Dangerous territory in the New Republic

Yesterday I did a “back of the napkin” feasibility study of an employee buyout of Republic Windows and Doors. It didn’t look very feasible.

Today, I’m going to go in a different, more dangerous direction: What about an employee takeover? What if the workers, who are already occupying the place, just fire it up again and go into business as a wildcat cooperative? That would open a big can of worms, challenging our notions of private property. It would also save at least some of those jobs in an industry that will be much needed if we are serious about infrastructure improvement and energy efficiency (think of all those single-pane windows on schools). So I think we need to think outside the box.

Before I go too far into this, I should mention that my parents were in the restaurant business when I was a kid. They struggled for years with two separate businesses at three locations, and eventually closed them all down. So I’m talking about the equivalent of a parallel universe in which their employees had seized the McLeod’s steakhouse right in the middle of our trying to wind down the business. I know that it would have been quite traumatic for us, not to mention a huge legal and financial pain in the butt. Mom and Dad, you might want to skip this entry.

Yesterday I briefly mentioned the notion of the city putting a lien on the place, but today we are talking about something different. I’m not a big fan of government socialism, and I know that having the city snatch Republic from its owners and hand it over to some rabble of union members would bring howls of protest, so I’m not talking about that approach. Of course, Chicago has nearly as much skin in the game as, say, Chase Capital ($9.6 million and $12 million, respectively) so they have some legal and ethical basis for such a snatch. Nevertheless, that would also conflict with the cooperative principles about autonomy, since that scenario would yield something that is at least partly owned by the city. I’m going to focus on a libertarian worker takeover.

I see three main issues: Do they have the technical skills? Do they have the moral high ground? And will anyone do business with them?

First of all, they’ve got the expertise to actually make the windows and doors. In contrast, the owners probably don’t. A bigger question is whether they are able to re-launch the supply and marketing operations. That depends on how much day-to-day management was done by the owners. Assuming that the workers know how to run the accounting systems (or can find someone who does), this obstacle may be overcome.

Second, do they have an ethical right to do this? I would argue yes on political, economic, moral, and religious grounds.

Politically, this is the private sector micro-equivalent of a peaceful revolution. In contrast to the unfortunate ongoing now spreading from Greece (which happen to stem from these same sorts of issues remaining poorly addressed), the folks at Republic have been doing maintenance and cleaning, and shoveling snow outside the plant. Nevertheless, the owners (or at least, their creditors) have a claim on that property that is rather similar to the British Crown’s right to a certain piece of real estate on this side of the pond. Both, ironically, are called Republic.

People have the right to non-cooperation with tyrants, whether those are tyrants of politics or business. My claim does not hinge on the owners of Republic being unsavory or abusive characters; they are simply engaged in a relationship of control over their subjects, and that goes against the values of our society. I challenge anyone to explain why democracy should be limited only to government, and not to the workplaces in which we spend most of our public lives.

Economically, we assume that the owners have a claim on the property because they paid for it. But really, the way business credit works is that people who already have money can use it as collateral to get other people’s money and then use that to build their business. Essentially, those with money to invest get the profits from business, and those who need money can’t get it and remain marginalized and forced to compete for increasingly scarce jobs. This system tends to concentrate wealth and create problems like what I looked at yesterday, which in turn creates an impasse that brings us to the dangerous thoughts of today. As I have been observing all week, everyone would benefit from the workers’ resuming production. They have already crossed the red line of trespassing, so what harm would be done if they were productive about it, especially if they were making a good faith effort to set aside some portion of their proceeds to pay for the value (at bankruptcy-sale prices) of what they had seized?

Morally, computing the value owed is somewhat complicated by the fact that the dominant values around business ownership are not really justified, only assumed. I challenge anyone to provide a moral justification for the following: Bringing money to the table (which can only be done by those with money) gives a right to profit, even though nothing productive can be done without labor (which everyone can contribute). Seriously. Tell me why that is OK, and why it is not more moral to have an arrangement based on our values of equality and justice. Leadership and vision should be compensated, but not with sole ownership of what was created by the work of all.

Religiously, I’m going to have to make some assumptions: It may be that the owners aren’t religious (and certainly they would do well to review scripture’s teachings about economic justice—starting perhaps with the book of James—as well as Islamic concepts of justice and Buddhist teachings on karma). Even so, we supposedly live in a “Judeo-Christian” society; and most of the workers at Republic are Latinos, and many Latinos are Catholic; and many people in our society (myself included) would acknowledge that the Bible is a pretty good source of guidance. The Good Book is chock full of teachings on social justice, but I’m going to point out one specific story, in which the nation of Israel is divided in half. For those who are unfamiliar with this, it marked a key point in the downward slide from when the people decided to have a king (despite God’s warning) to when the two kingdoms were destroyed, starting the Babylonian Exile. This is no trivial event, and there is no question that it was an economic uprising against an unjust and oppressive ruler in which the people complained of having “no stake” or investment; moreover, this revolt is clearly claimed to be an act of God. I never learned about this in Sunday school.

So there you have it. The workers have an economic, political, moral, and religious right to their workplace. Certainly these claims could be fleshed out further, being somewhat out of left field for most people. However, I think that this at least undermines the general assumption that only those with an established legal claim to the property have an ethical claim to it. Only the law stands in their way.

Finally, will a wildcat window and door company be able to buy materials and sell products, or will they be pariahs? That depends a lot on the economy. If things recover next year and we get back to business as usual, then probably not. But, if the turmoil deepens and more competitors go out of business and these workers become regarded as a scrappy band of problem-solving heroes, I think they would have a chance. They could quite possibly find a market in nonprofit organizations like Habitat for Humanity, or in retrofits of churches, or in charitable disaster-recovery repairs/retrofits. And of course, we can’t rule out that some developers will have a soft spot in their heart for the company that showed us that we don’t have to go home when we are unjustly fired.