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It’s time to take Elizabeth Warren’s agenda seriously

Sen. Elizabeth Warren appears on a series of screens during the recent Democratic presidential debate at Otterbein University in Ohio. Warren is now considered the front-runner in the race for the Democratic nomination. (Chip Somodevilla/Getty Images)

When Elizabeth Warren was only a contender in the crowd, she was widely admired for her rigorous approach, her emphasis on issues, her multitude of plans.

But now that she is the front-runner for the Democratic nomination, it’s time to take her agenda seriously.

With some exceptions, Democrats do not seem to realize how ground-altering a Warren administration might be. She has benefited from comparison with Bernie Sanders — a Democratic socialist. Warren is a capitalist, as she says, “in her bones.”

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And if your benchmark is Karl Marx, Warren is correct. She believes in private ownership of the means of production. But her program would lead to a radically different version of capitalism than what Americans know.

It would greatly increase the presence of government. It would do away with private health insurance, ban fracking for natural gas, introduce a new form of taxation, break up big banks and big tech, accelerate curbs on fossil fuels and turn higher education into a federal entitlement.

Warren also has proposed involving the government in the production of prescription drugs — certainly a creative approach to lowering prices.

A Warren administration would try to prevent investment and jobs from moving overseas — that is, to prevent businesses from responding to market incentives and acting in their own economic interest. Warren would also restrict corporations’ freedom to make basic capital decisions such as repurchasing their own stock.

Her buyback measure is not as egregious as Sanders’s, but her program is animated by contempt for big corporations, which, looking just at the Fortune 500, employ more than 26 million people and are entrusted with the savings of tens and tens of millions of Americans.

Her program would raise the presence, and the power, of labor unions. It would restrict trade, with results similar to Donald Trump’s, although the rhetoric is different. And it would do these things — many things — with a speed and scale that is revolutionary.

It has been said that Warren’s positions will moderate as the campaign progresses, or that once in office, she won’t be able to accomplish her agenda. This ignores our unhappy present situation (the same was said of Trump). And it is disrespectful to Warren. She has said, repeatedly, that she wants “big, structural changes.” She deserves to be taken at her word.

At the recent debate in Ohio, the Warren program that got the most attention was her plan to tax wealth over $50 million. It’s hard to imagine that this would be enforceable — Accounting Today calls it “a boon for appraisers” — but it is not her most troubling idea.

Taxes on big incomes should go up, though there are better ways to raise revenue than a wealth tax, including Andrew Yang’s value-added tax, eliminating the step-up in basis for inherited assets and raising the tax on capital gains.

The point is, taxes have fluctuated since 1776, and so they will continue. Warren’s more fundamental changes occur at the corporate level, before the profits are earned.

It’s worth stressing this: Redistribution is the government’s job; no one else can do it. But messing with business before the profits are earned messes with the source of the profits that pay for all the social things that Warren wants to do, and it messes with the incentives for earning them.

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Her signature plan to force large corporations to reserve 40 percent of board seats for employees violates every notion of American capitalism. It treats the assets of corporations as social assets, not really private, irrespective of their being funded with shareholder capital.

And it reeks of disdain for bigness. She does not propose that the owners of small businesses give up control. Big companies are not fundamentally different. They are not alien or malevolent creatures. They are small companies that succeeded.

Beto O’Rourke said at the debate in Ohio that Warren seems “punitive.” Warren said she was shocked. Yet her wealth tax, by targeting only the super-rich, does seem hostile to the wealthy. Social burdens should properly fall on everyone, with the rich paying more and others paying some.

And Warren blames virtually every social ill on “big corporations.” Her exchange in Ohio with Yang was revelatory. Yang blamed job losses on automation — a complex process for which no one set of actors is to blame. For Warren, there is always a culprit, and it’s always the same culprit: big multinational corporations.

Abraham Lincoln, who expanded the government more than any previous president, said property is “a positive good in the world,” and he elaborated, “That some should be rich shows that others may become rich.” Warren has said similar, but one doesn’t feel she means it.

There is a strong whiff in Warren’s rhetoric of state industrial policy, and a patent disdain for markets.

Her proposal to install labor in the boardroom would redefine American capitalism. Unions and corporations would be pressed into partnership. As the price for assuming responsibility for social goals, corporations would demand federal protection and surely get it. The result would be a more managed and less innovative economy — big companies, big labor, big government running the show. (She would further enhance the clout of union bosses by adopting “sectoral bargaining,” or bargaining industry by industry.)

Judging from her recent attack on Facebook, there would be strong pressure on social media to regulate domestic political ads. I know that Facebook has spread much misinformation. But the American model holds that the marketplace of ideas ultimately is the best judge. If not the market, who would Warren anoint to decide which politicians will be heard?

Some of Warren’s plans have been tried in Europe, such as universal health insurance and a greater role for unions, including, in Germany, in the boardroom. And Europe is the best model for what a Warrenized America would look like. I say that as an admirer of many aspects of European society, especially Europe’s investment in public goods (try comparing trains there with Amtrak’s). But no one should minimize the differences between the European and U.S. models.

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America remains a more individualistic society. It is easier to find a job or to get rich (or to go broke). U.S. choices are more unfettered; U.S. capitalism is closer to Adam Smith. Europe has fewer start-ups, lower growth, a lower per-capita income and higher unemployment. On the other hand, Europe has less inequality and less poverty, and everyone has health insurance.

The liberal approach has been to address social ills by bolstering the safety net while preserving American dynamism. It has usually moved in small steps, cognizant that social institutions are complex and that the well-intentioned can also make mistakes. Trump has destroyed the liberal center, and Warren, with her repeated assertion that problems have a “simple” causality, poses a similar threat to the liberal approach.

Warren is a better human being than Trump, as are the other Democratic candidates, but like him, she oversimplifies problems and is too eager to blame. She is certain to a fault.

As a senator, she blackballed a qualified Treasury nominee who had worked on Wall Street as if it were a stain. Her standard line that the system is “rigged” undermines trust in the system and promises a continuation of combative politics.

Warren has not explained how she would pay for her programs. She seems unaware that bigness in government — especially when it attempts many new things at once — also has its perils. Her mistrust of markets and trade seems suited to a post-growth era. It augurs not optimism but a defensive crouch. As Democrats choose, they might consider whether this is the future that they and the country will want.