Re: Who pays for ESOP shares?

[Shann Turnbull <sturnbull@mba1963.hbs.edu>]

In reviewing the "Thread index" I noted that this question is left in the
archive without being associated with the anwers I provided.  This posting
it to provide a link to my answers under the Thread of Re: Yes, the Earth
is Round (2) With self-financing depreciation cashflows
http://cog.kent.edu/archives/ownership/msg00044.html  and point 2 of my
follow up under this thread
http://cog.kent.edu/archives/ownership/msg00054.html

However, the best explantation of how productive assets can not only be
self-financing, but produce additional values including "surplus profits"
will found in my response of October 31st. in the thread: RE: Developing an
economics of ownership (2)
http://cog.kent.edu/archives/ownership/msg00059.html   This provides a
mathematical model.  An earlier response
http://cog.kent.edu/archives/ownership/msg00057.html exlains why employees
can obtain ownership WITHOUT giving up any income because of procreative
assets becoming self-financing.

Understanding the self-financing principle is essential to understand how
economic development can be organised so as not to need international
financiers like the World Bank who reduce the rate of development by
extracting interest payments to make the rich countries richer.  The
assertion by Joe Stiglitz to me in Chicago in January 1998 that the World
Bank is already teaching countries how to become self-financing does not
ring true if Bank staff do not accept the word "procreative".  (Refer to
end of point 2 in http://cog.kent.edu/archives/ownership/msg00053.html
)This word and its associated concepts would seem fundamental for
understanding the most efficient processes of self-financing economic
development and designing the most efficient institutional arrangements for
its introduction.

Regards

Shann







At 04:04 AM 20/10/1999 , you wrote:
>
>
>
>Here is my "Who Pays...?" paper as an EM.  I will send it separately as a Word
>file for the paper bank.
>*****************************
>
>
>                           Who Pays for ESOP Shares?
>
>                          ESOP Analysis and Evaluation
>
>                                 David Ellerman
>                                  World Bank*
>   *The findings, interpretations, and conclusions expressed in this paper are
> entirely those of the author and should not be attributed in any manner
to the
> World Bank, to its affiliated organizations, or to the members of its
Board of
>                   Directors or the countries they represent.
>Table of Contents
>ESOP Analysis and Evaluation
>The Ideology of the ESOP Movement
>Labor-based Aspects of Conventional ESOPs
>The Basic Contribution of the ESOP Idea
>Who Pays for ESOP Shares?
>Technical Analysis of "Who Pays for ESOP Shares?"
>  The No-Dilution Argument
>  ESOP Loan = Direct Loan + Diluted Sale
>  What About the No-Dilution Argument?
>  The Case of a Non-Leveraged ESOP
>  An ESOP Loan--Compared to What?
>  Analysis with Non-Negligible Worker Shares
>  Analysis of the Leveraged ESOP Buyout Transaction
>  Numerical Example of Buyout Analysis
>  Non-Tax Benefits of ESOPs
>References
>____________________________
>David Ellerman
>Economic Advisor to the Chief Economist
>World Bank, Room MC4-335
>1818 H St., NW
>Washington, DC 20433
>Ph: 202-473-6368
>Fx: 202-522-1158

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
Outside Australia, replace first "0" with "61" after international access code
Life long E-mail: sturnbull@mba1963.hbs.edu
http://www.mpx.com.au/~sturnbull/index.html