Breaking Good

by Michael Peck

In today’s economically class-cleaved America, ideological resistance continues unabated to the deployment of government as a force for good especially in contentious change scenarios such as solving growing wealth and opportunity divides and the future of organized Labor (to name just two). Too often, progress is facilitated mainly through the prism of trickle-down tax code set asides to inspire transformational behavior which doesn’t materialize to the desired extent.

This disconnect between theory and practice leaves out working class populations most needing more direct inclusion to uplift the starkly narrowing middle class consumer base that is threatening the end of commonly understood consumption-driven capitalism. As a result, there may be a small opening for policy innovation starting with the tax code (“Changing the tax code could help curb inequality,” Lawrence Summers, The Washington Post).Large scale, consumer-driven American businesses realize they are running out of middle class customers who can afford to buy their products no matter how cheap or where they’re manufactured which is almost anywhere but locally as more than 60,000 American factories have closed since the 1992 NAFTA trade agreement.

Insanely high corporate profits are not trickling down whether through the tax code or even to shareholders. Paul Krugman (“Barons of Broadband,” New York Times) notes that, “One puzzle about recent U.S. experience has been the disconnect between profits and investment. Profits are at a record high as a share of G.D.P., yet corporations aren’t reinvesting their returns in their businesses. Instead, they’re buying back shares, or accumulating huge piles of cash. This is exactly what you’d expect to see if a lot of those record profits represent monopoly rents.” Harold Meyerson (“Shareholder capitalism’s myth,” The Washington Post) points out that “there is no legal requirement for for-profit companies to maximize returns to shareholders.”

Monopoly rents and diverted shareholder returns are part of America’s self-investment insufficiencies. Other root causes include anachronistic ideological pandering to symbolic definitions that no longer reflect demographic and geopolitical realities on the ground. Thomas Frank (“The matter with Kansas now: The Tea Party, the 1 percent and delusional Democrats,” Salon.com) notes that America’s conservative political elites have succeeded in selling, “the folkways of ordinary Americans into a kind of a cult”…even though “its signature economic policies had brought catastrophic harm down on those same ordinary Americans.” Concurrently, the Divine Left’s “decades of moderating and capitulating and triangulating” to the Right’s “entire ersatz proletarian movement, a full-blown astrology of class discontent in which the hard-working average citizen was invited to feel himself imposed upon by upper-class liberals”…has come back to haunt both sides through complete systemic gridlock and inter-intra party polarization.

Already the end game is in sight for below the line tax-favored policies. During the past 30 years, U.S. public sector tax policies have brazenly picked winners and losers by amply rewarding those with passive income assets while cruelly marginalizing paycheck dependents. Today, and as a direct result, 400 individuals own more wealth than half the country’s bottom 150 million citizens combined. America ranks as the most unequal of any developed country and festers or stagnates at 65th from the top most free countries based on global social mobility and opportunity metrics.

Bipartisan graphs show that America’s below the line, tax code-driven approach to societal wealth creation has produced a passive income-aggregating plutocracy that, on face value, includes significant results for worker or member ownership entities: more than 11,000 employee-owned companies with an asset base of $858 billion and over 29,000 cooperatives with 350 million memberships, $3 trillion in assets and $500 billion in revenues. However encouraging, these figures obscure the less positive realization that first, the entire country with a current population of 305 million fields only 4,000 companies where the employees own the majority of their stock, and second, that there are not more than 450 worker-owned cooperatives representing a constituency of only 5,000 governing worker-owners. These figures help to conclude that the individual stakeholder, worker-ownership base in America has everywhere to go but down.

Thomas Edsall in “Whatever Happened to ‘Every Man a King’?” (New York Times) reviews three highly credible labor economists (Richard B. Freeman, Douglas L. Kruse and Joseph R. Blasi) who believe “that a major expansion of employee ownership is the most effective tool available to remediate inequality.” The Edsall piece points out that employees with some form of worker ownership accumulate more savings than employees in non-participating firms, that firms with some form of capital sharing perform better in the competitive marketplace than those without, and that workers with profit sharing or employee stock ownership are higher paid and have more benefits than other workers. “This means that the substantial profit sharing and gain sharing and ownership stakes for the typical worker in these plans tend to come on top of, not in place of, fair fixed wages and benefits.” It appears that the new formula for American private sector competitiveness is staring the country in the face.

Similarly, organized labor stands to benefit from above the line and above board proactive worker empowerment policies more than almost any other constituency given its present imbalance against dominating global human arbitraging and corporatist oligarchies for whom the public treasury qualifies as a personal ATM. This turn-around starts with union members entering the worker-ownership quadrant through the newly launched United Steelworkers – Mondragon hybrid union-coop model and can be accelerated by policies favoring equal class ownership.

Recent labor contractual and representation votes in both Seattle on the West Coast and Chattanooga in the Deep South may seem to have little in common in terms of history, geography, climate, and a progressive versus conservative future.  In terms of lost worker empowerment in two principal regional manufacturing industrial sectors, aerospace and automotive respectively, both cities have much more in common than recent labor conflicts might suggest.

Seattle and Chattanooga share stark reprisals voiced by local leadership (a CEO in Seattle, a U.S. Senator in Tennessee), and other management and elected officials that were so successful in obtaining their desired outcomes. In Seattle, Boeing emerged scot-free as a company overly dependent on heavily regulated industrial sectors but more powerful and more free to do as it pleases than the regulators and public sector clients it sells to. Boeing was able to threaten to move without any backlash while 22 U.S. states presented competing offerings for its presence without any consideration for the Seattle workers attempting to equate labor with capital. Chattanooga’s business and political hierarchy similarly threatened the local VW plant’s future (jobs shipped to Mexico, suppliers unwilling to stay, subsidies overturned, the city morphing into Detroit) with workers voting against enjoying the same levels of economic and participatory empowerment rights that their German counterparts possess.

In both cases, fear of “freely mixing the economic castes” represented a vertical, neo-paternalistic approach to business that is seriously out of line with more advanced economies demonstrating much higher levels of social mobility and opportunity and out of touch with American demographics, the so-called, “coalition of the ascendant” (gender and racial minorities, Millennials and Generation Y) who need more than minimal compensation conditions to translate imposed generational poverty into earned generational equity. Regardless of political affiliation, geography, age or social media familiarity, “Right to Work for Less” laws on average drive down wages by 14 percent and America’s income inequality metrics have grown proportionally as union density has declined. Instead of arguing the causes while trapped in today’s opportunity and mobility death spiral, above the line and above board choices for both public and private sectors going forward can be bipartisan and effective starting with the basic and historic all-American premise of market-based ownership for all.

For example, current U.S. Department of Labor restrictions on multi-employer pension funds do not facilitate smart investing in New Economy worker empowerment models (emerging hybrid models such as worker-owned union-cooperatives, B Corporations, workers wanting their pensions professionally invested in projects that provide direct opportunities to pension contributors, and pensions invested by worker-friendly private equity advisors). Right before the Chattanooga plant vote, Frank Fischer, Volkswagen Chattanooga’s CEO and chairman affirmed that “Our works councils are key to our success and productivity.” Some parts of America may never get the memo but surely it’s time to change the overall American conversation to rise above economic class-driven dialogue of the deaf.

Given America’s wealth, opportunity, and mobility disparity, it is fair to state that today’s generational equity potential is being developed by a few for a few almost like a country built on nepotism instead of equal opportunity and that America’s growing majority of minimum wage earners, renters, and temporary contract holders represent an immediate disenfranchised past that is fast becoming prologue. Considering the value of time to market versus America’s sharply rising relative misery index, generational equity is best invested and earned by above the line public and private policies focusing on empowering workers as equal class owners. Above the line means neither left nor right but just fair and good economic common sense, neither unrestrained government spending on selected groups and programs nor a total reliance on predatory capitalism mechanisms.

One class worker ownership policies honor individual efforts by structuring equal opportunity to access and benefits from workplace equity that becomes valuable based on marketplace performance. It fosters community and workplace solidarity, anchors local living economies and allows minimum wage dependency to transcend to sustainable employment. It transforms welfare from re-distribution to earned social credit, and no-way-out wage slavery to workplace, community, and civic equity.

Above board one class worker ownership equalizes labor immobility with capital mobility, and heals destructive opportunity inequality and unhealthy wealth versus poverty divides. It reverses the concept of credit from a private to a social good.  No worker community – organized, unorganized, alternative, rural or urban – is left behind.

Originally posted on the One Worker, One Vote blog. 

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