U.S. politics have become a tinderbox of extreme inequality and nationalism, but the country’s 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 towards a federal election, we ought to get up to speed with these policy debates. One intriguing proposal backed by Bernie Sanders and Elizabeth Warren would guarantee employees representation on corporate boards of directors, holding 40% of the seats. This model of “co-determination” already exists in countries like Germany and the Netherlands, and research suggests that co-determination results in lower inequality, reduced CEO pay and fewer layoffs during downturns.
Why shouldn’t working people have more of a say in the firms we work for? After all, corporations and workplaces are some of the most powerful institutions in our society and daily lives, but they have little practice or pretense of democratic control.
Another policy from the British New Economics Foundation goes even further. Its 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 recently adopted by the U.K. Labour Party and Bernie Sanders.
In the Labour Party’s version, corporations with over 250 employees would have to use stock issues to transfer 1% of equity per year to worker-owned trusts (to a maximum of 10%). The dividends earned would be paid out annually to the employees.
There is strong public appetite for this seemingly radical policy. In a recent YouGov poll, 55% of Americans supported (and 20% opposed) a version of the policy that would go further, transferring up to half of corporations’ equity to their workers. Even 50% of Republicans backed the plan.
Another popular plan would give employees the right of first refusal to buy a business if it’s being sold or shut down by its current owners.
Taxing the super-rich is also getting a dose of bold new thinking. Elizabeth Warren has outlined an annual wealth tax plan – 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 is the only federal party proposing a version of this policy.
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 Bernie 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 profoundly reshape who holds economic power and wealth in this country. •
Alex Hemingway is an economist and public finance analyst at the Canadian Centre for Policy Alternatives’ B.C. office.
