US Politics Mega-thread - Page 408

One candidate that may be equal to that task is a homely sounding economic noun that separates the wealthy from the rest of us. "Assets" are a seemingly magical set of resources that work for anyone who owns them. In conversations about economic fairness, "assets" are a resource that has largely remained outside the policy tent. President Obama has recently raised expectations about how economic policy might attack the problem of inequality. But he likely won't get that far unless he too is ready to step outside that tent.

Accounting textbooks teach us that there are different categories of assets, both tangible (e.g., land, buildings, housing, corporate stock, minerals) and intangible (e.g., patents, goodwill, copyrights). Wealthy people own lots of these assets. So many that they often forgo that more pedestrian instrument that makes possible the accumulation of income, the paycheck.

Unwealthy people own few, if any, assets. Theirs is wage-dependent, income based universe. They live from paycheck to paycheck. If assets are the key discriminant that sustains the wealthy, why is it that the most commonly invoked solutions to economic inequality tend to focus on income enhancing measures such as minimum wage campaigns, payroll tax credits and job training? That's not where the real money is. One could be forgiven for suspecting a plot. If the general problem of economic inequality could be likened to an overly deep bowl of soup that should be more fairly consumed, income-based solutions attack the challenge with forks. We need spoons, asset spoons. Let's examine a few.

Broad-Based Asset Sharing Strategies

Since 1982 every citizen of the state of Alaska has enjoyed an annual dividend as a return on their share of oil revenues through the Alaska Permanent Fund. Bipartisan support, including from former Republican Gov. Sarah Palin, has protected this asset sharing program for over 30 years. When legislators sought access to a share of Permanent Fund revenue to fund state deficits in 1999, they were rejected by 84 percent of voters. Annual dividend payments have ranged from $331 to $2,069 per Alaskan.

Similar natural resource-based ideas have been proposed but not yet implemented. One would provide all citizens an annual clean air dividend derived from taxing polluters. The "Sky Trust" concept developed by West coast entrepreneur Peter Barnes has also attracted bipartisan support in part because, like the Alaska Permanent Fund, it circumvents government capture and directs revenue immediately to citizens. Sky Trust dividends would be an asset shared by all. Natural resource-based asset sharing concepts have decided advantages: They can help address complex problems such as pollution, and they're easily shared through the common status of citizenship........

For all the data and anecdotes that can be shared about inclusive capitalism, it would be a mistake to suggest that the more established model of exclusive capitalism in the American workplace is on the run. Status quo models that reinforce concentrated ownership are taught in our premier law and business schools and touted as superior models. In their modestly titled paper "The End of History for Corporate Law," Yale professor Henry Hanssman and Harvard professor Reinier Kraakman declared the conversation about alternative ownership forms over. According to the authors, other corporate constituencies (e.g., employees) "should have their interests protected by contractual and regulatory means rather than participation through corporate governance."

Standing side by side with the business and law school skeptics who look askance at inclusive capitalism models are the investment theory scolds. Contrary to the legendary counsel of Andrew Carnegie that those who wish to build wealth should concentrate both their thoughts and their capital in very few places, these experts remain eager to pounce on any report of workers holding too much employer stock. Because workers are supposedly "invested" in their firm by virtue of their employment, buying stock in their employer would be the opposite of prudently hedging their bets. In practice, however, evidence published in Nov. 1, 2010's "Pension and Benefits Daily" shows that inclusive capitalism companies, particularly in the ESOP sector, are more likely to have diversified retirement designs (e.g., ESOPs and 401(k) or pension plans) than comparable companies.

And yet, the "diversification" criticism exposes a disagreement about inclusive capitalism's purpose. Inclusive capitalism is not an investment proposition; it is an ownership sharing proposition. It is about creating a new "membership" relationship between employees and their place of work, a relationship that is not merely psychological, creating a "sense" of ownership, but about real ownership.

Finally, how does an exclusive capitalism thesis comport with the existence of inclusive public stock markets open to all? Doesn't the existence of massive amounts of 401(k) stock owned by ordinary Americans refute the claim of exclusive ownership? Unfortunately, research by NYU economist Edward Wolff suggests not. Using 2010 data, he estimates that 80.8 percent of stocks and mutual funds and 91.5 percent of business equity are held by the top 10 percent of American society. So despite the populist marketing claims that Wall Street is owned by all of us, the evidence indicates otherwise. The public markets of Wall Street remain the preserve of exclusive capitalism.

The Rohrbacher-Sanders story suggests that the idea of inclusive capitalism enjoys a kind of ideological ambidextrousness that is promising. If enthusiasts of both the right and the left can refrain from insisting that participants enter the world of these ideas through their particular ideological doors, even more progress can be made.

On August 31 2013 04:07 JonnyBNoHo wrote:

I didn't say that the left is more opposed than the right. I said that both oppose it from different view points.

You said finance opposed it, not corporate law. Corporate law is not finance.