Liberalism is ascendant, at least in the Democratic Party. New Gallup polling just out shows that for the first time, more than half of Democrats identify as “liberal” as opposed to “moderate” or “conservative.” The left’s newly minted hero Alexandria Ocasio-Cortez is becoming the right’s new favorite foil. Her Green New Deal and amplification of Bernie Sanders’ cry for Medicare for All are gaining a great deal of attention for their boldness as much as for their potential to bust the federal budget. Obama aide Jon Favreau argues that people “want ideas that are commensurate with the size of the challenges we’re facing” rather than the incrementalism of compromise.
What all of this misses is that there is already a bold idea, with proven results and a long history of bipartisan support, that could transform capitalism and lift millions of people permanently out of poverty. This big idea makes a $15 dollar an hour minimum wage look squarely like small-minded incrementalism, and it won’t empty the federal treasury.
But nobody is talking about it except Broadway actors.
The revolutionary idea is to provide workers with increasing access to the capital their labor both produces and sustains. And the fight for that principle is now raging on Broadway after the musical “Hamilton” decided to give its workers a share in the production’s massive cash windfall. Now the national labor union Actors Equity is demanding that all Broadway performers and producers get a share of the spoils.
It is fitting that the show Hamilton kicked off this pitched battle. Profit sharing was one of America’s original bipartisan ideas and was backed jointly by the political enemies Alexander Hamilton and Thomas Jefferson.
When it came time to rebuild the New England fishing industry destroyed by the British, the two men agreed any government subsidy for industry would only be given under the condition that owners provide shares of future profits with their crews. After all, common sense dictates that people who have a stake in the economic performance of their company will be more industrious, innovative and committed. They will also, critically, have a chance to move up the economic ladder in a meaningful and lasting way.
This idea of a government subsidy encouraging profit sharing is just one way that we can incentivize a move towards more employee ownership. The corporate finance lawyer and economist Louis O. Kelso identified numerous ways to institute more citizen ownership through things like the Employee Stock Ownership Plan (ESOP).
More than 7,000 ESOPs — which are defined as companies owned in part or full by their employees — are currently registered in the United States. More than 28 million people participate in some kind of employee stock ownership program at companies like Southwest Airlines and Publix Super Markets. Municipal stock ownership plans are another Kelsonian idea where residents of a community are built into the ownership of their local roads, lights and other infrastructure.
Many more companies like General Motors, Intel, and Deloitte offer less revolutionary, but still valuable, variations on profit sharing.
The idea of employee ownership is taking off in the private sector and it also has a long history of bipartisan political support. Hamilton and Jefferson are not the only strange bedfellows to support the idea. The conservative icon Ronald Reagan described employee ownership as “a path that befits a free people.”
That puts Reagan in lockstep with Bernie Sanders — who has advocated in support of the issue for years. Hillary Clinton proposed an incentive for employee ownership during the 2016 presidential campaign, and the 2012 Republican Party platform argued that “employee stock ownership plans create capitalists and expand the ownership of private property.” They “are therefore the essence of a high-performing free enterprise economy.”
For all of this bipartisan support and market proof of profit-sharing, broader capital ownership is a big, bold idea capable of lifting millions out of poverty. Now, when is the last time you heard any politician talk about this idea?
At a time when “bipartisan” is the last word on anyone’s lips, broader ownership could actually bring the two sides together around an idea that shores up capitalism by addressing the stark inequality it tends to produce. I hope the new crop of Congressional leaders – from the most progressive liberals and all the way across the aisle – will come together around the idea of turning more American workers into American owners.