Monday, April 14, 2014

The Opportunities and Challenges of Income-Sharing

I recently had this exchange with a regular consumer of this blog who does not live in community, yet is intrigued by cooperative living:

My take on where you and I come from is that we are two moderates who happen to walk opposite sides of the street. What originally struck me about your posts, other than that they provide an insight into a different way of life, is how much of what you talked about applies to volunteer organizations, or any organization using cooperation as a means to get things done.

That’s intentional.

I think, though, that you have found a topic on which we disagree. I see very few advantages to income sharing and many disadvantages.

I’m happy to have this discussion, but I want you to understand that I’m not out to convince you that you should share income. If it doesn’t appeal to you, don’t do it!
1. If there is a large range of incomes, say an order of magnitude or more, those at the high end may feel they should have a proportionally larger say in how the money is spent. I happen to agree with this position. If these individuals had not joined they would have had complete control over their own income.

I reckon your argument here that decision-making power ought to be in proportion to market rate for the work one does for the group. To the extent that dollars buy votes I guess that makes sense, and there are certainly others who support this notion.

I have several concerns with this though (and I want you to take into account that these arguments are being advanced by someone who is making an order of magnitude more money than others in my income-sharing community—that is, I’m a living counterexample to your hypothetical):

o  The market place sets wages based on supply and demand, yet a great deal of domestic work is not monetized and therefore poorly reflected by wages.

o  In community (cooperative culture) we tend to value how things get done as much as what gets done. Navigating the "how” well requires relational skills, which don’t tend to be valued in the marketplace as strongly as technical skills. I shake my head, for example, when groups fork over thousands of dollars to architects yet balk at paying a process consultant a fraction of that amount—even though a skilled process consultant is rarer than a skilled architect and can more powerfully impact the community’s success. Knowing that compensation, at least to some extent, is based more on habit than value, I’m not inclined to equate worth with wages.

o  Having control over your own household budget living alone is not at all the same as having control over the household budget living in a group. While I’m out on the road as a consultant, things are being taken care of at home without my worrying about them. Yes, I turn over my paycheck, yet I have a mix of work I love and all my needs are met.

I have a friend who lives with his sweetheart in an apartment in Manhattan. He makes over $100,000 annually, yet used to live at Dancing Rabbit where he made about $15,000 annually. He did the math and calculated that he didn’t start getting ahead economically until he was making over $90,000—because of the difference in cost of living (rural Missouri versus urban NYC) and the difference through income sharing. That’s an incredible swing.

o  If decision-making were weighted based on income, it would mean focusing a lot of attention on wages, and who wants to live that way? One person, one voice is much simpler. (What's more, in consensus, the weights wouldn't make any sense anyway as you can't move forward in the presence of any principled objection—even one from a person who voice only counted one tenth as much.) If people with high wages had more say, and used that to prevail (rather than bringing others along through the strength of their reasoning, or their ability to balance everyone’s needs), they’d be resented for it, not celebrated.

o  That said, if a person’s money-making ability were germane to the consideration (as would be the case if a lawyer were giving their views about a legal opinion) then they’ll have all the power they need without claiming it on the basis of wage differential.

2. Sometimes it is just not fair. Let me give you an example I deal with every spring, when I volunteer about 40-50 hours/week to help people with their taxes. I come from a rural town of about 8,000 and we field four tax counselors. A nearby town of slightly less population, but wealthier, fields none. This season residents from the wealthier town overloaded us with so many clients that I do not expect to go back next year. My question is: At what point do you stop helping those who will not or cannot help themselves because they're taking advantage of the offer of assistance?

I have been part of several co-op organizations where members were expected to pay dues and help on various projects. Dues were the same for everyone as was the amount of expected labor.

In my experience, it’s more common that dues are based on a percentage of net income while labor is expected on a per person basis, yet I know that the one-size-fits-all approach is out there as well.

As expected not everyone did their share of the labor, but in most cases there was no "You will work x hours" rule. As for financial help, those of us with higher incomes often gave extra, but this was offered on a voluntary basis and was not expected—which I think is important.
Similarly, no one is forced to live in an income-sharing community. People chose to live there and no arms are being twisted. To be sure, in making that choice you'll be giving up most of your claim on discretionary money. In exchange, you get: a) security (the group will be there for you in hard times); b) less need to chase dollars (because of the economies of scale and the leveraging through sharing); c) a mix of work that includes a higher percentage of work you love, and a lower percentage of work you dislike (because people's aptitudes and preferences vary so much).

3. You lose control of your finances. This can be important if you are a good saver and investor and others in the community are not.

I agree with the advantages to a community sharing resources. In my experience the downside is upkeep. Unless someone is designated to see to maintenance its quality tends to fall to that provided by the least conscientious user.

You’re right that income-sharing communities are susceptible to tragedy of the commons dynamics (if no one owns it, no one takes care of it). Addressing this adequately requires wrestling with accountability issues and that's no cake walk.

There seems to be nothing in your list for improving life in the community that requires income sharing.

Au contraire, with income sharing you get:
Much more resource sharing (significantly lowering income needs).
o  Considerably more flexibility in how you cover both domestic work and income generation. In a typical two-adult household, you just have two variables for meeting both needs. In an income-sharing community of 10, it's possible for some people to do all domestic work while others slant everything toward income production—so long as you collectively make enough money and still get all the meals cooked, the diapers washed, and floors cleaned, you're fine. Having a mix of work you like is a tremendous boost to quality of life.
Much better economies of scale (if one person cooks for seven every night, it is far less total time spent in the kitchen than everyone cooking for themselves every night).
o  A significantly larger safety net (if one person gets sick or breaks a leg, it’s relatively easy to have everyone else shoulder a bit more to cover the slack—rather than all of that burden falling on their domestic partner, if they have one).

To be clear, the vast majority of intentional communities share with your hesitations about income sharing; but I've happily lived my last 40 years in one of the 10% of communities who pool income. I don’t expect to convince you that this is the way you ought to live. But I am hoping to convince you that I’m a thoughtful person who embraces income sharing for good reasons, and I’m hoping that you’ll see the potential it holds for pointing the way to attaining a high quality life on a fraction of the resource consumption of the average US citizen—which I believe is the challenge ahead.
Finally, I will note that employment of members by the community raises the whole employee/not equal, member/equal question, which, in my experience, has been a real deal breaker. And is one reason managers are told not to be friends with their subordinates.

Believe me, I understand the dynamic. Yet I’d rather figure out how to do it well—than forbid it because it’s awkward.

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