One of the great questions in economics is: who in an economy is best placed to bear risks? Osborne seems to think the answer is: workers. He's asking employees to give up their rights of unfair dismissal and redundancy in exchange for between £2000 and £50,000 of shares in their employer. This plan, he thinks, is "particularly suited to new businesses starting up; and small and medium sized firms."
Such companies, however, are risky. UK data show that, even in good times, around 10% of firms close (pdf) each year. And the risk is even greater for new firms. Alex Coad has estimated from US data that over 20% of new establishments (not quite the same as firms but close enough) die in their first year.
Workers who take up Osborne's offer - or who are forced to do so by employers - thus face a high risk not only of losing their jobs, but of seeing their shares become worthless too. This violates the first rule of investing: don't put all your eggs in one basket.
You might object that the loss of their shares is no problem, because it's the loss of something workers' don't have now.You'd be wrong. In giving up redundancy and dismissal rights, workers in stricken firms not only lose redundancy pay but also the right to a notice period during which they can look for work elsewhere.
So, what is the case for worker ownership?
One is that it can spur workers to work harder - maybe not hard enough to ensure that all firms survive, but sufficiently so to raise aggregate productivity.
The other argument is that ownership is necessary - but not sufficient - for control. And workers' control is a good way of reining in overconfident or rent-seeking bosses, and of mobilizing fragmentary and dispersed knowledge of complex organizations, All good Tories, having read Hayek, should appreciate that centralized planning is a bad idea.
Herein, however, lies a curious omission in Osborne's speech.Although he talked of "new rights of ownership" he did not mention that ownership should entail control. As bank shareholders will tell you, ownership without control is just a way of ensuring you'll be ripped off. Anyone would think Osborne wants workers to suffer a similar fate.