9) Local Investing Options
The money that has been used for financial speculation must be redirected to productive, local, socially responsible investment.
For instance, in the face of the mounting global warming crisis, people in towns in the Great Plains states (America's Saudi Arabia of wind) could invest in local wind turbine projects getting a return on energy sold to local power plants. The same could go for, say, solar projects throughout the Southwest.
During my research, I took a four-year look at Bluffton, Ohio (pop. 3,877) for a series of America's Best Town books. This town had a lot of elements of The New Economy, which will be referred to throughout the rest of the paper.
While in Bluffton, I attended a seminar on for Socially Responsible Investing. Mark Reiger is a stewardship representative for the Mennonite Mutual Association. MMA manages an investment fund of $1.2 billion.
Reiger said when looking for companies to invest in, MMA weighs such factors as: How environmental conscious is a company? Does the company pay a fair wage? What kind of social justice cause, if any, does the company back?
MMA, for instance, invests in major U.S. coffee companies that support fair trade coffee.
With this new jacked down economy, we would propose legislation that would allow First Mennonite church in Bluffton to develop a fund of its own. In essence, this would become a local mutual fund.
And they might invest in the Ten Thousand Villages store in their town. A big item at Bluffton Ten Thousand Villages is fair trade coffee, and other fair trade art work, sculpture, knitted clothes from villages in the Third World…
Bluffton also represents another twist to local investing. Several years ago, a group of Blufftonites formed a board and started an S-Corporation for the Common Grounds Coffee Shop downtown.
They sold Common Grounds shares at $1,500 a share. Some 62 town people bought shares. What's more, some of these shareholders put sweat equity into the place, helping to rehab the building.
Common Grounds manager Pet Suter told me that the shareholders did not invest because for they thought they were going to retire early: They did it because they thought such a venue would be good for the town in bringing people together.
And therein lies the ethos of The New Economy.
10) More Local Investing (Agrarian)
A big component of The New Economy will be a shift back to a much more decentralized, organic, agrarian based society. Our administration, for one, would push to classify mega-corporate farming as a monopoly and break this up.
In turn, we would provide a multitude of incentives for re-invigorating the establishment of the small family farm, en masse. This was once the backbone of our country. And we believe it should be again.
With this restoration, we would also promote much more local food production for local consumption.
One economic investment avenue in this new context would be for community sponsored agriculture. Bluffton, Ohio, had one of these as well.
With produce now traveling thousands of miles from field to table, we have lost the connection between local farm, land and consumer, T.R. Steiner told me.
His Red Oak Run Farm offers people per share ($390 a full share and $200 a half share) for a growing season. In return, shareholders receive weekly produce from the farm. What more, if a full-shareholder chooses to work 10 hours on the farm, they get $100 off. And if a half-shareholder works five hours, they get $50 off.
“People say that’s generous,” said T.R. “But I think farm labor should be viewed as a valuable thing in our society.”
Holy Cross College theology professor Mike Griffin is in the formulating stages of a class on the dynamics of local food loops. He said these are excellent examples of what he terms the "Economy of Communion."
While in South Bend, Indiana, I talked with Professor Griffin. He said being interdependent for the stuff of life on people in a town can't help but to get them to form community together more.
In Athens, Ohio, organic farmer Art Gish told me the conversations he has with town people at the Farmers Market each week is as important to him (if not more important) than the actual sales. Because, he said, he truly values community building.
Back in Bluffton, a Kitchen Co-op has developed around local food.
A circle of families have begun bartering homemade granola, homemade bread, homemade yogurt. Each item is assigned a value in so many co-op coupons.
Kitchen Co-op co-founder Wendy Chappel-Dick told me that the co-op has been a great community enhancer among the members, because more and diverse conversations are continually started around the bartering of foods.
11) Society of Conservers
During a round table discussion sponsored by Sierra Magazine, Lord John Browne, who is the group chief executive of British Petroleum, offered the following rather startling comment (at least it was startling for someone in his position):
“I, too, believe in market economies, but I question whether technological growth can keep us ahead of the consumption wolf, particularly if you are trying to export a consumption based economy to the whole world. It seems to me that at some point we need to say enough is enough.”
We, too, believe a consumption-based society (at our current consumption rate) is not sustainable. Actually, instead of being a Society of Consumers, we would be much better off becoming a Society of Conservers.
As an example, let’s go back to Bluffton, Ohio.
Another closed loop local initiative is First Mennonite Church's Lending List. Items are categorized. Under Kitchen/Food are: blenders, dehydrators, ice chests, canning equipment. Under Camping Equipment are: sleeping bags, tents, lanterns. And as this works among church members, it would work from neighborhood to neighborhood.
In jacking down the economy, we must curb our consumption. As we do this (house sharing, sharing items, we will decrease our need for as much capital. This, in turn, will allow more people to go to job sharing, opening up more time for faith, family and community. (The types of things that we would be tracking with the new National Survey.)
What's more, by sharing more, it could also free up more money for those in need.
If we Americans learn to live within our means, we will free up resources others need to feed, clothe and house themselves and their families, Korten wrote.
12) Demise of the Middle-Class
In the book The New American Poverty, author Michael Harrington notes that around 1840 (both in America and England), the upper class adopted a set of Victorian values that then permeated down to the lower orders in the emergent cities. That is, there was a premium placed on such qualities as thrift, order, industriousness, sobriety, the mastery of passions, and a deep regard for the future.
Some of those in the lower class started to adopt these as well. This moved some people from the lower class to a rapidly emerging middle-class, one that continued to grow almost unfettered until the 1920s.
It was at this point, Harrington notes that the educated classes in the U.S. started to repudiate the old values.
By the contemporary period, there was a collapse of the Victorian popular culture and the moral legitimacy of the institutions embodying it. This started to give way to another emerging “Me Generation”, with a general conviction that the old constraints did not apply.
This incrementally got worse and worse, as the ruling financial elite continued to consolidate more and more wealth and power. In kind, the middle class diminished.
David Korten writes that these fiscal elites used their control of fiscal policy to conduct a class war that has decimated the once celebrated American middle-class.
Korten believes there should be much more of an equitable distribution and that way more individuals contribute to the economy, not only as workers, but as owners.
And one of the best ways to bring this about is through co-operatives.
A cooperative is a jointly owned and democratically controlled enterprise.
In Cleveland, Ohio, I looked at Orange Blossom Press as an example. This printing company was started as a cooperative in 1976. Although the company dynamics have fluctuated over the years, at one point some 15 employees owned equal shares and had an equal vote in what went on at Orange Blossom. The company was started by a group of people who were active in local politics, social justice and the environment, said Donna Larrivee-Cohen, who has been with Orange Blossom since 1983.
And as Orange Blossom exists as a cooperative, on the agricultural front so does Eat Food For Life Farm in Yorkshire, Ohio. It has established an organic food cooperative. Six organic farmers throughout Darke County have come together to start a food store at the Eat Food For Life Farm. They sell organic eggs, bread, beef, and chicken, with each farmer having a stake in the business.
Also from an investment angle, local people could have helped with start up or ongoing rehab and expansion in return for dividends. Or, people could buy shares for a return of so much food a month.
There is a U.S. Federation of worker owned co-operatives. Melissa Hoover, its director, says they have recently seen a spike in calls requesting technical assistance, information and loans to start co-ops.
There is also a National Co-operative Business Association. The non-profit sector is spawning a good number of co-ops.
For instance, Yes! Magazine notes that Green Workers cooperatives have started in the Bronx, New York, for the establishment of a network of green businesses.
One of those businesses is Rebuilders Source, which is a discount retailer of used and surplus building material. It is an alternative to the landfill for some 1,900 tons of construction waste generated in the Bronx, New York, every day. (This, too, was reported on in Yes! Magazine.)
Our administration would provide incentives for similar networks of non-profit “Eco-Green” co-ops to start up in every town in the country, as a way of combating global warming and other environmental problems.
For instance, in Nebraska City, Nebraska we researched an Urban Forestry Model to plant 10,000 trees in this town of 7,000 people. In New Mexico, we looked at a Southwest Sustainability Project to retrofit homes with better insulation and alternative energy sources, like solar panels and wind turbines.
And these might fall under the category of non-profit cooperatives. For the private sector, point to the Mondragon Cooperative Network in Spain.
14) Mondragon Co-op
In South Bend, Indiana, I interviewed Elliot Majors, who gives presentations on the Mondragon Cooperative Corporation (MCC), which is the largest group of worker owned companies in the world.
Majors said it was started in 1955 and was initially in the town of Mondragon, Spain. He explained it was started by a Catholic priest, Fr. Don Jose Raimondi, to promote what the church refers to as distributism.
Distributism is about creating a society where everyone has enough and the gaps between rich and poor lessen significantly. Distributism is actually a third way economic philosophy to apply the principles of Catholic Social Teaching.
The belief is that ownership of the means of production should be spread as widely as possible among the general populace rather than being centralized under the control of the state (state socialism), or a few large business or wealthy individuals (oligarchic capitalism).
In these worker owned companies, there is a relatively egalitarian wage, with top management rarely being paid more than six times the lowest paid worker.
According to Yes! Magazine, there is also no unemployment in MCC. Rather, if there is slack time in one business, workers are moved around to other businesses.
MCC companies employ more than 100,000 worker/owners.
Worker/members do buy into these jobs, but there is often additional start up capital. So some workers’ shares of company profits are pooled in a bank owned by MCC. The bank, in turn, offers loans to new MCC business start-ups.
The piece in Yes! Magazine ends with a description of the town of Mondragon. The writers explain there is neither mansion on the hill, nor poverty in the streets but everyone has a comfortable place to live, healthy food to eat and the comfort of modern conveniences. Mondragon is proof that a commitment to the common good is not an obstacle to commercial success.
15) Less Bonds
Under our administration, the Federal government would shrink significantly. And we would highly discourage deficit spending.
Consequently, there would be little need to issue government bonds to cover the cost of projects.
Bonds are issued to raise capital by selling loans.
This has, for one, become a huge problem on the international stage. For instance, foreign governments, China for example, have been big buyers of U.S. Treasury Bonds.
According to an Associated Press article, Washington has little leverage over China (like bringing pressure about glaring human rights abuses there) because the U.S. depends on China to finance the U.S. government’s growing debt.
This is an absolute travesty.
In The New Economy, while this could not be legislated from a national level, we would like to see the issuance of municipal bonds (for states, counties, municipalities, local agencies and school districts) shrink considerably as well.
This, too, is merely deficit spending.
In Atwood, Kansas (pop. 1,500), we researched the Second Century Fund. This was a voluntary fund started to help with benevolent causes throughout the town. For instance, the money was used to help with purchasing extra textbooks at the local schools, or for city park projects, or for road projects that needed more funding.
In this town of 1,500, some $1 million was raised over 10 years. The interest alone on this fund each year was quite significant. In fact the year we were there, some $73,000 in disbursements were given to various projects just from the interest on the fund that year.
People donated to the fund out of a sense of civic responsibility.
Note: In a Society of Conservers, people would not be as quick to, say, scrap the old high school and build a new one. But rather they would be more apt to rehab the old high school at much less of a cost. For us to live within our means will invite frugality and ingenuity.
Note 2: We have become a society of compulsive debtors. There is now a 12-Step Group called Debtor's Anonymous. In Alcoholics Anonymous, people operate on the paradigm that they just don't drink today. Likewise, in Debtors Anonymous, people operate on the paradigm that they just don't debt today.
We as a nation would do well at this point to incorporate this way more in the federal government and in our own personal lives.
In the long term savings category, the second most expensive endeavor (after retirement savings) is college tuition. And college costs are currently rising at twice the rate of inflation.
In the year 2006, four full years of private education cost, on average, $120,000. For a public university, the average was $48,000.
The 529 Savings plans are sponsored by each state and there is no tax on this money. (Grandparents and even friends of the family can open a 529 plan for a student.) 529s invest in a mix of stocks, bonds and cash that are managed over different time horizons.
There are also Cloverdale Education Accounts. These, too, are tax sheltered. However, these have a broader definition of what can be saved for (tuition, books, fees, room and board) and can also be used to pay for private elementary and high schools.
These are not state sponsored and can be established at banks, brokerage firms and mutual fund companies.
So how might this look in a jacked down, decentralized economy?
Since financial speculation for the most part will be gone (as mentioned earlier), at the front end, in a slowed down and retooled, decentralized economy, there would be more of a premium placed on the trades (and hands-on apprenticeships) and small scale, labor intensive organic farming.
This would significantly decrease the number of people pursuing college.
Secondly, colleges would be re-tooled.
Currently, many liberal arts colleges require so many core classes in one major, supplemented by a good number of electives to get a degree (and supposedly, a well-rounded education). We would propose these colleges offer, besides a four-year liberal arts curriculum, a two-year, fast-track degree that primarily includes courses just specific to ones major.
This would cut college tuition costs in half for many and give them a respected degree in this new economy. In addition, we see as a tremendous monetary waste all the students who go through their college years majoring in something only to find when they start doing the actual job it is not for them.
So we propose the Antioch College model.
On a research stop at Antioch in Yellow Springs, Ohio, we learned students here are on an alternating study/work program. That is, students attend classes for a semester, then intern in their field of study for a semester. Then it is another semester of study and another semester of work.
This way students get a tremendously good, hands-on feel for the field they thinking about entering. And businesses, for reduced wages, get good intern help.
We would also put a tremendous premium on students who stayed local, for green purposes and continuity of community in their own hometown (or close by).We, for instance, would propose tax breaks for this.
This would also open a market for more community colleges nationwide.
Note: The traditional way we currently do a lot of college, has set the stage for a tremendous fracturing of community and a jumping off point for families to start to split up all around the country, sparking all kinds of long-distance, global warming gas travel and a significant breakdown of community.
17) A New Social Security Model
In a jacked down, decentralized economy, where Wall Street speculation goes away, retirement security would have to be approached in another way. (Some two-thirds of American workers currently have 401k savings.)
For most Americans, a working career will typically last 40 years. And retirement can last 25 to 30 years thanks to modern medicine, etc.
While some people (a minority at this point) have access to traditional guaranteed pensions from their employers, a majority has turned to 401k plans through their employers. (Some two-thirds of American workers currently have 401k savings.) While other people go with government sponsored IRA accounts, which can be set up through financial service firms.
However with Wall Street financial speculation going away, we must come up with a series of creative strategies to create social security for seniors in each community, I told a newspaper in Champaign, Illinois.
So what would that look like?
In our proposal, the IRAs, 401ks, etc., would be cashed out.
There would be no capital gains tax on this liquidation. (Or the money could be rolled over into local investment options.)
For instance, the government currently has a category for Small Business IRAs. The money could roll over into this, with a decentralized version of one of these set up through the local municipality and predicated on investing in local ventures.
Also, currently your average American wage earner can expect 57% of their pre-retirement salaries from age 55, with middle-income expecting 40% and high income 33%.
Concurrently, senior expenses often go down. For instance, offspring have moved out of the home. Often the house has been paid off so there is no mortgage payment. There is the possibility to down sizing to one car now that neither spouse is working.
Also, in this new economy with a premium placed on families staying close by in community, part of the safety net becomes, well, family. As it was in the old days.
For instance, in San Antonio, Florida, we looked at a family who had converted a basement into an apartment for the in-laws. They shared house expenses and the grandparents helped with the children.
In Amish communities, parents often build additions onto the home for children who marry.
In Amarillo, Texas, we met with the extended Barbosa family. They had moved into three homes near each other on the same block, sharing tools, lawn equipment, the cooking of meals…
And for those seniors who don't have families close by, we looked at the non-profit Friends of the Elderly model in Houghton, Michigan. Here volunteers adopt seniors for companionship, helping around the house, and so on.
Note: At the front end of this paper, I reference author David Kurten saying that “…we (America) must replace a defective operating system that values only money, seeks to monetize every relationship, and pits each person in a competition with every other for dominance.” Sound spiritual principles and plain old common sense would, I believe, say this is true. And what’s outlined in this paper would go a long way in moving us toward a much saner economy in this country, and a much saner way of life, period. –Joe.