Proposed Summary of Homestead Discussion to Date for Interim Report

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

Dear Homesteaders:
        Following is the proposed summary of the Homestead discussion to date for distribution to the Executive Committee. If you have any additions or corrections please send them to me by 1/8 for inclusion in the report.

"3) Summary of Homestead proposals and discussion

        

        The Homestead discussion is intended as a discussion of capital broadening policy proposals that have not yet been adopted.  The initial participants in this discussion included the following: Norm Kurland, Rodney Shakespeare expounding Kelso’s binary economic theories and policy proposals, including the Capital Homesteading Act. Shann Turnbull described his proposals concerning dual governance boards for companies, and time limited investor rights, which later devolve to stakeholder rights including employees.  The heated debate between these two views was moved to the Ownership discussion section, in order to allow room for others to discuss policy proposals that may not fit into either of these two systems, while allowing the economists to discuss in detail the premises of these two systems.

        Deborah Olson made a proposal called Stock Quid Pro Quo for the WTO (SQPQ). SQPQ outlined proposed provisions in international trade agreements or in national or state constitutions or legislation, to provide that companies provide stock in exchange for all manner of government largesse to employees or to funds run similarly to the Canadian labor venture funds.  This idea was criticized by Norm Kurland as not allowing the individual shareholder to act as a shareholder, as interfering too much with private property, and as injecting the government too much into the market. 

Shann Turnbull agreed with the underlying concept of the SQPQ idea, but felt it needed to be revised in several areas. He said his proposals for dilution of private stockholder interests for the benefit of stakeholders serves the same purpose. He has also suggested that all economic legislation require an “ownership impact statement”. His critique of SQPQ was that it would dilute newer stakeholders whenever a new SQPQ stock was issued. This might be an advantage to investor stockholders. Thus he proposes a separate class of stakeholder stock more in line with his proposals for devolution of stockholder rights over time to stakeholders.

Shann also believes that the stakeholders should be more narrowly defined to include only those who add value or are directly affected by the business, such as employees, customers, suppliers and neighbors.  He finds “pension fund socialism” to be negligent. On this item, I think we should explore the Canadian labor venture fund model more thoroughly.

Shann also suggests that these stakeholders not sit on a unitary board, but rather that there be several boards of directors in these companies to serve as checks and balances against conflicts of interest.

 

Robert Stumberg criticized it as lacking in sufficient understanding of international trade laws, and as too specific for national constitutions. He thought it might be better used in a state law context. We agreed to further joint work on the idea. Stumberg and Olson have had several conversations about potential future joint projects between Georgetown Law Center and COG.

 Walter Kamiat, of the Housing Investment Fund and Building Investment Funds of the AFL-CIO, criticized it as putting an additional cost or tax on some of the most progressive governmental programs we now have, such as housing subsidies. We might, therefore want to limit the SQPQ to certain of government largesse that serves only corporate interests, like communication, pollution and oil and gas leases.

Olson plans to take these critiques and formulate some alternative version of the SQPQ proposal.

We have circulated questions based on the writings of Law Professor Paul Carrington, and Professor and Activist David Korten, to draw out debate defining necessary  characteristics for viable policy proposals on broadening ownership. We are actively seeking involvement in this discussion from people, such as Korten, Per Ahlstrom and others whose primary interest is not employee ownership.

We are finding that it is very difficult to get sufficient time and attention from busy people to work on such difficult and complex matters as volunteers over the internet. Nonetheless, the comments we are getting are helping us define the questions and research agenda in this area."

Deb Olson
Homestead Discussion Moderator

Deborah Groban Olson

Project Co-ordinator

Capital Ownership Group Project

Ohio Employee Ownership Center

Kent State University

c/o Shared Equity Strategies, Inc.

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