Fair Exchange is the brainchild of Deborah Groban Olson, a well-respected attorney, specializing in Employee Stock Ownership Plans and labor law. The idea, in its essence, is simple: “If government provides a business subsidy (or incentive) in a form that basically constitutes equity capital, the public sector and the citizenry it represents become shareholders in the firm.” Or as she phrases it: “Fair Exchange equals providing citizens with equity managed by a community trust, in return for government subsidies or tax breaks to businesses.”
A recent article on the topic by Ms. Olson was published in the Cornell Journal of Law and Public Policy (Volume 15, Number 2, Spring 2006). In more than 120 pages of text, she covers the nuts-and-bolts in great detail. A legion of topics, which might seem tangential, but are central to her vision of reform are addressed, such as:
- Historical precedents – Homestead Act, Tennessee Valley Authority, the 1971 Lockheed Loan Guarantee, Conrail and investments in the railroads, the 1979 Chrysler bail-out, the Savings and Loan fiasco, the airplane stabilization plan of 2001, Alaska Permanent Fund, Alberta Heritage Fund, Canadian Labor Sponsored Funds, Community Land Trusts, etc.
- International and domestic laws that might conflict
- Model federal and state legislation for Fair Exchange
- How the community trusts could work and foster local development
- Improvements in corporate social responsibility that might be encouraged
- And many other issues.
Thus, “Fair Exchange is both a general concept and a specific strategy aimed at solving a major structural problem – the mobility of capital and the immobility of communities and labor. “ By giving communities the same rights as other investors, Fair Exchange means to level the playing field between corporations and states and localities.
Fair Exchange is simple, complex, and wild. Simple in the sense that the basic concept is easily understandable and quite compelling. Complex in its execution (especially Olson’s version). Wild, given our conservative times.
But could this be the answer to our prayers, regarding curbing and making more accountable today’s competition for capital? It might.
I think, for example, it needs to be simplified and that we should develop a spectrum of models to research and test – running the gamut from having voting rights and dividends to using these shares to capitalize new financing vehicles for local development.
For more information: go to http://esoplaw.com and http://cog.kentstate.edu