Comments about ‘John Hoffmire: Wage economy vs. employee ownership economy’

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Published: Monday, June 9 2014 7:30 a.m. MDT

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Bountiful, UT

I like the concept, and there have been a few instances of employee-owned businesses being successful, but really, when you come down to it, there are enormous differences in the interests of owning a company vs being an employee of the company.

Owning a business is survival-of-the-fittest, with brutal decisions involved, like laying off workers and replacing them with machines, to better compete in a ruthless market.

How many employee-owned businesses survive the test of time? How many employee-owned companies have survived major technological shifts that have rendered large chunks of the employee base obsolete?

Salt Lake City, UT

"...wages do not often create material wealth." Exactly so.

Marx explained it like this. Labor's flow is C-M-C, the laborers sells his labor time C for money M, which he then uses to by the necessities of life C. This is steady state, survival without accumulation.

The capitalist's flow is M-C-M', The capitalist takes money M and buys a commodity (could be labor, could be a physical product) C, which he sells for more money M', only in this case M' = M + profit. Here is accumulation.

My thanks to the writer for bringing up employee ownership. Such has been a mixed bag. Note that employee ownership is different from Worker Self Directed Enterprise, WSDE, in that under WSDE not only to the workers own the place, they also manage it democratically. Over the long haul this is a BIG difference.

Durham, NC

Perhaps the industry in an outlier compared to others, but software was built in the 70s and 80s on employee participation in equity ownership of companies via generous stock option plans. It is what built companies like Microsoft and Oracle. Employees were willing to put in huge hours, because they were part owners and had a stake in the success of the companies.

It was only through short sighted tax policy that the practice went away.

I currently work for a privately owned company that does about 3 billion a year in business. The owner tries to create ownership in the company through benefits... and a real retirement plan.... something almost unheard of in current companies. It has the near same effect of gaining employee loyalty. But what it doesn't do is encourage entrepreneurial culture - but rather one based on caution. It has served my company now in positive ways.... but very different ways.

I enjoy a very comfortable lifestyle now because of my association in companies that shared equity.... the extra effort was realized in very real ways, far past my last day with them. I don't see that incentive present in todays workplace.

2 bits
Cottonwood Heights, UT

I agree that employee owned businesses are a good thing. That's why I've always been an advocate of small businesses, and family businesses.

My father-in-law believes you can earn a LOT more if you are your own boss. He started and ran many small businesses. Sometimes with a partner, sometimes by himself. But he's always his own boss.

The advantage of starting your own business is... you get to keep all the income produced by your labor (except what the Government takes) Instead of the Boss getting all the income and giving some to you for your time.

Of course you need to put much of that money back into the business (IF you want it to succeed)... but it's up to you how much you keep and take home to your family.

I know he has worked harder than I ever have, and has taken more risks, and has failed more times than I could handle. So I have decided to not take the risk and work for a wage. It provides what my family needs... but I will never get "rich" this way... and I don't care to get "rich".

Deep Space 9, Ut

To "marxist" name the companies that are managed "democratically". I see companies that are managed through the typical Owner/President or the CEO running a board. Their owners make their workers feel more involved by letting them vote on things, but in the end, they do not actually run things democratically. Much like Communism being "democratic" when put into practice.

Salt Lake City, UT

RE: Redshirt1701 The largest WSDE in the world is the Mondragon Co-operative in Spain. It's the largest, I don't know if it is the most representative. Just do a search for Mondragon.

2 bits
Cottonwood Heights, UT

If you want to work for an employee owned company... that's fine. Do it! Start your own company! Open a taco stand and be your own boss! Or open your own hospital, or aerospace engineering firm (people have done it).

But in the meantime... don't try to throw stumbling blocks in front of regular companies. I want to keep my job, and my pay check.

Small businesses are great... but not EVERYTHING can be done by small businesses or mom-and-pop shops. I can't imagine a small mom-and-pop hospital, or a mom-and-pop run Boeing or GE.

Open Minded Mormon
Everett, 00

During WWII, Congress froze all DoD and contractor wages to avoid War Profiteering.

Since prices were fixes,
and in order to remain competitive in the hot job market,
Corporations were forced to add these sorts of employee owned Stock Options in addition to other benefits; Healthcare, Retirement, Sick Leave, Vaction as a means to intise skilled labor.

The pratice stopped in the 1960-1970's once corporations realized these now old geezers had all made themselves $millionaires by the time they retired.

It wasn't enough that they had also made WallStreet investors extremely Wealthy as well.
It's just a matter of Greed.

Those who work - the producers - should be working for them, and not for themselves.

lost in DC
West Jordan, UT

Yawn, ESOPs have been around for a long time – this article talks of nothing new.

You have to quote someone with credibility if you want us to take you seriously.

Open minded/arinaut
Yep, it was the dems in WWII that established the practice and allowed greed to take over. Why do you still support them?

Deep Space 9, Ut

To "marxist" they don't operate as a democracy any more than the US does. The Mondragon Corporation operates more like a Republic where you have the leading council making the big decisions. You see a democracy is where everybody votes, but a republic is where people vote for a representative to make their decisions. This is how modern corporations work. The owners vote for a CEO, wich the Co-operative has, and that CEO makes the big decisions.

Have you another corporation that is just like all other big businesses, but you think is different?

Ultra Bob
Cottonwood Heights, UT

Now that the Golden Goose is dead, the killers want to sell the carcass.

The problem with employee ownership of business is the same as with ownership of anything else, you've got to know what you're buying. Business ownership is no longer just a case of a human owner and his employees and the wealth of a business is no longer just the operational parts.

In the Stock market, the true value of a business goes up or down often having little relationship to the activities of the business itself.

Ultra Bob
Cottonwood Heights, UT

Many of us would just like to be able to trade our labor for enough wealth to handle the simple need of the good life. It would be nice to be rich but it takes a lot of hard work, training, and luck that we don't really want to take on. Not that we are lazy, it's just that we have other priorities.

However, since there are those who will work very hard at taking our wealth away from us, we need to protect ourselves either by being well educated or having a big brother to protect us.

In the role of big brother protector the government is expected to set the rules, regulations, enforce them and do the other things we ask it to do. If the government was actually doing its job we wouldn't need the Gebhardts and Angie's list to protect us from unscrupulous vendors.

Like the schoolyard bullies there are those who would hamper our big brother and call him Nanny as a derogative term. The only thing is, having a Nanny wouldn't be such a bad thing for people who have more important things to do.

Tooele, UT

Re: ". . . having a Nanny wouldn't be such a bad thing for people who have more important things to do."

So, if you want to be cared for by a nanny, go ahead. Make that choice.

What you and fellow liberals should not be able to do is make that choice for me.

It's the difference between freedom and tyranny.

Mike Richards
South Jordan, Utah

ANYONE can own stock in a publicly traded company. If you want to share in the profit or loss of a company, just buy stock. A privately held company chooses to whom it sells stock. A privately held company is under no obligation to sell stock to its employees.

The point is, if you want to take the risk that a business owner takes, there is nothing that stops you from doing that. Buy some stock. If you've chosen the right company, you'll make a profit. If you've chosen the wrong company, you'll lose money. That's what every business owner does every day of the year. He bets his ability to earn a profit in a highly competitive market on his unique skills to run a business better than his competition. The "government" does not guarantee his "risk".

Few businesses make a profit that justifies the risk involved. When employees know so little about economics that they demand that the minimum wage be doubled, do you really think they have sufficient economic training to run their own business?

Salt Lake City, UT

@Redshirt1701 "The Mondragon Corporation operates more like a Republic." Mondragon is a hybrid. There are a number of us on the left looking for a solution for labor, which, if you haven't noticed, is taking a beating. The trajectory for capitalism is toward ever more difficulties for labor. I'm looking for socialist models which involve individual empowerment. We may have to learn some new tricks.

Ogden, UT

If you want to see an employee centered and successful business model, Google America's largest steel producer, Nucor. As Artie Johnson would say, "Very interesting!"

Deep Space 9, Ut

To "marxist" what socialist system works? You are looking for a shiny new car in the wrecking yard.

The funny thing about you and your ilk is that you keep thinking that if you try socialism again that you can get it to work this time.

When has socialism actually worked? The best argument your ilk has ever made is that it works where capitalism is allowed to work within it. Why is it that socialism can only survive with capitalism funding it?

You realize that the current trajectory for our economy is socialism, and if it is allowed to continue on that path will only lead to more misery and less individual empowerment. Socialism destroys individual empowerment in favor of the collective.

You are right, we need to learn some new tricks. We need to learn to stand on our own and get the governmetn off our backs. We also need to learn that government impeads business, and that individuals will solve our problems, not the government.

salt lake city, utah

"You are right, we need to learn some new tricks. We need to learn to stand on our own and get the governmetn off our backs."

I think if you would take a deep breath and set the ideology aside for a moment and really try and understand what Marxist is saying you might find those new tricks.

" I'm looking for socialist models which involve individual empowerment" Marxist isn't saying anything about government takeover, he's talking about personal empowerment.

The key principle of socialism is community. You can define the community anyway you choose if you're creative. It can mean the whole society but it could also mean a community of workers.

If capitalism/private ownership is to thrive it has to change it's ways and re-define the winners and losers equation. That doesn't mean equal shares, so calm down. It does mean "sharing" of risk, rewards, and responsibility, the point of the article.

Kent C. DeForrest
Provo, UT

Good editorial. I've been writing about this for 25 years. Yes, employee ownership would have a significant impact on the rampant inequality that will soon sink our economy, but there are other, even more persuasive reasons to look at worker ownership models. Primary among these is that we currently have an economy dominated by businesses that are in direct conflict with our social ideals and political principles. In case you haven't noticed, most of the businesses in our country are authoritarian regimes that basically own their workers. This feudal pattern of business will eventually reach its inevitable destination. We can reverse this by encouraging (through tax rates) the transition to more democratic workplaces through various types of employee ownership options. The moral reasons for this move are even more persuasive than the economic arguments. We fought a war in the 18th century to overthrow authoritarian rule, but we failed to extend it into the economic sphere. We are now paying the price for that oversight.

Deep Space 9, Ut

To "pragmatistferlife" I don't think you understand socialism. "Community" is not its key. The key to socialism is control. Control by government officials that turn you from being an individual to just a number, demographic, or cause. Socialism does not operate as a community, just look at Europe. There is no "community" there, except for a minority of individuals that have taken it on themselves to care for others. The people look to the government, not the community, for help with most everything. Socialism cannot exist where people have a sense of community because they will reject the central planners.

Why redefine "winner" and "loser"? Winers are those that succeed, losers are those that don't. How hard is that to understand?

What new tricks does Marxist have? Socialism failes every time it is tried. Sometimes the death is quick, sometimes it is slow. The result is the same either way.

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