Since October, Senator Bernie Sanders has had a plan to initiate a massive transfer of wealth into worker hands. Nestled in the policy weeds of the Bernie campaign website is a relatively tame-sounding section titled “Corporate Accountability and Democracy.” Here, the campaign states that under a Sanders presidency, the administration would push policy to establish Democratic Employee Ownership Funds, which would be charged with managing an annual transfer of two percent of stock for all publicly traded corporations and those with $100 million in annual revenue until those companies had transferred 20% ownership. It perfectly embodies Bernie’s primary goal: extending economic democracy at a time when our country is in the midst of a deep class divide.
The funds would be managed by a worker-elected board, and workers would be able to vote the shares granted to them through the plan. Rather than targeting incomes, the policy would be all about ownership, which makes it an unprecedented move to democratize the US economy. A quick summary of the distinction between income and wealth: income is a flow of money as a return for work or investment, whereas one definition of wealth is defined as all of the assets one owns minus the liabilities one owes.
What’s so important about wealth? For one, wealth inequality in the United States is at an all-time high. Wealth ownership reflects a dizzying complex of institutions to tackle, in that a large portion of income inequality is a result of concentrated wealth that pays out an income to its owners. According to a 2018 study by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, roughly 30% of national income comes out in this “passive” form. But it also involves things like whether one owns a home or has any debt. Simply put, wealth involves a lot of different institutions in our economy, and all of them point towards a deeply unequal playing field for most people in this country. A multidimensional issue demands redress in multiple policy fronts.
The Sanders campaign has demonstrated a sharp understanding of wealth’s many faces, and in addition to the Democratic Employee Ownership Funds plan, has put out plans to tax those who have wealth worth over $32 million, provide first-time homebuyers financial assistance and counseling, and forgive all medical and student loan debt. No doubt, these are all important, systemic reforms. But together they omit a significant factor in determining the economic balance of power in our country: democracy at the level of corporate decision-making.
As economist Lenore Palladino points out, the “inclusive ownership fund” model that Bernie has introduced gives workers a much clearer stake in the direction a firm takes, and provides for some sharing in the profits that they’re responsible for. Further, she notes that US companies with some form of employee ownership tend to pay higher wages and remain more viable in the long term, as it helps to prevent profits being funneled into top executives’ stock-based compensation. In other words, we’re used to a select few executives and shareholders calling the shots in large corporations. Bernie recognizes the best way to change that is to socialize a chunk of large firms’ assets over time and finally let workers have a say.
As important as corporate ownership and democracy is, the debate in the 2020 presidential race has gravitated towards certain hot-button issues: health care, education, and job creation. The plan for Democratic Employee Ownership Funds—let alone the name—doesn’t fit neatly into a soundbite. But when Americans are asked about it, they overwhelmingly support the plan. Polling conducted by Democracy Collaborative shows 55% of Americans in favor of a similar policy and a mere 20% opposed.
Democratic Employee Ownership Funds have precedents in American government as well: in 1976, Alaska implemented a “permanent fund” which diverted a portion of state oil revenue toward an investment portfolio that now pays out an annual dividend to residents. Even in a relatively conservative state, which has repeatedly voted for Republican nominees to the presidency, the fund enjoys widespread support. Perhaps one of the prospects of establishing funds like this is that they generate a possessive investment among recipients. People understand when they are given a real, tangible stake in the economy, rather than another arcane, hard-to-quantify tax credit or means-tested benefit.
In a hard-fought primary with numerous presidential candidates entering and exiting the fray at any given moment, it’s often tough to remember any specifics about policy, let alone who someone like John Delaney is. But supporters of Bernie should remember that a plan like the Democratic Employee Ownership Funds model represents what his campaign is all about: expanding economic democracy at a time when our country is deeply divided between those who own and those who don’t.
Finn Collom can be reached at firstname.lastname@example.org.