Re: HOMESTEAD: Myth of Employee Ownership

[Michael Bindner <bindner@IowaFiscalEquity.net>]

This is about what I would expect from Bruce, who I worked with in my younger days on the staff of GOP Senator Roger Jepsen.

 

What Bruce and the ESOP critics (as well as most ESOP practicitions) is that these firms fail because they don't change their economic assumptions.  Most continue to behave like hierarchical capitalist firms - or else go to far the other way by placating Unions.  If firms change their assumptions and practice system like Value Based Management or my own 21st Century Economics (aka Inter-Independence) their results will differ greatly and they will beat out the capitalist firms which Mr. Bartlet has spent his career defending.

 

Michael Bindner

Keith Wilde <keithwilde@sympatico.ca> wrote:

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
To:
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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