OWNERSHIP: Re: Kelso and Turnbull

[Bill Gish <billgish@altavista.com>]

On Mon, 22 May 2000, Shann Turnbull wrote:

> 
> Just for the archives and historical record.
> Richard A. Stutsman states below that in regards to my 1975 book:
> 
> >Some of these concepts appear to overlap with some of Louis Kelso's 
> >proposals outlined in his book DEMOCRACY AND ECONOMIC POWER: Extending the 
> >ESOP Revolution through Binary Economics (with Patricia Hetter Kelso, 
> >1986/1991), while the OTC seems complimentary. 
> 
> The Kelso & Hetter book was written 11 years AFTER my book so perhaps my
> book encouraged some of the proposals?
> 
> I do know that I introduced the phrase "Social Capitalism" which Kelso
> later used in some of his articles until I reminded Louis and Patricia that
> I had coined this phrase for my book.  Stutsman confirms the view that my
> proposals can be complimentary even if the theory on which they are based
> are not.
> 
> Regards
> 
> Shann
> 
> 
> 
> >Keith,
> >
> >I had hoped to find the time and inclination to more fully respond to your 
> >and others' criticisms of my earlier postings. Now the threads have become 
> >stale.
> >
> >To be sure, I have erred in presuming to know what "most" economists believe 
> >about certain issues. Not having studied much economics nor read many 
> >economists writings, I am not in a position to know that. To some extent, 
> >therefore, I was parroting what others had written.
> >
> >First, let me say that I am well aware of the shift from Keynesian to 
> >"neo-liberal" policies on the part of the U.S. government. The so-called 
> >"Republican Revolution" begun by Newt Gingrich, with the help of millions of 
> >dollars of illegal fundraising by his GOPAC organization, was the bellwether 
> >for this movement which seems to have begun in the Reagan administration in 
> >the early 1980s. This movement is driven by the needs of large corporations 
> >which maintain well-financed lobbying offices in Washington and which 
> >lavishly fund Congressional and Presidential campaigns via the "soft money" 
> >loopholes in campaign finance law.
> >
> >So, yes, Keynes and demand-side economics are out, and Friedman, the CATO 
> >Institute, the Progress & Freedom Foundation, and supply-side economics are 
> >in. And I suppose it depends a great deal on who is paying economists' bills 
> >as to what economists say they believe in.
> >
> >I was born in 1945 and well remember the days of 70% income tax brackets and 
> >the 50% corporate income tax. The minimum wage was certainly more than many 
> >retail and fast food outlets wanted to pay their cashiers, cooks, and 
> >janitors. Likewise, the UAW, the AFL/CIO, the Teamsters, and the 
> >Longshoremen unions were garnering kingly wages for their members under the 
> >threat of strikes. These were the facts to which I believe Louis Kelso and 
> >other binary economists were responding when they stated that labor costs 
> >were artificially inflated as a result of New Deal "redistributive" 
> >policies. It wasn't workers who were footing most of the tax bill in those 
> >days--it was corporations and their largest stockholders.
> >
> >We are now witnessing a decades long repeal of the New Deal and welfare 
> >policies of Presidents Roosevelt, Johnson, and Nixon, thanks to the 
> >globalization process which is transferring well-paying American jobs to the 
> >Third World. The U.S. government is being successfully lobbied by 
> >corporations--and the American people are being successfully brainwashed by 
> >the corporate-owned media--to support policies which undermine all of the 
> >New Deal initiatives for artificially increasing the incomes of American 
> >workers.
> >
> >That said, the only solution that is being proposed to deal with the 
> >resulting increasing wealth disparity is "full employment". The unemployed 
> >can no longer depend on welfare payments or tax subsidies, but they must be 
> >forced to find jobs in a "musical chairs" process which drives down the 
> >market value of labor. At the same time, nothing is being done to spread 
> >ownership--quite the contrary. Capital stock ownership is becoming 
> >progressively more concentrated.
> >
> >So, yes, I erred in my assertions that the "redistributive" Zeitgeist was 
> >still going strong. But that doesn't mean that economists including Alan 
> >Greenspan have abandoned their attribution of "productivity gains" to labor. 
> >Yes, Greenspan and others say that it is capital which makes labor more 
> >productive. But by stating it that way, they are obscuring the need to 
> >distribute capital ownership more broadly in order that workers might more 
> >fairly share in the increased wealth generated by that capital. They assume 
> >that the productivity gains will always somehow trickle down to the working 
> >class, and in the 50s thru 70s it eventually did. Not anymore.
> >
> >Greenspan has stated that he believes increases in worker income are not 
> >inflationary, provided those increases do not exceed increases in [labor] 
> >productivity. He has also indicated that he believes a growth rate exceeding 
> >about 2.5 to 3.0 percent is necessarily inflationary, despite recent 
> >evidence to the contrary.
> >
> >Greenspan has stated more than once that there is a necessary tradeoff 
> >between capital investment and consumer spending--we have to cut back on one 
> >to increase the other. This is based on the fallacious notion that the only 
> >way to finance capital growth is to use past savings. I think we all agree 
> >here that growth can be financed by future savings--the future earnings of 
> >capital--which is fully compatible with--and requires--increased consumer 
> >spending.
> >
> >I, for one, have no desire to see the earnings of labor be artificially 
> >lowered, any more than I want to see them artificially inflated. I think the 
> >best policy is to let labor costs "float" in the "free market" with a 
> >minimal of legislative or government intervention, but only after changes 
> >have been made which lead naturally, and with a minimum of legislative and 
> >government regulation, to widely distributed capital ownership. (And let me 
> >again state that by "capital" I refer, among other things, to shares of 
> >corporate stock with 100% payout of profits as dividends.
> >
> >What is needed is a credible computer simulation of a macro-economy in which 
> >binary theory can be tested and compared with conventional theory. The 
> >problem will be how to create such a simulation without building in the 
> >assumptions which are to be tested.
> >
> >Incidentally, I have finally finished reading the posted version of Shann 
> >Turnbull's book DEMOCRATISING THE WEALTH OF NATIONS. I see great value in 
> >his proposals for the Ownership Transfer Corporation (OTC), the Land Bank, 
> >and the Producer-Consumer Cooperative (PCC). In particular, the OTC promises 
> >to accelerate the shift of capital ownership from large, concentrated 
> >holdings to stakeholders without the need for coercion. The implementation 
> >of his proposals would require a minimum of legislation or regulation, as 
> >they are contract based.
> >
> >Some of these concepts appear to overlap with some of Louis Kelso's 
> >proposals outlined in his book DEMOCRACY AND ECONOMIC POWER: Extending the 
> >ESOP Revolution through Binary Economics (with Patricia Hetter Kelso, 
> >1986/1991), while the OTC seems complimentary. I'll summarize Kelso's 
> >proposals below:
> >
> > * Mutual Stock Ownership Plan (MUSOP--mutual ownership by stakeholders of a 
> >group of related smaller businesses)
> >
> > * Consumer Stock Ownership Plan (CSOP--ownership of major suppliers in part 
> >by their larger customers)
> >
> > * General Stock Ownership Plan (GSOP--ownership of stock by 
> >undercapitalized individuals)
> >
> > * Capital Ownership Plan (ICOP--ownership of stock in businesses too small 
> >to have publicly issued stock)
> >
> > * Commercial Capital Ownership Plan (ComCOP--ownership of large office 
> >buildings and structures)
> >
> > * Public Capital Ownership Plan (PubCOP--ownership of shares of publicly 
> >used facilities such as streets, sidewalks, canals, prisons, schools, 
> >government office buildings, etc.)
> >
> > * Residential Capital Ownership Plan (RECOP--interest- and tax relief for 
> >home buyers).
> >
> >I would like to respectfully bow out of these discussions for now, as I have 
> >little to add to what I've already contributed. I have found these 
> >discussions to be enlightening. However, at this stage the participants seem 
> >to have all made their points several times. There is resistance to 
> >differing views on all sides, which is understandable, given the 
> >psychological defenses we humans acquire as we grow up.
> >
> >I believe change will come about as solutions to crises. It might be 
> >possible for humans to deliberately create positive change in the absence of 
> >crisis, as Bucky Fuller once hoped, but that has yet to be demonstrated on a 
> >large scale.
> >
> >I wish COG well in its endeavor!
> >
> ><<Richard>>
> >
> >P.S. See my interspersed comments below.
> >
> >
> >On 5/19/00 at 7:19 AM -0400, Keith Wilde wrote:
> >> 
> >>
> >>Yesterday I attended a two-hour presentation on the discouragement of 
> >saving by government policy. It had a few important implications for our 
> >subject. I have flagged Greenspan in my subject line because a speech by him 
> >was featured here in a recent contribution by Richard Stutsman. To go 
> >directly to the punch line, therefore, a senior officer in the Canadian 
> >social security system commented, after the presentation, that monetary 
> >policy for the past decade has been oriented to putting money in the hands 
> >of the wealthy (capitalists) at the expense of wage earners. To be more 
> >specific, low interest rates have encouraged explosive growth in stock 
> >market prices (and hence in capital investment), but as soon as the results 
> >of this investment boom begin to show in the price of labor, central bankers 
> >clamp it off by raising interest rates. A rising stock market is a sign of 
> >economic growth and should be encouraged, by the apparent logic of the 
> >bankers, but an increase in worker inco!
> >!
> >!
> >mes is inflation and must be choked. It was further noted that real wage and 
> >salary incomes have not been increasing for more than a decade, yet 
> >actuaries of the social security system are required by policy to assume a 
> >regular increase of about 1% per year in evaluating the soundness of the 
> >Canada Pension Plan. A sobering prospect for workers!
> >>
> >>Thus the behavior of monetary authorities seems to manifest the precise 
> >opposite of the Kelso argument that coercive power of organized labor is 
> >robbing capital of the right to its much higher dessert. It is further 
> >noteworthy that the upward pressure on the price of labor seems clearly to 
> >be a consequence of an abundant growth of capital, suggesting to me that 
> >labor is still complementary to capital and that the values of the two 
> >factors are not independent of each other. Our binarist colleagues, however, 
> >if I understand them correctly, will say that this is the case of an heroic 
> >Greenspan at the brink, protecting the beleaguered owners of capital from 
> >the rapacious greed of worthless workers!
> >
> >I don't think anybody except perhaps I, inadvertently, has said anything to 
> >that effect. Only in the past few years (less than five years) has there 
> >been any kind of labor shortage. And the current shortage lies in two areas 
> >that I can discern: technical and service. I do not believe that technical 
> >workers' salaries or consulting fees are artificially high. There is, 
> >indeed, a greater demand than supply. I see nothing in what remains of New 
> >Deal policies which could be accused of inflating their salaries and fees. 
> >Technical workers and their managers are an important input into the 
> >creation of technical capital, including business and e-commerce software 
> >development.
> >
> >As for service workers, there does appear to be a temporary shortage because 
> >of the rapid recent growth in consumer spending. Those knowledge workers are 
> >all dining out and shopping a lot more these days with their rapidly 
> >increasing incomes! However, I've seen my first self-checkout stations at a 
> >large chain of grocery stores (Harris Teeter). Soon, most cashiers will be 
> >replaced by a smaller number of security guards monitoring these automated 
> >checkout stations. Customers of fast food joints will press the buttons 
> >themselves to order their food, eliminating all but the manager/security 
> >guard. Those same knowledge workers are fast creating the Web software which 
> >will eliminate most of those brick and mortar retail service jobs. These 
> >would be desirable trends in a society in which leisure were promoted and 
> >capital incomes widely distributed. 
> >
> >Again, I didn't mean to claim that this temporary labor shortage is an 
> >effect of redistributive policies. I knew better than that.
> >
> >>To avoid making this item longer, I will report on the content of the 
> >presentation, and on some of its other implications for our subject, in a 
> >separate posting.
> >>
> >>Keith Wilde
> >>Ottawa, Canada
> >><mailto:kwilde@magi.com>kwilde@magi.com
> >>613 990-8125
> >>613 747-6847
> >
> >-- 
> >Richard A. Stutsman, Director
> >WorldWorks Symposium: An inquiry into how the world works
> >URL <http://www.worldworks.org>
> 
> 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
> Alternate:sturnbull@optusnet.com.au
> http://members.optusnet.com.au/~sturnbull/index.html


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