered but now must also work hard to stay ahead of the pack on policy.
Only days ago, the former Burlington mayor announced a plan that may do just that, breaking economic policy ground. Below, we review Sen. Sanders 2020 economic platform, starting with his new plan.
Good weekends, all…
Sen. Sanders’ new plan, while still lacking some details, would mandate that corporations “regularly contribute a portion of their stocks to a fund controlled by employees, which would pay out a regular dividend to the workers.” This plan is coupled with another that would require companies to give a certain number of seats on their Board to their workers. Sen. Sanders currently plans to introduce a shareholder’s proposal to that effect at a Walmart shareholders meeting on June 5.
The Big Idea: Turning Labor into Capital
The “shareholder primacy” doctrine in corporate America holds that corporations legally serve shareholders before other corporate stakeholders, including workers. Sen. Sanders contends that this doctrine leads to a corporate myopia where corporations focus on short term profits at the expense of long term growth, leading to depressed worker wages and the undermining of the American labor force.
So, Sen. Sanders is planning a proposal to require corporations to divert a portion of their stocks into an employee-owned fund, which would return a regular dividend to its workers. It is still unclear how much of a firm’s stock would be diverted to the employee-owned fund, as well as what the structure of the shares would be (non-voting, voting, etc.). Sen. Sanders is also preparing to release a plan that would require corporations to give worker representatives a certain number seats on their board of directors, similar to Sen. Elizabeth Warren’s Accountable Capitalism Act (S. 3348).
Combined, these measures represent a substantial reform of the role and relationship among managers, shareholders, and workers, to remedy a doctrine Sen. Sanders sees as prioritizing profits over people.
Equity in a Capital Context
Sanders’ proposal is perhaps not as well-known as other presidential proposals on mainstream issues such as healthcare, abortion, or gun control. That being said, according to recent polls, the idea of “inclusive ownership funds” is generally popular.
The Next System Project, an initiative of the Democracy Collaborative, found that 29 percent of respondents strongly supported “a policy requiring companies with over 250 employees to put 2 percent of their shares into a workers fund each year, up to 50 percent, which would pay dividends out to the company’s employees.” Twenty-six percent somewhat supported it, and only 12 percent said they strongly opposed it.
Democrats have proposed ideas like Sanders’ in the past. Employee stock ownership plans (ESOPs) have remained traditionally popular across both sides of the aisle, usually as a part of retirement packages. There are around 6,660 ESOPs in the US, holding roughly $1.4 trillion in assets. Progressives are beginning to warm up to a substantial expansion in this market-tested and scalable structure.
This month, Sens. Sanders, Gillibrand, Leahy, Hassan, and Shaheen introduced two bills that would encourage the creation of employee-owned companies.
- The WORK Act would give states over $45 million in funds to establish or grow employee ownership centers.
- The United States Employee Ownership Bank Act establishes the U.S. Employee Ownership Bank, which would provide funding to help workers purchase businesses through an employee stock ownership plan.
Although there is growing support for employee-owned businesses, it remains unlikely that any U.S. congress would pass into law a proposal that has been compared to economist Rudolf Meidner’s plan to gradually socialize ownership in 1970s Sweden.
Sen. Sanders has many other prominent economic policy proposals that are just as bold as his ideas to reform corporate America. Here are some of the most notable:
- Too Big to Fail: During his 2016 run for the presidency, Sen. Sanders said, “if a bank is too big too fail, it is too big to exist.” Sen. Sanders has again made it a central theme of his 2020 campaign, announcing his eponymously-named “Too Big to Fail, Too Big to Exist” bill back in October last year. The bill would compel banks with exposures of over 3 percent of GDP to break up into smaller — and in theory more manageable — institutions.
- Minimum wage: In January this year, Sen. Sanders re-introduced the Raise the Wage Act, S. 150, a bil that would raise the national federal minimum wage from $7.25 an hour to $15 an hour, incrementally over a five-year period. He has supplemented this message of increased pay for workers with bills such as the Stop BEZOS Act that would force large employers who underpay their workers to contribute to government safety-net programs.
- Estate tax: At the beginning of the year, Sen. Sanders introduced the For the 99.8 Percent Act, S. 309. The bill, targeted at the wealthiest 0.2 percent of Americans, would impose a 45 percent tax on states worth between $3.5 and $10 million, rising to 77 percent for estates worth over $1 billion. The bill is projected to raise $2.2 trillion over 10 years — around $500 billion less than Sen. Warren’s proposed “wealth” tax.
When Fringe Ideas Become Mainstream
In 2016, Sen. Sanders laid the groundwork for the pool of 2020 Democratic candidates to run on more left-wing policy ideas. Economic policy ideas that no one was talking about are commonplace, or central, in the debate. Sanders may be the victim of his own success, which has bred many imitators, all much younger. The question will be, will voters stick with Sanders as the prime mover behind this new left-wing movement in the Party, or will fresh faces with equivalent (or even more progressive) ideas crowd him out?