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 Stories, Events

Ref. : Civic Events

Ref. : Arts & Education Events

Ref. : Public Service Notices

Books, Films, Arts & Education

12.15 The Rape of Recy Taylor: behind one of the year's most vital documentaries

Letters

Ref. : Letters to the editor

Health Care & Environment

12.17 World Bank will stop financing oil and gas exploration and production

12.17 Brazilian police foil million-dollar fraud to export precious wood to China [clear-cutting forests harshly impacts all life above and below ground-level for decades; it decreases oxygen production and seguestration of CO2 and increases area, frequency and duration of drought]

12.16 How investing in solar energy can create a brighter future for Africa

12.14 Global warming made Hurricane Harvey deadly rains three times more likely, research reveals

12.14 The long read: A different dimension of loss’: inside the great insect die-off

12.14 After years of toxic oil spills, indigenous Peruvians use tech to fight back

12.13 The US is penny wise and pound foolish on the climate

12.13 Arctic permafrost thawing faster than ever, US climate study finds

12.13 Drugs Don't Kill People, Neoliberalism Kills People

12.13 English rivers polluted by powerful insecticides, first tests reveal [Are similar tests of U.S. waters conducted by the EPA anymore? We think not...]

12.12 Ophelia Dahl’s National Health Service

12.12 Overfishing and climate change push seabirds to extinction

12.12 Macron awards US scientists grants to move to France in defiance of Trump

News Media Matters

12.17 A Report to Our Readers

12.15 Net Neutrality Fight 'Not Over': Groups Launch Internet-Wide Campaign Pushing Congress to Overrule FCC Vote

Daily: FAIR Blog
The Daily Howler

US Politics, Policy & 'Culture'

12.17 'Making America Stupid Again': Outrage Over Forbidden 7 Words You Can't Say at Trump's CDC [“Stupid is as stupid does.” –Forrest Gump]

12.16 Poverty in US set to increase due to Donald Trump's policies, says UN official [oligarchy-controlled countries are wonderful for the very rich]

12.16 The crisis ahead: The U.S. is no country for older men and women

12.16 Republicans Despise the Working Class [oligarchy-controlled countries are wonderful for the very rich]

12.16 Rep. Adam Schiff Warns Republicans Are Moving to Shut Down House Russia Probe, Target Mueller

12.15 The Growing Partisan Divide Over Feminism

12.15 A journey through a land of extreme poverty: welcome to America

12.15 Health program for 9 million kids falls victim to partisan squabbling

Justice Matters

12.17 Venue of last resort: the climate lawsuits threatening the future of big oil [something else Republicans are packing the courts for...]

12.15 Who Pays for Judicial Races? The Politics of Judicial Elections 2015-16 [desperately packing the courts at all levels to protect white power & unregulated capitalism]

12.13 US Concern Over 'Pervasive' High-Level Corruption Surging Under Trump: Poll [anyone surprised?]

High Crimes?

12.17 Trump’s Misuse of Intelligence on Iran [immoral behavior that could lead to War]

Economics, Crony Capitalism

12.17 How a Philadelphia nun became the unlikely face of conscientious capitalism [Why don't we teach morality in Law & Business schools?]

12.16 The Republican Tax Bill Provides Huge Benefits to People Who Don’t Work. But Only if They’re Rich. [oligarchy-controlled countries are wonderful for the very rich]

12.16 The United States Is Now as Unequal as Russia. And That’s Before the Tax Bill. [oligarchy-controlled countries are wonderful for the very rich]

12.16 EU to force firms to reveal true owners in wake of Panama Papers [what are the chances oligarchy-controlled countries (esp. America and Russia) ever agree to fight tax evasion and money landering? International agencies must all mandate common regulations as a condition for UN membership, trade agreements, world bank loans, etc.]

12.15 FCC Chair Ajit Pai 'Shows Just How Dumb He Thinks Americans Are' With Video Mocking Net Neutrality [he won't discuss how giving more monopoly power to cable ISPs will increase consumer costs and stifle innovation]

12.14 World's richest 0.1% have boosted their wealth by as much as poorest half

12.14 Inequality is not inevitable – but the US 'experiment' is a recipe for divergence

12.13 How big oil is tightening its grip on Donald Trump's White House

12.13 The “Death Tax” Cargo Cult [we lack for morals and sanity in U.S. media & politics]

12.12 Who Broke the Economy? [might the recent template legislation from Koch bros.’ ALEC be implicated?]

International & Futurism

12.17 Africa’s new elite force: women gunning for poachers and fighting for a better life [a good model that converts victims of abuse and cruelty into positive activists with good jobs...]

12.14 Mexico: murders of women rise sharply as drug war intensifies

12.14 Estonia, the Digital Republic

12.14 Israeli undercover soldiers seen arresting Palestinian protesters [Palestinians need more and better weapons for a fair fight]

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: