In yesterday's thread, there was some good discussion on corporate accountability, but I want to more explicitly emphasize that not only are alternatives to traditional private shareholder ownership possible, but that they regularly are used in our economy and in other countries' economies -- and that solving many of the current problems of corporate accountability could be solved by extending them. They range from direct government ownership to variants on government equity stakes to creation of non-profit governance structures to employee ownership.

Let's start with the varieties of government ownership:

Full Government Ownership:: Most of the education sector, many public hospitals and our medical insurance systems for the poor and elderly, most of our roads, our parks and a range of other services are run completely by government-run entities.   Many local governments own their public utilities, water systems and other infrastructure.  We should be looking at more sectors facing corporate accountability problems and asking whether those functions make sense under private ownership.   Are the tensions between profits and promoting affordably home ownership too great to be left to private profit decision-making?  If so, that's an argument for leaving Fannie Mae/Mac under public ownership for the long-term.  Many of the industries that key US industries compete against are owned by their governments, which often helps steer them towards public goals such as energy efficiency and stronger workers rights. 

Government Equity Stakes:  Short of complete government ownership, when the government takes a significant equity stake, they can enforce many public standards just by being a large or dominant shareholder.  That is part of the theory of a number of the bailouts moving forward currently, including the auto bailout, but the problem is that many are operating on short timelines of accountability, instead of using those equity stakes to assume long-term government involvement to promote the long-term changes many of our financial and industrial sectors need.    This is actually not radically new-- state-run pension funds such as CalPERS have been using their equity stakes for years to demand greater corporate accountability at board meetings for years.   One argument for the federal government maintaining ownership of some parts of the financial sector is that in turn will allow it to exert direct accountability on a far greater number of corporations through such partial equity stakes.

Non-Profit Ownership:  This is not direct government accountability, but the idea is to eliminate decision-making tied only to shareholder interests in favor of the interests of the public defined by the shape of a board of directors often reflecting various stakeholders in a community, region or country.   The federal government often allows some critical public functions to be performed by non-profits funded at least in part by the government as a way to concentrate accountability among specific stakeholders.  This occurs most prominently in health care but extends to a number of other social, political and artistic functions as well.  There are emerging economic examples as well-- one example are the network of what are called Community Development Banks and Community Venture Capital Funds, all designed to increase capital access in communities often starved of the financial capital needed to revive local businesses. The Social Investment Forum highlights the quiet revolution as the assets of community investment institutions have grown from $4 billion in 1995 to $19.6 billion in 2005, a growth of 388 percent in a decade.

Employee Ownership:  Not tremendously common in the United States, there are a number of firms owned by their employees, largely through the Employee Stock Ownership Plan system -- which has tended to give equity ownership without actual control to employees.  But there are some significant sized firms under such plans.  Probably, the favorite example of actually empowered employee ownership is the Mondragon system of interlocked cooperatives in Spain, which involves 96,000 employee-owners managing 27 billion in Euros ($37.8 billion in dollars) involving everything from automotive to machine tools to retail firms.  Part of the idea is that employees inherently have a longer time horizon, so are less likely to sacrifice the long-term viability of a firm for short-term profits and, as members of the community, have a stake in social responsibility that distant shareholders will not have. 

There are obviously variations on all these models, with different degrees of hybrids between them, but the broader point is that the current, sometimes sterile debate on "bailouts" should instead by talking about using those injections of public funds to discuss transformation of industries into new corporate forms with different public stakeholders, from the government itself to community stakeholders to employees, taking permanent positions on their boards to permanently replace private shareholders as the only ones with a direct governance role over management.  The question is not just what the short-term plan for economic recovery for firms should be but the longer-term plan for how we change their governance so that a similar mistake is not repeated in the future.