Response to "I don't completely agree with you..." paragraph.

I can't speak to what Business School is teaching, but Law School is still firmly in the maximize shareholder value realm. Perhaps this is because Law School is being descriptive on what the law currently is, but my corporate law courses did not critique the system normatively. Regardless, I do think that the only way to change things is through cultural change. Changing education curriculum is a lot of this, but if you are correct then that is clearly not sufficient. I think it is naive, and hypocritical, to think that the Government has no role in cultural change. That is what I think the power of Warren's proposal is. I think your last sentence hits it dead on. The market cares about returns. IMO, this has led to market centralization with fewer firms having larger market power. This is not good for the free market, but is good for the returns of a company. It is the Government's role to counter-act this. Likewise, the market's emphasis on returns (which means its emphasis on benefitting capital) has led to labor being impacted negatively. I think this is the simplest explanation on inequality today. I think it is completely in the Government's role to counter-act this. Warren's proposal insures that "stakeholder" wealth is actually followed.

In response to your "There is a ton of activism among business leaders and investors..." paragraph.

I think this paragraph highlights where we see this proposal differently. You see it as active government intervention in the markets. That is not how I see it at all. Warren's proposal does not put the government in board rooms, and does not give the government a say in business decisions or the allocation of economic resources. What Warren's proposal does is changes what stakeholders are involved in that boardroom. This will definitely change decisions being made, but I don't see how it will lead to the economic distortions you are talking about. (as in centralized 5-year plans).

"These activist investors do impact who sits on boards as well. Sometimes, with workers. I just don't agree with govt usurping the shareholders in determining board make-up. "

I just think you fail to recognize that corporations are created by state law. It is the government that sets up corporations and provides them their legal rights. This is descriptively true. There were normative reasons to set up modern corporations (the move from small scale firms to huge ones) so the government did this. Now I think there are normative reasons to change the fundamental structure of corporations. I can't understand how the Government doesn't have the ability to do this. Again, corporations are creatures of law, not of nature. I see your concerns about government intervention. But I think the democratic process protects this. I would not vote for a candidate who wanted government ownership of the means of production. I don't think most Americans would either. Furthermore, corporations wield an oversized political inflience. I think they are pretty well protected. Why should the law (which created corporations in the first place) be able to stop the democratic process if that process wants to modify the procedural structure of corporations?

In response to your last two paragraphs...

I think this is your best point and it has really made me think. I do think that we need to guard against government intervention in individual market decisions just because as you point out they can be wielded arbitrary and capriciously. But to emphasize this point, that is not what Warren's proposal does. It does not choose K-Mart over Wal-Mart. It changes the legal structure of corporations...the rules that all corporations have to play by (I will grant that there are different rules for different sizes but the point still stands that this is a change to procedural rules).

The current legal regime makes shareholders all that matters in American corporate governance. That does not have to be the case. Germany is the easiest example here. That is a result of historical decisions that the United States legal system has made. You shouldn't think of our corporate structure as inherently correct or the best just because that is what we have.

Imagine a Rawlsian veil of ignorance. You were going to design a corporate legal structure. You could give shareholders all power, labor all power, etc. Why should shareholders have all the power? If you can convince me on this then I will change my point of view. I see the negatives that 100% shareholder power has caused (increased inequality, a race to the bottom for labor and the environment rules and regulations, a race to the bottom on corporate governance (Delaware), and the weakening economic position of labor). That is why I don't think it is the best system (at least for the current times). So why is the current system the best?