Alex Hemingway: Canada needs to catch up on new progressive economic thinking
Credit to Author: Stephen Snelgrove| Date: Thu, 19 Sep 2019 01:00:05 +0000
American politics has become a tinderbox of extreme inequality and nationalism, but its continuing political crises are sparking major progressive economic policy proposals in response. Much the same is happening in Britain, and in both countries the centre ground of economic thinking is shifting rapidly.
As Canada heads into a federal election, we ought to get up to speed with these policy debates.
The most visible of the bold new progressive policies is the Green New Deal, but other innovative proposals — relating to ownership and control of our economy — deserve our attention. These include policies to guarantee employee representation on corporate boards, promote employee ownership of companies, and get serious about taxing the super-wealthy.
Strikingly, polling in both countries shows these policies are highly popular with voters across the political spectrum.
One intriguing policy proposal from Democratic presidential candidates Bernie Sanders and Elizabeth Warren would guarantee employees representation on corporate boards of directors, holding 40 per cent of the seats. This model of “co-determination” in corporate governance would help rebalance companies’ focus on the interests of employees and the community as opposed to single-minded profit maximization for shareholders. The system already exists in countries such as Germany and the Netherlands, and research suggests that co-determination results in lower inequality, reduced CEO pay and fewer layoffs during downturns.
In some of the most powerful institutions in our society and daily lives — corporations and workplaces — there is currently little practice or pretence of democratic control.
Why shouldn’t working people have more of a say in the firms we work for?
Another policy from the British New Economics Foundation goes even further. Their proposed “inclusive ownership fund” plan would gradually transfer part of the equity ownership of large corporations to a trust held by employees. The policy was adopted by the United Kingdom Labour Party last year and Sanders recently announced plans to implement a similar policy.
In the Labour Party’s version, corporations with over 250 employees would have to use stock issues to transfer one per cent of equity per year to worker-owned trusts (to a maximum of 10 per cent). The dividends earned would be paid out annually to employees.
There is strong public appetite for this seemingly radical policy. In a recent YouGov poll, 55 per cent of Americans (including 50 per cent of Republicans) supported a version of the policy that would go further still, transferring up to half of corporations’ equity to their workers.
Giving employees the legal right of first refusal to buy a business if it’s being sold or shut down is also on the table in the U.S. and U.K. There is no such “right to own” in Canada, but the potential can be seen in examples like the Harmac Mill and CHEK TV on Vancouver Island. Each of these businesses was slated to close a decade ago but they were successfully bought out by employees and are thriving today.
Taxing the super-rich is also getting a dose of bold new thinking. Warren has outlined an annual wealth tax — vetted by prominent economists — that would raise enormous sums from fortunes over $50 million. While Canada has generally been behind on these debates, the wealth tax is a partial exception. So far, the NDP are the only federal party proposing a version of this policy in their current election platform.
Other potentially far-reaching tax policies include Warren’s “real corporate tax” based on the profits that corporations report to their investors in financial statements and Sanders proposed “Wall Street tax” on short-term financial flows to discourage unproductive speculative activity. These measures could create public revenue to invest in urgent social and environmental priorities.
It’s time for Canada to catch up with this new progressive economic thinking, which has the potential to fundamentally reshape who holds economic power and wealth in this country.
Alex Hemingway is an economist and public finance analyst in the B.C. office of the Canadian Centre for Policy Alternatives.
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