Presidential Perspectives on Employee Ownership

Presidents James Madison, Franklin D. Roosevelt, and Ronald Reagan

April 5, 2024 Richard Harmon

America's commitment to employee ownership didn't begin with passage of the Employee Retirement Income Security Act of 1974.  

Core concepts of shared-capitalism and economic justice have been embraced by US Presidents since independence. Their views and actions varied, but a glance at the historical record offers a clear throughline.

Some of the most relevant presidential quotes on broad-based ownership appear below. But context is critical. That’s where acclaimed author Nick Romeo comes in.

Romeo, a journalist who spent years covering policy and ideas for The New Yorker, sat down with CSG to help build a historical arc from Founders like James Madison to modern leaders like Ronald Reagan. Sharing content from his recent book, The Alternative: How to Build a Just Economy, as well as original insights, he offers a clear narrative on America's ongoing effort to build a more just economy through measures like employee stock ownership plans.


James Madison

"The proportion being without property, or the hope of acquiring it, cannot be expected to sympathize sufficiently with its rights to be safe depositories of power over them."

(Undated Letter, 1829)

Nick Romeo:  Today we talk about how aligned incentives boost productivity. That same concept was already understood by the Founders. They described how ownership drove people to work harder. And there are all these quotes talking about the importance of small landholders for a democracy.

At the time, there was deep tension between the percentage of the population with some level of property and the existence of a flourishing democracy. Some of the Founders looked across to Europe and saw the French Revolution. They recognized things can go terribly wrong in a highly unequal society. So, this was swirling around in background as the US entered the end of the 18th century and the early 19th century.

One solution was to try to increase the number of people who have some level of land ownership. But the Founders were very cautious and repeatedly state that they do not support absolute equality.


Abraham Lincoln

"In regard to the Homestead Law, I have to say that in so far as the Government lands can be disposed of, I am in favor of cutting up the wild lands into parcels, so that every poor man may have a home."

(Speech, February 12, 1861)

Romeo:  The idea that land could enable you to have a buffer from absolute desperation is central throughout the 19th century. You can grow a bit, you can hunt - there's a way to sort of keep yourself from total poverty and with hard work you can improve your station.

It makes me think about what a Homestead Act today would look like, given the shift from land to capital as the kind of basic engine of self-sufficiency. What does that look like in an economy that doesn't rely on farming in the same way – where we have, for better or worse, industrialized agriculture?


Theodore Roosevelt

"We must insist upon the principle of cooperation, of profit sharing and partnership... so that the prosperity coming to the big business organization shall in measurable degree and with some approximation to justice be divided with the ordinary wage workers in the business." 

(Undated Speech, 1913)

Romeo:  I love that he uses the word “justice.” Justice is sometimes thought of as foreign to economics. In fact, it's not. Economic transactions involve the distribution of scarce resources, and there are strong moral arguments for and against certain actions.

Zooming out a little bit, there's an interesting dynamic here. In the late 19th century, people like Andrew Carnegie, Rockefeller, JP Morgan, and other financial and industrial titans of that age become interested in some level of profit sharing.

There’s two ways to understand this. The cynical way is that this is a tactic to suppress wages and unions. If we give employees some level of equity in the companies where they work, we can sort of say, "Look, you don't need to have a raise every year." Similarly, you could say the Founders were interested in making a lot of small landholders simply because they feared a downtrodden electorate would vote to take away all their wealth.

The other reading, which is more hopeful, is the Founders, and the early industrialists in the late 1800s, are both concerned with the health of the country. They are concerned with justice, as Roosevelt said.


Franklin D. Roosevelt

"In these great problems of government, I try not to forget that what really counts at the bottom of it all, is that the men and women willing to work can have a decent job to take care of themselves and their homes and their children…" 

(Radio Address, April 14, 1938)

Romeo:  The crux of Franklin Roosevelt’s ideas was that citizens should have the right to earn prosperity. After the depression, it’s interesting that in the revamped social contract in America, and even in documents like Universal Declaration of Human Rights, the idea of a right to a job starts to show up.

It can't just be a horrific job. It can't be, no bathroom breaks, horrible, repetitive, backbreaking labor for hours and hours. It's a clear moral vision of the economy.

The idea that employment should be part of the social contract - this is worth thinking about in the context of employee ownership. There’s a real embrace of the kind of moral dimension of work.


John F. Kennedy

"It is through [profit sharing] that the productivity of our workers and our industrial community will continue to increase, and our wages and our national income shall continue to rise…" 

(Speech, November 12, 1953)

Romeo:  When Kennedy made these remarks, Sears was one of the major brands in America. The department store chain had a very generous employee ownership program. If Amazon workers in 2018 had the same level of employee ownership that Sears workers did in the 1950s, every Amazon worker in 2018 would have had roughly $380,000 in equity.

Now that's already a little dated. Since 2018, Amazon stock has more than doubled, and the number of workers has more than doubled. So today, it’s reasonable to think about over a million workers, and these would be folks driving, delivering packages, working in warehouses. All those folks would have equity balances of close to a million dollars.

You extend that to the hundred largest companies in America, you really do start to have what looks like a robust middle class. So, I think the Kennedy view is plausible.


Gerald Ford

"[The Employee Retirement Income Security Act of 1974] makes a brighter future for almost all the men and women of our labor force." 

(Speech, September 2, 1974)

Romeo:  Ford made this a statement upon signing ERISA into law. Clearly, it was a big moment for employee ownership. But there were detractors.

In 1975, Paul Samuelson, an influential MIT economist, went on 60 Minutes to discuss employee ownership and the ideas of Lewis Kelso. Kelso was the forerunner of the modern ESOP. He was an ingenious engineer of financial instruments and legal instruments to enable capital ownership among working folks.

Samuelson dismissed the concept of employee ownership out of hand. And in case you hadn't gotten the point, he also said, "Wouldn’t it be nice also if lollipops grew on trees?"

So, it's pretty striking today. I mean, since ERISA in 1974, millions and millions of Americans have, in fact, owned some level of capital at the businesses where they work. So, the lollipops have appeared on the trees. We haven't had the revolution. 


Ronald Reagan

"In recent years, we have witnessed medium-sized and even some large corporations being purchased, in part or in whole, by their employees... The energy and vitality unleashed by this kind of People’s Capitalism... can serve this nation well." 

(Speech, August 3, 1987)

Romeo:  With Reagan, you see the same tension as the industrialists of the late 1800s and even with the Founders. Again, there's both cynical and hopeful interpretations. The cynical read with Reagan is that he sees employee ownership as a kind of beachhead that will let him then dismantle a lot of elements of the regulatory state.

The more hopeful read – and this I think takes us all the way to the present – is that it’s rare to find an issue today where people like Marco Rubio and Bernie Sanders might find some common ground. But employee ownership is one of those issues. This is a big tent issue. It's something that a lot of people can get behind and American politics requires coalition building.

So even if we don't agree about every one of the positions that someone else in our coalition has, we can support some of these same endeavors. And I think when you start to see some of the individual stories of folks whose lives have really been changed by ESOPs, who can afford to have a comfortable retirement, help a grandkid go to college, own a home – these positions are hard to argue with.

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