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

08.15 RIDE FOR THE OVERRIDE

Ref. : Civic Events

Ref. : Arts & Education Events

Ref. : Public Service Notices

Travel
Books, Films, Arts & Education

09.24 Talking with Strangers: A Journey to the Heart of the Right

Letters

Ref. : Letters to the editor

Health Care & Environment

09.24 How to reduce the risks of carmageddon

09.24 Existing coal, oil and gas fields will blow carbon budget – study

09.24 Dutch parliament votes to close down country's coal industry

09.24 Trump to Fossil Fuel Execs: 'You Will Like Me So Much'

09.24 Earth Could Reach Critical Climate Threshold in Decade, Scientists Warn [we'll all die if denial idiocracy prevails]

09.23 Soil carbon storage not the climate change fix it was thought, research finds

09.23 The New, New Climate Math: 17 Years to Get Off Fossil Fuels, Or Else

09.23 Tribes Across North America Unite in 'Wall of Opposition' to Alberta Tar Sands

09.23 Air Pollution Is Linked to a Diabetes Marker

09.23 Ratifiying the Paris agreement will be a major step but must be the first of many

09.23 Farming on the edge: the Indian salt producers coping with 48C heat

09.23 100 countries push to phase out potentially disastrous greenhouse gas

09.23 Burger King and KFC called out for lagging behind on antibiotic-free meat

09.21 Drugmaker raises price of acne cream to $10,000 a tube [Only in America, land of opportunity...]

09.21 The devastating insulin scandal big pharma is hiding from you [Only in America, land of opportunity...]

09.21 375 top scientists warn of 'real, serious, immediate' climate threat

09.21 UN agrees to fight 'the biggest threat to modern medicine': antibiotic resistance

News Media Matters

09.22 What Donald Trump and Hillary Clinton aren’t talking about: Policy discussion is missing from the campaign

Daily: FAIR Blog
The Daily Howler

US Politics, Policy & 'Culture'

09.24 Channeling Sanders, Clinton Proposes Whopping Billionaire Estate Tax [worldwide normalization of taxes—with full visibility of income and wealth for fairest taxation—must be achieved. Automation is capable of eliminating 45% of jobs NOW, and it will happen rapidly to realize profits.]

09.24 Thousands of Verizon customers are battling data over-limit fees: Money Matters

09.24 HILLARY CLINTON: DEAD-ON COMIC, DULL POLITICIAN

09.22 IACP developed a 10 question survey on pressing criminal justice issues for the 2016 U.S. presidential nominees

09.22 Lies and Lapses on the US Campaign Trail

09.22 Mike Pence, a heartbeat away from the presidency? Now that’s frightening

09.22 Bernie Sanders: The ‘Nation’ Interview

09.22 Whom Should We Blame for Our Deranged Democracy?

09.22 Make the Public Health Insurance Option Central to the 2016 Campaign

09.22 Trump's Giant Conflict of Interest Just Got Bigger

09.22 Meet the Horde of Neo-Nazis, Klansmen, and Other Extremist Leaders Endorsing Donald Trump

09.22 Clinton hasn't won over millennials. And no, sexism isn't to blame

09.22 The Trump Foundation: what's known is shocking. We need to know more

09.21 Campaign Was Not Radical, Says Sanders, Just 'What Most Americans' Want

09.21 Top Six US Problems worse than Terrorism

09.21 Millennials Arrested at Paul Ryan's Office Denouncing GOP's Politics of Hate

09.21 Calling Syrian refugees like me Skittles would be funny if it weren't so cruel

09.21 Trump's plan to seize Iraq's oil: 'It's not stealing, we're reimbursing ourselves' [giggle giggle]

Justice Matters

09.21 SEC Probe Called Possible 'Moment of Reckoning' for Exxon's Climate Crimes

09.21 Warren Skewers Wells Fargo CEO for Greed and 'Gutless Leadership' [8:57 C-Span video]

High Crimes?

09.22 Stopping the War on Children

09.21 Russian planes dropped bombs that destroyed UN aid convoy, US officials say

Economics, Crony Capitalism

09.23 Carney backs green finance to cut emissions and boost growth

09.23 Helicopter money is back in the air

09.23 Wells Fargo's toxic culture reveals big banks' eight deadly sins

09.21 The Coming European Debt Wars

09.21 TTIP 2.0? New Leak Exposes Threats of Lesser-Known TISA Trade Deal

International

09.24 Syria bombings leave 1.75 million without running water in Aleppo [videos]

09.24 Larry Sanders, Bernie's Brother, to Fight for David Cameron's MP Seat

09.24 THE COMING CRISIS IN MOSUL

09.23 Eugene V. Debs and the Urgent Need for a New Anti-War Movement

09.23 A Single Migration From Africa Populated the World, Studies Find [we're all distant cousins]

09.23 Obama Puts Syria at Arm’s Length as Carnage Drags On

09.23 The Best News You Don’t Know

09.22 "Indifferent to Yemen's Misery," Senate Approves Massive Saudi Arms Deal [Cardin and Mikulski voted “Yea”]

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: