Newspaper logo  
 
 
Print view: Workers as Owners: An American Dream
FISCAL MATTERS:

Workers as Owners: An American Dream

The founders’ path to shared prosperity, less inequality

by Gerald E. Scorse
Expanding employee stock ownership plans (ESOPs) could go a long way toward easing income inequality.

George W. Bush talked the talk of an “ownership society,” but the laws he passed shifted income upward into the hands of the few. Three professors would rather see income flowing into the hands of the many, and they’ve written a book to point the way. The authors are Joseph R. Blasi and Douglas L. Kruse, both of Rutgers, and Richard B. Freeman of Harvard. The book is The Citizen’s Share: Putting Ownership Back into Democracy.

The nation’s founders wanted workers to have a piece of the pie, wanted widespread sharing of America’s bounty. The challenge of restoring the cod industry, laid low by the Revolutionary War, gave them the chance to set the national tone. George Washington, Thomas Jefferson and Alexander Hamilton played key roles in shaping legislation that split tax credits between ship owners (a three-eighths share) and crews (a five-eighths share). Further, owners could collect only if they had “a written, profit-sharing contract with all the sailors...covering the entire catch.” The law helped turn the industry around and remained in effect for nearly 20 years.

That was on the sea. On land, the government parceled out pieces of America itself to tens of thousands of early settlers. Starting with the Northwest Ordinance in 1787 (covering an area that became the states of Ohio, Indiana, Michigan, Illinois, Wisconsin, and part of Minnesota), Congress followed Jefferson’s lead: “distributing public lands to landless citizens, to give them a direct capital stake in society.” The land commonly went for bargain-basement prices with easy credit terms. The capstone was the Homestead Act of 1862, which turned over 160-acre plots west of the Mississippi. In Alaska, a law similar to the Homestead Act was on the books until 1986.

Today, of course, capital has replaced land as the primary source of wealth. For the authors, the nation’s beginning holds a lesson going forward: just as America itself was once divided up and shared, so capital (and the income it generates) should also be shared.

A template already exists in the form of employee stock ownership plans (ESOPs), pioneered by the financier Louis Kelso. ESOPs were included in the omnibus retirement bill passed by Congress in 1974. It offered tax incentives to companies to establish ESOPs, and to banks to lend set-up funds. Both incentives were later stricken. Today, with income inequality “the defining issue of our time” (President Obama’s words), there’s powerful reason to restore them. Corporations are awash in record profits; Congress should again encourage a cut for workers.

It’s surprising to discover how many already get one: “[T]here are an estimated 10,300 corporations with ESOPs and similar plans, with about 10 million workers and almost a trillion dollars in total market value....about 3,000 closely held companies are majority or 100% owned by their employees, about 3,000 are 30% to 51% owned, and the rest have ownership ranging from about 5% to 30%.”

Employee equity is part of the culture at companies of all sizes, including roughly a tenth of the Fortune 500. Equity stakes and start-ups were made for each other. Annually, nobody shares equity better than Google: “Each year a stock pie is cut up...Less than one percent goes to the top executives. The other 99 percent goes to the broad group of workers.”

Equity takes various forms: stock ownership, profit-sharing, gain-sharing (e.g., setting goals and reaping rewards for meeting them), stock grants, and stock options. The key is that all boats rise, not just the yachts.

“The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.” Keynes wrote those words about England in 1936. To deal with the same faults, America needs more “citizen’s shares” in 2014.


©2014 Gerald E. Scorse. Gerald E. Scorse helped pass the bill requiring basis reporting for capital gains. He writes articles on tax policy.



Copyright © 2014 The Baltimore News Network. All rights reserved.

Republication or redistribution of Baltimore Chronicle content is expressly prohibited without their prior written consent.

Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own.

This story was published on February 6, 2014.

 
Local News & Opinion

Ref. : Civic Events

Ref. : Arts & Education Events

Ref. : Public Service Notices

Travel
Books, Films, Arts & Education

07.21 Why Poor Schools Can’t Win at Standardized Testing

07.18 How Western Civilization Ended, Circa 2014

Letters
Open Letters:

Ref. : Letters to the editor

Health Care & Environment

07.22 California Halts Injection of Fracking Waste, Warning it May Be Contaminating Aquifers

07.22 Paterson's 'green blob' tirade reveals the right's problem with climate change

07.22 Climate models accurately predicted global warming when reflecting natural ocean cycles

07.22 HIV breakthrough reveals virus hidden in immune system cells

07.21 Green Energy Robin Hood: India Doubles Tax on Coal to Fund Solar and Wind

07.20 PROTESTERS URGE BROWN TO PROTECT CALIFORNIA’S WATER BY BANNING FRACKING

07.20 GERMANY LEADS THE WORLD IN ENERGY EFFICIENCY [map graphic, charts]

07.20 WHAT DOES THE EXPANDING SOLAR SECTOR MEAN TO GERMANY’S UTILITIES?

07.20 Boris Johnson: 'bollocks' to say Oxford Street has world's worst pollution

07.20 Death of Australian Pollution Levy Marks First U-Turn on Climate

07.18 CA Halts Injection of Fracking Waste, Warning it May Be Contaminating Aquifers

07.18 Making School Lunch Healthy Is Hard. Getting Kids to Love It Is Harder. This Lady Did Both.

07.18 Germany is most energy efficient major economy, study finds

News Media

07.21 Journalistic Malpractice: The Media Enables the Right-Wing Politicization of Science

Daily FAIR Blog
The Daily Howler

Justice Matters

07.17 This Widow's 4 Kids Were Taken After She Left Them Home Alone

07.17 Working Mom Arrested for Letting Her 9-Year-Old Play Alone at Park

07.17 Did the Other Shoe Just Drop? Big Banks Hit with Monster $250 Billion Lawsuit in Housing Crisis

US Politics, Policy & Culture

07.22 The Senate flunks basic biology: Inside a disgraceful hearing

07.22 If the Left Wants Scapegoats, Just Look in the Mirror

07.22 Detroit residents fight back over water shutoff: 'It's a life-or-death situation'

07.21 5 Giant Un-American Corporations Trying to Bolt U.S. to Avoid Taxes

07.21 Talking Openly About Obama and Race

07.19 Full Show: The Crusade Against Reproductive Rights [24:26 video]

07.19 Can Obama Weather the Current Geopolitical Shitstorm?

07.19 'Run, Liz, run!' Elizabeth Warren plays down 2016 bid despite growing chorus

07.18 Sex Assault on Campus, Prisoner Abuse at Rikers and Dark Money Rising (MuckReads Weekly)

07.18 America Is Ripe For Authoritarianism

07.18 Americans Are Leaving Religion Behind and It Scares the Hell Out of the Christian Right

07.17 We haven't yet tackled inequality; here are five ways to reduce it

High Crimes?

07.17 Gaza: this shameful injustice will only end if the cost of it rises [Over 1,000 comments]

07.16 The Court Trial of Bibi Netanyahu

07.16 Life In Gaza Explained[3:25 video]

Economics, Crony Capitalism

07.22 Here's Why Wall Street Reform Is Still in Limbo

07.21 OECD predicts collapse of capitalism

07.17 Who Advised Cuomo on Mortgage Industry Investigation? A Mortgage Lobbyist

07.17 States with Better 'Business Climates' Also Have Higher Inequality

07.17 Rupert Murdoch: politicians and red tape are holding business back

07.17 Colorado Attorney General Files “Massive” Lawsuit Against Foreclosure Mills, Paving Way for Suits in Other States

07.17 Act Immediately to Stop Congress’s Sneaky Move to Shut Down Broadband Competition

International

07.22 The Waste of War

07.22 The New Yorker Is Temporarily Making All Of Its Archives Free; Here Are 8 Stories You Should Read

07.22 Israel hits hundreds of targets in Gaza as soldier is confirmed missing

07.22 Bloody Weekend in Gaza [42 photos]

07.22 New Surveillance Whistleblower: The NSA Violates the Constitution

07.21 What Has $121,000,000,000 US Aid to Israel Really Bought? [3:17 video]

07.21 A Damned Paradise: Does Haiti Need Tourism? Or Does It Need Justice?

07.21 MH17: world's anger at Russia grows as bodies pile on to train at crash site

07.21 Gaza crisis: UNSC and Obama call for immediate ceasefire – live updates

07.19 Needing Skilled Workers, a Booming Germany Woos Immigrants

07.19 Understanding What Hamas Wants

07.19 Russia Has Become Dangerous Again

07.19 I'm in love with New York, but I know how lucky Australians are

07.18 Are the Kids Showing Up at the Border Really Refugees?

07.16 The Court Trial of Bibi Netanyahu

We are a non-profit Internet-only newspaper publication founded in 1973. Your donation is essential to our survival.

You can also mail a check to:
Baltimore News Network, Inc.
P.O. Box 42581
Baltimore, MD 21284-2581
Google
This site Web
 


Public Service Ads: