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Codetermination: A way to rebalance the economy?
Codetermination is one of the most interesting ideas you've never heard of.
- Codetermination is the name for corporate governance systems that place workers on the executive board.
- It is very popular in Europe but has long lost its popularity in the United States.
- It offers a variety of benefits, but it would change many aspects of the American economy.
We are living in an age where the questioning of major institutions occurs regularly. Large numbers of Americans support changing to a new economic system, and even many who recommend keeping capitalism think it needs a bit of an overhaul.
One idea, common in Europe but less so in America, that does the latter is called codetermination and maintains capitalism and the private ownership of property while giving workers a say in how their workplaces are managed. We'll look at what it is, how it works, and the proposal to bring it to America.
What is codetermination?
Codetermination can be broadly defined as workers' participation in decision-making in business affairs. This can take many forms, from workers' councils that offer advice on how to improve productivity in exchange for bonuses to having workers' representatives on executive boards. The basic idea is to give workers a way to protect their interests and help advance the organization in a formalized way. It has the added benefit of treating workers as people rather than as objects for productivity.
How does it work in the places that have it?
Codetermination is much more common in Europe than in the United States. Of the European countries, Germany is far and away the most invested in the concept. In Germany, all companies over a certain size are required to have some kind of it, with worker and union representatives occupying anywhere from a third to half of the boards of some major firms.
Most Western European companies have two boards, one that manages the day to day affairs of the company and one that supervises them. In the European firms with codetermination, employee representatives are placed on the supervisory board. They vote, deliberate, and otherwise help to run the company in the same way as any other board member but with a different set of values than mere profit.
Other countries in Europe also have codetermination, though we won't look into them here. The Germans also have workers councils that introduce an element of democracy to the shop floor in addition to the boardroom that is also worth digging into.
In the United States, a different kind of codetermination was common during parts of the 20th century. The Scanlon plan, a type of codetermination, was designed in the United States and was widely adopted in many industries. Based on the idea that workers did better when they were participating, the plan creates committees of workers and management that propose solutions to problems and develop ideas to improve productivity. In many cases, improved productivity translates into bonuses.
The plan was designed for failing enterprises but was later adopted by successful ones when they realized its advantages. During WWII, many companies adopted this system as a way to improve both productivity and morale. Interest in this program tanked after the war ended, and today the idea is entirely foreign to most Americans.
What effect does this have?
Studies have shown that codetermined businesses operate with long-term thinking rather than pursuing short-term profit and see improvements to their productivity. Another study found that codetermination can keep income inequality low across an entire country, presumably by keeping executive pay at reasonable levels and putting that money either in the hands of workers or back into the company. Countries with more codetermination also see fewer strikes.
Another study that cast doubt on the productivity benefits did find the system increased the bargaining power of the workers.
It also isn't too horrible for the economy overall to have large firms run this way, given how the German economy is one of the best in Europe. Over the last few decades, their economy has grown a tiny bit faster than America's. Fears that codetermination would turn Germany into Tito's Yugoslavia as the 20th century came to a close have proven laughably inaccurate.
All of the famous Teutonic companies you've heard of have workers on the board of directors. All things considered, they do pretty well. This is in part because there is a culture of pragmatism on these boards. Just because the workers have voting rights doesn't mean that they immediately run the company into the ground; it seems like the people who work at a place understand how to run it.
Elizabeth Warren’s plan to bring it to America
As part of her marvelously wonky campaign for president, Elizabeth Warren has introduced a plan to bring Germanic codetermination to the United States in a big way.
Her plan for codetermination is part of her larger Accountable Capitalism Act bill. The portion that focuses on worker participation is ambitious. Her plan would require some corporations, a few thousand of the largest firms in the country, to allow workers to elect a full 40% of the membership of their executive boards.
The idea is popular, with a majority of voters in every single congressional district supporting more codetermination in American business.
The plan also would require corporations to consider other interest groups than just their shareholders in decision-making, regulate the sale of stocks earned as executive payment more tightly, require near consensus on corporate boards before they could make donations to political organizations, and make the largest corporations seek federal charters rather than state ones.
What might it look like if we had it here?
Codetermination in the United States would have a variety of effects.
As mentioned above, codetermination at even a few of the largest firms would likely improve the condition of American workers a great deal given the decline in their bargaining power over the last few decades. Even if this is the only benefit to workers to be expected, which is a dubious stance, we would expect some increases in pay as a result of this plan. The other mentioned factors can also be expected to increase employee pay.
We might also expect codetermined companies to be less inclined to ship jobs overseas or layoff workers to raise profits as those very workers would have a say on the executive board, a point that has been raised in studies on the subject.
There would also be a variety of effects relating to the sudden inclusion of a new interest group in the C-suites. Rather than just focusing on the needs of shareholders, large corporations would also have to include their worker's interests in decision-making. This could not only change the choices they make, but alter the way our economic decision-makers think of workers, stockholders, managers, and how they can and should interact with each other.
On the other hand, the changes would likely cause the stock market to fall a bit as stock values returned to the actual values of companies for a number of reasons.
This wouldn't be a problem for most people since 80 percent of the stock market is owned by a mere 10 percent of Americans. It will, however, still be a bit of a shock. One estimate suggests the fall would be as much as a 25 percent drop, although that estimate assumed the adoption of a plan much more extensive than Elizabeth Warren's, more like the current German system, and should be considered just outside the scope of probability.
Discussions about how the economy should be structured are taking place ever more frequently and are increasingly focusing on ideas that have long been on the fringes of American thought. Codetermination may soon return to the American workplace as a way to help alleviate our economic concerns. While it isn't a silver bullet that cures all societal aliments by any means, it could prove an effective method to rebalance the economic scales.
This storm rained electrons, shifted energy from the sun's rays to the magnetosphere, and went unnoticed for a long time.
- An international team of scientists has confirmed the existence of a "space hurricane" seven years ago.
- The storm formed in the magnetosphere above the North magnetic pole.
- The storm posed to risk to life on Earth, though it might have interfered with some electronics.
What do you call that kind of storm when it forms over the Arctic ocean?<iframe width="730" height="430" src="https://www.youtube.com/embed/8GqnzBJkWcw" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe><p> Many objects in space, like Earth, the Sun, most of the planets, and even some large moons, have magnetic fields. The area around these objects which is affected by these fields is known as the magnetosphere.</p><p>For us Earthlings, the magnetosphere is what protects us from the most intense cosmic radiation and keeps the solar wind from affecting our atmosphere. When charged particles interact with it, we see the aurora. Its fluctuations lead to changes in what is known as "space weather," which can impact electronics. </p><p>This "space hurricane," as the scientists are calling it, was formed by the interactions between Earth's magnetosphere and the <a href="https://en.wikipedia.org/wiki/Interplanetary_magnetic_field" target="_blank" rel="noopener noreferrer">interplanetary magnetic field,</a> the part of the sun's magnetosphere that goes out into the solar system. It took on the familiar shape of a cyclone as it followed magnetic fields. For example, the study's authors note that the numerous arms traced out the "footprints of the reconnected magnetic field lines." It rotated counter-clockwise with a speed of nearly 7,000 feet per second. The eye, of course, was still and <a href="https://www.sciencealert.com/for-the-first-time-a-plasma-hurricane-has-been-detected-in-space" target="_blank" rel="noopener noreferrer">calm</a>.</p><p>The storm, which was invisible to the naked eye, rained electrons and shifted energy from space into the ionosphere. It seems as though such a thing can only form under calm situations when large amounts of energy are moving between the solar wind and the upper <a href="https://www.reading.ac.uk/news-and-events/releases/PR854520.aspx" target="_blank">atmosphere</a>. These conditions were modeled by the scientists using 3-D <a href="https://www.nature.com/articles/s41467-021-21459-y#Sec10" target="_blank">imaging</a>.<br><br>Co-author Larry Lyons of UCLA explained the process of putting the data together to form the models to <a href="https://www.nbcnews.com/science/space/space-hurricane-rained-electrons-observed-first-time-rcna328" target="_blank">NBC</a>:<br><br>"We had various instruments measuring various things at different times, so it wasn't like we took a big picture and could see it. The really fun thing about this type of work is that we had to piece together bits of information and put together the whole picture."<br><br>He further mentioned that these findings were completely unexpected and that nobody that even theorized a thing like this could exist. <br></p><p>While this storm wasn't a threat to any life on Earth, a storm like this could have noticeable effects on space weather. This study suggests that this could have several effects, including "increased satellite drag, disturbances in High Frequency (HF) radio communications, and increased errors in over-the-horizon radar location, satellite navigation, and communication systems."</p><p>The authors <a href="https://www.nature.com/articles/s41467-021-21459-y#Sec8" target="_blank" rel="noopener noreferrer">speculate</a> that these "space hurricanes" could also exist in the magnetospheres of other planets.</p><p>Lead author Professor Qing-He Zhang of Shandong University discussed how these findings will influence our understanding of the magnetosphere and its changes with <a href="https://www.eurekalert.org/pub_releases/2021-03/uor-sho030221.php" target="_blank" rel="noopener noreferrer">EurekaAlert</a>:</p><p>"This study suggests that there are still existing local intense geomagnetic disturbance and energy depositions which is comparable to that during super storms. This will update our understanding of the solar wind-magnetosphere-ionosphere coupling process under extremely quiet geomagnetic conditions."</p>
Research reveals a new evolutionary feature that separates humans from other primates.
- Researchers find a new feature of human evolution.
- Humans have evolved to use less water per day than other primates.
- The nose is one of the factors that allows humans to be water efficient.
A model of water turnover for humans and chimpanzees who have similar fat free mass and body water pools.
Credit: Current Biology
Being skeptical isn't just about being contrarian. It's about asking the right questions of ourselves and others to gain understanding.
- It's not always easy to tell the difference between objective truth and what we believe to be true. Separating facts from opinions, according to skeptic Michael Shermer, theoretical physicist Lawrence Krauss, and others, requires research, self-reflection, and time.
- Recognizing your own biases and those of others, avoiding echo chambers, actively seeking out opposing voices, and asking smart, testable questions are a few of the ways that skepticism can be a useful tool for learning and growth.
- As Derren Brown points out, being "skeptical of skepticism" can also lead to interesting revelations and teach us new things about ourselves and our psychology.