Economic Update: Worker Co-Ops Rising

[Music] welcome friends to another edition of economic update a weekly program devoted to the economic dimensions of our lives jobs debts incomes our own and those of our children I'm your host Richard Wolff I want to begin today with a problem of the American capitalist system it is the capture by business of the government agencies that are supposed to regulate them the term in economics is called regulatory capture when an industry or an enterprise that's supposed to be supervised and controlled by the government usually because of past bad behavior by that industry or enterprise instead what happens is the company either bribes or donates to the campaign of or finds a way to capture and control the very regulation that was supposed to control it it's a serious problem in the United States bad or worse that in most other advanced industrial capitalist economies and I want to give you some dimensions of this problem because it is becoming more not less severe under the Trump administration I'm gonna begin with randoms and examples the cosmetics industry because cosmetics are something that people put on their body on their skin and do so literally every day it is something that in Europe and the European Union has been very concerned about what those chemicals that are in those products can do and therefore over recent years in the European Union they have banned or restricted 1,300 chemicals in the cosmetics industry by contrast the United States over the same period of time has outlawed or curbed 11 that's right 1,300 chemicals limited in Europe 11 Limited here think about well it led a Connecticut state senator last year to think about it he's a doctor but he also serves in the state Senate of that state his name is Alex Berg Stein and he proposed a law in Connecticut that the United States or at least the state of Connecticut would use the same standards in banning chemicals that are in existence in Europe just catch up with the Europeans when asked about his law he said that given the power of the chemical industry and the power of the cosmetics industry he didn't think his bill would likely pass but I thought it was an interesting piece of information here's another place where dyes that are basically chemicals are used in the production of cheese chocolates and juice there in Europe a lot of the chemicals are banned again because they have been found particularly the chemicals and artificial colors and preservatives - hyperactivity they are linked to hyperactivity in children and for that reason they were banned but not in the United States the most widely used herbicide plant killer in the United States is called ultra zine it has been banned in Europe since 2003 because it pollutes water supplies led-based paints you know about them led-based paints they were banned in much of Europe before the Second World War but it took the United States until 1978 to ban lead-based paints in this country why do I talk about this well once upon a time liberals socialists and others look to the government as a way to control to limit the damage that is done by enterprises for whom profit is the bottom bottom line and who don't care therefore about these other consequences but the problem is you can't go that way anymore because the government has been captured by those it is supposed to control it won't work that old play of giving the power to the government at least not until we have very different governments from those that we have had and more and more of which we have had in recent decades I want to turn next to the notion that the United States currently has a quote unquote great economy something that President Trump repeats and that a great many others seem to acknowledge well no less an authority than the International Monetary Fund of which the United States is a member gave a kind of report card an assessment of where the American economy is and they concluded it was not in great shape in the understatement for which the IMF is famous quote the benefits from the decade-long expansion of the American economy have not been widely shared okay plain English the rich got richer and the poor got nothing that's what happened over the last ten years and it by the way gives the lie to the old argument again of liberal people that somehow if you grow the economic pie if we have economic growth then everybody will benefit no the last ten years show us if at the same time that you grow the pie because indeed it grew you decrease the slice that's given to working people they're not better off and the reality is that even though the economic output of goods and services grew very very substantially in the last ten years the real incomes of average Americans barely budged at all all of the gain went to the rich at the top here's a list of what the IMF says are signs that the economic performance in the United States is not good I'm just going to read you some of their lists the impact of rising suicides and drug overdoses on falling life expectancy the United States has now a lower life expectancy than almost any of the other countries in the g7 or the list of major industrial capitalist country that's not a sign of economic well-being the actual adjustment in the median income of the United States over the last decade or so has been actually for the last 20 years has been 2.2 percent median income rise in real terms over that time the gross output of goods and services rose 23 percent so somebody's getting all that extra output but the median the average American isn't among the 40% poorest forty percent of the population the wealth of the that bottom forty percent is lower today than it was in 1983 that's not a report card of a great economy forty five million Americans live in poverty by the statistics on poverty kept by the United States government social mobility has collapsed in the United States back in forty years ago half of the young people at the same age as their parents were living better than those parents did today half of today's young Americans earn less than their parents did at a similar age I mean it's a real collapse and finally we have some of the worst outcomes of our educational system of any advanced industrial economy so whatever else you think about if you look in anything like a balanced way at our economy if you don't cherry-pick the statistics that make things look good and carefully avoid looking at those that don't if you don't do that kind of lopsided behavior you get much closer to the IMF's assessment than to mr. Trump's self-serving effort at re-election next year the next item I wanted to turn to is the ongoing crazy theater of the tariffs and trade wars propelled by mr. Trump and the Republicans around the world most notably against China and Mexico but also against Europe and many other parts of the world I want to explain what that is about and what it how it relates if you like to another blustery bullying behavior of the same president and the same Republican Party namely the effort to get the Federal Reserve in the United States to lower interest rates what's the connection well here's the problem everyone who follows capitalism knows it's a highly unstable system on average every four to seven years capitalism has a downturn people lose their jobs businesses go out of business production is cut back the government raises less taxes a catastrophe sometimes it's short and shallow of the times it's long and deep the one after 20 2008 has been long and deep so it's very present in everyone's mind well if the average recovery is four to seven years and we note that we're now nine to ten years since the crash happened in 2008 and 9 everybody who pays any attention knows we're due for another one and it could happen either later this year 2019 or even worse for mr. Trump next year running up to the election in November of 2020 he doesn't want that to happen because he assumes in my judgment correctly that if a big depression hits next year he can kiss re-election goodbye so what is he gonna do and the answer is he's gonna cut interest rates he's gonna put pressure on the Federal Reserve to cut interest rates so that businesses will borrow more money hopefully and people will borrow more money hopefully and they will buy things and he can at least push that recession which everyone knows is coming so it happens late enough in 2020 that it will not destroy his re-election he tried to get mr. Powell his own appointee as the head of the Federal Reserve to cut interest rates but mr. Powell doesn't want to do it because we've pumped so much money into this economy that if things really get going there's a risk of an inflation which is what he's supposed to do so he said no so mr. Trump got angry and yelled at him he did that again repeatedly but he can't get anywhere so he has a second he is gonna make it look like the world economy is gonna crash he's actually gonna propel the notion of a disaster and hope that the incoming disaster will convince the Federal Reserve to stave that off by lowering interest rates cuz nothing else will work so he has to hype they had aggressive attitude towards China he has to hype the aggressive attitude towards Mexico that involved slapping tariffs on them while he was over there pretending he was a king and queen with those folks in England the American business community didn't like what he was doing they let him know right away that those tyrus he was gonna hit Mexico with that might be good for your reelection but if you do that we're gonna be hurt and if we're hurt you can kiss your reelection goodbye and in 24 hours the tariffs against Mexico disappeared they were all ready to go they disappeared because mr. Trump realized whoa whoa this is not a way to get reelected this is a way to get defeated so that was the end of the story in Mexico and immediately he hyped up the aggressive attitude towards China again the same plan I will get a reelected if it looks like terrible economic crisis is coming because then the Federal Reserve will lower interest rates and then everybody hopefully will borrow and we will stave off we will delay this catastrophe from coming down on us here's the message global economic problems mrs. Lagarde Christine Lagarde who's the head of the International Monetary Fund has announced officially that her agency that's one most respected agencies in the world for this kind of economics her agency estimates that the loss to the world in economic wealth from the United States China trade war if it continues much longer will be in the neighborhood of four hundred and fifty five billion dollars that's half a trillion speakable loss that will be of course pushed on those who can afford it least we are watching the Republican Party and mr. Trump ready to destroy their sectors of a global economy to get themselves reelected and the only really interesting question is whether the rest of the American system the business community the Democratic Party the working class will sit by and watch this theater played out in the way that it has been and the risks being taken to pander to this politicians reelection hopes we've come to the end of the first half of this program again I want to remind you please sign up to be a Youtube supporter where you get informed of what's happening with this program and our activities you simply go to youtube and you slash democracy at work and you'll find this program make use of our websites where you can communicate to us follow what we do our DeWulf with two F's comm and democracy at work dot info and finally as always a heartfelt thanks to the patreon community join us there your support and encouragement through patreon is of enormous importance stay with us we'll be right back welcome back friends to the second half of economic update for today I am very pleased to welcome to our microphones and our cameras jaan juda he is the director of communications at the democracy collaborative some of you may remember God alperovitz with whom I've worked on and off over the years works at that and has developed that over the years John here is works at the research and development lab working on the democratization of the economy which is one of their major projects in addition to his work at the collaborative and working on models of worker Democratic control of the workplace John has practical experience 15 years working with a book shop and cafe and Baltimore Maryland known as red Emma's it's very well established very well known I've been there myself and so I thought John would be a good person to talk not only about the theory and the idea of worker coops but the practical realities of them so John welcome very much to the pro great to be here okay many Americans are interested at least a little bit in worker coops they kind of know that that exists but mostly it has had the reputation which I don't think is accidental that it's a little bit pie in the sky it's a little bit utopian it can't work very long or or not for more than three or four people so when I hear that and I try to explain no no it has much greater reality than that I get incredulous looks you've been working and I want to particularly ask you to talk about practical realities and the one I thought might be good place to start is that part in Italy Emilia Romagna which is an economy in which if I understand correctly roughly forty percent of the enterprises are worker coops been that way for decades prove that this is a viable way to organize business so tell us a little bit about it yeah so Emilia Romagna is fascinating and it's fascinating because it's not just one worker co-op right you can point to one worker co-op in the states here and there and people are like okay maybe it's not totally utopian but they still can't imagine how it fits together they can they can see the business but they can't see the economy you look at Emilia Romagna though and you see an economy in which one-third of the GDP of this region it's a small region maybe four million people but one third of the economy is generated out of cooperative business this is really really incredible and it's in cross different kinds of work yep across different kinds of work different kinds of cooperatives some worker cooperatives some consumer cooperatives some producer cooperatives but all really working together and held together in this really incredible ecosystem and that's the key thing right it's not a it's not a monolith it's not you know one great idea that just happened to be really really successful it's an ecosystem of innovation of mutual support of cooperative finance and all of these pieces fit together and you have a situation where if you're talking to somebody on the street you have a 1 in 20 per 1 in 20 chance of meeting somebody who's a worker owner and a worker co-op it's an incredible incredible cooperative density compared to the to the United States and is it reasonable to say that it is existent for so many years that obviously it meets a need it's something that the people there value it's something that they work to reproduce that if there are enemies to work on coops they have not been able to undo this cooperatively based economy yeah oh I definitely think so I mean you see that it has generated real results for the people of the region like higher wages it's one of the honestly it's one of the most prosperous parts of Italy in part because you've had this cooperative economic development strategy that brings together basically small and medium sized enterprises some cooperative we held some not Crawford if we held but all kind of tied together in a big network of innovation and that network of innovation produces you know high quality food products high quality ceramics products does exports cabinets across the world all sorts of really interesting small industries that together form really a network of prosperity for the region and that is I think you know something that people are really really attached to I think they've developed the policies to accelerate this right the government in that area supports them in other words the government provides benefits supports contracts to the worker co-op sector just the way it does to the capitalist sector and the economy yeah I think that's a very important issue because here in the United States for example when you talk about building up worker coops people tend to think well that can only happen if the government helps them as if there's something happen with you know and then I have to explain it because I do economic history that the history of capitalism is the history of endless efforts by every capitalist enterprise to get subsidies to get contract the state has been supporting capitalism all that the worker coops will ask is basically a level playing field of getting that kind of support for their alternative way of organizing business yeah and that's what's happening in emilia-romagna and it'll in more general way you have a number of interlocking policies around cooperative finance you have to take three percent of your net profits as a co-op and kick them basically kick them down to the next generation of cooperative entrepreneurs give them capital to help their business exactly exactly if you're unemployed your business folds in Italy there's something called the Marke oral law which allows you to take some of your unemployment benefits but also to access wider cooperative finance and take over your business run it as a cooperative do it better than the bosses who ran it into the ground so this is there's all sorts of policies like this favorable tax treatment things that allow cooperatives to self finance themselves and to keep money flowing within the co-operative economy so the coop the worker coops I assume have been working to get politicians political leadership's government agencies to give them that support in other words there's a kind of almost natural collaboration between the worker co-op and at least parts of the political structure to reinforce each other just the way capitalist businesses cultivated relationships with their political parties to get the support of the state and there's nothing that should prevent the worker co-op from basically doing that - yep and just like you know traditional businesses will have things like the Chamber of Commerce and things like that in the Italian situation you have very powerful cooperative Federation's that worker coops are part of depending on exactly where on the ideological spectrum they lie and these cooperative Federation's provide policy advocacy but they also provide technical assistance they provide financing support so they become powerful ways of banding together for the question so a politician not to push the point but a politician would not want to be viewed negatively by the association of worker coops because that would hurt his or her chances of reelection that said number would they have to respond to the worker co-op sector given that it's a third or more of the economy in their region they couldn't possibly ignore it or at least it would be that a politically yeah a warfare of some sort can you imagine a sector of the American economy comparable with let's say a third of the American economy at some point in the future replicating this story of Emilia among other words can it happen here oh I certainly think so I wouldn't be doing what I'm doing if it wasn't I didn't think in my heart of hearts that it was actually possible I don't know it's gonna be possible tomorrow but I certainly think we've seen tremendous tremendous growth and excitement in worker cooperative models I know personally I helped start Fred Emma's worker cooperative in Baltimore about fifteen years ago and when we started there was nothing we were idealistic radicals all right who had read about worker coops once or twice and gotten excited about the model there was no support there was no movement there was just a lot of people like us discovering that this was an economic alternative that made sense for us and our lives and the way we wanted to put our values into practice and then flash short fast forward to today you see a tremendous movement you see a National Federation that's you know getting much more sophisticated much more you know much more nuanced much more powerful in terms of the way it's engaging with policy you see national financing networks springing up that are creating grassroots financing to help worker coops help other worker coops you see all sorts of really interesting shifts in local economic development policy when we started back in Baltimore in 2004 it was you know we were from crazy town right nobody but they would look at us to me like you're or what now and tell us a little bit about reddamma tell us because that's a practical project you were involved from the beginning how has it developed give us a little sketch I think people be very good so it started as a radical bookstore on coffee house it started just with the goal of paying the rent you know the idea that we could create dignified work for the people who work there you know on a full-time basis was a little bit like outside of the horizons when we opened the doors but what we have found is that the model worked we found that people really got something out of being in control of their workplace right that sense of control over a piece of the economy that you have to interact with on a you know basically daily basis was valuable and we found that it was also valuable to create space in the community and it's grown today we've expanded to the second time there's about 30 people on the payroll how many started it I was about 12 so you going from 12 to 30 yeah and these are people who all have a more or less equal say in the decisions how to run the business how to develop how to move how to grow yep everybody and it's pretty standard in worker coops you have you don't make somebody know a worker owner the minute they walk in the door because you know sometimes you meet people and doesn't work out but once you've proven that you're somebody that is you know excited about the future of the business you become a worker owner you become a member of this cooperative and you become part of this democratic enterprise that's you know really quite different than a traditional business do people get paid the same amount do they get paid differently how does that work there's a small a small range I think you know there's a moral imperative in pulse to make everybody equal right like everybody gets the same salary in practice people want to see raises over time they want to feel like the longer they invest in the project that they get a little bit back so we've capped it at two-to-one in practice it's much much lower than that in terms of ratio and that is you know very very different from of course traditional businesses in the US where we see you know 350 to one things like that ratios between the lowest paid and the highest paid employees of course in some ways the most important thing is that's a democratic decision what that rate in other words it is decided democratically right whether everybody gets the same or there are differences and what those differences are how big they are when you get them in other words you really are you know that you're not in a regular business because you're in the process of having decisions over well everybody gets paid right what's your sense of America today as a society Trump the the chaos of the wars against China and Mexico and whether the movement for worker coops fits into all of that you know I think it fits into restoring a sense of control and I think that's what's driven a lot of the politics in the u.s. is people feeling like they're in freefall people feeling like the bottom has fallen out of the American dream and they've turned in many cases to very reactionary ways of feeling in control ways that are you know focused on hurting other people right locking them up criminalizing them building a wall caging the children yeah and I think what worker coops do and what other kinds of democratized economic formations can do is give people a different sense of being in control a sense that's grounded in solidarity that's grounded in participation that's grounded honestly in community in community as you know it actually is and that I think is really really important I think we we need that desperately in the United States and I think what you see in terms of people you know fawking to these kind of idea isn't getting incredibly excited about these ideas is because people are really they're really hungry for ways to feel that they are in control of their own economic life and not at the play of these forces that seem yeah that seem overwhelming last question that we'll have time for there's so many is there a generational issue in other words do you discover as you see people are flocking old people and young people or is there is there some identity of particular people that are responding you know I think it's interesting because I think you see young people and all people relating to this in different ways but equally excited we actually at the democracy collaborative did some polling around worker ownership and we found that it was remarkably popular across ideological spectra across age differences and we found in practice is that you know you have a lot of young people who want to work at a worker coop you have a lot of older people who might be the owners of businesses and and they're thinking about the future they're thinking about their legacy they're thinking about what's gonna happen to this business I created and giving them the model of the worker co-op they relate to it in a different way but they see they see the same possibility John I wish we had more time thank you very much for your insights for all of you this is a wave of the future that's what we're learning and that's why we bring it to you I hope you found that interesting and I look forward to speaking with you again next week [Music]

Channel: Democracy At Work

Views: 31,930

Rating: 4.9324117 out of 5

Keywords: Richard Wolff, democracy, work, labor, economy, economics, inequality, justice, capitalism, worker co-ops, cooperativees, worker-owners, wealth, capital, finance, Federal Reserve, China, Mexico, IMF, Democracy Collaborative, yt:cc=on

Id: p2oDSEbiAZE

Length: 29min 50sec (1790 seconds)

Published: Mon Jul 15 2019