The Pen is mightier than the sword, but the Pen must sometimes move the sword against corruption if the corrupt are not moved by the pen.. An idea without an implementer is useless. "The Rulers do not carry the sword in vain"Rom 13:4

Wednesday, February 11, 2015

The problem with the Cleveland Model of worker cooperatives.

If you analyze the model here..
You will see both good and bad. The good, is the fact that this cooperative actually contributes to original economic growth by 'growing' something (lettuce). This can be import replacement or.. export... "tick".... now for the bad news.

In terms of economic growth you have to examine each phase of the operation to see if it 'originates' money or regurgitates  existing money.

From what I see, it is mostly the latter.  So in the short term it is valuable, to the extent that it saves on imports (Lettuce) or aids in exports (same)...but all the other activity is not actually contributing to the national wealth. The jobs it provides most likely tranlate into purchases of important goods and products.. (=balance of trade.. debt) But at least they are not a drain on the Federal coffers.

THE FUTURE is GOOD?. Pressed for time at the moment so I'll make this brief.. any worker cooperative, assuming it paid a reasonable sum to the former owner, or.. have been funded externally by 'shareholders' such as the non profit corporation in the image, (and to which they are accountable.. just like capitalist enterprises are accountable to their shareholders) should aim squarely at EXPORT...   If it doesn't,  the whole exercise is just sloshing existing money around the tub...not adding to it.

THE FUTURE IS DARK?  Here's the core of the problem. Worker owned enterprises are subject to the same market forces that a capitalist enterprise is.. 'competitiveness'.  So as long as the 'worker owners' are happy to accept the full liability if things go south, all will be ok if they crash. Are they willing to mortgage their homes to finance the business? (I did)

Here is where Coops end up...FAGOR

 Although Mondragon was able to save all its cooperative workers in the first economic meltdown in 2008 all the workers had to agree to take a 20% pay cut and give back some of the equity they had acquired over the years as owners so they could pay back some of the debt some of the larger, more globally oriented coops had acquired  although the workers in the coops had little decision-making power in the acquisition of these debts. (source)

 No matter how well intended your coop....you will still face the 'blunt instrument' of 2 things.

1/ Human nature..."Why should I pay $15 for a widget made in America when I can buy the same widget for $8 made in China... then I can use the $7 saving to pay my MORTGAGE or whatever other purpose I want.
2/  The fact of China includes a regime that is committed to keeping wages low, it's currency weak, and it's politicians in power... It also happens to be the BIGGGGGG power that will soon overtake the USA in economic might.

PREDICTION. Though I'm not a prophet or the son of the prophet, I still have common sense.  So, for all you happy chappy and chicky Americans out there..specially white liberals... here is what will happen. Unions, in desperation, will use your 'Employee free choice' laws to intimidate employees of public service bodies, and state/federal employees, to join their Union.  They will do this because those groups are not subject to the competitive winds of Chinese manufactured goods. Thus... they will then become prowling predators over the rest of the masses and will plunder them for all they can extract, to maintain the cozy cushy lifestyle of the Union leaders and the Public service employees. 
The Public service workers will morph from 'servants' to tyrants, because they'll realize that unless they oppress the masses, they will lose their plush lifestyles.
Hence the fulfilment of Platos 5th regime...after Democracy comes.....Tyranny.

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