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Emerald Property Rights, #4

Another of the benefits in a 'property rights' approach to economics is in the management of a corporate organization.

Historically we have represented the interests of individual laborers through collective legal representation - and there is nothing fundamentally wrong with that. Of course it can also be divisive and counter-productive as the distribution of profits needs to be 'argued'.

The most common left wing answer to this is employee ownership, and this can work, but it is also not without problems - for one, how do you make the tough personnel decisions?

A mix though of salary and ownership has many, many benefits.

Perhaps the biggest benefit has nothing to do with 'control' issues, but rather in keeping fully staffed during a downturn. Consider, for example, a compensation package which includes roughly one third based solely on profitability, ownership.

If profit disappears this is an automatic reduction in wage payroll of 1/3, meaning no one need lose their job through a normal business cycle.

Of course, downturns can also be an excuse to trim an organization as much as it is an opportunity to buy stock, real estate, and other assets.

But, really, we shouldn't need excuses to get rid of deadwood. We do need to make sure that the right decisions are made - with both employees and management. This, perhaps, is where local and federal shares of corporations should come into play - when there is a stalemate.

Of course, merit based pay, and promotion, is also a factor. Personally, I think it all fits well into the 'equation', as I've proposed here.


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