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Friday, December 16, 2011

Worker-Owners of America, Unite!

Gar Alperovitz chimes in on the re-evolutionary convergence of capitalism and socialism into a hybrid paradigm in a recent article in the NY TimesGar Alperovitz is a professor of political economy at the University of Maryland and a founder of the Democracy Collaborative, is the author of “America Beyond Capitalism.”

THE Occupy Wall Street protests have come and mostly gone, and whether they continue to have an impact or not, they have brought an astounding fact to the public’s attention: a mere 1 percent of Americans own just under half of the country’s financial assets and other investments. America, it would seem, is less equitable than ever, thanks to our no-holds-barred capitalist system.

But at another level, something different has been quietly brewing in recent decades: more and more Americans are involved in co-ops, worker-owned companies and other alternatives to the traditional capitalist model. We may, in fact, be moving toward a hybrid system, something different from both traditional capitalism and socialism, without anyone even noticing.

Some 130 million Americans, for example, now participate in the ownership of co-op businesses and credit unions. More than 13 million Americans have become worker-owners of more than 11,000 employee-owned companies, six million more than belong to private-sector unions.

And worker-owned companies make a difference. In Cleveland, for instance, an integrated group of worker-owned companies, supported in part by the purchasing power of large hospitals and universities, has taken the lead in local solar-panel installation, “green” institutional laundry services and a commercial hydroponic greenhouse capable of producing more than three million heads of lettuce a year.

Local and state governments are likewise changing the nature of American capitalism. Almost half the states manage venture capital efforts, taking partial ownership in new businesses. Calpers, California’s public pension authority, helps finance local development projects; in Alaska, state oil revenues provide each resident with dividends from public investment strategies as a matter of right; in Alabama, public pension investing has long focused on state economic development.

Moreover, this year some 14 states began to consider legislation to create public banks similar to the longstanding Bank of North Dakota; 15 more began to consider some form of single-payer or public-option health care plan.

Some of these developments, like rural co-ops and credit unions, have their origins in the New Deal era; some go back even further, to the Grange movement of the 1880s. The most widespread form of worker ownership stems from 1970s legislation that provided tax benefits to owners of small businesses who sold to their employees when they retired. Reagan-era domestic-spending cuts spurred nonprofits to form social enterprises that used profits to help finance their missions.

Recently, growing economic pain has provided a further catalyst. The Cleveland cooperatives are an answer to urban decay that traditional job training, small-business and other development strategies simply do not touch. They also build on a 30-year history of Ohio employee-ownership experiments traceable to the collapse of the steel industry in the 1970s and ’80s.

Further policy changes are likely. In Indiana, the Republican state treasurer, Richard Mourdock, is using state deposits to lower interest costs to employee-owned companies, a precedent others states could easily follow. Senator Sherrod Brown, Democrat of Ohio, is developing legislation to support worker-owned strategies like that of Cleveland in other cities. And several policy analysts have proposed expanding existing government “set aside” procurement programs for small businesses to include co-ops and other democratized enterprises.

If such cooperative efforts continue to increase in number, scale and sophistication, they may suggest the outlines, however tentative, of something very different from both traditional, corporate-dominated capitalism and traditional socialism.

It’s easy to overestimate the possibilities of a new system. These efforts are minor compared with the power of Wall Street banks and the other giants of the American economy. On the other hand, it is precisely these institutions that have created enormous economic problems and fueled public anger.

During the populist and progressive eras, a decades-long buildup of public anger led to major policy shifts, many of which simply took existing ideas from local and state efforts to the national stage. Furthermore, we have already seen how, in moments of crisis, the nationalization of auto giants like General Motors and Chrysler can suddenly become a reality. When the next financial breakdown occurs, huge injections of public money may well lead to de facto takeovers of major banks.

And while the American public has long supported the capitalist model, that, too, may be changing. In 2009 a Rasmussen poll reported that Americans under 30 years old were “essentially evenly divided” as to whether they preferred “capitalism” or “socialism.”

A long era of economic stagnation could well lead to a profound national debate about an America that is dominated neither by giant corporations nor by socialist bureaucrats. It would be a fitting next direction for a troubled nation that has long styled itself as of, by and for the people.

Wednesday, December 7, 2011

Apocalypse Tao: Austerity Hits the Export Economies

Agence France-Presse, via MSN News, calls our attention to the typically under-stated way in which the 2nd trumpeter plays his solo*:

Ni hao ma, beeyatch?
Glossa McGonagalica:
*What--you weren't thinking you could run an export economy under an austerity-induced global demand slump, were you?

Friday, December 2, 2011

The Gift that (We) Keep(s) on Giving: Through January 2013

"Demand a property tax on idle wealth.  Demand it NOW."--Liam McGonagle

"Seriously, do you expect a better opportunity to extract concessions from your enemies than when they lay begging, bleeding at your feet?"--Liam McGonagle

In case you were in the washroom when 'Jersey Shore' was interrupted with this late-breaking newstory:  Ben Bernancke just committed the U.S. to provide the European Central Bank ("ECB") with an unlimited line of credit.

That's right, a brand new bailout.  Structurally along the lines that Business Insider had warned us about in September, but much more ambitious; that article had postulated a trifling $1 trillion, not the bottomless pit we're actually being presented with. 

The basic deal is that we hand dollars over to the ECB in exchange for Euros, the value of which, has become highly dubious to say the least.  The ECB will in turn invest those dollars in large corporate banks to bolster balance sheets they themselves ruined through reckless underwriting practices and constant pressures for tax holidays and austerity measures.

Boun Natale e felice anni nouvi, Mario!
This is being billed as a stopgap measure to compensate for the fact that the genius architects of the Eurozone couldn't be bothered to implement a fiscal coordination authority in their new currency.  Must have seemed reasonable at the time.  We'd seen the end of history, after all.  Just like American civil liberties after 9/11, all the rules had changed.  The new era of seemlessly integrated global markets had pushed the capitalism's cycle of inevitable liquidity crises into the dustbin of history, right?

But is it really stopgap?  While similarly available currency swap loans had been available for some time previous, the duration of the current arrangement (i.e., a 50% reduction in the interest rate) is through January 2013, and is unlimited in amount.  Meaning that the committment is bounded in no way by the current supply of U.S. dollars.  So, at least theoretically, the U.S. will end up printing the dollars it will be obligated to provide incompetent European bankers.

When the implications of this development had finally settled in, and I'd had a chance to change into a clean pair of trousers and shower up a bit, I settled to thinking.  Two paradoxically conflicting corollaries floated to the surface:

1.  Nobody, I mean NOBODY, seems to have learned the lesson of the previous bailout regimes or Quantitative Easing programmes, namely that the size of the money supply in-and-of-itself is of distant, secondary importance to the circulation of currency.  Or, to put it in layman's language:  BANKERS DON'T DRIVE THE ECONOMY, CONSUMERS DO.

2.  The bizarre occurence of one nation printing money to manage the fiscal problems of another demonstrates exactly the sort of international commitment and cooperation that would be necessary to curb the irresponsible corporate leeching that led to these problems in the first place.  You know what I'm talking about, that old mantra of the defeatist traitor:  "But if we try to regulate corporations effectively, they'll just pull of stakes and move the show overseas!" 

As this incident suggests, it is effective government that provides the necessary stability for corporations to exist.  If so-called "populist" Tea Baggers in the House had the brains to realise this, they'd take this opportunity to make corporate elites pay their fair share of the burden:  i.e., more historically reasonable income tax rates and a tax on idle wealth.  Seriously, do you expect a better opportunity to extract concessions from your enemies than when they lay begging, bleeding at your feet?

Sadly, neither of these realizations seems likely to amount to much.  This is the era of greasy hacks like Newt Gingrich are seen as "transformational leaders" [1] and the worthless empty suit Obama tries to slide turds like this past us whilst simultaneously telling the American people that their "moment is NOW".  To date, the most vigorous response I've seen on this issue has been Ron Paul, condemning the Fed for taking this action unilaterally

Which, quite frankly, whilst being a step in the right direction, is nowhere good enough.  Paul was asleep at the wheel on this issue in September, wasting our time with penny-ante Solyndra b*llsh*t.  And nowhere do I see him calling for greater international government cooperation to curb the unaccountable multinational banks who are the primary beneficiaries of these abuses.  No mention anywhere of any increased corporate oversight, or fair transaction or property tax on the parasitic financial sector that destroys 80 cents in GDP out of every $1 that we give them.  Overall, even after grading on a curve, I just can't give Paul any grade higher than a "D-".  Try harder.

[1] Newt's constant use of the word "transformational" is equal parts insult, comedy and tragedy.  There's one reason that dried up old carpet-bagging whore never got "born again" into the Evangelical movement he so lustily courts on the campaign trail:  He'd leave a toxic oil slick in the baptismal pool.  The only thing Gingrish ever transformed is my dinner into vomit.