Making A New Economy: Getting Cooperative (Demo)

On March 16, 2013, David Morgan writes on Truthout:

A new economy is coming. While Wall Street banks are on a trend of corporate mergers and acquisitions, Main Street businesses are generating community wealth while undergoing a transition of their own. Traditional companies are becoming worker cooperatives, both to sustain during tough economic times and because years of success have enabled these companies to reward their workers. State and local governments are beginning to get wise to this trend, too, adding legislative influence to an already vibrant movement.

As one  of the five states that offer worker cooperatives an official business identity, Massachusetts leads the way in supporting worker cooperatives. Legislation is currently on the table that would formalize and clarify the transition process for companies looking to become worker-owned. The new laws would require business owners to notify their workers when they intend to sell the company, making it clear to employees that they are eligible to purchase or bid on the company. It would also give the employees the right of first refusal.

The cooperative movement enjoys growing acceptance in the business community, aided by visionary political leadership that recognizes the value of community resilience. A crucial part of the co-op movement is how it integrates with our communities; each new co-op makes the economy more accountable to the people who live on Main Street, and has the power to change how we will build a new economy.

Cooperatives put decision-making power in the employees’ or members’ hands and can keep a local economy going in tough times, and create stable jobs that are far less likely to disappear in times of crisis.

Members finance the cooperative through different methods: 1) by a direct contribution through a membership fee or purchase of stock; 2) by an agreement to withhold a portion of net earnings (profit); or 3) by assessments based on units of product sold or purchased.

A properly designed Employee Stock Ownership Plan (ESOP) is is an employee-owner financing mechanism that provides a corporation’s workforce with an ownership interest in the company. In an ESOP, companies provide their employees with stock ownership financed at no cost to the employees.

Other cooperative-type schemes include Consumer Stock Ownership Plan financing, which can simultaneously build the ownership into the consumers of monopolies such as telecommunications, water and power companies, mass-transit, and even cable and satellite television, who are the source of all their funding, and dividends paid out to the consumer owners would become an offset to their utility bills.

For-profit Citizens Land Banks/Cooperatives/Corporations organized for large-scale local land and infrastructural development and Homeowners Equity Corporations (HEC) for turning renters into owners are still other actionable ideas. HECs would obtain acquisition loans from commercial banks to purchase distressed properties at the current market value, which in turn would discount the loans at the local Federal Reserve at a rate reflecting transaction costs and a revised risk premium. The homes could then be leased at a realistic market rate to their former owners or new tenants. The tenant would earn shares in the HEC as lease payments were made, sufficient to cover debt service, maintenance, and taxes. When the acquisition loan for a particular property was fully paid, the tenant could exchange his or her HEC shares for title, or continue as a tenant/shareholder at a reduced lease payment, sufficient to cover maintenance and property taxes.

Through such economic democratization reforms, economic growth would be freed from the slavery of past savings, while creating a domestic source of new asset-backed, interest-free money and expanded bank credit to finance new capital formation repayable out of future savings (earnings).

Broadened private ownership and thus economic control is the path to greater prosperity, opportunity and economic justice, and should be the GOAL for America.

President Obama should convene a national discussion using the national media and social media, and our educational institutions, to open up a discussion on EVERY CITIZEN AN OWNER opportunity. He needs to educate at this time because academia, the media, and our so-called leaders are not addressing how people make money and the significance of OWNING income-producing physical productive capital assets. He needs to get people to understand that without system reform, as with today, in the FUTURE, we will continue to experience the exponential disassociation of production and consumption, which is the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being. This is a crucial understanding because at present for the 99 percent of the nation a JOB is the ONLY source of income to support themselves and their families.

Providing a way of legitimately getting productive capital ownership into the hands of the people who now don’t have it is the solution to America’s economic decline in wealth and income inequality, which will result in double-digit economic growth and cause EVERY American’s income to significantly grow, providing the means to support themselves and their families with an affluent lifestyle, and provide the necessary tax base to gradually pay off American debts. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.

Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm

http://truth-out.org/opinion/item/15001-making-a-new-economy-getting-cooperative