HOMESTEAD: Myth of Employee Ownership

["Keith Wilde" <keithwilde@sympatico.ca>]

I apologize if this article has already been seen and discussed previously,
but in case it has not I imagine that OEOC would have something to say in
rebuttal.

Keith Wilde


----- Original Message -----
From: Daniel Morin <dan@danmorin.com>
To: <socialcredit@topica.com>
Sent: Tuesday, January 13, 2004 1:57 AM
Subject: RE: [SOCIAL CREDIT] Social Credit and "and a world without money?"



> Pershap you should read the article "The Myth of Employee Ownership" by
> Bruce Bartlett at
> http://www.ncpa.org/edo/bb/2002/bb120902.html
>
> I am including the copy:
>
> The Myth of Employee Ownership
> Monday, December 5, 2002
> by Bruce Bartlett
>
> The imminent bankruptcy of United Airlines may be the final blow to an
idea
> that once entranced both liberals and conservatives. Known as industrial
> democracy, its proponents preached that employee ownership of the means of
> production could overcome the historical conflict between management and
> labor. But as UAL, an employee-owned company, demonstrates, it works a lot
> better in theory than practice.
>
> The left-wing approach to industrial democracy grew out of Marxism. Karl
> Marx argued that the fundamental economic problem of the industrial age
was
> the alienation of labor from its product. Previously, workers made entire
> products by hand for their final owners. But once they joined factories,
> workers might only make one small part of the product and had no idea who
> its final owner might be. For some reason that I have never been able to
> comprehend, Marx thought this was a big problem.v Unfortunately, Marx
> convinced a lot of other people that it was a problem as well. They
> concluded that only socialism would solve it--total state ownership of all
> productive assets. The theory was that workers controlled the state and
> would thereby own the assets. Thus workers would no longer be alienated
and
> exploited by greedy businessmen. Part of this theory assumed that owners
and
> managers added nothing whatsoever to the production process and were, by
> definition, parasites.
>
> In the early 20th century, some industrial democracy advocates took a more
> moderate approach. They said that it was unnecessary to go all the way to
> socialism in order to gain its benefits. Advocates of industrial democracy
> pushed for employee ownership of companies and plants within capitalist
> countries. They thought that the benefits would be so manifest that
> eventually socialism would emerge by evolution, rather than revolution.
>
> Interestingly, as the left's interest in industrial democracy waned in the
> 1950s, some conservatives picked up the idea. Pushed mainly by lawyer
Louis
> Kelso, he argued that employee ownership could overcome the adversarial
> relationship between business managers and labor unions. Kelso thought
that
> if workers could participate more in business decisionmaking and also
share
> in its rewards, they would be willing to moderate demands for excessive
> wages and work rules that hampered productivity. The result, he thought,
> would be a win-win situation for management and labor.
>
> Kelso's ideas got a big boost in 1973 when he convinced Senator Russell
> Long, Democrat of Louisiana and chairman of the Senate Finance Committee,
to
> support them. Although fundamentally conservative economically, Long also
> had a populist streak inherited from his father, Huey Long, a governor and
> senator from Louisiana famous for his populism. Kelso's idea of using the
> tax code to create employee stock ownership plans (ESOPs) appealed to
Long,
> who put it into law in the mid-1970s.
>
> The ESOP legislation led to a sharp increase in employee profit sharing
> plans. In a few cases, such as the Weirton Steel Company and Hyatt-Clark
> Industries, workers took full ownership in order to stave off layoffs or
> bankruptcy. However, Weirton ended up laying off workers anyway and
> Hyatt-Clark went out of business a few years after workers took control.
>
> Economists that have looked at ESOPs generally find that there is no
> significant increase in productivity at companies with such plans. The
> benefits to each individual worker are too small to fundamentally change
> their attitudes. On the contrary, they often use their ownership to block
> productivity-enhancing changes. The result is that management is even more
> hamstrung than it was before, leading to losses and bankruptcies.
>
> A December 4 report in the Washington Post looks at the experience of
China
> with employee ownership, which the government strong encouraged. Workers
> proved unwilling to make radical changes, blocked layoffs, slacked off
from
> work and often abused corporate assets. At the Jing Wine Company, for
> example, workers apparently drank much of the profits.
>
> Says economist Martin Sullivan about ESOPs in general, "There do not
appear
> to be any microeconomic foundations to back up claims that employee
> ownership of large corporations is good for the economy. In fact, there
> are--unfortunately--many reasons for economists to believe employee
> ownership can just cause problems."
>
> UAL seems to be the latest case of failure. Workers there have owned a
> majority of the stock since 1994--half of that owned by the pilots. Yet
UAL
> has the highest salaries for pilots of any domestic airline--receiving as
> much as $306,000 per year. This is $43,000 more than at the next
> highest-paid airline, Delta, and twice what pilots at Southwest Airlines
> make. No wonder the company is losing money.
>
> Employee ownership may still make sense as a way of privatizing government
> assets, but it is clearly no ticket to higher profits and productivity.
>
> Source Bruce Bartlett, Senior Fellow, National Center For Policy Analysis
> Monday, December 9, 2002.
>
>
>
> --------------------------------------------------------------------------
--
> ----
>
>
> > -----Original Message-----
> > From: wmklinck@shaw.ca [mailto:wmklinck@shaw.ca]
> > Sent: Tuesday, January 13, 2004 3:16 AM
> > To: socialcredit@topica.com
> > Subject: [SOCIAL CREDIT] Social Credit and "and a world without money?"
> >
> >
> > Perhaps Mike can explain how a modern economy could function without
> > money, i.e., a system of financial accountancy which provides for
> > assigning of values in order to accomplish rational or efficient
> > resource allocation in production and equitable distribution on the
> > consumption side of the economy.  Such a condition could, I submit,
> > exist only where abundance was so great and so automated that everyone
> > could draw from an unlimited supply without limitation and without any
> > contribution to production whatsoever.  That might actually apply in a
> > static situation experienced by some one marooned on the classic pacific
> > island where bananas and coconuts abound and nothing else was required
> > or desired--the natural "economy" of the island being without innovation
> > or technological advancement.  I think we will likely be extinct before
> > such a moneyless state can be obtained for mankind on earth.  Meanwhile,
> > I think we would be well advised to get on with the practical task of
> > setting our defective system of financial accountancy in order--and
> > advance from there.  Incidentally, how is it proposed that a system of
> > "social insurance" and "employee ownership" (no solution in itself to
> > the basic defects in the existing financial system) is to operate
> > without some basis of numerical evaluatation?  And how is effective
> > choice for individual citizens to be provided without money?  Surely,
> > just because the present financial system has a fatal design error
> > (which can be corrected by human intelligence) this is no reason to
> > conclude that the mechanism of money, per se, is some kind of evil to
> > abolished as soon as possible.  Sounds to me like throwing the baby out
> > with the bathwater--or jumping from the frying pan into the fire!
> >
> > Wally
> >
> > ----- Original Message -----
> > From: Dan Parker
> > To: monetaryreform@cog.kent.edu
> > Sent: Monday, January 12, 2004 8:12 PM
> > Subject: Re: MONETARY: Understanding Social Credit--copy of message with
> > PDF documents sent to Steve Nieman from Wally Klinck
> >
> >
> > Mike, I don't see a world without money as being a viable
> > alternative in the short to medium term, hence my work
> > on monetary reform.
> >
> > Regards
> > Dan Parker
> > ----- Original Message -----
> > From: Michael Bindner
> > To: monetaryreform@cog.kent.edu
> > Sent: Monday, January 12, 2004 2:01 PM
> > Subject: Re: MONETARY: Understanding Social Credit--copy of message with
> > PDF documents sent to Steve Nieman from Wally Klinck
> >
> >
> > I totally agree that the goal is a world without money.  How we get
> > there must have some relation to that goal.  Since socred and BE are
> > dependent on money creation, I don't believe they will suffice.  Using
> > social insurance privatization might get us to employee ownership &
> > control faster (see my page for details).
> >
> > Mike B
> >
> >
> >
>
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