On August 20, 2015, KJ McElrath writes on Ring Of Fire:
This week, several media outlets posted stories about one of Bernie Sanders’ proposals for restoring the American middle class and boosting job creation as well as productivity and job satisfaction – all while providing greater job security and putting more money into the pockets of workers.
That proposal, which Sanders made months before announcing his candidacy, is the establishment of worker-owned co-operatives:
“Instead of giving huge tax breaks to corporations which ship our jobs to China and other low-wage countries, we need to provide assistance to workers who want to purchase their own businesses by establishing worker-owned cooperatives.”
Although it was included in his “Economic Agenda for America,” the idea of employee-owned companies is not a new one. It is, in fact, one of the cornerstones of socialism: to have the means of production under the direction and control of the workers themselves under a decentralized management model. It is a model that was embraced by President Ronald Reagan himself, back in 1987:
“I can’t help but believe that in the future we will see in the United States and throughout the Western world an increasing trend toward the next logical step, employee ownership. It is a path that befits a free people.”
Currently, the US Federation of Worker Cooperatives estimates that there are 350-400 such worker-owned companies in the country today, employing 5,000 workers. Most of them are service providers of one kind or another. Not surprisingly, many of them are found in immigrant and working-class communities. These worker-owned co-operatives generate more than half a billion dollars in annual revenues – an indication of the economic potential of this business model.
Significantly, worker co-ops in the US have done better under adverse economic conditions. Such businesses were the subject of a 2013 documentary film by Mark Dworkin and Melissa Young, entitled Shift Change. A year ago, journalist Laura Flanders wrote an article for Yes!Magazine, covering the success of the workers’ co-operative model in New York City. One woman, who struggled on $6.25 an hour as a house cleaner, saw her wages quadruple after joining a workers’ co-op. This year, mayor Bill de Blasio and the city council earmarked $1.2 million in support of worker-owned businesses.
It is readily apparent that the worker-owned business model offers a solid alternative to traditional capitalism, in which the sole objective is to squeeze maximum profits out of the company, regardless of the costs to the community, the environment, and even the planet. But just how does Bernie Sanders’ economic vision fit into all of this?
Last year, Sanders introduced two bills in the Senate. One bill provides funding through the US Department of Labor for employee ownership centers, modeled after a similar organization in his home state of Vermont. The primary purpose of such an organization would be to provide education and support on worker ownership of companies. The companion bill, co-sponsored by Sanders’ colleague, Senator Leahy, would establish a US Employee Bank to provide financing in order to assist workers in purchasing businesses.
On his senate website, Sanders says:
“At a time when corporate America is outsourcing millions of decent-paying jobs overseas and with the economy continuing to struggle to create jobs that pay a livable wage, we need to expand economic models that help the middle-class…when employees have an ownership stake in their company, they will not ship their own jobs to China to increase their profits. They will be more productive. And, they will earn a better living.”
In case you have any doubt that an employee-owned business can be successful, consider Publix Super Markets. According to WikiPedia:
“Publix is a private corporation that is wholly owned by present and past employees. It is currently ranked No. 67 on Fortune magazine’s list of 100 Best Companies to Work For 2015 and was ranked No. 8 on Forbes’ 2014 list of America’s Largest Private Companies and is the largest in Florida. The company’s 2014 sales totaled US$30.6 billion, with profits of $1.74 billion, ranking #104 on Fortune magazine’s Fortune 500 list of U.S. companies for 2014. Supermarket News ranked Publix No. 5 in the 2014 “Top 75 North American Food Retailers” based on fiscal year sales. Based on 2014 revenue, Publix is the thirteenth-largest US retailer and thirty-fifth in the world.”
http://ringoffireradio.com/2015/08/bernie-pushes-hard-for-employee-ownership-of-businesses/
In this article an example is referenced to Public, In case one has any doubt that an employee-owned business can be successful. But while the article toots worker cooperatives, the corporate structure of Public is an Employee Stock Ownership Plan (ESOP, whose architect is binary economist Louis Kelso. In the late 1960’s I founded an economic justice advocacy firm, Agenda 2000 Incorporated, with Louis Kelso, who was chairman, to advocate broadened capital ownership financial mechanisms to create an American ownership culture. Also, my colleagues and I at the Center for Economic and Social Justice (www.cesj.org) are advocates for a Just Third Way and the proposed Capital Homestead Act, which would transform American into a universal capital ownership society.
As for the this article, a far better invisible incorporation structure for worker-owned corporations is the Employee Stock Ownership Plan (ESOP), which Bernie Sanders advocates. In fact, the reference to 11,000 corporations owned by workers should inform the reader that they are ESOP-structured S-corporations whose owners elect to pass corporate income, losses, deductions, and credit through to their shareholders for federal tax purposes. But there is a limitation to worker-owned corporations, that is: ONE MUST BE AN EMPLOYEE/WORKER. That means that millions and millions of Americans are by definition left out and even those Americans working now may not be working in the near future as tectonic shifts in the technologies of production and the globalization of production at the lowest cost destroy jobs and devalue the worth of labor.
A cooperative is member-owned and -controlled, rather than controlled by investors as in a corporation. But this is not to say that a corporation cannot be broadly owned by its workers and other citizens (as mentioned, there are presently over 11,000 employee-owned corporations structured under an Employee Stock Ownership Plan), all with voting rights and entitlement to their share of full earnings dividend income. Unlike a cooperative in which all members and shareholders have to be active in the co-operative, in a corporation the shareholders elect a board who in turn hires a CEO to oversee the day-to-day operation of the corporation. As cooperatives are formed to provide a service to their members rather than a return on investment, it is difficult to attract potential members/shareholders whose primary interest is a financial return. The idea to broaden personal/individual ownership of corporations, is to create new owners and empower each to benefit fully from a return on investment. While cooperatives are not obligated to seek profit for investors, but are created to meet members’ needs, there is still the requirement, as with corporations, that the investment to create them will generate a profit. Otherwise, there would be no income to sustain the business. So both cooperatives and corporations must operate using the logic of corporate finance that investments must pay for themselves.
Both cooperatives and business corporations are legally corporations under state charters. Both structures can be broadly OWNED (cooperatives: member/shareholder/investors; corporations: shareholder/investors) with operations overseen by vote of the members or owners. The problem today with respect to corporations is that they are NARROWLY OWNED and thus a say in decisions is restricted to those who OWN the most shares. The idea behind the proposed Capital Homestead Act is to use financial mechanisms that broaden the ownership of corporations, broaden decision making and operational oversight, and return fully the profit earnings to the owners, rather than retain those earnings or debt finance for reinvestment, neither of which creates ANY new capital owners.
As for financing business growth, the corporation would issue and sell new stock, which would be acquired broadly by children, women, and men using insured, interest-free capital credit, repayable out of the future earnings of the growth investment. Thus, by re-invisioning the corporation, we can achieve the full benefits of the corporate structure, controlled by the people, for the people. Broadly owned corporations would empower all current and future generations to take priority over profits (for shareholders and executives) by operating in the best interests of the well-being of people, communities, and the planet.
For a comparative structure tutorial seehttp://www.uwcc.wisc.edu/whati…/BusinessStructureComparison/
Bernie Sanders, while a long-time advocate for and supporter of employee-owned business corporations, now needs to take this concept to its fullest outcome and introduce legislation for the proposed Capital Homestead Act. See http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/…/capital-homestead-act-a-plan-for-get…/ and http://www.cesj.org/…/capita…/capital-homestead-act-summary/. Seehttp://cesj.org/learn/capital-homesteading/ andhttp://cesj.org/…/uploads/Free/capitalhomesteading-s.pdf.
The Capital Homestead Act is the fulfillment of the promise to broaden FUTURE wealth-creating, income-producing capital assets by creating millions and millions of NEW capital owners. Using financial mechanisms that provide insured, interest-free capital credit, repayable out of the FUTURE earnings of investments in the corporations growing America would empower EVERY child, woman, and man, whether employed or not, to acquire personal OWNERSHIP stakes in America’s viable and successful corporations simultaneously with their growth, without the requirement of past savings or ANY reduction in wages or benefits, if employed.
The Capital Homestead Act would facilitate the transformation of America’s corporations, now OWNED by a tiny minority wealthy ownership class, into a nation of universal capital owners, who would earn income through profit sharing and the full-earnings dividend payout of corporations, and enable America to finance its future economic prosperity while simultaneously creating new capital owners.
Norman Kurland, President of the Center for Economic and Social Justice (www.cesj.org) argues, “The haves represent a tiny fraction of humanity. Our ideas will split them between those who see our point and understand that they would benefit everyone without taking anything away from them during their lives, and those who want to keep ownership in an exclusive club. The latter cannot publicly attack the institution of private property without threatening the legal foundation that gives them their monopoly over the money system and the ownership system.”
Bernie Sanders is the ONLY candidate for president that will provide leadership to awaken all American citizens to force the politicians to follow the people and lift all legal barriers to universal capital ownership access by every child, woman, and man as a fundamental right of citizenship and the basis of personal liberty and empowerment. The goal should be to enable every child, woman, and man to become an owner of ever-advancing labor-displacing technologies, new and sustainable energy systems, new rentable space, new enterprises, new infrastructure assets, and productive land and natural resources as a growing and independent source of their future incomes.
See http://wp.me/p5wwCK-3T4 and http://wp.me/p5wwCK-3Sn
