6 Ways to Fuel Cooperative Takeovers

Cooperatives

Guest article

From now on, the global mantra for filling market gaps is going to be, “There’s a co-op for that.”  But co-ops need customers, money, and training.  How do we shift from business as usual to the work of cooperation? 

by Sven Eberlein

A WAGES-trained co-op.

In the aftermath of the 2008 financial crisis, businesses, products, and services that benefit people, communities, and the planetÑinstead of a few megabanks and billionaires—have been in higher demand.  The International Cooperative Alliance's recently published "Blueprint for a Cooperative Decade" lays out a long-term vision to make cooperatives not only the fastest-growing form of business but the acknowledged leader in environmental, social, and economic sustainability.  From now on, the global mantra for filling market gaps and new demands, according to Eric DeLuca of the National Cooperative Business Association, is going to be, "There's a co-op for that."  But co-ops—like any kind of business—need customers, money, training, political support, and help from their communities.  How do we shift from business as usual to the work of cooperation?  Here are a few strategies.  

1. Find Money

Where do you get the money to finance a new co-op?  Traditional banks are loath to lend to co-ops, often because they are unfamiliar with them or do not trust that a cooperative business model can yield profits.  But there are institutions that can help.  

The National Cooperative Bank (NCB) has become a leading funder for new housing, business, and consumer cooperatives.  Chartered by Congress in 1978 and privatized as a member-owned financial institution in 1982, it has provided more than $4 billion in loans and investments to co-ops all over the country—from a New York City housing co-op to an organic grocery in San Francisco to a solar project at Denver International Airport.  Most recently, NCB has been working with PNC Bank in Pittsburgh to allocate $13 million in loans to local co-ops.  

The nonprofit Heartland Capital Strategies Network—allied with NCB and other credit unions—is another rapidly growing source of funding for cooperatives, especially for the union co-op movement.  The organization has committed billions of investment dollars to profitable projects in green construction, manufacturing, affordable housing, and transportation.  

McKusker's Market photo courtesy of Franklin Community Co-op.

2. Convert to a Co-op

Some cooperatives get their start from traditional sole proprietorships or corporations.  This can happen, for example, when a business owner wants to retire or move on and the employees buy the business. 

Franklin Community Cooperative (FCC) in Greenfield, Mass., acquired McCusker's Market, in nearby Shelburne Falls, when the owner of the longstanding natural foods store was ready to retire.  A third of FCC's members lived near McCusker's.  The purchase allowed FCC to keep its commitment to serve downtown Greenfield while solving its space problem at its popular flagship store.  All of McCusker's Market's staff were rehired and retrained, and sales went up 15 percent during the store's first year as a cooperative.  Since the purchase, the cooperative has attracted many more members all over the region.  

3. Hook Up With Big Partners

Bring co-op business to the mainstays of your community—hospitals, schools, government services—which are already committed to community-scale investment and the public good.  It's a mutually beneficial relationship:  The co-op keeps money circulating in the community; the institution provides stable demand for the co-ops services or products.  

Ohio Cooperative Solar photo courtesy of the Cleveland Foundation.

"If you can get even a small bit of a university's goods and services devoted to your co-op," says Democracy Collaborative co-founder Gar Alperovitz, "you can go to any bank, and they'll be happy to finance you, because you've got a market."  

The Evergreen Cooperative Initiative, a group of local, sustainable, and worker-owned co-ops in Cleveland, is built on a strong partnership between the co-ops and local institutions—such as Cleveland Clinic, University Hospitals, and Case Western Reserve University—which have a combined annual buying power of more than $3 billion.  

Ohio Cooperative Solar, another Evergreen business, is in the process of installing photovoltaics at these three institutions and has also placed nearly 700 solar panels on the city hall and library rooftops in nearby Euclid.  Evergreen Cooperative Laundry (a green cleaning operation) washes bed linens for Judson Retirement and McGregor Homes, two large nursing homes in the area.  

The film Shift Change gives an inspiring look at worker-owned enterprises, from the Mondragón co-ops in Spain to the Arizmendi bakeries in San Francisco to Isthmus Engineering in Madison, Wis.

4. Be Co-op Curious

You can learn more about the business of sharing—how co-ops work, why they're important, how to support them, and how to start and manage one—from organizations across the country working to promote cooperative enterprise.  

The Bay Area group Women's Action to Gain Economic Security (WAGES) was founded in the 1990s to help immigrant women form cooperative housecleaning services.  Now they are creating toolkits for anyone looking to start a green cleaning co-op.  "With all the emphasis on co-ops coming on the heels of the Occupy movement, we're seeing an increased interest right now," says Elena Fairley, who is working with WAGES as an AmeriCorps VISTA member.  

College and university programs are also training the next generation of cooperative entrepreneurs.  The Cooperative Teach-In is a nationwide initiative that has connected colleges, universities, and programs like AmeriCorps VISTA with cooperatives across rural and urban America.  

The Toolbox for Education and Social Action is a worker-owned producer of resources in support of the cooperative movement, including the game Co-opoly.

The Teach-In uses creative tools to help participants learn the importance of cooperative economics.  For example, the "Democracy Rating Warm-up Exercise," an interactive survey, allows participants to "rate the level of democracy in the institutions they interact with on a daily basis," and group discussions explore how the cooperative model differs from typical business models.  And a fun way to gear up for a cooperative future is to play a round of Co-opoly:  The Game of Cooperatives.  

As interest in cooperative business has grown, some young entrepreneurs have taken it upon themselves to learn more.  For example, Co-cycle is a group of 15 undergraduates who crossed the country last year on their bicycles, visiting more than 70 co-op organizations and building a network of like-minded communities.  "A year ago I didn't know what a cooperative was," writes Co-cycle participant Riko Fluchel on the riders' blog.  "Now, after the nine weeks of touring cooperatives across the continental United States, I know first-hand that cooperatives empower people's lives."  

The Co-cycle journey is chronicled by a team of filmmakers from New York University in the forthcoming feature-length film To The Moon, which will introduce viewers to the ideas that guide cooperatives and Co-cycle—like teamwork and dedication to a new shared economy.  

Arizmendi Bakery photo by Tony Nguyen.

5. Shop Co-op

By buying from co-ops or using cooperative services, you can create local jobs, keep wealth in your community, and shop according to your values.  

• The most comprehensive directory of U.S. cooperatives is CooperateUSA.  
• You can also find your local food co-op through the Cooperative Grocer Network. 
• Looking for a co-op starting near you?  The Food Co-op Initiative maintains a map of co-ops still in the organizational stage.  
• The new Data Commons Cooperative is building a "Stone Soup" directory,find.coop, created by members.  

6. Make Co-op Friendly Laws

Cooperatives are often at a financial and technical disadvantage in an economy dominated by quarterly profits and shareholder returns.  The United Nations recently resolved "to encourage governments and regulatory bodies to establish policies, laws, and regulations conducive to cooperative formation and growth."  In 2012, the United Nations celebrated the "International Year of Cooperatives," noting that co-ops "build a better world" and "empower people."  

Big Dividends For Your Community

How credit unions put members' money to work right where they live.

At the federal level, supporters of cooperatives are pushing for the National Cooperative Development Act (H.R. 3677) (NCDA), which would create a national development center designed to bring federal resources to cooperative development.  From loans and seed capital for start-ups to funding for technical assistance providers, passage of the NCDA would not only help level the playing field for co-ops but increase economic development and create much-needed jobs in underserved areas of the country.  

A different bill would raise the cap on small business loans from another type of co-op:  credit unions.  Fifteen years ago, the banking industry lobbied for and obtained this cap to throttle its competition.  The Credit Union Small Business Jobs Bill (S. 2231) would more than double the limit to nearly 30 percent of assets.  According to the Credit Union National Association, this would enable credit unions to loan an extra $13 billion of their $300 billion lending capacity to small businesses in the first year alone, helping to create as many as 140,000 jobs.  

This article first appeared here

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Sven Eberlein wrote this article for How Cooperatives Are Driving the New Economy.  Sven is a San Francisco-based freelance writer.  

Political Democracy can and will be fortuitous when Economic Democracy is established.   Explore this and other articles covering alternative economics, ethical leadership, economic democracy, and a society without the weal and woe of social and economic vicissitudes HERE   How does PROUT compare or contrast with capitalism or communism?  Explore the answers HERE What are essential ingredients assuring progressive sustainability bereft of the vicissitudes of economic or political predation, privation or disparity?  Learn more HERE   http://gplus.to/ProgressiveSustainability

The Economy: Under New Ownership

Cooperatives

What if we all owned and oversaw the banks, by vote, and had a say in decisions made by retailers where we shop?  What if we ran our workplaces without corporate CEOs?  

How cooperatives are leading the way to empowered workers and healthy communities.  

by Marjorie Kelly

Pushing my grocery cart down the aisle, I spot on the fruit counter a dozen plastic bags of bananas labeled “Organic, Equal Exchange.” My heart leaps a little.  I’d been thrilled, months earlier, when I found my local grocer carrying bananas—a new product from Equal Exchange—because this employee-owned cooperativeme outside Boston is one of my favorite companies.   Its main business remains the fair trade coffee and chocolate the company started with in 1986.  Since then, the company has flourished, and its mission remains supporting small farmer co-ops in developing countries and giving power to employees through ownership.  It’s as close to an ideal company as I’ve found.  And I’m delighted to see their banana business thriving, since I know it was rocky for a time.  (Hence the leaping of my heart.)  

Employees at Equal Exchange, the oldest and largest fair-trade coffee company in the nation.  It is also a worker-owned cooperative.  Photo by Paul Dunn.

I happen to know a bit more than the average shopper about Equal Exchange, because I count myself lucky to be one of its few investors who are not worker-owners.  Over more than 20 years, it has paid investors a steady and impressive average of 5 percent annually (these days, a coveted return).

Maneuvering my cart toward the dairy case, I search out butter made by Cabot Creamery, and pick up some Cabot cheddar cheese.  I choose Cabot because, like Equal Exchange, it’s a cooperative, owned by dairy farmers since 1919.

At the checkout, I hand over my Visa card from Summit Credit Union, a depositor-owned bank in Madison, Wis., where I lived years ago.  Credit unions are another type of cooperative, meaning that members like me are partial owners, so Summit doesn’t charge us the usurious penalty rate of 25 percent or more levied by other banks at the merest breath of a late payment.  They’re loyal to me, and I’m loyal to them.  

On my way home, I pull up to the drive-through at Beverly Cooperative Bank to make a withdrawal.  This bank is yet another kind of cooperative—owned by customers and designed to serve them.  Though it’s small—with only $700 million in assets, and just four branches (all of which I could reach on my bike)—its ATM card is recognized everywhere.  I’ve used it even in Copenhagen and London.

With this series of transactions on one afternoon, I am weaving my way through a profoundly different and virtually invisible world:  the cooperative economy.  It’s an economy that aims to serve customers, rather than extract maximum profits from them.  It operates through various models, which share the goal of treating suppliers, employees, and investors fairly.  The cooperative economy has dwelled alongside the corporate economy for close to two centuries.  But it may be an economy whose time has come.  

Something is dying in our time.  As the nation struggles to recover from unsustainable personal and national debt, stagnant wages, the damages wrought by climate change, and more, a whole way of life is drawing to a close.  It began with railroads and steam engines at the dawn of the Industrial Age, and over two centuries has swelled into a corporation-dominated system marked today by vast wealth inequity and bloated carbon emissions.  That economy is today proving fundamentally unsustainable.  We’re hitting twin limits, ecological and financial.  We’re experiencing both ecological and financial overshoot.  

If ecological limits are something many of us understand, we’re just beginning to find language to talk about financial limits—that point of diminishing return where the hunt for financial gain actually depletes the tax-and-wage base that sustains us all.  

Here’s the problem:  The very aim of maximum financial extraction is built into the foundational social architecture of our capitalist economy—that is, the concept of ownership.  If the root of government is sovereignty (the question of who controls the state), the root construct of every economy is property (the question of who controls the infrastructure of wealth creation).  

Many of the great social struggles in history have come down to the issue of who will control land, water, and the essentials of life.  Ownership has been at the center of the most profound changes in civilization—from ending slavery to patenting the genome of life.  

Author Marjorie Kelly:  It’s no accident that the deep redesign of our economy isn’t beginning in Washington, D.C.  It is rooted in relationships:  to the living earth and to one another.  Photo by Cameron Karsten.

Throughout the Industrial Age, the global economy has increasingly come to be dominated by a single form of ownership:  the publicly traded corporation, where shares are bought and sold in stock markets.  The systemic crises we face today are deeply entwined with this design, which forms the foundation of what we might call the extractive economy, intent on maximum physical and financial extraction.  

The concept of extractive ownership traces its lineage to Anglo-Saxon legal tradition.  The 18th century British legal theorist William Blackstone described ownership as the right to “sole and despotic dominion.” This view—the right to control one’s world in order to extract maximum benefit for oneself—is a core legitimating concept for a civilization in which white, property-owning males have claimed dominion over women, other races, laborers, and the earth itself.  

In the 20th century, we were schooled to believe there were essentially two economic systems:  capitalism (private ownership) and socialism/communism (public ownership).  Yet both tended, in practice, to support the concentration of economic power in the hands of the few.

Emerging in our time—in largely disconnected experiments across the globe—are the seeds of a different kind of economy.  It, too, is built on a foundation of ownership, but of a unique type.  The cooperative economy is a large piece of it.  But this economy doesn’t rely on a monoculture of design, the way capitalism does.  It’s as rich in diversity as a rainforest is in its plethora of species—with commons ownership, municipal ownership, employee ownership, and others.  You could even include open-source models like Wikipedia, owned by no one and managed collectively.  

These varieties of alternative ownership have yet to be recognized as a single family, in part because they’ve yet to unite under a common name.  We might call them generative, for their aim is to generate conditions where our common life can flourish.  Generative design isn’t about dominion.  It’s about belonging—a sense of belonging to a common whole.  

We see this sensibility in a variety of alternatives gaining ground today.  New state laws chartering benefit corporations have passed recently in 12 states, and are in the works in 14 more.  Benefit corporations—like Patagonia and Seventh Generation—build into their governing documents a commitment to serve not only stockholders but other stakeholders, including employees, the community, and the environment.  

Also spreading are social enterprises, which serve a social mission while still functioning as businesses (many of them owned by nonprofits).  Employee-owned firms are gaining ground in Spain, Poland, France, Denmark, and Sweden.  Still another model is the mission-controlled corporation, exemplified by foundation-owned companies such as Novo Nordisk and Ikea in northern Europe.  While publicly traded, these companies safeguard their social purpose by keeping board control in mission-oriented hands.  

If there are more kinds of generative ownership than most of us realize, the scale of activity is also larger than we might suppose—particularly in the cooperative economy.  In the United States, more than 130 million people are members of a co-op or credit union.  More Americans hold membership in a co-op than hold shares in the stock market.  Worldwide, cooperatives have close to a billion members.  Among the 300 largest cooperative and mutually owned companies worldwide, total revenues approach $2 trillion.  If these enterprises were a single nation, its economy would be the 9th largest on earth.  

Often, these entities are profit making, but they’re not profit maximizing.  Alongside more traditional nonprofit and government models, they add a category of private ownership for the common good.  Their growth across the globe represents a largely unheralded revolution.  

What unites generative designs are the living purposes at their core, and the beneficial outcomes they tend to generate.  More research remains to be done, but there is evidence that these models create broad benefits and remain resilient in crisis.  We’ve seen this, for example, in the success of the state-owned Bank of North Dakota, which remained strong in the 2008 crisis, even as other banks foundered; this led more than a dozen states to pursue similar models.  We’ve seen it in the behavior of credit unions, which tended not to create toxic mortgages, and required few bailouts.  

We’ve seen it in the fact that workers at firms with employee stock ownership plans enjoy more than double the defined-benefit retirement assets of comparable employees at other firms.  And we’ve seen it in the fact that the Basque region of Spain—home to the massive Mondragon cooperative—has seen substantially lower unemployment than the country as a whole.  

Together, these various models might one day form the foundation for a generative economy, where the intent is to meet human needs and create conditions in which life can thrive.  Generative ownership aims to do what the butcher, the baker, and the candlestick maker have always done:  make a living by serving the community.  The profit-maximizing corporation is the real detour in the evolution of ownership, and it’s a relatively recent detour at that.   

The resilience of generative design is a key reason that people have often turned to these models in times of crisis.  When the Industrial Revolution was forcing many skilled workers into poverty in the 1840s, weavers and artisans banded together to form the Rochdale Society of Equitable Pioneers, the first modern, consumer-owned cooperative, selling food to members who couldn’t otherwise afford it.  

During the Great Depression in the United States, the Federal Credit Union Act—ensuring that credit would be available to people of meager means—was intended to help stabilize an imbalanced financial system.  Today, credit union assets total more than $700 billion.  In the recent financial crisis, their loan delinquency rates were half those of traditional banks.  Since the crisis, credit unions have added more than 1.5 million members.  In Argentina in 2001, when a financial meltdown created thousands of bankruptcies and saw many business owners flee, workers—with government support—took over more than 200 firms and ran these empresas recuperadas themselves, and they’re still running them.  

Last year, with financial and ecological crises mounting worldwide, the U.N. named 2012 the Year of the Cooperative, and cooperative activity, is advancing around the globe.  Cooperatives were largely sidelined during the rise of the industrial age.  But current trends indicate that conditions may be ripe for a surge in cooperative enterprises.  As people lose faith in the stock market, feel mounting anger at banks, and distrust high-earning CEOs, there’s growing distaste for the business-as-usual Wall Street model.  Meanwhile, the Internet has enabled the expansion of informal cooperation on an unprecedented scale—with the Creative Commons, for example, now encompassing more than 450,000 works.  As the speculative, mass-production economy hits limits, cooperatives may be uniquely suited to a post-growth world, for they are active in sectors related to fundamental needs (agriculture, insurance, food, finance, and electricity comprise the top five co-op sectors).  

If many of us fail to recognize an emerging ownership shift as a sign of progress, it may be because it arises from an unexpected place—not from government action, or protests in the streets, but from within the structure of our economy itself.  Not from the leadership of a charismatic individual, but from the longing in many hearts, the genius of many minds, the effort of many hands to build what we know, instinctively, that we need.  

This goes much deeper than legal or financial engineering.  It’s about a shift in the cultural values that underpin social institutions.  History has seen such shifts before—in the values that underlay the monarchy, racism, and sexism.  What’s weakening today is a different kind of systemic bias.  It’s capital bias:  capital-ism—the belief system that maximizing capital matters more than anything else.   

The cooperative economy—and the broader family of generative ownership models—is helping to reawaken an ancient wisdom about living together in community, something largely lost in the spread of capitalism.  Economic historian Karl Polanyi describes this in his 1944 work, The Great Transformation, tracing the crises of capitalism to the fact that it “disembedded” economic activity from community.  Throughout history, he noted, economic activity had been part of a larger social order that included religion, government, families, and the natural world.  The Industrial Revolution upended this.  It turned labor and land into commodities to be “bought and sold, used and destroyed, as if they were simply merchandise,” Polanyi wrote.  But these were fictitious commodities.  They were none other than human beings and the earth itself.  

Generative design decommodifies land and labor, putting them again under the control of the community.  

It’s no accident that the deep redesign of our economy isn’t beginning in Washington, D.C.  It is rooted in relationships:  to the living earth and to one another.  The generative economy finds fertile soil for its growth within the human heart.  The ownership revolution is part of the “metaphysical reconstruction” that E.F. Schumacher said would be needed to transform our economy.  When economic relations are designed in a generative way, they’re no longer about sole and despotic dominion.  Economic activity is no longer about squeezing every penny from something we imagine that we own.  It’s about being interwoven with the world around us.  It’s about a shift from dominion to community.   

Political Democracy can and will be fortuitous when Economic Democracy is established.   Explore this and other articles covering alternative economics, ethical leadership, economic democracy, and a society without the weal and woe of social and economic vicissitudes HERE   How does PROUT compare or contrast with capitalism or communism?  Explore the answers HERE What are essential ingredients assuring progressive sustainability bereft of the vicissitudes of economic or political predation, privation or disparity?  Learn more HERE

Taxed by the Boss: Brutal Corporate Gouging of State Coffers

Taxed by the Boss 

By David Cay Johnston

(Reuters) - Across the country more than 2,700 companies are collecting state income taxes from hundreds of thousands of workers - and are keeping the money with the states' approval, says an eye-opening report published on Thursday.

The report from Good Jobs First, a nonprofit taxpayer watchdog organization funded by Ford, Surdna and other major foundations, identifies 16 states that let companies divert some or all of the state income taxes deducted from workers' paychecks.  None of the states requires notifying the workers, whose withholdings are treated as taxes they paid.
General Electric, Goldman Sachs, Procter & Gamble, Chrysler, Ford, General Motors and AMC Theatres enjoy deals to keep state taxes deducted from their workers' paychecks, the report shows.  Foreign companies also enjoy such arrangements, including Electrolux, Nissan, Toyota and a host of Canadian, Japanese and European banks, Good Jobs First says.

Why do state governments do this?  Public records show that large companies often pay little or no state income tax in states where they have large operations, as this column has documented.  Some companies get discounts on property, sales and other taxes.  So how to provide even more subsidies without writing a check?  Simple.  Let corporations keep the state income taxes deducted from their workers' paychecks for up to 25 years.
It was not always this way.  Letting companies keep their workers' state taxes apparently began in Kentucky two decades ago as a way to retain jobs.

Last July when I wrote about six big companies that pocket Illinois state taxes (r.reuters.com/zux57s) I knew there was more to this.  But I had no idea how pervasive these diversions were until I read an advance copy of the 39-page report by Good Jobs First.

CORPORATE SOCIALISM

Deals cut with the states over the past two decades diverted $5.5 billion from public purposes to private gain, the report says.  Close to $700 million more was diverted last year, Good Jobs First estimates.

New Jersey approved $73.2 million in new deals in 2011 on top of $178 million diverted that year alone under previous deals.  I calculate that at nearly $80 per household in corporate welfare based on New Jersey's 3.1 million households.

These deals typify corporate socialism, in which business gains are privatized and costs socialized.  They also mean government picks winners and losers, interfering with competitive markets.  Leaders in both parties embrace these giveaways because they draw campaign donations from corporate interests and votes from people who do not understand that they are subsidizing huge companies.

Michael Press, a Connecticut consultant on tax incentives, says such deals, however troubling, are an inevitable result of the U. S. Constitution setting up competition between the states.

"In an ideal world we would not provide any corporate subsidies," Press told me.  "It looks like corruption.  But if you do it right, if you only target those companies whose behavior you change to create jobs or keep jobs in your state then these targeted temporary arrangements are cheaper - much cheaper - and can be more effective than an overall reduction in tax rates."

The mission of Good Jobs First (www.goodjobsfirst.org) is making economic development subsidies accountable and effective.  In years of working with their data I have always found it sound.  While Greg LeRoy, Good Jobs First's founder, has rooted out all sorts of hidden subsidies over the years, he emphasizes that he is not inherently hostile to them, only to secrecy, waste and what he calls job piracy and job blackmail.

"Job piracy" occurs when one state diverts taxes to lure an employer across state lines.  AMC Entertainment announced a deal last year to move its corporate headquarters from Kansas City, Mo., to a nearby Kansas suburb.  In return, Good Jobs First said, Kansas will let the multiplex chain keep $47 million of state income taxes withheld from its workers' paychecks, a drain on public finances that did not create any jobs, but does enrich the Wall Street firms that own AMC including arms of J. P. Morgan, Apollo Management, Bain Capital and the Carlyle Group.  AMC declined to answer my questions.

"Job blackmail" occurs when a company threatens to close a plant unless it gets tax money.

In Illinois, the law requires companies to threaten to leave before they can keep taxes withheld from paychecks.  Motorola Mobility, now being acquired by Google; the truck maker Navistar; the German manufacturer Continental Tire, and three auto makers - Chrysler, Ford and Mitsubishi - get to keep $346.8 million in taxes over 10 years because they threatened to leave Illinois.  Navistar can pocket $62.1 million even if it fires a quarter of its Illinois workforce, its contract shows.  A recent deal gives Sears $150 million, Good Jobs First reported.

PROMISES OF JOBS

Promising to retain jobs can be lucrative.  General Electric invested $126 million updating part of its Ohio operations.  In return, GE gets a tax credit equal to $115.3 million of its worker taxes, recovering 92 percent of its investment.  A sweet deal for GE, but not its competitors.

Gary Sheffer, GE's top spokesman, said the company told its workers about the deal.  In all, he said, GE is investing around $300 million in Ohio and "the resulting taxes the state will receive will far exceed the tax credits provided to GE."

That response, I think, misses the point - GE should pay its own bills without taking welfare.

Many figures in the Good Jobs First report are from disclosure reports some states make.  Others come from news accounts and company announcements.

Total revenue losses are higher than the report states.  First, some states hide the costs.  Phil Mattera, the research director at Good Jobs First, said he lists the cost as zero for states that hide the numbers.

Good Jobs First wants to end these diversions, but failing that recommends mandatory disclosure to the workers as the first reform.  I concur.  It's the first step in ending corporate welfare as we know it.

(The author is a Reuters columnist.  The opinions expressed are his own.  Corrects $346.8 to $346.8 million in paragraph 15)

(Editing by Howard Goller and Amy Stevens)

© Thomson Reuters 2011.  All rights reserved.  Users may download and print extracts of content from this website for their own personal and non-commercial use only.

Exhaustive Study Finds Global Elite Hiding As Much As $21 to $32 Trillion Offshore

Newly updated report reveals how wealthy individuals and their families have between $21 and $32 trillion of hidden financial assets around the world in what are known as offshore accounts or tax havens.  The actual sums could be higher because the study only deals with financial wealth deposited in bank and investment accounts, and not other assets such as property and yachts.  The inquiry was commissioned by the Tax Justice Network and is being touted as the most comprehensive report ever on the "offshore economy."  It also finds that private banks are deeply involved in running offshore havens, with UBS, Credit Suisse and Goldman Sachs handling the most assets.  The report’s author, James Henry, a lawyer and former chief economist at McKinsey & Company, explains more in this video. 

We must remember that this information about offshore tax havens and the $21 to $32 Trillion dollars covers "individuals", not enterprises doing the same thing, which may add anywhere from $50 to $80 Trillion dollars or more. 




All too often people deliberate about taxation, tax codes, scaled taxation and such, yet there may be wholly fresher possibilities than shuffling round the way things are done now without making any truly substantial progressively sustainable choices and actions. 

PROUT offers an alternative perspective on this relatively necessary concern of taxes, which may also include some suprising factors.  Explore PROUT's perspective here

Explore this and other articles covering alternative economics, ethical leadership, economic democracy, and a society without the weal and woe of social and economic vicissitudes HERE

How does PROUT compare or contrast with capitalism or communism?  Explore the answers HERE

Capitalism in Three Spheres

Capitalism in Three Spheres

While trying to fight against any sort of exploitation, first we must have a clear understanding of the nature of the exploitation.  Today human society is subjected to ruthless exploitation by contemporary capitalists.  Capitalist exploitation has brought humanity to the brink of disaster by spreading its exploitative tentacles into every aspect of human life.

According to PROUT, capitalist exploitation is perpetuated in three spheres – the physical sphere, which we are well aware of, and the intellectual and spiritual spheres.  Each of these types of capitalist exploitation is equally dangerous.

To solve the problem of capitalist exploitation in the physical sphere, we will have to ensure that the movement of money does not become restricted or immobile in the hands of a few capitalists.  The present economic system should be thoroughly transformed, and a comprehensive and completely new economic system should be built in its place.  In this new system money will not be restricted or immobile in the hands of a few capitalists.  The more the optimum mobility of money is kept unrestricted, the more it will strengthen and invigorate the socio-economic life of the collective body.



Intellectual Capitalism

In the psychic sphere there is a noticeable lack of motivation and effort on the part of intelligent and educated people at present to properly utilize their acquired knowledge for the collective welfare.  This is the psychology of an apathetic and elitist class who do not like to move from their privileged position to work for the welfare of the common people.  This psychology gives rise to a special type of intellectual capitalism.

Intellectual capitalism causes several pressing problems in society.  First, the literacy skills of a large part of the population are not developed.  Secondly, the socio-economic consciousness of the indigenous people is not encouraged.  Thirdly, unhealthy inferiority complexes and fear complexes influence the minds of the people so that they are kept psychically weak.  Fourthly, the intellectual and moral development of human beings is hindered, so intellectual backwardness and irrationality become rampant in society.  Finally, narrow sentiments like geo-sentiment and socio-sentiment start exerting a destructive influence on society.  Consequently, intellectual exploitation, dogmatic theories and doctrines, and religious superstition and rituals become widespread.

Intellectual inertia has assumed dangerous proportions.  Taking advantage of this intellectual stagnancy, rapacious capitalists deviously spread a subtle web of exploitation and suck the vitality of society.  Through this process capitalists are able to perpetuate their insidious rule of exploitation.

People have been loudly protesting against capitalism for a long time, and on numerous occasions have launched agitations against capitalist exploitation.  Remaining vigilant about people’s dissatisfaction with the capitalist system, capitalists have continually changed their methods of exploitation.  For instance, they have bought off disgruntled intellectuals and used them as tools of exploitation in their economic schemes.

Capitalism has always adapted to changing circumstances.  Thus we see that in different periods there have been different forms of capitalist exploitation such as feudalism, laissez-faire capitalism, imperialism, colonialism, neo-colonialism, mixed economy, multinational corporations, etc.  Today even communism, which was once a deadly weapon against capitalist exploitation, has become a blunt and obsolete tool.

Psycho-economic exploitation is the latest form of dangerous and all-devouring capitalist exploitation.  It is a special type of exploitation which first weakens and paralyses people psychologically in various ways, and then exploits them economically.  Some of the methods of psycho-economic exploitation include:

the suppression of the indigenous language and culture of local people;

the extensive propagation of pseudo-culture, exemplified by pornographic literature which debases people’s mind and particularly undermines the vitality of the youth;

the imposition of numerous restrictions on women, forcing them to be economically dependent on men;

an unpsychological education system with frequent political interference by vested interests;

the negation of dharma in the name of secularism;

the balkanization of society into numerous castes and groups;

the damaging of society by the use of unnatural and harmful methods of birth control;

placing the control of different mass media, such as newspapers, radio and television, in the hands of capitalists. 

Both intellectual exploitation and psycho-economic exploitation are great dangers to the human race today.

To counteract this threat, powerful popular sentiments will have to be generated immediately for the liberation of intellect.  For this, the first requisite factor is that intellectuals must keep their intellects pure and unblemished.  Casting aside all their inertia and prejudices, intellectuals will have to mix with the common people and engage themselves in their welfare.  They will have to assist the common people in their development and extend their support to all anti-exploitation movements.  This approach will help to root out exploitation, stabilize the structure of society and expand the intellectual standard of the common people.  Human society will move forward to a brilliant future with rapid steps.



Spiritual Capitalism

Besides the physical and intellectual spheres, capitalism also exists in the spiritual realm.  Some people neglect their family and society and go to caves in the mountains and perform arduous penance to fulfil their longing for spiritual emancipation.  Because of their selfishness, they keep spiritual knowledge to themselves and do not bother to arouse spiritual awareness in individual and collective life.  This is capitalism in the spiritual sphere.  It is ultravires to the very spirit of spiritual practices, which is:

Self-realization and service to humanity.

To a spiritualist, everything – right from the Creator down to a small blade of grass – is the manifestation of Supreme Consciousness.  The state of equanimity is one of the main characteristics of spirituality.  Without attaining this quality, one cannot establish oneselves in the supreme state, and one’s movement towards Supreme Consciousness will be hindered at every step.  In ancient times many people found themselves in this tragic predicament.

Genuine spiritual practice is the birthright of all people.  In all spheres of collective life – economic, political, social, etc. – a scientific and rational outlook is essential.  The inculcation of cardinal human values is an urgent necessity.  This is the demand of the age.  Because such higher values are lacking in social life, there are many incongruities and confusions in society.

Today there is an urgent need for an all-round spiritual revolution in individual and collective life under the leadership of a group of accomplished and idealistic leaders.  These leaders should be endowed with spiritual power, and their ideology should be based on the solid rock of spirituality.  Such highly qualified leaders are called sadvipras.  They will ensure social progress in all countries in all ages.

All genuine spiritualists will have to adjust with the level of the dusty earth inspired by the spontaneous love of their hearts.  They will have to share the wealth of their developed intellects with others to lighten the sorrows and sufferings of humanity.  Through their guidance and leadership, human thinking will take a new turn and move along an entirely new path.  The latent spiritual power in human beings will be awakened.  Through their effort and inspiration, the new people of a new generation will be armed with a bold new optimism and vision of the future, and march forward triumphantly.  

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7 Social Principles of PROUT

1st Social Principle of PROUT

In the flow of the social cycle, a class is always dominant.

Originally, no well-knit social system had evolved. So we may call this age the proletarian (shu’dra) era. In those days all people survived by their physical labor. Then came the era of the valiant, which we may term the warrior (ks’attriya) era. This was followed by the age of intellectuals (vipra). Finally comes the commercialist or capitalist (vaeshya) era.

As a result of the rapacity of the capitalist era, when the warriors and intellectuals are relegated to the level of proletariat, proletariat revolution (shu’dra viplava) occurs. As the proletariat has neither a strongly built society nor sufficient intelligence, the administration of post capitalist society goes into the hands of those who lead the proletariat revolution. These people are brave and courageous, and so they establish the advent of the second warrior era. After the successive order of proletariat-warrior-intellectual-capitalist eras comes revolution, and then the second cycle of similar successive order begins. Thus the rotation of the social cycle (samaja cakra) continues.


2nd Social Principle of PROUT

In the nucleus of the social cycle spiritual revolutionaries (sadvipras) control the cycle in order to liberate all.

Spiritual revolutionaries are those moral and spiritual aspirants who want to put an end to exploitation and vice by the application of force. They do not belong to the periphery of this cycle because they will control the social cycle positioned as its driving shaft or nucleus. The social cycle (samaja cakra) must revolve, but if the military in the warrior age or the intellectuals in the intellectual age or the capitalists in the capitalist age degenerate to play the role of exploiters instead of administrators, in that case the inherent characteristics of spiritual revolutionaries shall be to protect the honest and the exploited, and to bring under control the dishonest and rapacious exploiters, through the application of their special force.


3rd Social Principle of PROUT

Evolution is the acceleration of the speed of the social cycle by the application of force.

Spiritual revolutionaries (sadvipras) will initiate and establish the intellectual (vipra) age by bringing under control the warriors (ks’attriyas) as soon as the warriors degenerate into exploiters. Here the advent of the intellectual age, which should have come in natural course, is expedited by force. Such a change of eras may be called evolution (kranti). The difference between evolution and natural change is that in evolution the movement of the social cycle is accelerated by the application of force.


4th Social Principle of PROUT

Revolution is the acceleration of the speed of the social cycle by the application of tremendous force.

Revolution (viplava) is the application of tremendous force within a short time to destroy the formidable control of any era and replace it by the next era.


5th Social Principle of PROUT

Counter-evolution is the application of force to turn the flow of the social cycle in the reverse direction.

If any era reverts to the proceeding one by the application of force, such a change is called counter-evolution (vikranti). For example, the establishment of the warrior (ks’attriya) era after the intellectual (vipra) era is counter-evolution, and is very short-lived. Within a very short time the next era or the one after it again replaces this era. In other words, if the warrior era suddenly supercedes the intellectual era through counter-evolution, then the warrior era will not last long. Within a short time either the intellectual era or, by natural course the capitalist (vaeshya) era, will take its place.


6th Social Principle of PROUT

Reversing the movement of the social cycle by the application of tremendous force is called counter-revolution.

If, within a very short time the social cycle is turned backwards by the application of tremendous force, such a change is called counter-revolution (prativiplava). Counter-revolution is still more short-lived than counter-evolution.


7th Social Principle of PROUT

A complete rotation of the social cycle is called peripheric evolution.

A complete rotation of the social cycle, concluding with the proletariat (shu'dra) revolution, is called peripheric evolution (parikranti).

Guiding Principles of Economic Decentralization

Guiding Principles of Economic Decentralization

PROUT proposes five guiding principles for economic decentralization. These are:

1)  There should be local control of resources. This is especially necessary for those resources that are involved in the production of the basic necessities. Raw materials must be utilized as close to their source as possible for maximum efficiency, sustainability and benefit to the local people.       

2) Production is need-based, driven by consumption rather than profit. Commodities should be produced primarily for the local market to prevent the outflow of capital. The socio-economic unit should be of sufficient size to create stability in the local markets and economy in general.     

3) Production and distribution should be organized mainly through cooperatives. Cooperatives are largely incapable of competing in a centralized, capitalist environment. With a decentralized economy, however, the cooperative system will provide the means to ensure that everyone at the local level has employment and decision making power in the economy. This is a critical component of economic democracy.     

4) There should be local employment in local economic enterprises. This is contingent upon strong local education so that skilled people are available in all fields. Cooperatives can play a role in this process by providing on-going educational opportunities for their members as well as opportunities for implementing this knowledge. This also ensures that very talented people can be properly utilized and will not succumb to "brain drain," moving to more developed and affluent areas as is happening all over the world today. Many of the most skilled and talented move from rural areas to urban ones, and from the developing nations to the developed.     

5) As far as possible, commodities pertaining to the basic necessities which are not locally produced, should be removed from the local markets. It is essential to the development of local production that this rule be applied. Initially, people may have to accept lower quality goods, higher prices, or less availability, but with proper development in accordance with the desires of a population, good results can be achieved by retaining capital within an economic unit. If there is enthusiasm and pride in locally produced goods, this process will proceed very well. 

Trade

Under PROUT, the issue of trade must be carefully considered. Guidelines should exist so that trade is beneficial to all parties concerned and to the economy as a whole. In an economic democracy, resources are considered the property of the people of that socio-economic unit. Furthermore, one of the maxims of economic decentralization is that refinement and manufacturing should take place as close to the source of raw materials as possible. Hence, the export of raw materials is considered inappropriate in such an economic framework. An exporting socio-economic unit would lose valuable opportunities for the creation of new jobs and economic vitality. Often, economies which depend upon the export of raw materials are economically underdeveloped and have a low standard of living. Depending upon the nature of the raw materials, the importing socio-economic unit might run the risk of overemphasis on industry; or if food is involved, it may harm the socio-economic unit’s ability to become agriculturally self-sufficient. Generally, such kind of trade is not conducive to economic decentralization or to a balanced economy.

However, when a socio-economic unit has insufficient raw materials to meet the minimum requirements of its populace, the importation of raw materials may be allowed. It should be carefully verified that the imported raw materials are indeed surplus to the socio-economic unit of origin.
 
Once a local economy is able to meet the basic needs of its people, finished goods which are not and cannot easily be produced should be allowed to enter an economic unit. Care should be taken, however, that they do not undermine the market for local goods. It is good if such kind of trade takes place through barter.
 
As an infrastructure develops for the exchange of manufactured goods, the free trade of surplus, finished goods between fully self-sufficient socio-economic units should be encouraged. This will help to facilitate prosperity and socio-economic parity amongst units. As this occurs, socio-economic units may begin to merge. This is a positive development if decentralized production and economic democracy are not jeopardized. One final and important point should be made in this matter. In order to avoid the emergence of a class of rich traders and middlemen, transactions between socio-economic units should be conducted only through producer and consumer cooperatives.
 
It should be clear how this approach differs from the capitalistic notion of freedom of trade. In quest of higher profit margins, capitalists seek cheap raw materials and cheap labor while targeting markets for finished goods which can give high returns. This is beneficial neither to the people living near the raw materials (who do not reap the benefits of ownership and may simply be employed in low wage mining, agricultural, or other jobs) nor to the populace of the more affluent market, for employment opportunities decrease as industry moves to cheap labor areas. And it is only marginally better for the areas which provide the labor for manufacturing because labor conditions, wages, and benefits will be as low as the capitalists can get away with. It may or may not stimulate much local economic growth or raise the standard of living. Furthermore, tremendous energy is wasted in shipping goods and raw materials between the sites of origin, sites of manufacturing, and the final markets.  
 

Decentralization and Self-sufficiency

According to PROUT, economic planning has to begin at the grassroots level in order to make use of and develop the experience and expertise of the local population. This implies that the optimal form of an economy is a decentralized one, rather than the centralized form which is present in both capitalist and socialist countries.

Decentralization is preferred as it is the system which best allows local people to retain power over their own economic destiny. And as previously discussed, decentralization is a crucial ingredient for economic democracy.

In order for decentralization to exist successfully, there must be a cooperative economic structure. In such a structure the profit motive would be replaced by the desire to produce goods to meet the needs of the local people. The desire for profit is often at odds with this idea of production for consumption. Capitalists start industries only where favorable conditions for production and sales exist. They therefore often ignore the real needs of a population insofar as profits are often made at the expense of local people and the local eco-systems. Under the cooperative economic structure, self-supporting economic units will be the norm. Such units must be nurtured and strengthened. This requires a decentralized approach to industry as well as agriculture. Self-sufficiency does not mean only the local production of food - the industrial sector is highly important as well, and cannot be neglected. Hence PROUT advocates the existence of a full range of industries, mostly on a small scale, for every socio-economic unit.



The treadle pump, such as this man uses in Nepal, costs around $20 US, and can increase a farmer's production by $100 US per year. With this technology, many families in Asia and Africa have increased their income. In Bangladesh, their production and sales are now sustainable without any external aid (but not in Nepal or many other countries in which they are used to great benefit). Because treadle pumps would help a local community become agriculturally self-sufficient, PROUT would not prohibit farmers (or, preferably, farming cooperatives) from importing them. It would want them to do so via barter, however — and would discourage the export of surplus yields in exchange for any goods that could be produced locally.