Life-changing event

I have moved from Sacramento to Washington DC, to serve as communications specialist for the National Cooperative Business Association. My primary responsibility will be coordinating and writing content for the Cooperative Business Journal (CBJ), a bimonthly print publication, as well as NCBA’s monthly “eNews.” If this seems sudden, its because it was sudden; only four weeks between applying and arriving at the office.

This new staff position will impact my availability for speaking and writing on cooperatives. Because I’ll be representing NCBA as a member of its public affairs staff, my public words will need to be in harmony with the messages put forth by NCBA. On the bright side, I’ll be involved in shaping those messages.

I am suspending my blog for the time being. It will probably return as a mirror of a blog site for NCBA once they go live with their web site redesign this spring. My speaking availability will also be managed through NCBA’s new Speaker Bureau.

Meanwhile there are nearly 180 back posts that may be browsed or searched. The blog’s history includes my extensive reflections on the economic crisis (both launched in Oct 2008), accounts of my travels to co-op hotbeds in Italy (Oct 2008) and the Basque Country and US Rust Belt (Oct-Nov 2009, my five-week national book tour (Jan-Feb 2009), and my participation in a really wild dogfight on co-ops and health care reform (all summer long). There are also some oddballs about spontaneous musicals, musical instruments, movie reviews, and paradigm shifts. Hooray for reruns!

In my absence from the blogosphere, I recommend related blogs like The Workers’ Paradise (US), Co-operatives in the Spotlight (UK), and Robb on Cooperation (NZ). The Distributist Review and Front Porch Republic also frequently address cooperative economics and are worth a visit for their sheer mass of interesting and thought-provoking discussion.

And maybe more people can start co-op blogs now. Feel free to rat out other and new co-op bloggers (including yourself) in the comments below.

This blog thing has been a whole lot of fun (and sometimes a big pain in the butt), and I will miss being able to let rip about whatever crosses my mind. However, I see this as trading in my little plastic pail and shovel for a hydraulic excavator. I have to be more careful about where I start digging, but I’ll be able to move a whole lot more dirt.

I think it’s a pretty good deal, and I’ve got no regrets. Thanks for reading, and thanks especially to those who took the time to comment.

In cooperation,

Andrew McLeod

Helping Haiti

As the disaster in Haiti enters its second week, it is time to start changing gears. Aid can help, but at some point Haiti needs something else. One WSJ editorial by Bret Stevens argues that

For Haitians, just about every conceivable aid scheme beyond immediate humanitarian relief will lead to more poverty, more corruption and less institutional capacity.

“Just about” is the key phrase here. Stevens pans most long-term aid as ineffective at best and counterproductive at worst, but his focus is primarily on government based aid. He unfortunately ignores cooperatives as a promising approach. In a nation with a weak and corrupt government, there are obvious problems with simply shoveling money, and co-ops can address these problems.

A few years ago, I wrote my own op-ed piece in the Seattle Post Intelligencer on the need for local cooperative economies to help get through disasters, and also assembled a manual on community-based disaster recovery. I was writing with New Orleans in mind, but my thoughts are even more relevant to Haiti.

Another problem reported today is that many of the country’s community leaders (and some governmental leaders) have died. CNN reports that the women’s movement has been particularly devastated by the loss of three great advocates. There is now a dire need for grassroots leadership development to accompany economic assistance. Assistance must be designed in ways to lessen dependency while rebuilding community leadership. Cooperatives can excel at this, and they are already at work in Haiti.

The International Cooperative Alliance is rallying cooperative movements from around the world to help cooperators in Haiti. Its Haiti earthquake page serves as a clearinghouse for information about what responses are already coming from the global co-op community.

Meanwhile in the U.S., the Cooperative Development Foundation is channeling its Cooperative Emergency Fund toward Haiti. Funds raised will be channeled through other cooperative groups with “boots on the ground” in Haiti, to build on the economic successes and relationships that have already been cultivated.

For example, ACDI/VOCA has been working for years in Jacmel, Haiti’s fourth-largest city. It has 50 staff in the city, and is the largest NGO presence on Haiti’s southeast coast. In addition to ongoing economic development, ACDI/VOCA is also distributing emergency aid.

The U.S. based National Rural Electric Association (NRECA) has an international division, whose projects have included a decade-long effort to organize Haiti’s first electric co-op in Pignon, with 500 members. This village was not seriously damaged, but is certain to see an influx of people attracted to a modern power grid that has transformed the town. NRECA is sending staff to help with aid and help begin the process of rebuilding Haiti’s electric system. This continues and expands a long tradition of electric co-ops helping each other out when disaster strikes in the U.S.

The World Council of Credit Unions has also shifted its focus from a three-year program to extend credit to Haiti’s rural poor, to providing more immediate aid. It has already pivoted toward assessing the damages to Haitian credit unions, and plans to launch a rebuilding program to help extend credit for the recovery.

Fonkoze, the local partner for the international microfinance cooperative Oikocredit, is currently assessing damage to its 40+ branches. They are urgently working to relaunch their system so members gain access to funds at a time when prices are skyrocketing due to scarcity.

There has also previously been work  underway with help from non-cooperative supporters.  USAID has supported the creation of credit co-ops for coffee growers, and supported launching a federation of credit co-ops. Alcatel-Lucent and other partners have provided technological assistance to coffee co-ops. Given the country’s effective decapitation and a growing exodus from the capital, this sort of rural development is going to be more important than ever.

The achievements of cooperatives in Haiti are admittedly dwarfed by the enormity of the problems even before the quake. However, it seems that a small effective approach is better than a large ineffective one. And co-ops working in specific communities in ways that can provide models for the rest of Haiti.

Also, co-ops don’t have to stay small. The absence of effective government provides an opportunity to build something that is more connected to the needs of communities and hopefully less prone to corruption.

There are a lot of organizations clamoring for aid, but before you send your money to buy more bottled water that will sit in a warehouse somewhere (or be turned back in midair) consider the longer view. Immediate aid and cooperative economic development can work hand in hand to build a new Haiti.

But without a more cooperative economy, Haiti will always need more aid.

Saving democracy, part two

NOTE: in my last post I raised concerns about a breakdown of decision-making processes in the government. Here’s what co-ops have to do with that:

Consider the parable (attributed to Paulo Friere, I believe) in which someone is sitting on a riverbank. He sees a person floating by, struggling against the current. He jumps in and rescues the person, but no sooner are they onshore when someone else comes floating by. So he jumps back in and repeats the good deed. And again there comes someone down the stream. This time, he turns and begins running upstream. Those already rescued cry out in indignation at his lack of compassion for the drowning, to which he replies “I’m going to find out who’s throwing them in.”

We face many urgent and specific problems (like health care), and it is good to struggle toward finding solutions for these problems. We should seek to help people obtain affordable healthcare and break up the obscene profiteering and concentration of power that led to the reform impulse.

However, sometimes we have to step back and look upstream. It is good to work on whatever issues are before us, but  at some point we’ll run out of energy unless we can address the systemic issues.

“Grassroots” gets thrown around a lot in our political dialogue, but many initiatives and groups that claim that label are using the same giant and ailing processes that have allowed things to get to this level of dysfunction. They may be a step in the right direction, but don’t provide a real challenge to the problem.

Cooperatives are the true grassroots of democracy. They are micro-democracies, in which everyday people can participate in the processes of democracy – making and considering proposals, debating issues, building consensus. Without this sort of everyday practice of democracy and equality, is it any wonder that our larger democratic systems are breaking down? How can they be maintained without a citizenry that is familiar with democratic process?

We generally treat democracy like someone who sits on the couch all year and then tries to run a marathon. We’ve got to regularly exercise our democracy muscles.

For example of how that could work, consider the northern Italian province of Trentino, where one in 50 citizens are on a cooperative’s board of directors at any given time. Assuming that average length of service is five years during fifty years of adult life, that means that roughly 1/5 of the people in Trentino have direct experience of sitting in a governing body.

Democracy (and decision-making in general) is an organizational technology for getting things done. In order for a large technological system to function it needs lots of support, both in the present and the past. Higher levels of organization are dependent on simpler predecessors. Either way, the giant and complex cannot exist for long without the small and simple.

We need to get democracy active throughout society by creating as many democratic bodies as possible. Gradually, people trained in grassroots democracy will be elected to school boards and local committees, city councils and county commissions, and eventually state and federal legislatures. Then we’ll be much better equipped to deal with the constant attacks from those whose interest are against democracy.

Democracy must be continually renewed, and the urgency of real grassroots democracy becomes all the more clear when it gets to the current point that it is arguably falling apart at the top.  We can no longer afford to simply hope that our government’s democratic processes can maintain themselves. We have to take matter into our own hands and rebuild democracy from the bottom up.

Saving democracy, part one

I’ve been making occasional visits to Front Porch Republic, which is a pretty interesting blog site with an intriguing tagline: “Place. Limits. Liberty.”

Most recently, I came across a piece by Patrick Deneen called “New World Order.” It is a bit of a downer (and the comments are even worse). He essentially frames the last century and a half as an uneasy marriage between two great forces – Equality and Stratification. He warns of their impending divorce and a scenario in which democracy is sacrificed in vain attempt to maintain our levels of prosperity.

It seems that this divorce is already underway in the health care reform process, and this has me thinking about how co-ops might be able to help save democracy.

My vote is much less meaningful if I am only allowed to vote between two “serious” candidates representing the twin capitalist business parties. I am free to vote otherwise, but that is regarded as somewhere between foolhardy and antisocial. (You voted for Nader?)

It should be obvious to anyone that concentrations of wealth are disruptive or even destructive to political democracy. Greater concentrations mean greater distortion, due to the great and growing fortunes needed to run for office. This actually threatens our prosperity AND our democracy; consider a recent NY Times op-ed by Frank Rich calling corrupt bankers (and their feeble regulators) a worse threat to our nation than al-Qaeda. Yikes.

There are all sorts of antidemocratic conventions in our political system, such as the Senate giving more weight to a voter in Wyoming than to 70 Californians. These conventions have always been around as checks to protect the (virtuous) rural voter from the (corrupt) urban one. We can debate whether they are wise or right, but they are enshrined in tradition and relatively stable. And as we shall see, stability is a very good thing.

What really has me worried is the increased frequency with which the Congress’ traditions are bent or simply ignored. I don’t mean the rapid erosion of civil liberties and snowballing security procedures, although those are alarming enough. Rather, my concern is primarily the rapid breakdown of long-held conventions within government.

Take the filibuster: Not long ago, this was used in extreme cases and required a concerted effort by the minority party to prevent the closure of debate. Senators actually had to get up and endlessly debate, or read the phone book, or recite poetry, or whatever. Now, the filibuster has mutated into a de facto requirement for supermajority.

This means the very presence of 41 senators in a party willing and disciplined enough could prevent anything from passing. This means that 50.1% of the populations of our 21 smallest states can effectively prevent anything from happening in this government. Theoretically, about 1/18 of the population can stop the show. Considering that smaller states tend to be more conservative and conservatives often vote Republican, it is easy to see this as the United States being held hostage by the Republican Party.

Unfortunately, the Democrats’ cure for this malady has been even worse than the disease, as demonstrated by their worsening contortions to get health care reform passed. As I observed with alarm last summer, Sen. Baucus did an end run around the usual committee process with his “gang of six.”

Now, it gets even worse. Typically, differences between House and Senate bills are resolved in conference committee, made up of a set number of representatives from each party and each chamber. However, ”Democrats” are now doing something else in order to sideline the Republicans.

Has it not occurred to anyone that the Republicans will follow this precedent with gusto when (not if) they regain control of Congress?

There isn’t anything sacred about the conference committee process, but we cannot afford to be confused about how laws are passed at this particular point in our history.

I sometimes work with people who are just starting cooperatives, and one of my first tasks is to help them figure out how to make decisions. As I put it, one of the worst situations is when people use opposition to the outcome of a certain decision to challenge the decision-making process itself. In such cases, there are two decisions to be made simultaneously with one dependent on the other.

It becomes very difficult to look at what is in the long-term best interest of the group, because a certain decision on process will affect the outcome of the issue at hand. Further complicating things, there may be an air of frustration about the process challenge or an urgency to the first decision, making it impossible to take the time to have an open conversation.

Does this remind anyone of anything?

On the other hand, there’s a big difference between a dozen people trying to get a new food co-op launched and the United States Congress.

I often tell groups that they need to have a firm process in place before they do anything serious. It is one thing for a group that is still meeting in someone’s living room to have a blowout, break up, and stop meeting. But once they’ve got a lease signed and contracts to install their fixtures, the stakes are raised immensely. At that point, splintering may result in lawsuits and decades of hard feelings.

That is bad enough, but now we are facing the breakdown of decision-making in the world’s most powerful legislative body. We’re not at a critical point yet (that would come when the Supreme Court gets involved), but we are certainly headed in the wrong direction.

Whatever one might think about healthcare reform, it is more important that we have a functioning democracy. Otherwise, Deneen’s dire prophesy is already coming true.

NEXT TIME: How co-ops foster political democracy

Move your money WHERE?

The Huffington post now features a screaming giant headline:

A NEW YEAR’S RESOLUTION

Move Your Money To Community Banks

This article argues that Wall Street banks are wrecking the economy and we would be better off if we collectively stopped funding their mischief. Hear hear!

The authors recommend moving funds to Main Street banks. They even created moveyourmoney.info to help people do that, providing access to a database of solvent community banks. That is a fine idea, but unfortunately they miss the opportunity to really address the problem. Credit unions are not even mentioned in the original post, although they have added this update:

Credit unions do not disclose financial data in the same way as FDIC-insured banks. As a result, credit unions are not presently included in the IRA ratings database, which covers over 8,000 federally insured banks and thrifts. IRA is developing a method to rate credit unions in a way that is comparable to the IRA bank stress ratings. We’ll be updating users of “Move Your Money” on this issue early in 2010.

That’s a good addition, but credit unions should not be an afterthought. They are generally sound, so there is much less need for ratings like what IRA provides. Some credit unions are struggling, but they typically avoided the risky behavior that caught many community banks. Credit unions are generally insured by NCUSIF, which is way better than the bank insurance that is provided by the depleted FDIC.

Wall Street banks were once Main Street banks, and their governance is often fairly similar. The main difference is scale. Banks are banks.

It’s a Wonderful Life is central to the Move Your Money narrative: the good small banker (George Bailey) wins out over the evil big banker (Mr. Potter). But they totally fail to mention that Potter was not some big banker from out of town; he was the majority shareholder of Bailey’s own building and loan. He was just as much a community banker as Bailey himself.

Bailey merely managed what was effectively Potter’s bank. Bailey’s relative powerlessness was central to the plot. In the movie, it was the collective action of the people of Bedford Falls who saved George and the bank. The movie’s story was fine, but it wouldn’t have held up in real life. Potter would have come back and replaced the board, then done whatever he wanted. That’s how capitalism works.

This means that moving your money to a community bank is not really a solution. It depends a lot on the bank. Some may be very scrupulous and community-oriented; others may be in the process of being gobbled up by larger banks.

A couple of other points are worth noting: First, building & loan associations were often mutuals (which were cooperative in essence). Second, they gradually grew and mutated into savings and loans. Remember S&Ls? They were the trigger for the country’s last big financial crisis a couple of decades ago.

What Bedford Falls really needed was a credit union that was not under Potter’s control.

In a credit union, there can be no majority shareholder. Credit unions are not perfect, and many of them act a lot like banks. But their fundamental architecture is different. They are accountable to depositors, who benefit from any profits.

Even without the values argument, credit unions are functionally superior to community banks. As an expression of the sixth Cooperative Principle of cooperation among cooperatives, many credit unions create effective nationwide service through branch sharing arrangements like this one.

So yes, move your money. Please. All of it. Right now. You don’t have any excuse anymore. Here is a credit union locator to help you get started.

Happy new year!

The gift of disorientation

Last night I stumbled onto one of the most whimsical conspiracies ever. I originally thought I should file this away for April Fool’s Day, but the more I think, the more it screams Christmas. Jesus was quite the prankster, after all.

I don’t know how it happened. I got home from a show last night and was killing time in the bottomless pit of internet, poking around in online videoland. I started with videos on Kim Peek and other savants. One link led to another and suddenly I stumbled into a world where the usual rules don’t apply.

Improv Everywhere is a collective that “causes scenes of chaos and joy in public places.” They are somewhat related to flash mobs, but usually much more organized. They do things like freeze in Grand Central Station, throw a “welcome back” party for a stranger at the airport, and pack a doomed-to-failure $10 Sunday night show of an obscure band from Vermont.

What I love most about this group is the deeply subversive nature of their attacks on New York reality. In that city, people generally leave each other alone, but isolated bursts of eccentric interaction are part of the fabric of life. In some cases, the pranks are set up to start small, so innocent bystanders don’t immediately notice that something is “wrong” beyond the presence of a garden-variety weirdo; then they are dragged through several stages of realization that everyday life has left the building.

This dynamic is most highly realized in their (mis-named) “spontaneous musicals,” which are an all-out assault on normalcy. Musicals have always struck me as absurd: suddenly the monotone spoken world dissolves into song, in which anyone from lovers to rival street gangs can more deeply express what’s really on their minds.

IE’s masterpiece was a tightly choreographed musical number in the middle of a food court. “I Love Lunch” took advantage of the Today Show’s technical toys and even recruited one of its hosts for a cameo as “Agent Curry.” The mission started subtly, with a socially-unacceptable shouted conversation between two agents across a food court. One (sitting alone at a table without any lunch) warns the other “don’t sing a song, man” but it is too late. The agent simply loves lunch too much for his passion to be contained in simple speech.

In the video of this incident, the crowd seems mildly annoyed by the disturbance. This is New York, after all. Lots of artists live here and sometimes they get carried away. Probably the stress of trying to make it during the recession, coupled with low blood sugar. His friend’s response suggests this isn’t the first time this has happened. Most witnesses probably don’t notice that the agent is somehow backed by musical accompaniment from the PA system

But then another agent joins in. And another. Soon a half-dozen people are singing and dancing and brandishing sporks. The crowd’s irritation turns to alarm, to confusion, to a sort of blissed-out disorientation.

I’m not sure if and how this actually helps out with the economic issues that are the focus of this blog. IE doesn’t seem to be very profitable, so distribution of dividends is not an issue; they do, however, double as a sort of cooperative marketing opportunity for their “senior agents.” Even so, I think something important (and hilarious) is going on. We need some dramatic shifts in how people see the world and interact, so this sort of signal jamming can be very helpful in helping people bust out of the Matrix.

I believe there is power in the disorientation wrought by inspired mass pranks. At the very least, it gives witnesses someone something to tell their friends. It often seems to break down barriers between strangers, who bask in the aftermath and ask each other “what just happened?” Maybe some of these stranger become friends. They at least might say hello next time they see each other on the 6 train, and remember the day they got a glimpse of another world.

But the potential may be even deeper than this. I’m sure that most people faced with a growing crowd of singers will wonder how far the virus will spread. Many might have a moment of fear that they’ll be the only ones who don’t know the words (surrounded by zombies scenario). A few might even teeter on the brink of song themselves, totally open to the moment when they suddenly know the words and melody, and are swept up in the miraculous music.

In the same way that disorientation can be used for evil (such as sensory deprivation techniques that the US uses to pretend that it doesn’t torture people), the experience of another reality can open people up to new ideas and experiences. I’m not sure what that looks like, exactly. Perhaps Rev. Billy and the Church of Life After Shopping is a step in this direction, using the street preacher concept to attack consumerism through stunts like his Starbuck’s exorcism.

Another fascinating aspect of all this is that people in groups can get away with things that they would never try alone. Groupthink is a powerful source of permission to do whatever is happening. This, too, can go horribly wrong (Rwanda, for example). But if IE can stage an annual “no pants subway ride” it seems like there’s a lot of room for modeling all sorts of oddly positive behavior: spontaneous public potlucks (loaves and fishes, anyone?), repeats of the $10,000 Wall Street Money Drop, and soap box preaching (not necessarily religious) are just a few ideas that pop to mind.

Those who want to explore this might investigate the Urban Prankster Network, where troublemakers can connect and conspire to make life more interesting for the rest of us. I’m not quite ready to start the Sacramento chapter, but if someone else does, I’ll be happy to join.

2012: International Year of Cooperatives

Last week, the United Nations declared that 2012 will be the International Year of Cooperatives.

Here are some excerpts from a draft resolution, which is reportedly identical to the final draft that will soon be available.

Recognizing that cooperatives, in their various forms, promote the fullest possible participation in the economic and social development of all people, including women, youth, older people, people with disabilities and indigenous peoples, are becoming a major factor of economic and social development and contribute to the eradication of poverty…

(The General Assembly) 3. Encourages all Member States, as well as the United Nations and all other relevant stakeholders, to take advantage of the Year as a way of promoting cooperatives and raising awareness of their contribution to social and economic development;

4. Draws the attention of Member States to the recommendations contained in the report of the Secretary-General for further action to promote the growth of cooperatives as business and social enterprises that can contribute to sustainable development, eradication of poverty, and livelihoods in various economic sectors in urban and rural areas and provide support for the creation of cooperatives in new and emerging areas…

The International Cooperative Alliance was instrumental in passing this resolution, which was proposed by 55 states (!) and passed by consensus. It follows numerous resolutions affirming the value of cooperatives, as well as a series of International Days of Cooperatives.

I can’t help but notice that the year chosen is rich with irony: 2012 is variously  believed to be a) the end of the world, b) a time of glorious spiritual transformation, and c) an election year.

Each of these scenarios raise some questions about our future together on this beat-up little planet.

Will this long-due global acknowledgement of the value of cooperative economics be upstaged to the global cataclysm that some are predicting? Having cities crumbling into the seas will certainly complicate trying to figure out the best location for a new food co-op or worker-owned solar panel factory. But at least we’ll all go together when we go.

Or, could it be that 2012 isn’t so much the end of the physical world as the end of an era, in which we experience a paradigm shift to higher consciousness? If so, it is certainly reasonable to suppose that such transformation might also include a shift toward more democratic and participatory economies. I have a hard time seeing how enlightened people could put up with our current mess of economic injustice, and a year of cooperatives fits nicely into the paradigm shift narrative.

Or, is this going to be the year that we finally realize that whether we elect a Democratic president and Congressional majority, or whether we then turn around and blame those Democrats for failing to solve the problems they inherited (and which really can’t be blamed on Bush, going much deeper than the policies of a single administration), government is not really the solution to our problems? Already, Rep. Dana Rohrabacher (GOP-CA) is calling for a new GOP platform that includes employee ownership, and I think that would be a particularly worthwhile thing for Republicans to consider.

A decade ago, Rohrabacher reached way across the aisle to co-sponsor a bill with socialist Bernie Sanders (and Ron Paul). I’m not sure that we want to wait for more government resolutions, but it can’t hurt to have people in our own government who get the concept of empowering communities to take care of their own needs. That way, we don’t have to rely on centralized government-based approaches.

Whatever happens, it will be helpful to have a coordinated international observation of how co-ops can help improve the economy (as well as their shortcomings). I suspect that 2012 will be chock full of Y2K-style survivalist antics, so we’ll need all the help we can get in providing folks with though processes that don’t involve wondering whether they have enough ammo.

We’ve got a couple of years to get ready for the big show.

Copenhagen and cooperatives

The much anticipated climate change summit has mostly failed. There is still some overtime haggling over how to spin the failure, but it is clear that there won’t be a substantive and binding agreement that rises to the severity of the problem we really do face.

The breakdown was apparently due to revolt against an undemocratic and manipulative process that is business-as-usual in international decision-making (like the IMF, WTO, etc). Indeed, the atmosphere inside and outside the convention center mirrors the WTO rebellion of exactly a decade ago. Through formal and informal means, the “haves” tried to control the conversation and effectively dictate outcomes to the “have nots.”  The result has been an embarrassing train wreck of a summit, in which heads of state were kept meeting until 2am before handing things off to their underlings for a further five hours of misery.

The Brazilian president said it well: “To submit heads of state to certain kinds of discussion like the one we had last night – I haven’t seen such a meeting in a long time.”

Now nobody knows what is happening, but they are planning another all-nighter before visas start expiring on Saturday. Some leaders are already leaving.

Now what?

Not surprisingly, I believe that cooperatives are a key part of how the world should respond to our leaders’ collective failure. Copenhagen’s collapse is due to a fundamental flaw in our economic system: Growth is considered normal and contraction is considered bad. But contraction is as much a part of nature as expansion, and sooner or later we’ll be reminded that we are still subject to nature’s rules. What goes up must come down, and co-ops are the best way I know to humanely negotiate an economic downshift.

I can totally understand why nobody wants to make do with less than their parents’ generation, but at some point that becomes inevitable. I just spent a weekend reading “The End of Oil” by Paul Roberts. It was published in 2004 so it is full of price spike warnings that are now quaint: $2 gallons! $40 barrels! For months at a time! (My goodness, what a crackpot predicting such dire and outlandish…oh, wait, it’s already worse than that.)

More recently, the International Energy Agency predicted a global peak in 2020. As The Economist notes,

Coming from the band of geologists and former oil-industry hands who believe that the world is facing an imminent shortage of oil, this would be unremarkable. But coming from the IEA, the source of closely watched annual predictions about world energy markets, it is a new and striking claim.

Roberts acknowledges what The Economist points out, that nobody really knows when global oil and gas production will peak and begin their irreversible decline. But whenever they do, we’d better be ready or it will make Copenhagen look like a PTA meeting. And since most producers (both nations and corporations) have been consistently failing to replace lost production for years now, it seems we should assume that the peak oil pessimists are right. So we all need to work on our own personal action plans (and I don’t mean guns, gold and beef jerky).

Another book that I’ve heard is useful but haven’t read yet is “$20 per Gallon” by Christopher Steiner – it takes peak oil seriously, but also looks at some of the positive changes that it might bring. On the really pessimistic side of things is “Long Emergency” by James Howard Kunstler (who also has quite a blog). Take your pick, but if you haven’t yet read about peak oil, you’ve got your homework.

Roberts analyzes the strengths and weaknesses of replacement technologies like solar, wind, and hydrogen. He repeatedly raises an issue that is will be central in the wake of the Copenhagen fiasco: The introduction and spread of essential technologies will depend largely on when they become economically competitive, and we’d better hope that happens while we still have enough petroleum to make the transition.

Unfortunately, capitalist business need profit, and a recurring theme in Roberts’ analysis is that replacement fuels are all moving toward profitability with excruciating slowness while peak oil approaches with alarming speed. And everything I’ve read about peak oil suggests that whenever it happens, that will be too late to start figuring out what to do; changing fuels is going to be the most difficult and complicated task ever undertaken by humanity, so if we want to put new wings on our jumbo jet in mid-fight, we should start before we run out of fuel.

The key contribution that co-ops can make is that they can operate at the break-even point rather than needing enough profit to attract outside investors. What needs to happen now is some sort of massive consumer co-op of people who are committed to buying new technologies as soon as they can possibly be created. These would need to be teamed up with worker co-ops of employees at, for example, the many auto plants that are now shutting down.

It might not be possible to start this with an automotive product, and if Kunstler is right even “green” cars are a distraction from what really needs to happen. In any case we should look for intermediate business models to keep these suppliers running until a new cooperative car can be designed and launched.

For example, a company that now makes car windows could produce a different sort of curved and tinted glass – parabolic mirrors for solar collection. Factories producing pumps, frames, and motors could be adapted to the other components needed to create a commercial version of smallish but powerful solar arrays, to be deployed as as backup power (or water heating) in small rural communities or apartment buildings. Eventually these firms could expand back into the auto industry, perhaps creating a hydrogen car before it is profitable. The co-op solar arrays could also be used to produce hydrogen at a locally-based network of fueling stations, which could be tied to car-sharing cooperatives, along the lines of ZipCar (which is not a co-op and has failed to spread beyond a handful of profitable locations). The cars could also be designed for small-scale sharing, with features like multi-user odometers (to help divvy up costs by use) and snap-in trunk dividers.

This is an extraordinarily complex undertaking that I’m suggesting, and maybe even impossible. But at this point I’m not sure what other options we have. The old ways of thinking are not going to get us out of the mess that they created. And if we are creating a whole new sustainable energy economy, it might as well be based on an economic structure that is sustainable. If we keep concentrating wealth, it will make petroleum even less affordable for most people while pushing alternative fuels further out of reach.

Cooperation is fast becoming a matter of survival. Our governments can’t do it, so it’s up to us now.

Permanently higher unemployment (!)

I read a lot of economic news, and it’s not every day I come across an article as startling and unnerving as this report that the “natural” rate of unemployment may have increased from 5% to 7%. That’s the word from “Nobel Prize winner Edmund Phelps and Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian.” I don’t know if they are right, but it seems like they could be. They certainly know a thing or two about economics.

This topic always gets me riled up because deep down I don’t believe that there’s anything natural about a system that actively prevents more than one in 20 people from working (and then blames people who need public assistance for high taxes). I’m not really qualified to prove this, but it seems pretty logical that the real problem is that a large stock of unemployed people are needed to keep wages unnaturally low. In a natural system, markets would be allowed to function without the Federal Reserve’s active meddling to keep people out of work so their capitalist buddies can have lower labor expenses.

Of course, unemployment has not always been subject to this supposedly natural minimum. Here’s an interesting chart that overlays the unemployment rate with a variety of political and economic events. It doesn’t really look like there is a correlation between minimum wage increases and unemployment, and umeployment used to be well below five percent. Decide for yourself.

If it is actually true that the “natural” rate of unemployment is a moving target to be raised as high as needed to keep the dividends flowing, we’ve got even bigger problems than I suspected. In any case, there is a fundamental problem here: capitalism sees labor (people) as servants to capital (money).

It seems like there could be an analogy to a car that has had a (very small) hole punched in its engine. Maybe the car can still run, but it needs more fuel to get the same amount of power. Alas, that means more heat in the system, which potentially puts more stress on the various pipes and potentially enlarges the hole.

What happens next time there is a financial crisis? Does the “natural” rate jump to ten percent? (or maybe only nine?) Or do we have a real blowout and wind up on the side of the road?

Of course it is not certain that the definition of “full employment” has really changed by two percent. The article presents this as a minority view, and a 40% jump (5% x 1.40 = 7%) in anything would be really dramatic. But even if the change is only a fraction of what Phelps and el-Erian describe (say, an increase to 5.2%), that is still hundreds of thousands of people who are going to be excluded from working and trying to get money flowing in their communities.

What would happen if we looked at investors as the inflationary force, rather than blaming people who are actually making and doing things for their income?

We might wind up with a system like the Mondragon cooperatives in the Basque Country of Spain, which are owned and democratically controlled by their workers. These co-ops managed to get through a long and brutal recession during the ’80s and ’90s without laying off members. A recent article even claims that the local unemployment rate was as low as one percent while Spain’s rate spiked to 27 percent. (if anyone knows the source of this figure, please say so – I’m a bit suspicious of its accuracy).

Even if this number is only referring to the valley where the co-ops started – and now comprise 60 percent of the workforce – it’s still worth exploring. It might not be possible to achieve this level of employment throughout the economy, but that doesn’t make this any less desirable as a local goal.

There is already a lot of interest in creating sustainable local economies, and it seems like “sustainable” should include the opportunity for as many people to work as possible, as well as loss of wealth to outsiders who already have surplus wealth to invest. Any time a system has a leak that isn’t somehow compensated, it is by definition unsustainable

My intent is not to beat up on folks who are just trying to retire and see the stock market as their best option. That’s part of the myth of investment -they might be the next Warren Buffett or George Soros, but almost certainly will not. Those micro-investors have no control over the firms in which they invest, and can only hope that decisions are made to reflect their interests. Instead, I’m talking about those like Buffett and Soros who have real control, and who create their own economic weather. They might be brilliant and friendly and philanthropic and good, but they still have way too much money.

I’m also not saying that there is no room for passive investors to make a buck here and there. The problem is that investors have apparently  overrun the system, and are exerting an inflationary pressure that is keeping millions of people out of work. This wealth should be distributed based on physical contribution to production by people who are really invested in the firm. We should be talking about a “natural” rate of investment, above which an overabundance of hungry investors drive inflation.

As I said, I can’t prove this is so, but it seems like a reasonable explanation for what is happening. We had a basically jobless recovery since the last recession in 2001, and nobody seems to be seriously predicting we will approach full employment anytime soon. Unless we find ways to dramatically reshape ownership, we’re going to see a lot less good work for the foreseeable future.

RIP John Logue

I’ve just gotten news that John Logue, longtime director of the Ohio Employee Ownership Center, has passed on. He was a shining star of the cooperative movement, and laid the groundwork for the groundbreaking Evergreen Cooperatives of Cleveland. I am glad that I got a chance to meet him while he was here, most recently on my trip to the Rust Belt. Thanks for all your work, John.

Wendy Patton, a former student, has written a fine tribute, which I’ll reproduce here:

Tribute to A Great Ohioan:

Dr. John Logue of Kent State University

The epicenter of global economic change in America has been in the Midwest. To those of us with roots in Ohio, this economic cataclysm has been the challenge of our time in personal and public ways.

Great people are attracted to great challenges.  Dr. John Logue of Kent State University is a shining example of this kind of greatness.  Arriving in Kent in the mid-seventies from Texas -  by way of Princeton and Europe -  Dr. Logue’s credentials, charm, optimism and moxie could have taken him anywhere to teach and work.  He chose northeastern Ohio.  His life’s work has addressed our challenges. 

John was diagnosed with a particularly virulent cancer on December 6 and was gone by December 9.  He touched so many of us in a personal way that the e-mail list serves cannot possibly reach everyone.   It is a measure of his contribution to the community that it takes an editorial to reach all who need to know.

Long-time Director of the Ohio Employee Ownership Center and professor of political science, John burned the midnight oil with workers trying to buy their closing plant.  He worked with the same intensity, the same mix of pressure, charm, counsel and insight, as he taught their sons and daughters at Kent State University. He made his students stretch:  he taught us to travel, to interview, to observe and to participate.  He made us write for publication and he got our work published.  He took us with him into the plant; he forced us to be equal, to speak, to testify.  We became journalists, labor leaders, civil servants, political scientists, marketing directors, business owners.  We were better for having studied with him. 

He taught the parents of his students on the shop floors of industrial plants.  His life’s work with employee ownership touched Ohioans affected by plant closure from communities across the state. He made them stretch – to explore options, to learn business strategies and finance, to lead, to cooperate, to facilitate.  His work was beyond the social safety net.  He worked with displaced workers as investors.  They became investors.   From the closure of the steel mills through the departure of DHL from Wilmington, for the past 25 years the reaction to economic disaster in Ohio has been:  “Call John Logue!” In the face of difficulty, he gave us a sensible course of action.   He is uniquely optimistic, uniquely American – but his optimism is born of faith in us, faith in our ability to stretch and to succeed.

In the last two years, John’s work moved to employee ownership in the community through Cleveland’s new cooperative green venture, the Evergreen Laundry.  He brought the same expectation of high achievement to the workers and investors in the new enterprise.  His vision of a cooperative and egalitarian workplace is the right vision for our future.  Not only has it been embraced by hundreds of Ohio companies and cooperatives and thousands of workers, but major institutions – the United Steelworkers, for example – are moving to a model of economic progress based on employee ownership, worker participation and investment in community.

Great challenges bring hardship and yield progress.  John Logue has provided steady, sure, insightful and lasting progress in our economic storm.  We are grateful for his contribution.

by Wendy Patton,  former student and OEOC colleague, and most importantly, close friend.

 The following information comes courtesy of Dan Bell.

 Part of John’s legacy is the Ohio Employee Ownership Center (OEOC) [www.oeockent.org] is an economic development program funded in part by the State of Ohio Department of Development.  Since 1987 we have worked with roughly 485 companies and employee groups employing 93,000 workers; of those, 71 firms employing 14,000 workers have implemented partial or complete employee ownership.  We know from analysis of IRS form 5500 filings that these 71 companies have created about $300 million in equity for their employee owners.  We also serve a network of 70 employee-owned companies on an ongoing basis with training on ownership and participation.  These companies employ 15,000, mostly in northeastern Ohio, and generate more than $2.4 billion in sales.

A message board has been set up for those who would like to share their thoughts or stories about John, or read what others have to say.  

http://johnlogue.blogspot.com/