You Can Kiss Your Savings Goodbye if this Happens

A socialist might see injustice in that inequality. But seniors know this wealth gap is the difference between the start and the finish of a career of work and thrift, making the last mortgage and retirement payments rather than the first. Seventy-two percent of the value of all domestically held stocks is owned by pension plans, 401(k)s and individual retirement accounts, or held by life insurance companies to fund annuities and death benefits. This wealth accumulated over a lifetime and benefits all Americans.

That means it’s your life savings on the line—not the bankroll of some modern-day John D. Rockefeller—when Democrats push to limit companies’ methods of enriching their shareholders. Several Democratic congressmen and presidential candidates have proposed to limit stock buybacks, which are estimated to have increased stock values by almost a fifth since 2011, as well as to block dividend payments, impose a new federal property tax, and tax the inside buildup of investments. Yet among all the Democratic taxers and takers, no one would hit retirees harder than Sen. Elizabeth Warren.

Her “Accountable Capitalism Act” would wipe out the single greatest legal protection retirees currently enjoy—the requirement that corporate executives and fund managers act as fiduciaries on investors’ behalf. To prevent union bosses, money managers or politicians from raiding pension funds, the 1974 Employee Retirement Income Security Act requires that a fiduciary shall manage a plan “solely in the interest of the participants and beneficiaries . . . for the exclusive purpose of providing benefits to participants and their beneficiaries.” The Securities and Exchange Commission imposes similar requirements on investment advisers, and state laws impose fiduciary responsibility on state-chartered corporations.

Sen. Warren would blow up these fiduciary-duty protections by rewriting the charter for every corporation with gross receipts of more than $1 billion. Every corporation, proprietorship, partnership and limited-liability company of that size would be forced to enroll as a federal corporation under a new set of rules. Under this new Warren charter, companies currently dedicated to their shareholders’ interest would be reordered to serve the interests of numerous new “stakeholders,” including “the workforce,” “the community,” “customers,” “the local and global environment” and “community and societal factors.”

Eliminating corporations’ duty to serve investors exclusively and forcing them to serve political interests would represent the greatest government taking in American history. Sen. Warren’s so-called accountable capitalism raids the return that wealth provides to its owners, the vast majority of whom are present or near retirees. This subversion of capitalism would hijack Americans’ wealth to serve many new masters who, unlike shareholders, don’t have their life savings at stake in the companies that are collectivized.

After dividing retirees’ rightful earnings eight ways to serve the politically favored, the Warren charter goes on to require that “not less than 2/5 of the directors of a United States corporation shall be elected by the employees.” With a mandate to share profits with seven other interest groups and 40% of the board chosen by non-investors, does anybody doubt that investors’ wealth would be quickly devoured?

P.S. Dear Elizabeth. Here’s how to make money.

Read more from Gramm and Solon here.