These remarks really need to be compared to the situation in Germany. A large degree of stakeholder democracy is enforced by law. In Germany, any company with more than 50 employees must allow workers some representation on issues of hiring and firing, and any company with over 300 employees must provide funds so that at least one worker can work full-time on workers concerns. Representation on the Board, by workers, is common. And the result seems to be a highly efficient system.
Compare that to the American experience, in which fraud and abuse has been widespread: Enron, Worldcom, the S&L Bailouts, CountryWide, Wachovia, etc.
As programmers, we know that bad code can be written in any language, and clearly fraud can be committed under any legal system. Still, we also know that each language tends to encourage certain habits, while discouraging certain other habits. Obviously one can find examples of fraud in Germany and efficient operations in the USA. However, it is striking how few scandals ripple through the German business community, and how very competitive German manufacturing firms are.
Given the comparison of Germany to the USA, I'd be cautious about dismissing systems of stakeholder democracy.
The system in Germany is different in that it names a particular set of stakeholders, namely workers, and gives them a formal place in governance controls. To my knowledge, German managers do not have to take into account the objectives of suppliers, the local economy, or society at large in their decision making. While it's similar, it actually addresses the first point I made, as compared with the California law under discussion.
German companies have much more concentrated share ownership, which gives them an advantage for corporate governance that perhaps makes scandals less likely. Also, they are a product of the German culture which is very different from American culture.
Given that most mortgage fraud was done at the employee level (for instance, encouraging people to lie on applications), I'm not sure how giving the employees a greater voice would have an impact at all.
Compare that to the American experience, in which fraud and abuse has been widespread: Enron, Worldcom, the S&L Bailouts, CountryWide, Wachovia, etc.
As programmers, we know that bad code can be written in any language, and clearly fraud can be committed under any legal system. Still, we also know that each language tends to encourage certain habits, while discouraging certain other habits. Obviously one can find examples of fraud in Germany and efficient operations in the USA. However, it is striking how few scandals ripple through the German business community, and how very competitive German manufacturing firms are.
Given the comparison of Germany to the USA, I'd be cautious about dismissing systems of stakeholder democracy.