Democracy: A Journal of Ideas, a policy publication of renown in Washington, DC, selected Professor Kent Greenfield to be one of the writers providing sixteen ideas that shape the progressive agenda for 2016. Greenfield’s article offers solutions to Delaware’s problematic corporate governance law.
Popular among progressives as a place to vet ideas before a policy push—Senator Elizabeth Warren, for example, first proposed her financial consumer protection agency in the pages of Democracy—the Winter 2016 issue of the journal also includes among the sixteen writers former Massachusetts gubernatorial candidate Juliette Kayyem, former US State Department policy planning director Anne-Marie Slaughter, and former Obama chief economics advisor Austan Goolsbee.
“Delaware corporate law cares not at all about employees, communities, customers, or other stakeholders, except insofar as shareholders also gain,” writes Greenfield. “If there is a conflict, shareholders must win. Gouging customers for shareholder gain? Fine. Using child labor overseas for shareholder gain? Go for it.
“This legal rule is mistaken on its own terms,” he continues, “but doubly problematic because of the undemocratic nature of Delaware’s dominance.”
Greenfield presents two solutions: one, that states assert the right to govern corporations whose primary place of business is within their borders; two, that “corporations of sufficient size to affect national interests be chartered at the national level,” subjecting them to the constraints of democratic pluralism.