The green wire in the power cord is connected to the chassis of your machine — meaning all major exposed metal parts. This is done so that if you have an insulation failure on a hot wire, the short-circuit current will flow harmlessly to ground through that green wire, without significantly raising the voltage on those metal parts. The fault current will quickly trip the circuit breaker and eliminate the hazard. That’s the function of the dedicated ground wire. You don’t need it on a double-insulated tool, but you do on a Shopsmith.
Now lets see what happens if you connect that green chassis-ground wire to the neutral conductor back to the electrical panel.
Case 1: No electrical faults. The voltage on the neutral wire stays very close to ground, and the machine works normally. The machine chassis may have a couple volts on it, relative to earth ground, but you’d need a voltmeter to detect it.
Case 2: Single-point open-circuit fault on the neutral conductor back to the electrical panel. (The neutral conductor develops a bad connection due to a loose screw, corrosion, etc.). Now there’s no return path for the current to your Mark 7. So when you turn on the power switch, there’s no current flow, the machine won’t run, and your return wire up goes to full line voltage. And since you have connected that return conductor to your green chassis-ground wire, your entire machine goes “hot”. When you touch the machine, YOU become the return path for the current, via the earth itself!
The reasons for code requirements can be pretty obscure, and the code itself makes no attempt to explain the reasoning. But in general, wiring to code means that a single-point electrical fault will cause neither fire hazards nor shock hazards.
