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

08.27 The Con Artistry of Charter Schools

08.24 How the US Helped ISIS Grow Into a Monster

Letters
Open Letters:

Ref. : Letters to the editor

Health Care & Environment

08.28 If Not D.A.R.E., Then What?

08.28 Big power out, solar in: UBS urges investors to join renewables revolution

08.28 London to get hybrid buses that could charge wirelessly

08.28 Climate change mitigation a business opportunity for UK firms, Davey says

08.27 How Doctors See the Syrian Civil War

08.27 Obama Seeking Global Climate Accord in Lieu of a Treaty

08.27 Global warming is already here and could be irreversible, UN panel says

08.27 New coal power stations threat to EU’s emissions target

08.26 Hearings planned after call for nuke-plant closure

08.26 The 1,300 Bird Species Facing Extinction Signal Threats to Human Health

News Media

08.26 Why Rand Paul Is a Press Management Wizard

Daily FAIR Blog
The Daily Howler

Justice Matters

08.28 The Extreme Partisanship of John Roberts's Supreme Court

US Politics, Policy & Culture

08.28 'We're Like Animals To Them': An American City's Daily Racism

08.26 Cutting the Corporate Tax Would Make Other Problems Grow

08.26 Bullets and Ballots

08.25 Mike Brown’s shooting and Jim Crow lynchings have too much in common. It’s time for America to own up

08.25 The Effects of Chicago's Violence on Children: Best #Cityreads of the Week

08.24 Wilson supporters 'won't live in fear'

High Crimes?

08.24 Gaza highrises flattened by Israel

Economics, Crony Capitalism

08.26 Colonization by Bankruptcy: The High-stakes Chess Match for Argentina

08.26 Tax Dodge Used by Bain Escapes Scrutiny on Inversions

08.26 Amazon at odds with Germany over strong union tradition

08.25 ROBOTS ABLE TO PICK PEPPERS, TEST SOIL, AND PRUNE PLANTS AIM TO REPLACE FARM WORKERS

08.25 Burger King the Latest to Jump on the Corporate Tax Inversion Bandwagon

08.25 The Data Brokers: Selling your personal information [14:22 video]

08.25 How the web lost its way – and its founding principles

International

08.28 Ukraine Sees Russian Invasion as Rebel Assaults Intensify

08.28 The Procrastination Doom Loop—and How to Break It

08.28 Dueling Jihadists: Is the Islamic State Beating Al-Qaida?

08.28 Forgotten in Iraq: Besieged City Faces Destruction by the Islamic State

08.28 Factory and Lab: Israel's War Business

08.27 U.S. Mobilizes Allies to Widen Assault on ISIS Militants

08.27 Pentagon: Isis has global aspirations

08.26 Cutting the Corporate Tax Would Make Other Problems Grow

08.26 The Problem With Bombing ISIS

08.26 UAE and Egypt behind bombing raids against Libyan militias, say US officials

08.26 Friends of Israel

08.25 France thrown into political turmoil after government dissolved

08.25 Libyan capital under Islamist control after Tripoli airport seized

08.25 US: no ransom paid for journalist freed in Syria

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: