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
Letters

Ref. : Letters to the editor

Health Care & Environment

07.27 Worse Than Keystone XL? TransCanada's Terrifying "Plan B" [map]

07.26 EPA ruling on aircraft emissions paves way for new regulations

07.26 How climate change is rapidly taking the planet apart [that "conservative" politicians blithely ignore this crisis is criminal and immoral]

07.26 The green deal is dead: time to revive the great British energy refurb

07.26 China's coal peak hailed as turning point in climate change battle

07.25 The global community is failing to address mental health

07.25 Burning coal for gas in UK seabeds would flame pollution, says report [insane]

07.25 Solar subsidy cuts lead to loss of 12,000 jobs [insane]

07.25 ‘World can’t afford to silence us’: black church leaders address climate change

07.25 'The best solution? Move the Mauritanian capital': water on the rise in Nouakchott

07.25 Pills laced with deadly opioid infiltrating drug market, DEA says

07.25 BLUER SKIES AHEAD FOR OHIO: FIRSTENERGY ANNOUNCES LANDMARK COAL RETIREMENTS [Coal-fired electricity plants decline 45% in 6 years!]

News Media Matters

Daily: FAIR Blog
The Daily Howler

US Politics, Policy & 'Culture'

07.27 She's With Them–But We've Got Us: A Movement Bigger Than Sanders

07.27 'It's a matter of survival': the black Americans fighting for gun rights

07.26 This Sanders Delegate Unleashing on Hillary Clinton Is Going Absolutely Viral [2:08 video]

07.26 Meet the Latina Bicycle Brigade Fighting Against Gender-Based Violence

07.26 The Unseen Philadelphia

07.26 A Party at War With Itself

07.26 Hillary-Kaine: Back to the Center [Must Read: the bad Hillary is irrepressible and will help Trump enormously, because he's not her]

07.25 Mission Accomplished at DNC, Clinton Hires Wasserman Schultz for Top Post [Hillary rewards cheating...]

07.25 Debbie Wasserman Schultz to resign as DNC chair as email scandal rocks Democrats

Justice Matters

07.24 $1 billion alleged Medicare fraud, money laundering scheme leads to Florida arrests [more investigative staff—not staff cuts—could be vastly profitable!]

High Crimes?
Economics, Crony Capitalism

07.26 Japan’s “Helicopter Money” Play: Road to Hyperinflation or Cure for Debt Deflation?

07.24 Trump’s tax plan would do little for the average American but a lot for the 1%

07.21 FBI arrests senior HSBC banker accused of rigging multibillion-dollar deal

International

07.27 Welcome to the new age of uncertainty

07.27 Japan to unveil huge $266bn economic stimulus, say reports

07.27 MPs predict surge in immigration amid Brexit uncertainty

07.27 Catalonia tells Spain it will push for secession with or without assent

07.26 Apocalypse Now: A Year of Crises, Shocks and Fears of Terror

07.25 Five clinics in northern Syria hit by regime air raids, say activists

07.25 In Hacking, Russia Accused of Playing in U.S. Politics

07.24 America Keeps Lethal Nukes All Over Europe for No Good Reason

07.24 At Least 80 Dead in Kabul After Massive Attack on Peaceful March

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: