RE: What Do Stock Market BubblesTell Us?

[Clifford Poirot <cpoirot@xxxxxxxxxxx>]

This is an interesting proposal. Of course, such legislation would have to
be very specifically worded to avoid companies misusing employee equity, as
retirement funds are sometimes abused currently.

The other issue is how employees would respond to having part of their
compensation at risk to market fluctuations. At present, there is already
often conflict between the interests of rank and file stock holders vs, the
interest of upper level management. Since upper level management controls
the proxy process and often, the major portion of shares, upper level
management tends to always win on proxy votes.

> -----Original Message-----
> From:	Gunnar Tomasson [SMTP:tomasson@xxxxxxxx]
> Sent:	Thursday, May 04, 2000 7:18 AM
> To:	POST KEYNESIAN THOUGHT
> Subject:	Fw: What Do Stock Market BubblesTell Us?
>
> Further to an earlier posting, my following e-mail message of today's date
> may be of interest to PKT Forum participants:
>
> ************
>
> 1.  A Stock Market Bubble (SMB) is reality mocking mainstream and
> monetarist teaching that Money is a Factor of Production.
>
> 2.  Now - as before - reality will not be denied.
>
> 3.  As before, when the current SMB is history, two options will present
> themselves:
>
> (i)  Make believe that the next time, for sure, reality will be denied; or
>
> (ii)  Adjust the economy's legal, financial, and fiscal structure to
> accommodate reality.
>
> In a lecture given in Iceland in 1982, I suggested with respect to (ii)
> that longer-term financial stability would be served by partial payment of
> employee compensation in the form of direct equity ownership in the
> businesses that employed them.
>
> Over time, and with appropriate supporting structural reforms, this form
> of personal "saving" would crowd out the fly-by-night "capital" which
> "bubbled" - before "bursting" - the erstwhile Asian "tiger" economies and
> that of Russia before coming home to stoke the current SMB.
>
> Gunnar
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