data for dunking #1: Elizabeth Warren =/= Stalin

By Colin McAuliffe (@ColinJMcAuliffe) and Sean McElwee (@SeanMcElwee)

One day, we will possess technology that will be able to automatically distinguish sincere arguments written by conservative intellectuals from parody. Until then, Data for Progress (@DataProgress) is committed to fact checking the dumbest takes from all your least favorite fever swamps.

By Colin McAuliffe (@ColinJMcAuliffe) and Sean McElwee (@SeanMcElwee)

Worker co-determination, the idea that workers should have representation on company board of directors, is wildly popular (52 percent of likely voters in favor, 23 percent opposed) and has become a policy idea of growing interest among progressives. Senator Tammy Baldwin was an early leader on the issue and has introduced legislation to mandate worker representation on boards and ban share buy-backs (read her case for the legislation here). Senator Elizabeth Warren of Massachusetts recently unveiled legislation that would require the boards of some companies to be 40 percent workers.

The conservative response to this plan (in line with what exists in many OECD countries) was... quite vitriolic. In National Review, Kevin Williamson called it, "Elizabeth Warren’s Batty Plan to Nationalize . . . Everything" and referred to it as "the largest seizure of private property in human history." Is it? And would it mean that the US would be less free?

First, let’s try to put Senator Warren’s bill in perspective. Worker codetermination is not a new idea and already exists in several OECD nations. There are also different degrees of codetermination which affect how much control workers have in the boardroom, and what size a firm can grow to before codetermination is mandated. Countries with the strongest codetermination laws such as Sweden and Denmark mandate that workers elect a third of the board of directors for all companies with more than 35 employees. The United States is at the complete opposite end of the spectrum with no mandated codetermination. An index of the degree of codetermination was created by economist Felix Hörisch which places countries on a scale from 0 (no codetermination) to 5 (a degree of codetermination on par with Sweden or Denmark).

Hörisch’s codetermination index is based on number of employees at a company, while senator Warren’s bill mandates codermination based on revenue. This makes placing her bill on the codetermination scale a bit tricky, partially because revenue is not always public information. From the most recent available IRS statistics of income from 2013, about 8,000 firms filed tax returns with more than $250 million in revenue (this is the largest revenue category the IRS reported). Aside from being just one quarter of the threshold for codetermination in Senator Warren’s bill, that’s about 0.14% of returns filed that year. By comparison, setting the codetermination threshold to 500 employees would cover about 0.33% of firms according to data compiled by the U.S. Small Business Administration, which would end up being about a 3 out of 5 on Hörisch’s codetermination index. So while we can’t pin Senator Warren’s bill down to a specific number, we can estimate that it would be close to the low end of Hörisch’s index.

Next, we turn to the question of whether or not existing countries with varying degrees of codetermination are in fact totalitarian hellscapes with massive government seizures of private property. As it happens, conservative think tank Heritage Foundation includes an index of economic freedom (it’s kinda silly, but it’s their index), which can be used to test this claim. Their index, available here, ranks countries by ease of starting a business and other measures. When we compare the codetermination index to the economic freedom index, the trend is completely flat.

codetermination.jpg

This suggests that there would be little impact on economic freedom as conservatives measure it, even if the United States were to mandate codetermination for much smaller firms than what Senator Warren has proposed.

Fact-check: Data for Progress ranks Williamson's claim that Elizabeth Warren's bill is "the largest seizure of private property in human history" as five lying Wyatts, the highest dishonor we bestow upon rank stupidity in the service of plutocracy.  

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