Paradigm Busters

My crystal ball has never worked very well, but the part of me that longs, that aches, for something better than our Ponzi-scheme economy refuses to give up on dreams of a humane future.

This sort of thing – rumored for weeks – could be it:

PITTSBURGH – The United Steelworkers (USW) and MONDRAGON Internacional, S.A. today announced a framework agreement for collaboration in establishing MONDRAGON cooperatives in the manufacturing sector within the United States and Canada. The USW and MONDRAGON will work to establish manufacturing cooperatives that adapt collective bargaining principles to the MONDRAGON worker ownership model of “one worker, one vote.”

“We see today’s agreement as a historic first step towards making union co-ops a viable business model that can create good jobs, empower workers, and support communities in the United States and Canada,” said USW International President Leo W. Gerard. “Too often we have seen Wall Street hollow out companies by draining their cash and assets and hollowing out communities by shedding jobs and shuttering plants. We need a new business model that invests in workers and invests in communities.”

Josu Ugarte, President of MONDGRAGON Internacional added: “What we are announcing today represents a historic first – combining the world’s largest industrial worker cooperative with one of the world’s most progressive and forward-thinking manufacturing unions to work together so that our combined know-how and complimentary visions can transform manufacturing practices in North America.”

Highlighting the differences between Employee Stock Ownership Plans (ESOPs) and union co-ops, Gerard said, “We have lots of experience with ESOPs, but have found that it doesn’t take long for the Wall Street types to push workers aside and take back control. We see Mondragon’s cooperative model with ‘one worker, one vote’ ownership as a means to re-empower workers and make business accountable to Main Street instead of Wall Street.”

Both the USW and MONDRAGON emphasized the shared values that will drive this collaboration. Mr. Ugarte commented, “We feel inspired to take this step based on our common set of values with the Steelworkers who have proved time and again that the future belongs to those who connect vision and values to people and put all three first. We are excited about working with Mondragon because of our shared values, that work should empower workers and sustain families and communities,” Gerard added.

In the coming months, the USW and MONDRAGON will seek opportunities to implement this union co-op hybrid approach by sharing the common values put forward by the USW and MONDGRAGON and by operating in similar manufacturing segments in which both the USW and MONDRAGON already participate.

…

About MONDRAGON:

The MONDRAGON Corporation mission is to produce and sell goods and provide services and distribution using democratic methods in its organizational structure and distributing the assets generated for the benefit of its members and the community, as a measure of solidarity. MONDRAGON began its activities in 1956 in the Basque town of Mondragon by a rural village priest with a transformative vision who believed in the values of worker collaboration and working hard to reach for and realize the common good.

Today, with approximately 100,000 cooperative members in over 260 cooperative enterprises present in more than forty countries; MONDRAGON Corporation is committed to the creation of greater social wealth through customer satisfaction, job creation, technological and business development, continuous improvement, the promotion of education, and respect for the environment. In 2008, MONDRAGON Corporation reached annual sales of more than sixteen billion euros with its own cooperative university, cooperative bank, and cooperative social security mutual and is ranked as the top Basque business group, the seventh largest in Spain, and the world’s largest industrial workers cooperative.

About the USW:

The USW is North America’s largest industrial union representing 1.2 million active and retired members in a diverse range of industries.

Here’s the Ocholphobist – a guy who’s experienced at making beautiful objects with his hands, but who seldom writes on such things any more – weighing and balancing the workers’ cooperative model:

I recently spoke with an old Catholic Worker friend of mine who told me of a talk given recently in which he heard that Mondragón is worried that an EU style bailout of Spain along the lines of what happened in Greece would actually hurt the cooperatives (Mondragón is not the only one) in Spain. Large financiers generally do not like cooperatives like Mondragón because they do not run with the sort of debt load and constant large debt shifting that a typical corporation does, and the debt they have tends to be decentralized – spread out over a number of smaller financial institutions (note that one of the “four areas of activity” Mondragón is engaged in is finance – this is common among worker cooperatives in Europe — just as many communities and groups of workers in America have local credit unions and many large corporations have their own finance divisions) . And these EU bailouts, like the American bailouts, buttress large finance, with the de facto result that midsize, small, and micro finance options are left in a less competitive position than they would be were there no bailouts, or less centralized bailouts.

The labor movement in the U.S. has little leverage against corporations and its impotence is increasingly pathetic. Often in the American context, when a union does manage to maintain some real power it uses it in as corrupt and abusive a manner (often abusive toward their own, these days) as corportatist power brokers do. But usually American unions are in the business of losing what power they have had so this is less and less a concern. It seems to me that if there is to be any future in workers organizing for their own protection and aid in the United States it will primarily be along the lines of models such as the one Mondragón provides. But I rather doubt that will happen beyond a few small scale efforts and the occasional lipservice. Worker cooperatives do not really fit into the destructive plutocratic order in which we find ourselves today.

It should be noted that in most worker cooperatives (I daresay nearly all of them that last for more than a few years) there is not a utopian vision of financial egalitarianism. There is still a meritocracy at play, arguably more so than in current corporatist models. A worker (or a small worker owned business seeking membership in the cooperative) is not guaranteed to be vested in the cooperative, but must earn it over years and invest himself or herself in a manner which shows to others competence and seriousness and follows well established protocols, with a system in place to curb abuses and address complaints. One will see in a worker cooperative, however, more money staying within the communities where the cooperative is found, and nothing like the radical disparity between the wages of workers and the salaries of executives such as we see in most U.S. corporations, in which execs are paid for their skills in social networking and an ability to manipulate government and lying to the public with that perfected air of banality we routinely see from our suits.

All that said, the ethos of Mondragón Corp has undergone something of a change since EU integration and taken something of a more EU character. The EU is a sly dog. Within the EU constitution there is a mandate which requires the EU to follow the principle of subsidiarity, but as we see with the recent bailout of Greece (along with a host of other moves), the EU is often the furthest thing from an institution which follows the principle of subsidiarity. There is the possibility of a convenient use of subsidiarity rhetoric whilst actually following centralized, top-down, corporo-statist models. It is quite conceivable that cooperatives could be formed which, on paper, look like cooperatives, but which actually function more like corporations.

It is now not uncommon for American Orthodox to argue how neo-con, paleo-con, or libertarian political and/or economic orders are somehow in keeping with Orthodoxy. I suppose an Orthodox embracing subsidiarity would simply be another act in that circus. The chief fault of subsidiarity, as I see it, is that the notion is too vague to be of serious use when applied to any macro-economic vision. One finds both Leftists and those on the Right espousing the ‘true’ version of subsidiarity. Subsidiarity works best as a flexible guiding model in particular micro-economic environments, a part of an economic order with a wide array of labor structures, such as we see with Mondragón Corp in the context of Spain. I have a friend who says he would never fly Distributivist Air, were there such a company. I am not sure that a well run worker cooperative airline would be any less safe than the typical corporate airline, but I have worked for a family owned business of which the thought of the coworkers I had at said business owning that business sends shivers down my spine. Another business I once worked for did go for a varient of the subsidiarity model, and is now in dire straights with half of the staff let go, instead of being sold to a friend of mine who could have actually kept the business thriving, seeing as how he had run it successfully for some years. The original owner, instead of selling to my friend, decided to follow a hasty subsidiarity minded scheme presented by an employee with many ideals and little actual experience in the business and now, out of desperation, the company mimics corporate stores more than it ever did. I suppose that in business, as in most of life, there is a charism to doing things well and any economic order can get in the way of a given charism at a given time.

I was unaware of this book until the Ochlophobist linked it. It’s on my wish list now. And here’s more about Mondragon (in a Wikipedia article that the Wikipedia poobahs would like to see rewritten for greater objectivity).

Red Tories | Front Porch Republic

I haven’t decided yet whether I like The American Conservative enough to renew my subscription, but the June issue is excellent, and I’d recommend that you pick it up before the next issue rolls around.

The feature article of the June issue is “Shattered Society,” an essay by Brittish philosopher and politics wonk Phillip Blond, who styles himself a “Red Tory.” The subhead is “Liberalism, Right and Left, has made lonely serfs of us all,” and asks “Does the Red Tory tradition offer a remedy?”

The article is powerful. The responses (e.g., Daniel McCarthy, Nicholas Capalidi) are provocative. Like Daniel Larison at Front Porch Republic, I thought Capaldi’s response was badly misguided. I even though it was condescending psychobabble, probably a calculated hatchet-job commissioned by corporate interests. That’s why I blog while Daniel Larison blogs and can actually get a job writing professionally. He insinutes the same sort of thing but does it more nicely.

“White flight? Suburbs lose young whites to cities”

The Daily Astorian – Astoria, Oregon.

The headline is bogus, but lifted right from the linked article. This is not “White flight” as if young whites are fearful of minorities. It is an effort, conscious or not, to achieve a more humane and less car-centered life.

But think of the next step: poorer folks move into the now less desirable suburban homes just in time to experience the ravages of peak oil, making them poorer still (as they fuel their behemoths) and the rich still richer (as they walk to work, restaurants, etc., free of such urgent need to burn fossil fuels in their personal transporters).

Healthier, maybe; but often more energy-efficient, too.

In Chalk One Up for Organic at Front Porch Republic, Kathleen Dalton discusses a study from the Land Institute that, although aimed at a different objective, was also able to show that organic farming is in many areas more energy-efficient than conventional, chemical-based farming, even when the increased need for human labor is taken into account.

Distributist economist John Médaille comments not to forget the fuel costs of moving food across the country, either.

This follows uncomfortably (for the friends of corporate megafarms) the publicity about Roundup-Resistant weed infestations.

When will we ever learn that there is no technology fix for finitude? There are limits in this created world. We may not know where they are exactly, but the chronically recurrent giddy glee (E.g., “Oh boy! The pill! Now we can have all the sex we want, whenever we want, with whomever we want, without consequences!” Or “Oh boy! Roundup! …”) is delusional.

“A very efficient way of producing human happiness.”

There’s an excellent little essay by Mark Mitchell at Front Porch Republic today that distills a lot of what that site/blog/movement is about. I especially liked this paragraph:

Wilhelm Röpke recounts a conversation he had with a prominent economist in the aftermath of WWII. As they strolled along the streets of a German town, Röpke pointed, with satisfaction, to the many small vegetable gardens kept by the residents of city. The economist shook his head disapprovingly and grumbled. “A very inefficient way of producing foodstuffs.” Whereupon Röpke responded, “But perhaps a very efficient way of producing human happiness.” This rejoinder takes us to the heart of the matter. Happiness is the proper end of life. By happiness I do not mean the glib and transitory pleasure that so often is confused with happiness today. Happiness, as described by classical and Christian thinkers, is a life of excellence in accordance with goods and standards (both natural and supernatural) that are suited to human beings. This sort of happiness is not achievable in isolation, for humans are creatures fit for community.

Efficiency and specialization are tools, to be set aside when they fail to promote human happiness. Too often, they are among the things that “are in the saddle and ride mankind.”

Goldman Sachs – “the other side” told persuasively

“Goldman Sachs” is not a term of endearment at my favorite websites, such as Front Porch Republic. And I have reflected my own ill-ease with such too big to fail concerns in recent weeks, as well as passing along some counter-arguments.

Wall Street Journal columnist Gordon Crovitz today defends Goldman Sachs in his own way: short selling a derivative signals the market that a sector may be ready to collapse. I certainly agree with that – just as short selling a stock signals that a particular stock may be ready to tank.

The most telling point for me in Crovitz’s column – apropos of why the SEC may lose its case against Goldman Sachs rather than why derivatives are good – is simply that once you accept the premises that (1) shorting a derivative is beneficial because it signals the market of a possible sector collapse, and (2) long buyers in these specially created securities knew someone else was selling short, it seems to follow that “it would be hard to prove that it mattered who [the short seller] was.” That John Paulson was selling short and that Goldman Sachs bundled the derivative for him seems to be what SEC thinks GS should have disclosed.

All this, of course, ignores John Médaille’s, invocation of Aristotle and Aquina to distinguish natural from unnatural market exchanges, but Distributist economics are, for the time being at least, so far out of the mainstream as to be easily ignored. Considering the repeated failures of mainstream economics, that may be ripe for change.

The Democrats have a bright if peurile idea: “Hey, guys! I’ve got a great idea! Regulation utterly failed to prevent the economic collapse, and voters are mad at Wall Street, so lets grab this chance to make Washington bigger with even more regulation! Whaddya think, guys?!” (I’m not sure the Republicans have a counter-plan. They’re just in denial that a market could fail.)

Pretending to regulate something as complex as derivatives is destined again to fail, so I would be remiss were I to pass up, before Congress passes “the most sweeping overhaul of the financial regulatory system since the aftermath of the Great Depression,” not to sing another rousing chorus of “if they’re too big to fail, bust ’em up!”

Crony capitalism

I haven’t yet, and probably never will, fully think through this editorial from today’s Wall Street Journal, titled An Economy of Liars. The author is from the Cato Institute, a right-libertarian group, so read it discerningly for that bias.

Thomas Carlyle, the 19th century Victorian essayist, unflatteringly described classical liberalism as “anarchy plus a constable.” As a romanticist, Carlyle hated the system—but described it accurately …

The idea that multiplying rules and statutes can protect consumers and investors is surely one of the great intellectual failures of the 20th century. Any static rule will be circumvented or manipulated to evade its application. Better than multiplying rules, financial accounting should be governed by the traditional principle that one has an affirmative duty to present the true condition fairly and accurately—not withstanding what any rule might otherwise allow. And financial institutions should have a duty of care to their customers. Lawyers tell me that would get us closer to the common law approach to fraud and bad dealing …

Hayek’s mentor, Ludwig von Mises, predicted in the 1930s that communism would eventually fail because it did not rely on prices to allocate resources. He predicted that the wrong goods would be produced: too many of some, too few of others. He was proven correct.

In the U.S today, we are moving away from reliance on honest pricing. The federal government controls 90% of housing finance. Policies to encourage home ownership remain on the books, and more have been added. Fed policies of low interest rates result in capital being misallocated across time. Low interest rates particularly impact housing because a home is a pre-eminent long-lived asset whose value is enhanced by low interest rates.

Distorted prices and interest rates no longer serve as accurate indicators of the relative importance of goods. Crony capitalism ensures the special access of protected firms and industries to capital. Businesses that stumble in the process of doing what is politically favored are bailed out.

Note through this that it’s not just big business lying. Big business and government are in bed together.

But “financial institutions should have a duty of care to their customers”? And “Deregulation is not some kind of libertarian mantra but an absolute necessity if we are to exit crony capitalism”?

Yes, but who will enforce that if not the “cognitively captive” regulators? Class action lawyers? Sheesh! They’re as unpopular as bureaucrats, and justifiably so in many, many (most?) cases. Dismantling regulation per se is not an adequate response. That will only leave us captive to megacorp or to a new cartel of judges and shysters with a chaotic jumble of 50 different rules, one per state.

On the other hand, a local bank, not answerable to a Mother Ship in New York City, might behave itself without massive, Washington-based regulation and without big gun bullshit slingers like the Breck Girl, John Edwards, to sue them if they do get out of line.

Isn’t this another indicator that we need some trust busting of the “too big to fail”? Then we can deregulate. Right?

Greetings, Masson’s Blog followers

There’s no explanation for the traffic spike today besides Doug Masson’s kind words at his blog. Welcome to you all.

I’ll see if I can come up with something new to say, but meanwhile those of you converging from the left coasts should like “Places not worth caring about” from last night. James Howard Kunstler posits, among other things, that if we keep building places not worth caring about, we’ll soon have a Country not worth caring about – a point on which there should be ample ground between thoughtful liberals and conservatives, I’d think. We’re embodied creatures, after all, and the space we inhabit affects us powerfully.

Like a lot of young men, I once thought I’d be an architect. I quickly learned that I did not have what it took, so I thought I’d be a homebuilder. I abandoned that for different reasons – heck, it was the 60s and early 70s and everything was unsettled – and eventually landed in the disreputable profession of law, having tired of making an honest living. [Note to self: locate smiley-face icon. Or winky-face.]

Doug described me as a true conservative, which I’ll take as high praise. Religiously, I went off the scale 13 years ago, embracing Eastern Orthodox Christianity – which it’s critics fault for not changing with the times. To that, I say, “Damn straight!” That’s as conservative as it gets religiously, though you’ll find some Obama bumper stickers in our parking lot on Sunday. Religious and political conservatism are not, except for perhaps a few issues, a package deal.

Back to places worth caring about. I’m Chairman of my Church Building Committee as we plan a new building that we intend to be very much worth caring about. Here’s a few thoughts I shared along with two key renderings. [Note to self: incorporate PayPal button for friendly Church Building Fund donations.]

We’ve hired a Charleston, SC designer to lead in the design of an Orthodox temple and site to cherish for centuries. His sensibility is New Urbanist, but we’ll be building at 43N and 225 just west of Battle Ground, on 8 acres currently supporting corn or soybeans.

As important as the temple itself – which will even have real plaster walls to receive iconography in the future – is the site plan, creating a fitting sense of both invitation and separation, with a courtyard that will serve a fairly important purpose at “Orthodox Easter.” The idea is not alien to the points Kunstler is making about urban spaces in “Places not worth caring about.”

Again: welcome, visitors/newcomers.

Places not worth caring about

In James Howard Kunstler’s view, public spaces should be inspired centers of civic life and the physical manifestation of the common good. Instead, he argues, what we have in America is a nation of places not worth caring about.

And argue it he does, with passion in the greatest tirade I can recall ever watching. Take 19:48 to watch it yourself and see if you can keep from laughing – and agreeing. (Oh yeah: watch it with your earbuds or after the kiddies are down for the night.)

“Suburbia – Advanced Mutation” and “What’s Really Going On Here?” look too much like the postwar excrescences in my hometown. I used to think it was my town that was the problem, but most of the stuff built since World War II – i.e., most of the stuff built in my lifetime – is not worth caring about.

After the Market State: Phillip Blond on the Future of a Free Society

I must pass along an important lecture which summarizes the direction my thought has been heading in politically.

Society and the private sphere have become increasingly monopolized by the state and the market, which seem inadequate for dealing with increasing economic and social dysfunction. Phillip Blond, the influential Director of the London think-tank Respublica, argues for the necessity of the enduring bonds of family and local community, and the wide distribution of property and public responsibility that these require. Blond will outline the vision that has increasingly captured the attention of Britains Tory Party in his lecture, Red Toryism: What it means and why it is a genuinely radical alternative to the Market State.

I tried to embed the YouTube video here, but couldn’t get that to work.