Initiation of Policy and Strategy Discussion concerning Industrial Policies

[Deborah Groban Olson <dgo@esoplaw.com>]

Dear COG Network Participants who have chosen this discussion, (and several of
you who have not but who I think might be interested):

        Welcome to the discussion of Indsutrial Homestead Policy. To contribute
to this discussion, please send comments to Homestead@cog.kent.edu. Also if you
have not signed up with Dan Bell for this discussion please send your name,
address and email address to Homestead@cog.kent.edu.  ( I have included at the
end of this email the summary of this working group's charge.)

        Please send in your comments on the following matters. 

        1) Reading material this group should reveiw, along with citations and
information on its availability. If it is available electronically, please give
an electronic address, and let us know if it can be obtained for the COG
on-line library or via a link to the COG web site.

        2) Your opinion on subjects and priorities for this discussion.

        3) I know of several ideas that fall in this category. These include: 

                A) The Kelso proposal on opening the Federal Reserve Discount
Window for favorable loans to employee owned companies, as well as consumer
sops, etc.

                B) The more detailed CESJ proposal called the Capital Homestead
Proposal which incorporates the above mentioned Kelso ideas along with the
concept of enterprise or empowerment zones; and

                C) A proposal to create a US federal constitutional amendment
that would require any government body or agency in the US to get a quid pro
quo for the commonweal in exchange for any government largesse to any private
business. 

                D) Minnesota legislation aimed holding companies and local
governments accountable for promises to create jobs in exchange for tax breaks.

        Please provide any information you have on these or related ideas. 

        4) My proposal for organizing this disucssion is as follows.
                
                A) Find a pool of ideas to consider (which may include all of
some of the above.)

                B) Reach agreement on an agenda of ideas we will study and
discuss.

                C) Obtain and distribute materials on those ideas.
                
                D)  Determine our criteria for the types of policies we
want COG
to spend time and resources developing, being mindful of cultural and economic
differences and that COG is a global project.

                E) Determine which of the policy ideas we have reviewed meet
those criteria.

                F) Focus these thoughts into recommendations to be used as
goals
or objectives in a strategic planning process for action by COG network
members, or, if necessary, as recommendations for further research.
                

        Following is the focus of this discussion:   
The "Industrial Homestead Project." The Industrial Homestead Project’s purpose
is to create policy alternatives that provide financial benefits and a voice to
the general population in exchange for the protection and benefits governments
provide to businesses. One such form would provide stock ownership to employees
and/or the general population as a quid pro quo for government largesse to
private corporations. American examples of this philosophy to date include the
1974 Chrysler bailout and the establishment of Conrail, which both mandated
that a portion of the company is employee owned. 





1) The historical precedent for the term “Homestead” is the United States
Homestead Act of 1862 , which enabled a vast population of landless workers and
immigrants to become land-owning farmers through sweat-equity. 
2) The Project will explore a wide range of policy ideas in this area, to
arrive at agreement on a few deemed worthy of in-depth development and
prioritizing use of future resources for their development. A few examples of
these ideas include (without limiting our search for ideas in any way)
proposals
to:    
a)      Provide tax benefits to companies on a sliding scale depending on the
quality and quantity of employee ownership and control;

b)      Create an ownership impact audit process for bidding on government
contracts, giving credit against pricing to companies that implement meaningful
long term local ownership disbursement of their stock; 
c)      Open the US Federal Reserve discount window to promote employee
ownership by providing very low interest loan funds (0.5%) for investment in
companies using ESOPs, CSOP, and Community Investment Corporations. This
proposal would require every bank which uses the Federal Reserve (or initially
those in an experimental study) to make a specified percentage of its business
loans to companies qualifying for these funds; 
   
d)      Draft model language for amendment of national constitutions, to
require
a quid pro quo to the common weal for government largesse (from every level of
government) to corporations that would deter smaller government units from
competition for corporate location by means that undermine local economies; 

e)      Draft model language providing definitions of terms such as “common
weal” and “government largesse”, etc.  and mechanisms for responsible parties,
such as labor-venture funds, community development financial institutions,
credit unions, and other certifiably locally controlled financial institutions
to hold the quid pro quo stock responsibly in a manner that would encourage
public markets to continue to invest in these companies and communities;

f)      Create a public sky trust to receive payments in cash or stock for
pollution by energy companies; 

g)      Work with the European Federation of Employed Shareholders (EFES) to
develop a European policy direction that encourages broad ownership throughout
Europe while allowing for the differences in cultures, laws and circumstances
in the various countries;

h)      Examine the benefits and limits of European co-determination as now
practiced, and develop a means to combine the best features of co-determination
with those of employee ownership while retaining or increasing access to
necessary capital;

i)      Explore mechanisms for labor-sponsored venture funds to use employee
ownership as an exit strategy;

j)      Create a hybrid of consumer and employee ownership for privatization of
existing publicly owned companies such as utilities;

k)      Research methods used by NGO’s, such as the World Bank, to persuade
global companies to indiginize their workforces to determine if such methods
could be utilized to get similar companies to extend ownership to greater
numbers of employees; 

l)      Model the effects of creating a sliding scale capital gains tax
providing no tax on capital gains for families with incomes below $100,000 and
increasing the capital gains tax in proportion to the combined earned and
unearned income of individuals and families above that figure; 
      
m)      Model the financial, social and capital access impact of removing
corporate income tax from all 100% employee owned companies;

n)      Model the financial, social and capital access impact of creating time
limits on returns capital investment (similar to copyright laws). 
3) One of the difficulties in dealing with international corporate power is
that corporations have outflanked national control by becoming global. To
respond effectively, similar policies must be promulgated in as many countries
as possible. This Project aims to focus the attention of an international
Network toward creation of policies that could be viable in many countries.  We
hope to follow up with future projects elaborating the details of policy
proposals and pilot projects testing the policies in practice.



Thank you very much for your assistance.

Deb Olson