economics

Breaking Good

In today’s economically class-cleaved America, ideological resistance continues unabated to the deployment of government as a force for good especially in contentious change scenarios such as solving growing wealth and opportunity divides and the future of organized Labor (to name just two). Too often, progress is facilitated mainly through the prism of trickle-down tax code set asides to inspire transformational behavior which doesn’t materialize to the desired extent.

This disconnect between theory and practice leaves out working class populations most needing more direct inclusion to uplift the starkly narrowing middle class consumer base that is threatening the end of commonly understood consumption-driven capitalism. As a result, there may be a small opening for policy innovation starting with the tax code (“Changing the tax code could help curb inequality,” Lawrence Summers, The Washington Post). (more…)

Rebuilding the Yellow Brick Road

A new worker-ownership evolution-revolution featuring more virtuous capitalism communities of practice is demonstrating that doing well can realistically and profitably be based on doing good. This brave new economic world is emerging from green-shoot, “made in America” antidotes to structural unemployment and income inequality, sprouting ubiquitously among increasing absentee-owner-plagued urban and rural geographies. Hybrid home, land, and workplace sovereignty-recuperation models through local equity enterprises are building a “new green economy” equation, where labor seeks to operate in a permanent seller’s market as does domestic energy sourcing with renewables and distributed generation serving as means to better, more sustaining, stakeholder-centric ends.

Societal benefits from this approach are inclusive and sustaining. Comparative labor advantages are sourced locally, stakeholders equate to shareholders, and profits recycle to the businesses and communities that produce them. Local labor regains its natural place-based sovereignty in regards to its relationship with local and exterritorial capital which, while necessary and hopefully sufficient, is subordinated to the needs of the working class people and communities it finances instead of the reverse. Under this approach, solidarity as a founding American immigrant-inspiring and hosting community principle so closely aligned with freedom and daily liberties is reborn, rewired, and reused. (more…)

Public/Private Sector Ownership Proposal (P2SOP)

A new socio-political populist movement is sweeping America in reaction to the 2008 financial tsunami of deregulated, greed-based causes and massive wealth transfer effects or receipts to the financial one-percent. Based purely on the numbers seen to date, this movement is and will be composed of rising and current Millennials and the “Net Generation” or “Generation Edge”, immigrants and minorities, plus any white person with a progressive conscience. Converging as a new coalition of the socially and technologically willing, these voters (unless effectively wholesale disenfranchised) will provide a national elections cycle majority for decades as America becomes a majority minority country even though some geographical revisionist and recidivist pockets will persist (such as the Mason Dixon healthcare divide) based on political gerrymandering and subtext political culture.

Represented in numerous cross-pollinating private and nonprofit sector organizations across the country, this movement reacts to no-way-out diminishing expectations and desperation. Practitioners are studying and forming various hybrid, virtuous cycle, cooperative and collaborative capitalism models that honor individual initiative in the context of broad-based and transparent stakeholder ownership centered in “local living economies.” (more…)

We Need More Employee-Owned Businesses | U.S. News

By David Brodwin

Worker-owned businesses are on the rise. The number of worker-owned business in the U.S. is growing robustly, around 6 percent per year, and these businesses now account for about 12 percent of the private sector workforce. Yet, worker-owned business are frequently disparaged as “not quite capitalism.” Skeptics repeat the cliché that worker-owners bog down seeking consensus on the most minor points.

The skeptics should keep in mind that some the world’s most respected business organizations are in fact, owned entirely by their staff. It’s true for top tier law firms and accounting firms. It’s true for leading management consultants like McKinsey. And top investment banks like Goldman Sachs were partnerships until relatively recently in their history.

Members of worker-owned co-ops may not think of their businesses as having anything in common with top-tier professional services firms, but there are several important similarities between the two structures:

In both cases, the partners (or employee-owners) have a vote in electing the managing partner or president.
In both cases, the managing partner or president must exchange information extensively with other partners or owners, in order to maintain support and buy-in to the firm’s plans.
In both cases, compensation is shared among the partners or owners. This keeps incentives aligned.
In both cases, compensation is variable, based on a combination of individual and overall performance. This makes the firm more robust, since in tough times it has less of a payroll to meet.
In both cases, there are clear-cut rules for how a person newly entering the firm can become a partner or owners. This promotes a meritocratic culture that rewards performance and discourages cronyism.

Because of these characteristics, worker-owned businesses were, on average, better at maintaining their fiscal health during the last recession.

Read the whole article via usnews.com.

Time to Make Job Creation a Team Sport | Huffington Post

By Frank Islam and Ed Crego

The American jobs machine is broken. To fix this, we need to bring more cooperation to capitalism and make it a team sport.

In our previous two blogs we looked at the condition of labor and workers in the United States and recommended worker cooperatives as a means to address that condition. In our final blog in this series, we explore why this is an essential action at this point in time and what cooperatives of all types can bring to the table.

America has always prided itself on rugged individualism and the benefits of the free market system — as well it should for the contributions that many individual entrepreneurs and capitalism have made to advance the American dream over the past half century or so. Times have changed.

Now, we live in an era when self-centered individuals and extreme capitalism are extracting rather than adding value for society. As a result, the American dream is at risk for the vast majority of workers.

Stagnant wages, high unemployment and increasing income inequality have been the standard bill of fare for workers since the end of the Great Recession and the beginning of the ever-so sluggish recovery…

“It used to be,” as Jia Lynn Yang points out in a masterful article for The Washington Post, “a given that the interest of corporations and communities such as Endicott (birthplace of IBM) were closely aligned. But no more. Across the United States as companies continue posting record profits, workers face high unemployment and stagnant wages.

Driving this change is a deep-seated belief that took hold in corporate America a few decades ago and has come to define today’s economy — that a company’s primary purpose is to maximize shareholder value.”

Ms. Yang examines this transformation in detail in her article and traces its origin to Milton Friedman and the “Chicago school” of free market economists. We don’t know if the University of Chicago economists deserve the credit — or blame — for this change.

We do know that it used to be that workers bled IBM blue, John Deere green, or International Harvester red. Today, workers are “free agents” and disposable — they just bleed.

The question becomes what do you do to stop the bleeding? We don’t expect most large corporations to grow a conscience. We know that many small businesses can’t get loans or credit. We know that government at all levels is shedding jobs rather than creating them.

So, we need to turn elsewhere. One of the primary answers, as we proposed in our previous post, is for workers to take matters in their own hands by forming worker cooperatives and becoming business owners. In that post, we featured the Mondragon Corporation from Spain, the world’s largest industrial, worker-owned and run cooperative with more than 80,000 employees world-wide and revenue in excess of $14 billion euros.

Cooperatives may sound like an un-American or unrealistic proposal or solution. Nothing could be further from the truth. They are as American as mom and apple pie…

Read the entire article via The Huffington Post.

The Reading Revolution

The debate over who lost Detroit and how to fix it rages on while Politico reports in “Break-up-the-big-banks fever hits the states” that legislators from “at least 18 states have introduced resolutions this year calling on Congress to split up banking giants by putting back in place a wall between commercial banking, taking deposits and making loans, and investment banking, the world of traders and deal-makers.” It turns out that quarantining the banksters and salvaging our cities have a lot in common in an America that currently ranks below Zimbabwe in global income inequality and social mobility.

The key issue facing America’s liposucked cities is how to monetize assets without giving up public sector control. (more…)

Our Broken Social Contract | The New York Times

By Thomas B. Edsall

Many Americans think that their country has lost its way. But when they try to make sense of what’s happening, they disagree about whether the problem is essentially economic or whether it stems from cultural and moral decay.

Charles Murray, the provocative author of “Coming Apart” and “The Bell Curve,” argues that the cultural insurgencies of the 1960s yanked crucial underpinnings out from the social order and undermined traditional norms of self-restraint, responsibility, family, faith and country. Murray’s latest portrayal of America’s social deterioration focuses on the long-term impact of these insurgencies, notably on a typical, though fictional, working-class community he calls Fishtown. Fishtown is made up of whites who “have no academic degree higher than a high school diploma. If they work, their job must be in a blue-collar, service, or low-level white-collar occupation.”

Murray continues:

Now let us return to the relationship of Fishtown’s decline with America’s civic culture. The decline of industriousness among Fishtown males strikes at the heart of the signature of America’s civic culture — the spirit of enterprise, stick-to-it-iveness, and hard work to make a better life for oneself and one’s children. The divergence in marriage and the rise of single-parent homes has cascading effects. The webs of civic engagement in an ordinary community are spun largely by parents who are trying to foster the right environment for their children — lobbying the city council to install four-way stop signs at an intersection where children play, coaching the Little League teams, using the P.T.A. to improve the neighborhood school. For that matter, many of the broader political issues in a town or small city are fought out because of their direct and indirect effects on the environment for raising children. Married fathers are a good source of labor for these tasks. Unmarried fathers are not. Nor can the void be filled by the moms. Single mothers who want to foster the right environment for their children are usually doing double duty already, trying to be the breadwinner and an attentive parent at the same time. Few single mothers have much time or energy to spare for community activities.

An eloquent description of American social dysfunction comes from my colleague David Brooks, writing about Edward Snowden, who leaked information on domestic surveillance. Brooks argues that Snowden is the product of an upbringing lacking “gently gradated authoritative structures: family, neighborhood, religious group, state, nation and world,” who thus became party to a

rising tide of distrust, the corrosive spread of cynicism, the fraying of the social fabric and the rise of people who are so individualistic in their outlook that they have no real understanding of how to knit others together and look after the common good.

A very different assessment of where and how America has lost its ethical and moral moorings comes from Alan Krueger, the chairman of President Obama’s Council of Economic Advisers. Krueger has argued in two recent appearances, at Oberlin College and more recently at the Rock and Roll Hall of Fame (of all places) that the uncritical worship of the free market in the 1980s allowed the nation’s corporate elite to abandon longstanding constraints in its treatment of labor, especially in shifting the rewards of rising productivity from employees to the owners of capital.

With the blessing of the new right, Krueger argues, corporate America has abandoned its commitment to the commonweal over the past three decades. It no longer honors norms of fairness and equality. To Krueger, it is in the economic sphere that American integrity has been eroded and its ideals corrupted.

At Oberlin, Krueger put it this way:

In considering reasons for the growing wage gap between the top and everyone else, economists have tended to shy away from considerations of fairness and instead focus on market forces, mainly technological change and globalization. But given the compelling evidence that considerations of fairness matter for wage setting, I would argue that we need to devote more attention to the erosion of the norms, institutions and practices that maintain fairness in the job market. We also need to focus on the policies that can lead to more widely shared – and stronger – economic growth. It is natural to expect that market forces such as globalization would weaken norms and institutions that support fairness in wage setting. Yet I would argue that the erosion of the institutions and practices that support fairness has gone beyond market forces.

As the point man for the Obama administration on economic policy, Krueger has become the leading opponent of those who believe that growing inequality and middle-class stagnation are the inevitable consequences of technological innovation and the disruptive force of globalization.

Read the whole op-ed at The New York Times.

Can co-ops remake America’s economy from the ground up? | Marketplace

Federal Reserve policymakers have generally relied on tweaking interest rates as a strategy for jump staring the economy. But in a country where wages adjusted for inflation have been stuck in place for almost a decade, some scholars think the economy needs a more aggressive overhaul.

Gar Alperovitz is a political economist and historian. His new book, called “What Then Must We Do: Straight Talk About the Next American Revolution”, details systemic changes for the economy. He says co-ops are key to the nation’s recovery.

“Most people don’t realize that changing the ownership of wealth means one person, one vote. That’s what a co-op is. 130 million Americans are already members of co-ops — they are all over the country and people just don’t notice them,” he says. “It’s a different very American, down-home way to begin looking at democratizing ownership, starting at the bottom and working up from the grassroots.”

Listen to the whole interview with Alperovitz at Marketplace.

CUNY Law Community Economic Development Clinic Partners with Mondragon Corporation on Union Coops | CUNY School of Law

New York, NY – The City University of New York School of Law’s Community Economic Development (CED) Clinic has launched a new partnership with the Mondragon Cooperatives, the largest worker-owned cooperative in the world.

Under the new partnership, the CED Clinic, in collaboration with Pennsylvania-based Regional Housing Legal Services, will help launch the Pittsburgh Clean & Green Laundry, an eco-friendly laundry based on Mondragon’s cooperative model. Pittsburgh Clean & Green aims to re-employ 100 primarily minority laundry workers, who were laid off when their Sodexho Corporation laundry closed. They will work in a new state-of-the-art facility in Pittsburgh’s Central District.

CUNY’s CED Clinic will provide legal support for a new model of unionized worker cooperatives—called “union coops”—recently launched by Mondragon, the United Steelworkers union (USW), and the Ohio Employment Ownership Center (OEOC).

“Union coops can create well-paying, democratically run workplaces in communities hard hit by the economic recession,” explains Carmen Huertas-Noble, associate professor and director of the CED Clinic. “The union component of the model provides front line worker-owners with the security of a collective bargaining agreement and leverages the organizational expertise and economic power of the labor movement.”

By partnering with Mondragon USA, the CED Clinic aims to become a national leader in the integration of cooperative and labor law and to help union coops like Pittsburgh Clean & Green Laundry get off the ground.

The CED Clinic will collaborate with Mondragon USA to:

  •  Develop the legal framework for the USW-Mondragon-OEOC union-coop model nationwide
  •  Support other ongoing union-coop projects following the USW-Mondragon-OEOC model
  •  Connect with key sources of U.S. financing, such as the National Cooperative Bank, foundations, advocacy groups, and public sector labor departments
  •  Contribute to union-coop project strategy and roll-out
  •  Ensure union-coop model legal standardization in both design and execution

“We are inspired by the news that CUNY Law’s CED Clinic will be working with us to develop the union coop model legal framework,” said Michael Peck, Mondragon’s North America Delegate. “Professor Huertas-Noble and CUNY Law students bring to this project a wealth of ‘hands-on’ experience and a deep commitment to community service and economic justice.”

Read the press release from CUNY School of Law.

Can Co-ops Save Unions? | In These Times

Labor-cooperative partnerships may herald a new strategy for labor–if they can get off the ground.
BY REBECCA BURNS

What has 18 owners, no bosses and high hopes for fostering workplace democracy in America? New Era Windows LLC, a worker-owned cooperative formed last year by members of United Electrical Workers (UE) Local 1110.

After occupying their factory to save their jobs—twice—workers at a closing Chicago windows plant decided last year to try a new tack: running the business themselves. They purchased equipment from their former bosses and are now setting up a new factory they believe will create good jobs in the city’s depressed economy.

New Era is one of a growing number of union-backed cooperatives nationwide that could herald a new strategy for labor. In his survey of existing cooperatives, economist Gar Alperovitz has calculated that the number of workers in partly or wholly employee-owned companies now exceeds those who belong to private-sector unions—a statistic that speaks both to the perilous state of the labor movement and the promise of reviving it through new structures.

In the case of New Era, the decision to form a cooperative was the result of a long battle with management. In 2008, upon being told that their factory would be closed and they would be fired immediately without severance pay, workers staged a six-day occupation of the Republic Windows and Doors factory and emerged victorious. Their stand, coming at the height of the financial crisis, was celebrated nationwide. It also emboldened them to occupy once again in February 2012, when new owner Serious Energy announced that it, too, would be closing the plant. The workers’ journey from occupiers to owners was paved in part by UE’s tradition of militancy, which some progressives hoped would inspire other unions fighting mass layoffs.

The labor movement at large hasn’t reprised the 1930s-era tactic of occupying factories in order to regain a foothold in existing workplaces. But a growing number of unions, led by the United Steelworkers (USW), are exploring creation of new worker-owned cooperatives as a strategy for contending with the offshoring of U.S. jobs. Like the workers who formed New Era Windows, USW began experimenting with cooperatives partly out of necessity—as job losses mounted amidst the financial crisis, “there seemed to be an opening to consider how we might create a better model, because everything was falling apart,” says Rob Witherell, USW’s cooperative strategist. USW decided to partner with Mondragon, Spain’s famous group of cooperatives, to create a template for union co-ops.

Now, USW is helping launch several pilot projects, including a green laundry in Pittsburgh that could replace some of the 100-plus jobs lost when an industrial laundry in the area closed several years ago. Members of United Food and Commercial Workers are currently employed in an urban farming cooperative in Cincinnati, with more projects planned under the behest of the Cincinnati Union Cooperative Initiative.

Read the whole article from In These Times.

Learn more about the union co-op model from the United Steelworkers.

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