The Economic Consequences of Sen. Sanders' Stock Confiscation Plan

Ryan BourneBernie Sanders wouldconfiscate 20 percent ownership stakes in 22,000 companies, distributing the stocks to workers through shared employee ownership funds. His “Corporate Accountability Plan,” announced yesterday, should lay to bedany lingering doubts that “democratic socialism” is just about social democracy, or a bigger welfare state. Rather, it amounts to a fundamental attempt to re-order the American economy through federal government edicts.Under Sanders ’ “Democratic Employee Ownership Funds,” all publicly traded companies and those with at least $100 million in annual revenue would have to contribute 20 percent of their stock to “workers” over a decade, creating an “employee-controlled fund” that distributes any dividends to employe es. Unlike ordinary stocks, workers couldn’t sell or transfer the stocks in their name. Instead, the fund would be managed by elected worker representatives, with ordinary voting rights. Worker representatives would also make up at least 45 percent of boards in firms with at least $100 million in annual revenue, $100 million balance sheets, and publicly traded companies.There are some obvious economic problems with this combined plan:If we force businesses to compensate employees via collective stock donations, then employers will look to reduce remuneration costs in other ways, most likely reducing wages to offset the cost of said donations. We ’d expect Bernie’s plan then to change the composition o...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs