A Future Worth Fighting For
March 26, 2019 9:26 AM Subscribe
“Excess profits would no longer benefit only the rich and powerful, and the benefits of holding capital would be shared across society. The funds would be controlled by workers within entire branches of industry, thereby ensuring that they would not provide an unequal benefit to workers in the most profitable companies and not contribute to increased differences in wages between workers — unlike other profit-sharing schemes bound to specific companies as have periodically been seen in the US and other countries in the past.” Revisiting the Meidner Plan, what we can learn from the 1970s Swedish effort to gradually socialize ownership.
Yeah not a big fan of the diagrams either, and normally I'm a sucker for visuals. Oh, well. Still an interesting article.
My first, and perhaps US-centric and kneejerky response, is that the Plan seems to assume honest and good government. Like, there's no clear provision for "how do we deal with across-the-board regulatory capture?" or "how do we deal with an entire government coming into power who care about nothing other than looting for their own benefit?" And maybe those were not scenarios that they felt needed to be covered in 1970s Sweden. But I don't think you can propose such a thing with a straight face in post-Trump America, certainly. (Really you shouldn't have said it in pre-Trump America, because honestly we've had worse leaders, but it's been a while.)
If you're going propose giving control of huge swaths of the economy to government or quasi-governmental agencies (some of which, if I understand correctly, were supposed to be run by political appointees), you need to wargame out how that system is going to cope with at least an election or two's worth of total burn-it-all-down demagoguery and corruption. I mean, right now we have an oil company suckup running the Department of the Interior, and someone who hates the concept of public schools running the Department of Education. Can you imagine who'd get appointed to run the council-of-councils in charge of wage-earner funds? Maybe they'd bring in specialists in looting-via-privatization from Russia. (Just kidding. They'd call McKinsey.)
Anyway, it's not an insurmountable problem—the US government as it exists right now has significant checks-and-balances to allow it to (hopefully) ride out bad leadership and self-correct. But it's a hard problem. The market economy is effectively a distributed system for resource distribution—one can argue that it does this poorly, and I'm not sure I'd argue—but if what's needed is more centralization of control so it can be delegated to the public via the government, it creates a very hard dependency on government not being totally dysfunctional. Which is not unreasonable, but if the motivation for the change in the first place is because our government is fucked-up, it's a bit circular. I.e. we need to fix government so we can fix the economy so we can fix the government...
Where I strongly agree with the article is that the French model (comité d’entreprise) deserves more serious consideration. This allows for more distributed control than I sense the Meidner Plan anticipated, and I suspect would be more palatable to US workers. One way I could imagine this being implemented is by giving tax-advantaged status to employee ownership organizations (whatever we want to call them), and then letting companies transfer ownership shares gradually in lieu of taxes. Maybe in step with raising the corporate tax rate, to make it revenue-neutral; political opposition to corporate tax increases isn't nearly as strong as increases to taxes on individuals. You'd need some anti-dilution provisions, and some incentives to keep the employee-owners from just selling their shares and cashing out, but that doesn't seem unmanageable. Anyway, if you arranged it so that it results in a short-term profitability boost, you'd use the executive class' worst instincts (short-term profits uber alles) against them to bait the hook.
posted by Kadin2048 at 12:59 PM on March 26, 2019 [5 favorites]
My first, and perhaps US-centric and kneejerky response, is that the Plan seems to assume honest and good government. Like, there's no clear provision for "how do we deal with across-the-board regulatory capture?" or "how do we deal with an entire government coming into power who care about nothing other than looting for their own benefit?" And maybe those were not scenarios that they felt needed to be covered in 1970s Sweden. But I don't think you can propose such a thing with a straight face in post-Trump America, certainly. (Really you shouldn't have said it in pre-Trump America, because honestly we've had worse leaders, but it's been a while.)
If you're going propose giving control of huge swaths of the economy to government or quasi-governmental agencies (some of which, if I understand correctly, were supposed to be run by political appointees), you need to wargame out how that system is going to cope with at least an election or two's worth of total burn-it-all-down demagoguery and corruption. I mean, right now we have an oil company suckup running the Department of the Interior, and someone who hates the concept of public schools running the Department of Education. Can you imagine who'd get appointed to run the council-of-councils in charge of wage-earner funds? Maybe they'd bring in specialists in looting-via-privatization from Russia. (Just kidding. They'd call McKinsey.)
Anyway, it's not an insurmountable problem—the US government as it exists right now has significant checks-and-balances to allow it to (hopefully) ride out bad leadership and self-correct. But it's a hard problem. The market economy is effectively a distributed system for resource distribution—one can argue that it does this poorly, and I'm not sure I'd argue—but if what's needed is more centralization of control so it can be delegated to the public via the government, it creates a very hard dependency on government not being totally dysfunctional. Which is not unreasonable, but if the motivation for the change in the first place is because our government is fucked-up, it's a bit circular. I.e. we need to fix government so we can fix the economy so we can fix the government...
Where I strongly agree with the article is that the French model (comité d’entreprise) deserves more serious consideration. This allows for more distributed control than I sense the Meidner Plan anticipated, and I suspect would be more palatable to US workers. One way I could imagine this being implemented is by giving tax-advantaged status to employee ownership organizations (whatever we want to call them), and then letting companies transfer ownership shares gradually in lieu of taxes. Maybe in step with raising the corporate tax rate, to make it revenue-neutral; political opposition to corporate tax increases isn't nearly as strong as increases to taxes on individuals. You'd need some anti-dilution provisions, and some incentives to keep the employee-owners from just selling their shares and cashing out, but that doesn't seem unmanageable. Anyway, if you arranged it so that it results in a short-term profitability boost, you'd use the executive class' worst instincts (short-term profits uber alles) against them to bait the hook.
posted by Kadin2048 at 12:59 PM on March 26, 2019 [5 favorites]
One way I could imagine this being implemented is by giving tax-advantaged status to employee ownership organizations (whatever we want to call them), and then letting companies transfer ownership shares gradually in lieu of taxes.ESOP's (Employee Stock Ownership Plans) are an underutilized tool. Essentially, an existing owner sells the company to a pension plan owned and operated by their employees, who then owe no corporate tax (the employee owners are still responsible for income tax and any taxes applicable on cashing out of the ESOP). The "typical" ESOP conversion these days occurs when a retirement-age single owner without a family succession plan sells to their employees.
These type of tools not only benefit workers, but you can also pitch them to libertarian / anti-tax types as a way to avoid corporate tax.
now time to read the article...
posted by GetLute at 2:12 PM on March 26, 2019 [3 favorites]
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posted by eotvos at 10:05 AM on March 26, 2019