How extreme is wealth disparity in the US? Imagine every person in the economy walks by, in order of income from low to high, with heights proportional to what people make. You’d see mostly a parade of dwarves, with some unbelievable giants at the very end. Political economist and historian Gar Alperovitz and social entrepreneur Ted Howard of the Democracy Collaborative depict breakthrough models for breaking this vicious cycle by democratizing wealth, ownership, and access to capital.
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Bioneers Series XIII - Program 12-13
A Parade of Dwarves:
Democratizing Wealth Creation for a New Economy
00:00 Welcome (00:04)
00:04 Alperovitz Teaser (00:16)
If you don't like corporate capitalism, you don't like state socialism, there's got to be a different model. Why are there only two models? We're looking at the beginning of a developing national dialogue that actually is asking what does the next system look like?
00:20 Macy (00:09)
It’s all alive, it’s all connected, it’s all intelligent, it’s all relatives…
00:29 Bioneers teaser (00:28)
We stand at the threshold of a historic opportunity in the human experiment: to re-imagine how to live on Earth in ways that honor the web of life, each other and future generations.
It's a revolution from the heart of nature - and the human heart.
In this series - The Bioneers: Revolution from the Heart of Nature - we celebrate social and scientific innovators with breakthrough solutions for restoring people and planet - creating a future environment of hope.
00:57 Theme music fade out (00:08)
01:08 Opening underwriting narration (00:11)
Support for The Bioneers: Revolution from the Heart of Nature is provided in part by Organic Valley Family of Farms and Mary’s Gone Crackers.
01:19 NARRATION 1 (01:30)
Here’s a startling image to illustrate income distribution:
“Suppose that every person in the economy walks by, as if in a parade. Imagine that the parade takes exactly an hour to pass, and that the marchers are arranged in order of income, with the lowest incomes at the front and the highest at the back. Also imagine that the heights of the people in the parade are proportional to what they make: those earning the average income will be of average height, those earning twice the average income will be twice the average height, and so on.
“The observers would see, mostly, a parade of dwarves, and then some unbelievable giants at the very end.”
In today’s U.S. economy parade, you’d need a telescope to see the heads of the financial titans appearing in the final fleeting seconds.
A global financial super-elite of mega-billionaires has attained unprecedented wealth extremes – producing a world of have-nots and have-a-lots. According to the CIA, the U.S. is now a more unequal society than Egypt and Tunisia.
So how do we break the vicious cycle where the rich get richer and the 99 percent get poorer?
This is “A Parade of Dwarves: Democratizing Wealth Creation for a New Economy” with political economist and historian Gar Alperovitz and social entrepreneur Ted Howard.
I’m Neil Harvey. I'll be your host. Welcome to The Bioneers: Revolution from the Heart of Nature.
02:54 Music fade (00:10)
03:04 Alperovitz wkshp 1a (00:19)
The top 1% of income owners, have increased their share over the last 30 years steadily from about 10% to about 20% of the income, with the bottom 99% going down. And that reflects not only economic issues, but political power.
03:23 NARRATION 2 (00:20)
Gar Alperovitz has had a distinguished career as a historian, political economist, activist, writer, and government official. He is the Lionel R. Bauman Professor of Political Economy at the University of Maryland. He’s the author of “What Then Must We Do Now? Straight Talk About the Next American Revolution.”
03:43 Alperovitz wkshp 1b (00:30)
The top 400 people in the United States—you can probably get them in a couple of rooms here easily—have more capital than the bottom 180 million taken together. It is not possible to have a democratic society if that continues—that's a medieval number. I mean that technically. I don't mean that rhetorically. Four hundred people have more wealth than the bottom 180 million taken together. Extraordinary and unusual.
04:13 NARRATION 3 (00:55)
The “bottom” 180 million people comprise over half the U.S. population! – it shows just how distorted our expectations of fairness have become. Yet it’s simultaneously a “golden age of corporate profits.”
In the 1970s, multinational corporations started offshoring entire manufacturing sectors to countries where labor was cheapest, workers were not organized, and environmental regulation was weak.
U.S. cities in the manufacturing Rust Belt, experienced massive unemployment. Many residents had to leave to find work. Urban infrastructures and tax bases collapsed. Urban blight became the new normal.
Witness Cleveland, Ohio: over half of the population has left in the last 60 years. Ted Howard has studied this crisis for thirty of those years.
05:08 Howard 1a (00:16)
Cleveland used to be the fifth richest city in the United States back in the 1950s. There were more Fortune 500 corporations headquartered in the city of Cleveland, Ohio than any city in America except New York City. Today there's one or two left.
05:24 NARRATION 4 (00:14)
Ted Howard is the founding Executive Director of The Democracy Collaborative at the University of Maryland and a senior fellow at the Cleveland Foundation. He has been working on solutions to problems like those that Cleveland confronts.
05:38 Howard 1b (00:39)
In the 1950s, Cleveland had 915,000 people living in it. Today, there are 386,000. Between 2000 and 2010, that city lost 17% of its population in one decade, and the only reason you didn't hear about that is because most of you probably heard that Detroit lost 25% of its population. So, it was even worse off. So this question of how do we anchor jobs and keep them in place is an essential for our urban areas because people are going to flee those areas if there’s not productive work to do.
06:19 NARRATION 5 (00:20)
Ted Howard and Gar Alperovitz see a direct connection between the concentration of wealth and the decline of our cities and communities.
One reason is that businesses are incentivized to go where they can profit most – without regard to the people and places they leave behind -- or to the sustainability of the environment.
06:39 Alperovitz int 1B (01:37)
Most cities the corporations come in for a big payoff and in 10 years they leave to go looking for another payoff, and the instability is there. You can’t build a democratic culture, democracy itself, in cities which are highly unstable and the tax base keeps changing and people lose jobs.
Furthermore, you can't do any serious sustainability planning if you have continual dislocation of the city, if the jobs keep going. One of the patterns we have in a good part of the country is what I call throwaway cities, we literally throw away cities—Detroit was three million, they've lost a million people; that means, think of it, housing for a million people, schools for the kids, roads for a million people, mass transit, hospitals, everything that a million people need was there. Those people had to go somewhere, so that means the society somehow has to build housing, roads, schools for that same million people, literally throwing away the city and having again to build it someplace else. Now that's extraordinary capital cost, very wasteful. All that is carbon costly. And it's destabilizing so you can't do the kind of planning you need to deal with that, you know, climate change issues in various forms.
So, this whole complex of issues goes right to the heart of can we change the power relationships, can we stabilize the basis of community and democracy, can we begin getting at carbon costs? There is no answer in many of these communities. There is no answer. The pain continues unless you do something new.
08:16 NARRATION 7 (00:39)
Throwaway cities, disposable people, and a rapidly deteriorating global climate. If our current economic system intrinsically creates this vicious cycle, what kind of system would work better.
When Alperovitz and Howard started the Democracy Collaborative in 2000, they wanted to offer strategies for creating resilient, local, living economies, stable families and communities, and green sustainable practices built into the business model itself.
Gar Alperovitz says the structural change we most need is to democratize wealth and access to capital.
08:55 Alperovitz wkshp 1b (00:44)
We're seeing a whole lot of people interested in co-ops, worker-owned companies, nonprofit corporations, public banking, the public in many states—there's 20 states looking at single-payer healthcare, 20 states looking at public banking like the North Dakota bank, a whole series of issues that all look in one form or another at a very decentralized, extremely American idea about changing ownership of wealth in a very democratic way that is beginning to set a new idea. And in many cases, it's an idea that corresponds with, is integrated with, a vision of an ecologically sustainable, build-from-the-bottom, community-by-community vision of a different system.
09:38 NARRATION 8 (00:34)
What some call Capitalism 2.0 is exploding the conventional economic paradigm with a profusion of diverse economic strategies, such as the spreading model of the North Dakota public bank, where deposits serve the public good, by prioritizing loans to local farmers, students and industries.
One way to help a community remain a community is to support those institutions that by their very nature cannot cut and run. Gar Alperovitz and Ted Howard call them “anchor” institutions.
10:12 Howard 2 (0:57)
Some people call them eds and meds—hospitals and universities, for instance—but it can also be city governments, the kinds of things that tend to stay in place and don't exit a community. Businesses will come and go, but these institutions are rooted in place, and they are businesses. Many of them are nonprofits. If you take all the hospitals in the United States, and there are about 6,000, and if you take all the universities in the United States and colleges, and there are about between 4 and 5,000, and you were to aggregate their annual purchasing budgets, their procurement budgets, they would total over a trillion dollars a year of goods and services being purchased by institutions that essentially cannot move. So, the question of how to work with these institutions to drive that economy activity locally to benefit the community becomes a key part of a strategy, I think, of building a resilient economy.
11:09 Alperovitz int 1A (00:23)
If you think about it from the perspective of democracy, not only does it begin building a different ownership pattern as a basis of power, but if you stabilize a city, begin this way to anchor jobs—these companies don't get up to go, the people live there—you being stabilizing the basis of the community, and that's the only way you can get a democratic community.
11:32 NARRATION 9 (00:24)
Another part of the solution is to give workers a stake in the company that employs them. If the workers are also owners, a company is much less likely to move to another city or country – or to fire workers to drive higher profits for Wall Street. And when business decisions are made in the interests of the workers and the community, it creates a sense of stewardship. Ted Howard.
11:56 Howard 3 (00:51)
If we all owned a company and we were contributing our labor to it and making that company work, and if it was controlled by us rather than outside investors, as the company became profitable, we would all share in that profit, those earnings.
The community wealth building model also emphasizes stewardship over capital, and by stewardship I do mean sustainability, environmental friendly process, and so forth, but what I really mean is that the people working in a company understand that they're working there because other people 10 and 20 and 30 years ago helped build something, and so that while they are benefiting now, part of their responsibility as workers is to ensure that that business is passed on to succeeding generations.
12:47 NARRATION 10 Lead to Mid-Break (00:33)
Studies show that when people have a stake in their workplace, and are trained on how to participate as stakeholders, the companies are more profitable, more competitive. Gar Alperovitz and Ted Howard are getting a chance to road test some of their ideas in Cleveland. That story when we return. This is “A Parade of Dwarves: Democratizing Wealth Creation for a New Economy.”
I'm Neil Harvey. You are listening to The Bioneers: Revolution From the Heart of Nature.
13:20 MID BREAK (01:01)
14:21 NARRATION 11 (01:02)
To explore all available Bioneers radio shows and video programming, please visit media.bioneers.org
The data are clear. Excessive inequality – this parade of dwarves and giants - creates volatility, fuels crises, undermines productivity, retards growth and freezes social mobility. It results in underinvestment in infrastructure, education, technology and environmental restoration.
According to Nobel Laureate economist Joseph Stiglitz, more equal societies are better for everyone, including the wealthy.
Gar Alperovitz and Ted Howard are bringing their democratic vision for a new economy into practical reality through the Evergreen Cooperative Initiative. This ambitious prototype enterprise sprouted from of a series of meetings organized by the Democracy Collaborative, the Cleveland Foundation and the Ohio Employee Ownership Center. Ted Howard.
15:23 Howard 4 (01:25)
The Cleveland Foundation's the oldest community foundation in the country. They came to us and said, We know you're not from Ohio, but would you work with us to design a strategy in six low income neighborhoods where there are about 43,000 residents, 40% of whom live below the poverty line, overwhelmingly African-American, median household income below $18,500. And would you create a community wealth building strategy unlike anything that's exists in the United States as a learning laboratory? We want to take a risk. We are tired of business as usual because Cleveland just keeps getting poorer. So we need to try something different.
And so the strategy we designed became the basis for what's called the Evergreen Cooperative Initiative. There are three legs to the stool, very simply: one, work with the anchor institutions to find purchasing opportunities that can be driven locally to put people to work, create wealth in the community. Second, build up a network of community-based worker-owned businesses capable of getting contracts from those institutions and putting people back to work. And third, have a commitment in those companies that—an Evergreen company in commercial laundry, for instance, when compared to a competitor in the same commercial laundry sector will be greener.
16:48 NARRATION 12 (00:48)
The Evergreen Cooperative Initiative is supporting a remarkable range of grassroots business ventures.
For instance, the Evergreen Cooperative Laundry operates on an industrial scale, serving anchor institutions such as hospitals, universities and hotels. Located in a LEED gold building, it’s the greenest laundry in the area.
Then there’s the Green City Growers Cooperative. With the city’s help, the coop has cobbled together 10 acres of land in the heart of Cleveland, on which is a three and a quarter-acre hydroponic greenhouse. It’s partly solar-heated, and it’s the largest greenhouse in any US city. The Coop annually produces 3 million heads of lettuce and 300,000 pounds of herbs for local businesses and large nonprofits.
17:36 Howard 5 (00:28)
We're selling it at the exact same price that they're buying it from California, but the local food market is thrilled because it's not being transported 2,000 miles. So they get seven days more shelf life. And it's grown in a controlled internal environment so things like e.coli and Listeria are far less likely to happen. So, they get it at the exact same price and look at all this other benefit. That's the way to get customers.
18:04 Alperovitz int 3A (00:07)
And they're on line to put in one or two, probably two, maybe three businesses a year to keep expanding this complex.
18:11 NARRATION 13 (00:10)
As the Evergreen Cooperative secures anchor institutions to invest in the neighborhoods where they’re located, it keeps businesses from moving their operations elsewhere.
18:21 Alperovitz int 3B (00:45)
Cleveland Clinic, the University Hospital, Case Western Reserve University—those three alone in this poor neighborhood purchase roughly three billion, with a B, billion dollars of goods and services each year. Now that's a lot, none of which had gone to this particular area at all.
And, in fact, that's what's happening in Cleveland now, and many other cities, by the way, are following that—Atlanta and Pittsburg and Washington, DC, and Amarillo, Texas even. This is an expanding phenomenon. There are models building up.
18:55 NARRATION 14 (00:13)
Gar Alperovitz cites the success of large-scale, worker-owned cooperatives around the world, some on much larger scales. But he believes Evergreen is taking the cooperative model to the next level.
19:08 Alperovitz wkshp 2 (01:14)
If you actually look at what's happening in the Cleveland model, there is a nonprofit corporation that links these worker-owned companies. They aren't just free standing. They are linked to a community building structure, institutionally, that is a nonprofit corporation. Part of their profits go back into that to help stabilize and do things, good things, in the community, and also part of their profits go back into a revolving fund to start new companies, so it'll be an expanding community building, not just worker building. And that principle—there's a lot of people interested in worker co-ops and worker ownership, and I'm one of the people who's been talking a lot about that, you know, don't get too romantic about worker ownership, worker owners tend to do things—if they have to pollute occasionally, because they've got—the market is pushing them hard, somebody else is against them, they're not necessarily going to resist those pressures. They may also have interests that are larger than the community in which they live. So, when you put together an effort like this which involves very big capital for that community and a lot of effort, the community as a whole in the structure of the design is going to benefit from the design.
20:22 Howard 7 (02:13)
And that's why we've set up this overarching structure called the Evergreen Cooperative Corporation. And what we've done is we work with the public authorities. The city government of Cleveland is very involved in this; it couldn't work without them. And we're getting money and things like HUD 108 loans, which are federal funds that go through cities, and it's 20-year money at like two and a half percent interest, so it's cheap capital that's designed to help create jobs in inner cities, so we use that. We're using tax credits of all kinds. We've set up our own revolving loan fund where we raise $5 million of philanthropic money and put it in there, and then the fund turns it into a 1% loan that helps start up these companies.
But I should say also the workers have skin in the game, because to be a member of a co-op, you need to buy a share, you need to buy your membership, and we set our membership at $3,000. So, when you're elected to the co-op, you need to pay $3,000, and most people don't, so what we do is we give people an increase in salary and do 50% payroll deduction over a three-year period.
And the culture that we're trying to create in each company, and we're very intentionally trying to create a culture, is that as a worker-owner, you know you're succeeding in two ways: 1) is your company working and is it cash-flowing positive and are you in the black and, you know, you're able to make something of a profit, but 2) are other people in the community getting the same kind of opportunity that you have; in other words, is your company creating more jobs in the community, is it creating more community stability, more wealth for the community.
So, we've set this up so that the holding company actually has a veto power, even if all of us said we want to sell the company and cash out and get rich, the board of the holding company has to endorse that decision by a super majority, and that, frankly, would be a tough row to hoe. So, that's part of the structure of this on behalf of the community.
22:35 NARRATION 15 (00:50)
It changes the game when workers make a personal as well as business commitment to the larger vision of community wealth creation, stability and sustainability.
As economic pain rises, Gar Alperovitz observes this kind of fundamental shift spreading across the U.S.
Models like Evergreen can be adapted anywhere. Time Magazine, The Economist and Bloomberg have all written about it. It may be the harbinger of a huge historical change that’s closer than we think.
Gar Alperovitz believes our democracy depends on it -- plus it’s a quintessentially American expression of the diverse, pluralistic economic democracy that first inspired the country’s founders.
The Unites States didn’t start out as a parade of dwarves - in fact, it rebelled against being one.
23:25 Alperovitz wkshp 3 (01:14)
So part of this is very Utopian, but I'm a historian and a political economist, and I'm also—been very hard headed involved in politics. I ran House and Senate staffs and I did policy planning in the state department. I've been there, done that, run very nasty political campaigns and been at the effect of them. I think we're talking about extremely practical political stuff.
Historically, change like that is common as grass in world history. Most people never believe it until it begins to happen, but there is a pain level and a moral concern building up in the country, and the development of many, many projects—there are 130 million people involved in co-ops and credit unions, there are 10,000 worker-owned companies around the country, 20 states introducing banking, public banking legislation, on and on and on, 4,000, 5,000 neighborhood-owned corporations. The press doesn't cover this, but the undercurrent of what this is the new economy in formation is building, and the time for us to begin to talk about where does that take us if we want a democratic outcome and a serious outcome is right here and now, and so let's get on with it. [Applause]
24:39 Voices from Evergreen video clip (01:20)
Man: Evergreen changed my life for the best, because if it wasn’t for Evergreen and the cooperative, I’d don’t know where I’d be right now.
Woman: Evergreen has changed my life... it has enabled me to be a contributor not only to the community but to society as well.
Man: I love telling people about Evergreen, about what Evergreen’s done for me, what I’ve done for Evergreen, and what we’ve done together.
Man: You have to grow. You have to nurture it. You are instrumental in what it becomes. And that’s the difference between working at Evergreen and somewhere else.
Woman: I am an owner versus just a worker. I help make decisions in the company.
Man: It’s a terrific formula. And we owe it to make sure that we give this every opportunity to work.
Man: It allowed me to dream again. The things I put on hold, the things I put in the back of my mind and thought not possible, it’s brought that back to the forefront.
25:52 NARRATION 16 (00:10)
“A Parade of Dwarves: Democratizing Wealth Creation for the New Economy” with Ted Howard and Gar Alperovitz.
26:02 Bioneers BXIII - Program Close/Credits (1:35)
You can explore more Bioneers radio shows and video programming online at media.bioneers.org. For information on attending the National Bioneers Conference and Bioneers events in your area, please visit bioneers.org or call 1-877-BIONEER.
The Bioneers: Revolution From the Heart of Nature is a production of Bioneers and Collective Heritage Institute.
Executive Producer: Kenny Ausubel
Written by Catherine Stifter and Kenny Ausubel
Senior Producer: Neil Harvey
Managing Producer: Stephanie Welch
Production Management and Station Relations: Kate Hunter
Distribution is by WFMT Radio Network
Interview recording engineer: Jeff Wessman.
Our theme music is taken from the album "Journey Between" by Baka Beyond and used by permission of Hannibal Records, a Rykodisc label. Additional music was made available by Jake Schepps at JakeSchepps.com and Clint Goss at manifestSpirit.com. For more music information, please visit media.bioneers.org
The opinions expressed in The Bioneers Revolution from the Heart of Nature radio series are those of the presenters and are not necessarily those of Bioneers and Collective Heritage Institute, the underwriters, or this radio station.
My name is Neil Harvey. Thank you for listening. I invite you to join the Bioneers in inspiring a shift to live on Earth in ways that honor the web of life, each other and future generations.
This is program number 12-13
27:52 Closing underwriting narration (00:38)
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