Here’s a letter to the Wall Street Journal:
In “Enemies of the Economic Enlightenment ,” Phil Gramm and Michael Solon offer substantive reasons to fear Elizabeth Warren’s proposal to quasi-socialize corporate governance. In response, Barrett Maners labels Messrs. Gramm’s and Solon’s argument “dogmatic and antidemocratic” (Letters , April 24). But he offers not a single substantive reason in support of Sen. Warren’s scheme. The closest Mr. Maners comes to offering substance is his assertion that “The externalities created by the pursuit of corporate self-interest and profit above all else can no longer be hidden.”
Yet what are these alleged externalities? If they are so vivid, surely Mr. Maners could have given as an example at least one.
I don’t deny that effects commonly called “externalities” exist. Ironically, though, such effects would be far more prevalent and worse if corporate governance were bent to Sen. Warren’s will. By giving workers and other non-owners of corporate assets decision-making power over those assets, Sen. Warren’s plan would unleash the most classic of externalities, namely, the power to reap personal benefits by controlling the use of an asset while avoiding most, if not all, of the attendant costs of that use.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030