Re:Ownership poision and antidotes

["Thomas Brandt" <tbrandt@dbedt.hawaii.gov>]

In the post below, Mr. Turnbull states that Kelso did not recognize or offer a
solution to the problem of investors capturing profits in excess of those
required to entice investment.  Does Norm Kurland agree with this?

Thanks!

____________________Reply Separator____________________
Subject:    Ownership poision and antidotes 
Author: Shann Turnbull <sturnbull@mba1963.hbs.edu>
Date:       9/8/99 10:38 AM

Dear All

I would like to relate my last posting to the exchange between Deb Olson
and Michael Harrington on globalisation.

The Community Investment Code (CIC) proposal that I requested COG to
promote with the WTO is aimed at harnessing the forces of globalisation and
economic efficiency to promote the localisation of ownership and control.
That is, to promote localisation with globalisation!

The CIC is based on host countries providing tax breaks to attract Foreign
Direct Investment (FDI) or domestic investment on condition that all
ownership transfers from investors to local citizens after the investment
time horizon.  Beside democratising the ownership and control of both FDI
and domestic investment it improves the efficiency of the economy by
capping the ability of investors to capture profits in excess of the
incentive they require to invest.  Kelso neither recognised this problem or
offered a solution to it.  So while the Kelso approach provides a very
valuable way to ameliorate the poison of concentrated ownership it does not
kill the snake which creates the poison!   However, the CIC does not
democratise credit so the two approaches are complementary and symbiotic,
each reinforcing and supporting the contribution of the other.

The differences in the various approaches to the poisonous problem of
concentrated wealth may be summarised as follows:

Karl Marx wanted to avoid the poison by eliminating ownership
Henry George wanted to reduce the effects of the poison by taxing land
ownership
Louis Kelso wanted to ameliorate the poison by sharing ownership creation
Shann Turnbull wants to minimise the poison by changing the rules of ownership

Regards

Shann



At 09:54 AM 7/9/1999 -0700, Michael Harrington wrote:
>Deb,
>I got a chance to read the literature on the IFG website and my reaction was
>a bit mixed. My opinion is very much consistent with Norm Kurland's
>elegantly expressed views in his email sent to the Homestead group. 
>
>There is definitely a global phenomenon going on that is concentrating
>economic wealth and control in much the same way as is happening
>domestically, as you have often noted in citing Bill Greider's book. But it
>seems like the IFG's best intentions are colored by anti-financial
>capitalist sentiments with attacks against speculators, the use of
>derivatives, high-yield securities, etc. This strikes me as misguided. 
>
>Financial markets manage economic risk. To do this most efficiently, a
>liquid trading market is required. Trading specialists fulfill this critical
>function - they assume risk with the expectation of making a return: more
>risk = more return. Sometimes they win, sometimes they lose, but either way
>they create essential value and their profits are justified. Their
>activities require a competitive market, public oversight and regulation,
>but it would be foolish to throw the baby out with the bath water. The
>problem really is how to get more citizens to participate in calculated
>risk-taking through long-term ownership strategies rather than portfolio
>speculation, because economic growth is essentially successful risk-taking.
>
>
>The problem internationally is best noted by the difference between
>long-term foreign direct investment (FDI) vs. short-term portfolio
>investment. I would seek ways, consistent with Kelsonian principles, to
>reward FDI without penalizing "speculators" except when their activities
>violate law. Portfolio investment should be a diversification strategy, not
>a get-rich-quick scheme. 
>
>Globalization is ultimately about economic efficiency, while the dynamics of
>free market exchange is concentrating the returns to that greater
>efficiency. This is definitely an immense problem but to opppose
>globalization outright strikes me as trying to rewrite the laws of
>economics.
>
>I think Norm Kirland states the overall principles most eloquently and
>comprehensively,
>
>Regards,
>
>Michael Harrington, Ph.D.
>The Milken Institute
>mharrington@milken-inst.org
>(310) 998-2699
> 
>    
>
>-----Original Message-----
>From: Deborah Groban Olson [mailto:dgo@esoplaw.com]
>Sent: Thursday, September 02, 1999 8:29 PM
>To: Michael Harrington
>Subject: RE: Introductions, Proposals and News
>
>
>M
>www.ifg.org
>Deb
>At 02:45 PM 9/2/99 -0700, you wrote:
>>Deb,
>>I'm not familiar with the International Forum on Globalization. Is there a
>>site or a cite available?
>>M
>>
>>-----Original Message-----
>>From: Deborah Groban Olson [mailto:dgo@esoplaw.com]
>>Sent: Thursday, September 02, 1999 1:30 PM
>>To: Michael Harrington
>>Cc: Homestead
>>Subject: RE: Introductions, Proposals and News
>>
>>
>>Dear Michael:
>>        You are doing precisely what is needed. To our knowledge, economists
>>have
>>largely ignored Kelso. Your efforts to make the case, as an economist, will
>>be extremely helpful. If we can engage the economists in a debate on these
>>issues, get publicity for the debate and get some experiments started to
>>test the theories proposed, we will be making serious progress. I am
>>herewith forwarding you email to the COG Homestead group. As a member of
>>that group you should feel free send email to all the other Homestead group
>>members whenever you wish by addressing it to Homestead@cog.kent.edu.
>>
>>        Do you know anything about or have any opinions about the
>>International
>>Forum on Globalization? 
>>
>>        Thanks,
>>        Deb Olson

Shann Turnbull
P.O. Box 266 Woollahra, Sydney, Australia, 1350
Phone: 02 9328 7466 office; 02 9327 8487 home
Fax: 02 9327 1497 home & office.  Mobile 0418 222 378
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Life long E-mail: sturnbull@mba1963.hbs.edu
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