Toxic inequality? Take a clue from 'Hamilton'

Story highlights

  • Justin Talbot-Zorn, Jove Oliver: "Hamilton" producers will profit-share with cast
  • They say even Hamilton-Jefferson agreed on profit sharing as good for America's economy
  • They say Clinton, Sanders, 2012 GOP platform concur as well. Now, next president should direct policy toward it

Justin Talbot-Zorn is a Truman National Security Fellow and founder of Upaya Strategies, a consultancy that connects academic experts with policymakers. He served as Legislative Director to three Members of Congress. Jove Oliver is founder and president of Oliver Global, a communications consultancy. The opinions expressed in this commentary are solely those of the authors.

(CNN)Recently, the producers of the Broadway musical "Hamilton" announced plans to do something unprecedented: share profits from ticket sales with the actors in the show. This is fitting for a musical that has focused on social justice themes, and it's a helpful step at a time when even many successful Broadway actors face serious income insecurity.

Yet the move is also significant for a historical reason—one with an important lesson for policymakers in this presidential election year.
Justin Talbot-Zorn
Jove Oliver
As the musical makes clear, Alexander Hamilton and rival Thomas Jefferson couldn't stand each other. But looking back at a little-known episode in the early history of American policymaking reveals there was one big economic idea on which they strongly agreed: profit sharing and employee ownership.
When British warships destroyed vital New England fisheries, Hamilton and Jefferson agreed the new government should help rebuild the industry in part by lifting costly taxes for fishers -- but only under the condition that the owners of the fishing fleets offer profit-sharing or ownership shares to the boats' crews.
The principle was simple. Both Jefferson and Hamilton believed that for the country to succeed workers needed to have a stake in their industries and the overall economy's performance.
'Hamilton' creator freestyles with Obama
'Hamilton' creator freestyles with Obama

    JUST WATCHED

    'Hamilton' creator freestyles with Obama

MUST WATCH

'Hamilton' creator freestyles with Obama 01:21
Fast forward about 225 years, and Democrats and Republicans are locked in an all-encompassing ideological clash that would make the founders blush. Yet this principle—that workers should have a stake in ownership and a share of profits—continues to resonate with people on both sides of the partisan divide. It's a principle on which even Bernie Sanders and the mainstream GOP actually agree.
Over his long career in Congress, Bernie Sanders has been Capitol Hill's foremost advocate for policies to expand "employee ownership"— the idea that workers should receive shares in the companies they serve, above and beyond their regular compensation. For Sanders, the idea is straightforward: employee ownership and profit sharing strategies strengthen workers' bargaining positions and address the decoupling of productivity and wages.
Thomas Piketty, the global guru on inequality, has also spoken favorably of the idea as an antidote to declining economic mobility, explaining that "America used to be based on broad access to wealth and property."
Profit-sharing in the coffee industry
Thrive_00004509

    JUST WATCHED

    Profit-sharing in the coffee industry

MUST WATCH

Profit-sharing in the coffee industry 04:06
But this is hardly a socialist idea out of Vermont communes and the French ivory tower.
Ronald Reagan called employee ownership "a path that befits a free people." The 2012 GOP platform declared, "Republicans support employee ownership. We believe employee stock ownership plans create capitalists and expand the ownership of private property and are therefore the essence of a high-performing free enterprise economy." Conservatives have long seen these strategies as a road to "capitalism with more capitalists."
The new announcement by the producers of "Hamilton" is just the latest example of a longstanding tradition in the United States. Throughout the 19th century, worker-owned cooperatives were an important pillar of the economy. Companies today including Google, Ford, and Deloitte give their rank-and-file employees some access to capital through profit sharing and ownership programs on top of wages.
Burger King owners give back to employees
newday good burgers_00000601

    JUST WATCHED

    Burger King owners give back to employees

MUST WATCH

Burger King owners give back to employees 00:33
Businesses like Southwest Airlines and New Belgium Brewing are owned partially or fully by their workers through Employee Stock Ownership Plans (ESOPs)—essentially trusts that enable employees to acquire ownership without having to invest their own money. About 10 million employee-owners now work at firms comprising more than $800 billion in assets across the United States.
But this is still a small share of the overall economy.
Reagan worked in a bipartisan coalition with Sen. Russell Long, a Democrat from Louisiana, to expand the model by providing tax incentives encouraging financial services firms to help establish ESOPs. And while these incentives were eliminated as part of 1990s budget cuts, there's been a new movement afoot to accelerate the expansion of worker ownership.
In several recent Congresses, Bernie Sanders has joined with Republicans, including the former Reagan adviser Rep. Dana Rohrabacher, to sponsor legislation to boost ESOPs and employee ownership schemes. And recent Sanders' bills have focused on tax benefits for employee-owned firms, as well incentives for state and federal agencies to establish institutions like the successful Ohio Employee Ownership Center to expand the model.
With millions of baby-boomer business owners set to retire over the next decade, such technical assistance centers can help businesses plan for succession without yielding to the whims of investors who might move jobs offshore or change company culture. In the current Congress, 43 Republicans and 23 Democrats have joined forces to push for new related legislation to make it easier to establish ESOPs under subchapter S of the tax code.
Hillary Clinton, too, has signaled serious interest in this economic platform, unveiling a proposal for a new profit-sharing tax credit as part of campaign roll-out last summer.
Regardless of the election outcome, our next president should take a cue from the agreement that Hamilton and Jefferson designed and make some of the now-numerous existing federal tax credits—from research & development to capital investment to NASCAR and horse racing—conditional on some degree of worker ownership.
In the early days of U.S. history, Hamilton and Jefferson understood the importance of inclusive capitalism. In an age of perpetually divided government and widespread distrust of Wall Street, this time-tested approach could be the shape of things to come: a path for reversing toxic trends of concentrated wealth and declining social mobility—without big government redistribution.
It's striking that Hamilton and Jefferson could agree on an economic principle, but it's even more striking to see Bernie Sanders and the mainstream GOP find common ground.