The things that worry Mark Warner don’t fit easily on a bumper sticker.
This past week, Virginia’s senior senator has been doing the sort of thing that senators typically do when Congress is in recess. He toured the Veterans Affairs Medical Center in Salem. He presided over roundtables with business leaders in Rocky Mount and Martinsville. He took a test drive in a driverless car at a research site near Danville.
In between, he scrunched his lanky frame into a booth at Zorba’s Small World Café in Salem and expounded on his favorite topic — the economy. Specifically, how it’s changing, both for good and for ill.
Up and down the Interstate 81 corridor, Warner sees “new energy” in one small town after another — he name-checks Marion, Wytheville, Pulaski and ticks off some of the specific developments he’s seen in each town. He talks excitedly about the rise of a new wave of entrepreneurship — with shared workspaces, incubators and accelerators springing up in one town after another. He mentions the Grandin Co-Lab in Roanoke, the new Staunton Makerspace in that city.
He expresses the wish that someone — someone other than government, that is — would step forward to create a “statewide backbone” for all these new entrepreneurial spaces, so they could share ideas, back-office resources and even lists of potential angel investors so we “basically make sure we don’t reinvent the wheel” in each community.
All that’s on the plus side. Then there are the things that worry him — basically the fate of capitalism itself.
This is the futuristic side of Mark Warner that appealed so much to Virginians when he was governor, but is harder to see in the context of a partisan U.S. Senate and a gridlocked Washington.
For the past year or more, he’s been digging into an issue that defies a partisan pigeonhole. That’s the rise of the so-called “gig economy” — the idea that more and more Americans are working as “independent contractors,” and not full-time employees. By some estimates perhaps one in three people in the workforce no longer hold a full-time job, but instead move from “gig” to “gig,” trying to piece together multiple streams of income.
For some, that’s an entrepreneurial opportunity; for others, it’s a forced necessity. In any case, the result is the same: They’re not getting benefits through a traditional employer. Warner’s worry is that someday this is all going to come back to the government’s doorstep. All those Etsy merchants and Airbnb hosts and Uber drivers aren’t paying into government unemployment funds — and so when they get sick, or get hurt on the job, they don’t qualify for disability benefits or worker’s comp. Who pays the bill then? Should government do something now to make sure it doesn’t get stuck with a big bill (or a social crisis) later?
A year ago, Warner came to Roanoke for a roundtable with “gig economy” contractors at the CoLab. Since then, he’s joined with scholars at The Aspen Institute to study the issue. Interestingly, that initiative has a Republican co-chairman — Mitch Daniels, the former governor of Indiana and now president of Purdue University. One answer seems easy, Warner says: Portable benefits. The United States is unique in that most benefits flow through specific employers — and therefore don’t move when workers do.
Warner sees this as part of a bigger problem: Is capitalism today working the way it’s supposed to? He thinks not, and rattles off some statistics that he says prove it.
In the pre-Internet 1960s, the average stockholder worked through a broker and held their stocks for eight years and four months. Now, in the world of digital trading, it’s down to just two months. That, Warner says, values short-term profits over long-term investment. He blames so-called “activist investors” — who in some cases might rejuvenate sleepy companies, but often simply cut costs (and workers) to squeeze out an immediate profit for shareholders without regard for the people or communities those decisions impact.
Some more stats: At one time, 50 percent of corporate profits were reinvested in the business. Now, 95 percent of corporate profits are going into stock buy-backs or dividends. Good for shareholders, but not necessarily good for the country. “It’s just a very different capitalism than the capitalism I grew up with in the 1980s,” says Warner, who made his fortune in cellphones before turning to politics “I want to make American capitalism work for everyone.”
He has some ideas on how to change things. On corporate governance: Should long-term shareholders have more voting weight than short-term shareholders? On the nation’s tax code: Why is investing in machinery considered an asset, while investing in people is considered a cost? Companies do a better job training workers than the government does, Warner says, but disincentives in the tax code — not to mention the short-term profit motive — mean companies are foisting that job off on taxpayers.
Warner’s not alone in asking these questions. There are various buzzwords for these kinds of discussions in economic circles: Capitalism 2.0. Conscientious Capitalism. Inclusive Capitalism. Whatever they’re called, Warner senses an opportunity to act on some of them after the election — assuming Hillary Clinton wins. Voters, he says, intuitively understand the nation’s social contract has frayed. “They may not know the data, but they get the idea.”
He says some Republican senators have expressed interest in these ideas, but they’re reluctant to speak up during an election. After the election … well, a new president will probably have ten months to push through an agenda before the next set of elections start to loom. “If it becomes the old Democratic left against the old Republican right,” he says, then nothing will happen even then. But can some of these issues be “re-framed” in a new, non-partisan way? He’s hopeful.
He’s also worried. He sees signs that the economy is about to go through even more upheaval than we’ve already had. “The biggest job in America for males is driving,” he says. “Artificial intelligence could put all of them out of jobs in 20 years.” In other words, those driverless cars like the one he tested near Danville could be the precursor for automated commercial vehicles like tractor trailer trucks. What happens then?
You may read this editorial on the Roanoke Times website here: http://www.roanoke.com/opinion/editorials/editorial-warner-promotes-capitalism/article_610fb194-3b18-5e79-99b9-a45a137c26a3.html