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 Gov’t Stories, Events

Ref. : Civic Events

Ref. : Arts & Education Events

Ref. : Public Service Notices

Travel
Books, Films, Arts & Education

06.19 In Morocco’s Atlas mountains, Berber girls find the way out of rural poverty: an education

Letters

Ref. : Letters to the editor

Health Care & Environment

06.24 UK's out vote is a 'red alert' for the environment

06.24 66 million dead trees in California could fuel 'catastrophic' wildfires, officials say

06.22 Republicans Offer a Plan to Replace Obamacare

06.22 Women Take Over the Family Farm

06.22 Our new alliance unites 600m city dwellers in fight against climate change

06.22 California's last nuclear plant to close amid longstanding earthquake concerns

06.20 Sewage effluent fights desertification in Egypt

06.20 Brexit: Cutting red tape, or weakening green laws?

06.19 How a mama bear saved a woman and her dog from the wolf stalking them

06.19 How a mama bear saved a woman and her dog from the wolf stalking them

06.19 Obama at Yosemite attacks 'lip service' to natural beauty amid climate inaction

News Media Matters

Daily: FAIR Blog
The Daily Howler

US Politics, Policy & 'Culture'

06.24 What It Will Take to Gain My Support in 2020

06.22 THE WOMAN CARD

06.22 How American Politics Went Insane

06.22 MAKING A KILLING

06.22 America's gun problem is so much bigger than mass shootings

06.22 Insult, provoke, repeat: how Donald Trump became America's Hugo Chávez

06.21 Con vs. Con

06.21 Clinton's Wall Street Donors Revolt After Warren Emerges as VP Contender

06.21 The Issues the Candidates Aren’t Talking About

06.20 People's Summit Offers Hope for a Movement Bigger Than Bernie

Justice Matters

06.24 Experts ask for new investigation into disappearance of 43 Mexican students

High Crimes?

06.21 THE SHADOW DOCTORS

Economics, Crony Capitalism

06.21 The Growing Case for Massive Taxes on the Rich

06.21 George Soros: EU exit risks 'black Friday'

International

06.24 More than 1,200 die of starvation and illness at Nigeria refugee camp

06.24 Beijing has fallen: China's capital sinking by 11cm a year, satellite study warns

06.24 Nicola Sturgeon prepares for second Scottish independence poll

06.24 European far right hails Britain's Brexit vote

06.24 European far right hails Britain's Brexit vote

06.24 David Cameron resigns after UK votes to leave European Union [videos]

06.22 The Netherlands' Upcoming Money-for-Nothing Experiment

06.22 Jean-Pierre Bemba sentenced to 18 years in prison by international criminal court

06.22 Israeli troops 'mistakenly' kill Palestinian teenager

06.21 Fur flies as #CatsAgainstBrexit stirs up EU debate

06.20 Anti-establishment candidates elected to lead Rome and Turin

06.20 The State Department’s Collective Madness

06.20 U.S. will seek billions more to support Afghan military efforts

06.20 A refugee in Edinburgh: 'My children don’t want to know they’re Syrian' [5:45 video]

06.20 Study: Large number of Turks in Germany put Islam above the law

06.20 Study: Large number of Turks in Germany put Islam above the law

06.20 Protesters across Germany rally against discrimination

06.20 Opinion: Out of sight, out of mind

06.20 Humanitarian crisis as tens of thousands flee Fallujah in Iraq

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: