Re: Stock Quid Pro Quo for Gov't. Largesse Idea for Seattle WTO Globalization Teach-In

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

Dear David:

        

Thank you
for your response to my email to Mike Dolan.  I have not seen your
book, but I will look for it. Please tell me something more about you,
your organization, and also who Tony Clarke and John Cavanaugh are and
what they do.

        

I would be
delighted to assist in the Seattle plenary or other related efforts.
Regarding non-democratic ESOPs, I have been a major proponent of
participative employee ownership for years. Please see my website
www.esoplaw.com,
which includes many of my law review articles such as "ESOPs for
People, Not for Wall Street."

        

I am
currently working on an article on the ICC aspects of the WTO and its
world government constitutional ramifications. The essential point is
that throughout US histsory, the ICC has been the engine of increased
federal power and decreased state power,and that civil society must
retain ultimate authorithy over the interests of commerce.  In some
cases, like the New Deal legislation, the broad ICC reach has been a good
thing. But the New Deal was created in response to enormous agitation in
the streets for social and economic justice.

        

In
response to your request for specific proposals, that might be discussed
at your Globalization Teach-in, following is an excerpt from a proposal I
am only now sending out to the COG Homestead discussion group. It has not
yet been reviewed or discussed by the others. It is a concept that could
be used in international trade agreements or charters or in national or
regional constitutions or as legislation.

        

It is not
a COG position. At present it is solely my responsibility. I began
working on it based on conversations I had with Bill Greider on solutions
to the problems he outlined in his book, One World Ready or Not, the
Manic Logic of Global Capitalism.  I highly recommend his book
for both problem exposition and an outline of some solutions.

        

My
proposal is still in development.  I hope to have in a more useable
and publishable form as of the November 30 events.  Please do not
publish it without my consent, as I would like to further refine it.
However, a rough draft  is:

        

" One
of several proposed solutions to the problem of capital concentration is:
broad individual ownership of productive capital by the general
population, derived from future retained earnings, NOT expropriation of
existing wealth. This particular proposal is one of a number being
discussed on-line at the Capital Ownership Group/ virtual conference
center at
http://cog.kent.edu
in the “Industrial Homestead Policy",open to the public.

        

(This group is discussing several proposals related to the WTO. In various ways they all deal with requiring corporations to distribute ownership to employees, local communities and/or the general public in exchange for benefits they get from either trade agreements or governments. COG invites participation from others who are interested in serious discussion about creating proposals, implementation strategies and vehicles. COG’s primary concern is to develop an ongoing coalition to create a viable alternative to the WTO model that meets the needs of people in the developing and the developed world. We want to create policy proposals around which people's organizations can coalesce and organize.  COG is building an on-line library and welcomes articles and links to other websites.)

        

 Stock Quid Pro Quo Proposal

1) Intent: Stock to workers, citizens and labor-venture funds as quid pro quo for government largesse  

The intent of this proposal is to reverse concentration of capital, provide a stream of income for all citizens, and give citizens a voice in governance of major corporations.

a)      Use existing government largesse to businesses to require distribution of capital to citizenry at large.

b)      Create a diverse electorate within corporations as political hegemony transfers from nation-states to global corporations.

c)      Create new private, stock fund entities, modeled on the Canadian Labor Venture Funds, to manage these assets in the collective self-interest of the citizen-shareholders.

d)      Use the citizen-shareholder funds both to educate the citizen-shareholders and to help them wield their market power in the interests of local communities.

2) Proposed Language

This is rough draft model language for amendment of national constitutions, model state or local legislation, might serve as a “green light subsidy proposal” in international trade proposals such as the Multilateral Agreement on Investment (MAI), the North American Free Trade Agreement (NAFTA), the Free Trade Agreement of the Americas (FTAA) and other similar international agreements on investment and trade, or as an addition to the UN Charter or in other international agreements such as a policy direction for the United Nations Commission on Trade and Economic Development (UNCTED).

 “In exchange for government largesse (from every level of government) to businesses require governments to provide a quid pro quo at fair market value to the common weal.” 

3) Definitions of these terms (perhap in enabling legislation):

 “Commonweal” means private or public entities, including non-governmental trusts, employee trusts, community trusts, stock funds, investment funds, co-operatives, for-profit and non-profit corporations, and other entities provided they met specific tests of bona fide interest in protecting the long term economic, social, ecological and/or cultural interests of the local citizens. When developed in greater detail this definition shall provide mechanisms for responsible parties, such as labor-venture funds (such as those in Quebec and Manitoba fashioned under the Canadian labor-venture fund law), 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.

 “ Government largesse” means any tax deduction, abatement, grant, government subsidized or guaranteed loan, license, lease, concession, or contract, etc.

 “Fair market value” has its current definition under the US Internal Revenue Service and the US Tax Court ( or similar institutions in other countries or within international trade law, if such a concept exists therein and is as well developed as the US tax law concept. 

 “Quid pro quo” means corporate common stock with the greatest voting and dividend rights or preferred stock convertible into such common stock or its equivalent in cash.

4) Intended Effects?

a)      Deter government units from competing with each other for corporate location by means that undermine local economies.

b)      Build a diverse stock portfolio for every citizen over a generation.

c)      Create a source of non-wage income and a vote in corporate decision from a diverse citizenry.

d)      Create means for the new corporate citizenry to intelligently and collectively exercise their concerns by electing some members of the boards of directors of the funds that hold their stock.  The majority of the board members would need to meet fiduciary competence criteria and the funds would have to carry fiduciary insurance. The boards of these funds would hire professional managers.  Some of these funds could be pension type and others could be more like mutual funds or IRAs. Individuals would have the ability to move their funds every five years to a similar type of fund (i.e. pension money might have to move only to other pension type funds).  Thus the funds could be assured of patient capital, while individuals would have some ability to vote with their feet, and some ability to use their own capital to create new businesses, buy homes, educate children, etc.

5)      What Next?

Use these proposals as a program (or part of a larger program) around which to organize diverse constituencies concerned with capital concentration and loss of local control by labor and local governments, and as part of the civil society agenda for trade negotiations promoted by citizen groups."

At 09:37 PM 8/29/99 -0700, you wrote:
>Deborah Olson: I was delighted to hear of your initiative via Mike. It
>sounds like a wonderful and badly needed project. 
>
>I also think your observation that the WTO agreements are the equivalent
>of the ICC is right on target. As I'm sure you are aware, however, the
>WTO arrangement is the equivalent of eliminating the U.S. government and
>replacing it with an unelected National Trade Organization controlled by
>the largest corporations with the power to over ride state governments
>and constitutions to assure implemention of the ICC without regard to
>any other public interest. Even though the ICC left the U.S. government
>in place, I suspect it has played a major role in strengthening
>corporate power over local governments and advancing the concentration
>of wealth in the United States. Obviously the consequences globally will
>be even more extreme.
>
>Whatever the case may be with the ICC, I suspect we might all agree that
>broadening the base of real stakeholder ownership of corporations is a
>far higher priority than expanding trade and the rights of
>corporations--and I endorse to my colleagues the idea that we should
>find a way to include this as a proposal on the agenda of the citizen
>meetings in Seattle. Do you have specific thoughts on action at the
>level of international agreements that would advance this goal?
>
>Are you familiar with the book I released in March this year: David C.
>Korten, The Post-Corporate World: Life After Capitalism (San Francisco:
>Berrett-Koehler Publishers, 1999). It presents a strong argment that to
>create a global economic system that works for people and nature it is
>essential to move toward more human scale enterprises owned by real
>stakeholders who have more than a purely financial interest in their
>operations. If you have not seen it I would be pleased to send you a
>copy with my complements.
>
>So far as I could tell from your website, your concept of broadening
>ownership participation is pretty much identical to the concept of
>stakeholder ownership dealt with in my book. I did not see mention on
>your site that a great many ESOPs are phoney efforts to free management
>from accountability to anyone other than themselves and actually deprive
>worker owners of real ownership rights, but I gather from what I read on
>the website that your project is promoting the idea of real ownership
>with real participation in decision making. Right on. I believe this
>must be right at the top of the labor union agenda.
>
>Dave Korten
>
>Mike Dolan wrote:
>> 
>> Thank you Deborah for your thoughtful inquiry and invitation to join your IH
>> discussion.  Welcome to the coalition organizing for Seattle.
>> 
>> I have copied your message to David Korten, John Cavanagh and Tony Clarke,
>> who are collaborating on a plenary relating to the taming of corporations,
>> as well as to the International Forum on Globalization, which is organizing
>> one of their prize-winning Globalization Teach-ins for the weekend prior to
>> the Ministerial itself, and also to our friend Bob Stumberg at Georgetown
>> Law.
>> 
>> I am very interested in COG's mission and the notion of a global ICC; and I
>> look forward to seeing COG/IHP proposals that relate specifically to the
>> WTO.
>> 
>> Looking forward to meeting you in Seattle,
>> 
>> Mike Dolan
>> 
>> ===== Original Message from dgo@esoplaw.com (Deborah Groban Olson) at
>> 8/26/99 2:44 pm
>> Original Recipient(s):
>> To: MDOLAN@CITIZEN (Mike Dolan)
>> Cc: Homestead@cog.kent.edu (Homestead)
>> 
>> Dear Mike:
>> 
>>         This is in response to an email forwarded to me by the National 
>Lawyer's
>> Guild Labor Committee, of which I am a member, dated 8/19/99 regarding
>> shutting down Seattle.  I am an attorney who specializes in employee
>> ownership and capital strategies for labor. I am the chair and project
>> coordinator for the Capital Ownership Group (COG), a global network of
>> employee owners, attorneys, financial and other professionals who create
>> employee ownership, labor leaders, community organizers, religious leaders
>> and other activists interested in using broadened ownership to help deal
>> with the negative effects of globalization.
>> 
>>         We have created a virtual think tank, open the public, to develop 
>capital
>> broadening policy proposals and implementation stragegies. We collect data
>> on best practices in employee ownership which we share with our colleagues
>> worldwide. Our web site (virtual think tank) has five formal policy
>> discussion groups and several informal discussions, including groups from
>> India, Europe and Mexico working on related issues.
>> 
>>         One of the discussions I chair is the "Industrial Homestead 
>Policy" group.
>>  That group is discussing several proposals related to the WTO. In various
>> ways they all deal with requiring corporations to distribute ownership to
>> employees, local communities and/or the general public in exchange for
>> benefits they get from either trade agreements or governments.  We invite
>> participation from others who are interested in serious discussion about
>> creating proposals, implementation strategies and vehicles. We would be
>> happy to participate in a teach-in or other events in Seattle. However, our
>> primary concern is to develop an ongoing coalition to create a viable
>> alternative to the WTO model that meets the needs of people in the
>> developing and the developed world. We want to create policy proposals
>> around which people's organizations can coalese and organize.
>> 
>>         Please visit our website http://cog.kent.edu to get a better idea 
>of who
>> we are.  I specifically request that you join our Industrial Homestead
>> discussion. Most of the WTO related stuff has not yet been distributed, as
>> I am working on it this week.  I have the AFL-CIO petition to the WTO, the
>> CFED/Georgetown Law Center analysis "International Investor Rights and
>> Local Economic Development" and an Australian proposal on a Community
>> Investment Code  which I am trying to co-ordinate with proposals for a US
>> Constitiutional amendment requiring a quid pro quo to the commonweal for
>> any government largesse to businesses.
>> 
>>         I am very excited about the coalition you are organizing, and 
>would like
>> to work with that coalition on a long range basis to develop a strategic
>> approach for people's organizations to deal with globalization.  Not only
>> do we need concrete demands of or to the WTO and related governments. We
>> need sound alternative proposals for creating global rules.
>> 
>>         The MAI, NAFTA and the new agreements to be negotiated by WTO or 
>OECD are
>> very similar in global scope to what the Interstate Commerce Clause was for
>> the creation of the United States.  However, there is no corresponding
>> international constitution with a bill of rights being negotiated .
>> 
>>         If the 8/19 article is correct, you are trying to unify the 
>protest in
>> Seattle around a demand that the trade ministers take stock of the effects
>> of existing trade agreements. That is a worthy goal, but I hope the
>> unifying demand can be more pro-active. I would like the coalition to have
>> a concrete set of demands dealing with dispersion of capital ownership and
>> capital credit in addition to labor rights and, evironmental protections.
>> Furthermore, if there is to be a group creating the global equivalent of
>> the Interstate Commerce Clause, then there ought to be the equivalent of a
>> constitutional convention occuring along with it. What is the role of the
>> UN in this process? What should its role be? What is the UN Commission on
>> Trade and Economic Development's role?
>> 
>>         I look forward to working with you and the coalition.
>> 
>>         Please forward this message to other appropriate people.
>> 
>> Sincerely,
>> Deb Olson
>> 
>> Deborah Groban Olson
>> Project Co-ordinator
>> Capital Ownership Group Project
>> Ohio Employee Ownership Center
>> Kent State University
>> 3163 Penobscot Building
>> Detroit, MI 48226
>> (313) 331-7821 or (313) 964-2460
>> (f) (313) 331-2567
>> email: dgo@esoplaw.com
>> web site: http://cog.kent.edu
>> 
>> ****
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>> 
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>> included information for research and educational purposes.
>> 
>> Mike Dolan, Deputy Director
>> Public Citizen's Global Trade Watch
>> ph  202.454.5122
>> fx  202.547.7392
>> 
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>
>-- 
>David C. Korten
>PCDForum
>pcdf@econet.org
>http://iisd.ca/pcdf
>