Bailing Out Workers Not Corporations: Five Point Plan for Community (NOT Corporate) Wealth Building.

Today, we begin our exploration of strategies through which we can finally achieve economic, social, racial, and climate justice in America. Today’s post outlines a plan to retake our local economies, restore their wealth and their autonomy. Read on!

Democratizing the Workforce Post COVID:
The Democracy Collaborative’s Five-Point Plan

As noted on Monday, many feel we are at a crossroad as a nation and that receptivity to bold and meaningful change is more likely in 2021 than at any time in our lifetimes. Retake is working to investigate transformative policy and legislative initiatives that have been researched and often implemented in other states and nations with our newly formed Transformation Study Group (TSG), which meets twice monthly by Zoom. They are investigating how to achieve a clean environment, affordable housing without displacement, truly expanded and progressive tax structures, democratizing the workplace, and re-imagining education and other policy areas. Briefs will begin emerging from this group this fall. If you would like to participate and have an instinct for or a background in research, send us a note and tell us a bit about you. We are holding tremendous conversations and examining some truly groundbreaking possibilities. Write to RetakeResponse@gmail.com if you want to explore getting involved with the TSG.

While the TSG is doing its work, we are launching a series of posts that will examine the work of other US think tanks that have been examining an alternatives to our capitalist economy, our undemocratic workplaces, our unhealthy health system, and more generally, our failure to focus public policy on people and planet instead of private profit. We want to expand the public discourse and raise our expectations as to what we want and how we can get it. If others are correct and America is thirsting for meaningful change, we want to begin broadcasting what that could look like.

In Monday’s post, we used the following two passages from the Democracy Collaborative’s most recent newsletter to put this work in context:

“Each passing day we are faced with further evidence of the scale of the crisis we are now facing. A potentially unprecedented wave of evictions as moratoriums come to an end; the threat of far-reaching utilities shutoffs as residents struggle to make ends meet; small businesses shuttering with little relief in sight. And all this on top of the heartbreaking and uneven landscape of preventable death, with Black, Indigenous and other people of color bearing the brunt of the pandemic and its fallout. The scale of the crisis necessitates immediate and decisive action. But these actions will be ineffective if we do not acknowledge a fundamental truth: we were already in crisis long before the COVID-19 pandemic. What we are observing now are the logical outcomes of a political-economic system that by design puts profit and “shareholder value” over peoples’ lives and the health of our planet.”

From Democracy Collaborative. “August 2020 Newsletter”

And now the vision: a democratic and reparative economy instead of an extractive, predatory, and profit-driven economy, again from the Democracy Collaborative.

“There is no reason why the ruptures generated by COVID-19 need to result in a return to the status quo of continued extraction, inequality, and ecological destruction. Rather, we can, and must, choose policy responses that build the groundwork for this democratic and reparative economy.”

From Democracy Collaborative. “August 2020 Newsletter”

The Opportunity for
Transformation of the Economy & the Workplace

Once America emerges from the COVID-19 pandemic we will inherit an economy with millions of bankrupted small-to-medium-size enterprises (SMEs) that are the beating heart of American communities. We will face an enormous challenge in rebuilding our economy, will have the opportunity to rebuild our crumbling infrastructure, and a critical need to transition from fossil fuels to renewable energy.

To address these challenges and opportunities, we can revitalize the economy the way another Democratic administration did in 2008, offering the mega banks who caused the meltdown massive bailouts and unconditionally bailing out failing industries like the auto industry. Or we can follow a different path that is delineated in the Democracy Collaborative’s five-point plan, “Owning Our Future After COVID-19,” a plan that would begin with a shift in perspective on what local communities are for and how they are valued.

“The key challenge of building back better is to
ensure the community sector is seen not merely
as a consumer of services, but also a leader, an
innovator, a wealth builder and a valuable
contributor and important co-designer in policy
decisions in the new economy.”

From The Democracy Collaborative: “Owning Our Future After COVID-19”

The current capitalist model views us as impotent customers of the goods and services they produce or as cogs in their wheels, employed when and how they see fit. We have no say in where they open operations, what they produce, what it costs, and whether or not it truly benefits us individually or collectively. The Democracy Collaborative first offers a different vision of what our role should be in our economy and then then lays out precisely what a democratic (small d) relief effort and a sustainable economy would look like. Their plan is comprised of five parts:

  1. Preserve local community economies by blocking financial extraction and consolidation;
  2. Extend public ownership in the public interest;
  3. Ground economic reconstruction in a new era of community wealth;
  4. Institute a green industrial strategy on the basis of a green stimulus recovery package;
  5. Establish a next-generation institute to support the movement for a democratic economy.

I. Preserve local community economies by blocking financial extraction and consolidation;

Today, private equity investors are said to possess $5 trillion in funds and are poised to come in and swoop up the best of these small and medium-sized enterprises at a bargain price and reorganize those businesses to extract the maximum profit for investors living far from the communities where the work is done.

There is another way to restore those businesses.

To preserve SMEs and the wealth of local communities, The Democracy Collaborative calls for using federal, state, and local funds to acquire the SMEs, preventing equity capitalists from scooping up those businesses and reorganizing them to maximize profit and extract wealth from communities.

“First, we must call for mobilizing public capital to prevent the leveraged buyout of local economies by private capital. One mechanism could be a federal, state, or even city-level holding company that would acquire struggling SMEs and hold them until they could be relaunched in the recovery. One historical model is the Reconstruction Finance Corporation, used to great effect in the New Deal when it became the nation’s biggest bank and single largest investor.”

From The Democracy Collaborative: “Owning Our Future After COVID-19”

In New Mexico, think in terms of using some significant proportion of the billions of dollars held by the state in the Land Grant Permanent Fund and funds managed State Investment Council as funding that could be used for this purpose. With NM having one of the largest permanent funds in the world, we are uniquely poised to implement just such a strategy. To advance the goal of democratizing the workplace, preference could be given to businesses that agree to reorganize as worker-owned and/or worker-managed businesses, thus ensuring that essential workers are treated like the important workers they are. NM could actually implement this strategy and create the legal and financial framework to salvage our local economies in the 2021 legislative session.

Another investment strategy would involve the Treasury:

“The Treasury Department should be urged to quickly expand the capital base of the nation’s roughly 1,000 community development financial institutions, which use a combination of federal and investor assets to lend in disinvested, beaten-down communities. The emphasis should be on CDFIs that specialize in employee ownership and support for local business.”

From The Democracy Collaborative: “Owning Our Future After COVID-19”

This is an entirely different approach to economic stimulus, one designed to build local, worker-owned and/or managed business community that recycles income in the community, instead of extracting it to Wall St. profiteers. In NM, we have an opportunity to create a State Public Bank, a vehicle we have described before. Even if legislation is passed to initiate the development of a NM State Public Bank, it would take a few years to create, but once established it could be an important partner in this kind of strategy, partnering with community banks, credit unions and CDFI’s by leveraging the state bank’s deposits to seed employee owned and other local businesses.

II. Extend public ownership in the public interest.

Recall that in 2008-09, Obama bailed out the mega banks, who promptly purchased a huge amount of foreclosed real estate at bargain prices, reselling those properties at exorbitant profits and leaving the foreclosed penniless. This is a perfectly reasonable market-driven strategy in a neoliberal, dog-eat-dog, capitalist system. We do not have to operate this way. We also bailed out the auto industry without securing anything in exchange, like commitments to build electric vehicles or secure union salaries. In both instances local economies and workers gained nothing while the mega corporations were infused with huge amounts of capital. And so the second part of The Democracy Collaborative’s five-part plans calls for a new approach to salvaging failing corporations and industries, not bailouts, buyouts.

First, in order to protect communities, workers, and the environment, we must block crisis profiteering by absentee corporations and extractive capital. If the government bails out large corporations, it should receive ownership stakes in return and use its voting rights to restructure and repurpose companies in the interests of people and planet. The time has also come to establish long-term democratic public ownership as a new common sense, especially in essential sectors such as utilities, housing, transportation, education, and health care.

From The Democracy Collaborative: “Owning Our Future After COVID-19”

So, for example, if an automotive industry corporation is seeking a bailout, terms would include public majority ownership and majority board membership along with conditions that the company transition to producing far more electric vehicles and rather than paying exorbitant executive salaries, pay living wages with benefits for essential workers. Likely, corporations would see this reform coming and could avoid having to play by the new rules by utilizing mergers with other mega corporations who then agree to continue their extractive ways. The Democracy Collaborative offers the following as a solution to these mergers:

To block crisis-enabled financial extraction, the public should be given the right of first refusal on large corporate acquisitions and mergers during the crisis and recovery. Approval of corporate acquisitions and mergers in essential industries—food, medical equipment, pharmaceuticals—could be conditioned on companies adopting new charters mandating public interest and democratic governance approaches. Such steps could prefigure an era in which maximizing returns to capital is viewed as outmoded, archaic, and dangerous in a world of interdependence and resilience. 

From The Democracy Collaborative: “Owning Our Future After COVID-19”

The Democracy Collaborative specifically identifies vaccine and medicine production as industries that should be nationalized and organized and focused on public benefit, not private profit, a strategy that we will lay out in greater detail on Friday. They also see the fossil fuel industry as a candidate for a government buyout (see Part IV below). In short, instead of using its immense financial and legal leverage to foster sustained exploitation and exorbitant profit, the government uses its power to advance local communities, workers, and families.

III. Ground economic reconstruction in a new era of community wealth.

The Democracy Collaborative calls for an end to the practice of building local economies by trying to lure outside, large corporations to open franchise businesses that extract and export the profits while exploiting the workers. Instead The Democracy Collaborative proposes an entirely new approach to restoration of local economies, one predicated upon building community wealth, not extracting it.

Building community wealth should be the basis of a national reconstruction strategy. The explosion of mutual aid groups and community tables in the crisis could be incorporated into a major push to build power at the community level, centering recovery and reconstruction in the paradigm of community wealth.

From The Democracy Collaborative: “Owning Our Future After COVID-19”

One strategy that The Democracy Collaborative has long advanced is having local government partner with what they call “anchor institutions” like hospitals, school districts, and other larger locally-owned business stakeholders to encourage and facilitate anchor institutions to be more purposeful in purchasing and service procurement. By relocalizing how these institutions do business, local funding recirculates in the local economy rather than being exported to absentee businesses.

When Roxanne and I toured progressive cities across the country two years ago, we visited Rochester NY, a city that worked with a local supermarket chain that had planned to contract with a firm from another state to do its janitorial services. Instead, the city provided seed funding to form a worker-owned cooperative to provide the service to over a dozen stores. In this way Rochester dollars were invested in Rochester workers operating in a democratized work environment with the market chains resources recycled within the local economy.

On the next stop in our tour, Roxanne and I visited Buffalo where we saw an even more expanded version of how anchor institution partnerships could develop and sustain local economies. The city’s largest employer, Buffalo General Hospital, partnered with PUSH Buffalo, a non-profit community organization who developed worker-owned cooperatives that revitalized abandoned neighborhoods, purchasing and renovating abandoned housing, installing renewable energy systems and energy efficiency measures, and then sold or rented the housing to low-income residents, many of whom were employed by PUSH Buffalo or one of the many small business operators launched by PUSH. One extraordinary product of this work was the transformation of a long abandoned three-story elementary school, donated by the school district (anchor institution) with the upper floors converted into Affordable Senior Housing while the lower floor was converted into a vibrant community center with a community theater and community meeting spaces. These are the kinds of things that can be done if the primary purpose is community benefit, not private profit. And there are many other successful models employing these kinds of alliances as The Democracy Collaborative has been providing technical assistance to communities throughout the nation to implement local models of what was done in Rochester and Buffalo. But they are largely small-scale pilots, not the standard way of doing business. The Democracy Collaborative proposes that we move beyond pilots and transition how local government and their anchor partners do business, all business, not just a contract here and a pilot project there.

IV. Institute a green industrial strategy on the basis of a green stimulus recovery package.

The fourth part of The Democracy Collaborative’s plan is for federal and state government to invest in a green stimulus package that creates living-wage jobs, transforms the public health and housing sectors, and shifts the economy away from fossil fuels. They point out that the very same populations and communities that are being disproportionately impacted by COVID and the related recession are the ones who will also be disproportionately impacted by the looming climate crisis.

The Democracy Collaborative recommends publicly owned renewable energy grids and generation, investments in energy efficiency improvements in public and/or low-income housing and a complete shift from community reliance on absentee corporate ownership of a vast array of services and products. To achieve this, they recommend restoration of local control of food chains, energy generation, and other essential services, not just in service of economic justice and local wealth building but because the for-profit corporations have utterly failed us during COVID and will continue to do so in addressing climate change.

We will not make our way safely through the climate emergency if our economy remains dominated by corporations with a primary duty to profit maximization and investor return. This crisis has shown how the market fails when confronted with existential risk, and how basic services that should be universal—such as broadband or energy—cannot be treated as the byproducts of profit-seeking investments.

The Democracy Collaborative specifically calls for the energy industry to be municipalized. In NM, this is the exact strategy that our State Land Commissioner endorsed when she appeared on Retake Our Democracy’s radio show in March. With this kind of vision and leadership, it could be possible for NM to free itself from its incessant tug of war with privately owned utility companies like PNM and chart our own energy future, without shelling out millions in exorbitant CEO pay and hundreds of millions in shareholder profit.

This moment should be used to transform our utility system, perhaps through a new federal Community Ownership of Power Administration (COPA), working for a large-scale shift from investor- to community-owned energy.

From The Democracy Collaborative: “Owning Our Future After COVID-19”

Part Four of The Democracy Collaborative’s plan explicitly links economic, racial, and climate justice.

V. Establish a next-generation institute to support the movement for a democratic economy.

The Democracy Collaborative introduces this strategy with acknowledgment of the tremendous work done across the nation of local community-based and justice focused organizations and coalitions, but they then note that whatever the initiative being advanced by these groups in whatever community, they encounter headwind from local and state government rather than being facilitated, expedited, and supported by government. It is always a battle. And so, The Democracy Collaborative proposes a realignment of local power structures, power structures that transcend siloed, single-issue advocacy and build coalitions that recognize a common enemy: corporate capitalism, and a complicit ally: government. They ask advocates to connect the dots, join forces, and seek a unified platform such as the one proposed in this and future posts.

Throughout American history, broad social movements have succeeded in pushing forward progressive agendas, whether in the Progressive Era, the early labor movement, or the civil rights movement. We need such a movement appropriate for our own times and challenges, linked to a system change agenda, capable of pushing radical “non-reformist reforms.” Our communities must start demanding a new approach that can hold local and national political leadership to account.

From The Democracy Collaborative: “Owning Our Future After COVID-19”

The Democracy Collaborative acknowledges that forging and sustaining these kind of coalitions will require a different kind of leadership capacity and a deeper understanding of the elements of a new, revitalized, democratic local economy. And so they propose the development of robust training and technical assistance organizations that development the knowledge and offer training and technical assistance to local coalitions.

Building the alignment, power, and energy that fuels a movement such as this will require deeper and more innovative approaches to political education. We envision a new research and training institute that supports movement-building and the development of resilient and long-term leaders, who become fully aware of cutting-edge practices and policies in many countries, trained in theories of organizing and enterprise development for long-term systemic change. 

From The Democracy Collaborative: “Owning Our Future After COVID-19”

Assuming Biden wins, we will be at a crossroad, with one path relying upon the same neoliberal policies and practices that created the wealth gap, the crumbling infrastructure, and climate collapse. Political leadership will likely initially advance the use of the same tired public investment policy that subsidizes corporations who then extract concessions from workers as their way of saying thank you. This five-part plan is a complete departure from this model, essentially allowing local communities to retake their wealth and their autonomy.

On Friday, we will explore how elements of this plan have been developed by The Next System Project to outline how we could retake from the mega corporations the research, development, and manufacturing of medicine and vaccines to vast benefit of our future resilience to disease and pandemic. COVID has provided ample evidence of the need for such a transformation.

We can do this.

To read the full Owning Our Future After COVID 19, click here. It is worth it.

In solidarity,

Paul & Roxanne



Categories: Economic Justice, Community & Economic Development

Tags: , , , ,

6 replies

  1. It sounds good basic but I do not see much written here about the very foundation of all change.
    Explicit and spelled out basic moral/humane and ethical principles underlying policies and any use of ‘technical help’. Also, government institutions like cities and states as well as their departments are populated by ‘people’. So, it depends on what ethics those people follow. Maybe they follow the ethical principles of the ‘christian right’ or those moral principles of any other ‘orthodox’ religion?

    • I agree, eduardo. As Roxanne has pointed out, what we need are new minds. When people sense connection to a place on Earth, and to community, we will certainly move toward sustainable and peaceful ways of living.

      There is the matter of spreading the ideas. I don’t know how to counter the massive power of the corporate and right-wing media; somehow, though, we have to publicize the vision that life can be more than working away, trying to pay rent and acquire stuff.

  2. I really like all the hopeful ideas presented here. In Los Alamos we just lost our print newspaper, our radio station, and our movie theater (all in the past month or two). I wonder how some kind of public entity or collective could provide services to replace these institutions.

  3. I think the work of the Democracy Collaborative provides an initial framework for what we could organize here in New Mexico., I hope this happens.

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