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COG
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[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index] Re: Employee Ownership Legislation in Philadelphia
While I sympathize with Robert Fireovid's suggestions for cutting the legal costs for implementing ESOPs, I don't think this is the most significant barrier, and, in any event, this problem is not one that state and local governments, given their growing taxpayer resistance in our slow-growth economy, can do much to alleviate. The two biggest barriers, in my opinion, are (1) a lack of viable companies led by experienced management who are committed to empowering workers with first-class ownership and democratic governance rights and (2) the failure of the Federal Reserve System to encourage the democratization of capital credit in the financial institutions through which money is created today in ways that perpetuate concentrated ownership. The essence of ESOP financing, as envisioned by Louis Kelso, is to provide access to self-liquidating or procreative capital credit to people who have no assets or collateral and who cannot afford to reduce their consumption incomes to pay cash for their equity shares, as is monopolized under conventional techniques of corporate finance by present owners of capital. Kelso and other systemic and holistic visionaries started with the correct premise -- that those who control money and access to capital credit control who will be tomorrow's capital owners. If this premise is correct, I think it is unrealistic and unnecessary to think that the ownership of future capital should rest on the backs of the taxpayers or on the goodwill of those who today have a monopoly over accumulated savings. Such a dependency on those in power will not change the system. And at best any movement toward the decentralization of economic power will continue to be tokenistic and continue to merely treat the symptoms of fundamental defects in our economic system. Is there a more effective option for mobilizing grassroots initiatives
that could change the system structurally to encourage more ESOPs?
I think there is. For example, local and state government could adopt
resolutions, focusing on the Fed's control over money and credit, along
the lines of the Global Justice Movement's Statement of Shared Vision
To: Jacob Gray
Jacob, This is to respond to your request to COG for legislative ideas that might be brought before the Philadelphia City Council. Given the budgetary problems faced by cities and states in today's slow-growth national economy, much more radical ideas than those dependent on taxpayer support or the good will of deep pocket investors are needed. Your equity project should become aware of a hidden reservoir of low-cost productive credit that has not yet been tapped for building economic justice into community development and the worker ownership movement. That hidden source is the section 13 discount powers of each of the 12 Federal Reserve Banks, in your case the Philadelphia Fed. In other words, under section 13 of the Federal Reserve Act a regional Fed has the power to monetize through its local commercial banks at a mere Fed service cost of 0.5% or so the formation of new private sector capital formation in highly feasible, well-managed projects. There is nothing but the lack of demand from citizens that this newly added productive assets (roughly $7,000 annually at present growth rates per man, woman and child in America) be financed in ways that spread capital ownership equitably among local citizens. You can compare this option with how the Federal Reserve has been monetizing
Federal public sector deficits for non-productive Federal spending since
World War I, which has done nothing to address the monopolistic concentrations
of money power that artificially keep have-nots from becoming haves.
Unfortunately, most "solutions" to the problems of poverty treat ownership
participation by the poor and middle-class as irrelevant. They therefore
fail to focus on the Fed and how the money power of the Fed can become
To respond more directly to your request for legislative proposals, here are the specific measures I would propose for creating a "Super" Empowerment Zone in Philadelphia, starting with a new vehicle (a "Community Investment Corporation") for aggregating land, funding infrastructural improvements, spreading development profits to all the citizens, and creating incentives for broadened ownership of enterprises that locate on the land: http://www.cesj.org/homestead/reforms/other/reformsforcic.html For a brief description of how a CIC differs from other development vehicles, see: http://www.cesj.org/homestead/creditvehicles/cha-cic.htm To see how the multi-phased process for linking the CIC and local broadly-owned enterprises to the Fed's discount window, see: http://www.cesj.org/homestead/strategies/community/ciclinking-notes.pdf I hope that these writings will be helpful to you. There are organizations in Philadelphia, San Francisco and East St. Louis who are working with us to implement the CIC strategy in their cities. If you have any questions, do not hesitate to contact me. Norm Kurland
Robert Fireovid wrote: It's my understanding that the most significant barrier to starting an ESOP
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