Re: Re sorting the issues

[IPGmail@aol.com]

In a message dated 11/2/99 sturnbull@mba1963.hbs.edu writes:

>  Kelso emphasised that his
>  proposals were not to take away from the existing owners or seriously
>  dilute them but to create new owners from expanding businesses.  But this
>  shows why ESOP's are a palative rather than a cure for concentrated 
>  ownership.

Despite Kelso's protests, I am in sympathy with Ellerman that the question of 
dilution is more complex than Kelso acknowledged.  Whether changing financing 
arrangments to move the ownership of new investments from current 
shareholders to others is dilution is a matter of how you define "ownership," 
i.e., what rights are included in the concept, and whether their inclusion is 
just or not.  In other words, I think his devices would change current 
ownership rights, which as you point out is essential to the goal of 
broadened ownership.  I doubt that spreading the ownership of newly formed 
capital would be enough to get there.

>  ...I take a pragmatic approach that
>  no business can exist without employees, customers and suppliers, which
>  includes the host community. So it makes good business sense to cut these
>  people in on both ownership and control.

I agree, but worry about the people who would still be left out of any 
significant ownership stake.  E.g., a large proportion of our poorest 
citizens are not likely to be employees, suppliers, part of a (local) host 
community, or even customers to any significant degree, of major 
corporations.  Kelso extended the ESOP model to trusts for customers, 
residents of host communities, etc., but he also, in his earliest writings, 
had a universal plan where non-recourse credit was given to individual 
citizens for investment rather than channelled thru trusts with beneficiaries 
defined by some relation to a business.  I would like to see more 
consideration of that idea than it has had in quite a long time.  There are 
other ideas for getting capital into the hands of poor citizens, such as 
Michael Sherridan's Individual Development Accounts (see my website for 
references), which are more clearly redistributive, but also worthy of 
consideration.

Alan Zundel
Institute for the Public Good
http://www.publicgood.org