Thursday, December 8, 2016

Musings About Economics

I was surprised to discover that in the last decade economics has become increasingly interesting to me as a social change agent.

My surprise is not so much that economics should have a seat at the table when discussing the elements of sustainable culture—that made eminent sense to me right away. The shock is that I might be sitting at the table, helping to articulate the economic elements of the better world we're all aspiring to manifest. I never saw it coming. 

Today's offering is a collection of 10 interestingly-shaped pieces of the economic puzzle. While I cannot promise that they can be assembled into a compete picture they suggest a different relationship to economics. See what you think.

1. The Big Canvas
For more than half my life I've identified cooperative culture as my lode star. As someone who wants to make a positive difference in the world, I screen all of my work through the fundamental question, Is this in service to building a more cooperative world? Mostly I've devoted myself to pursuing this through promoting and understanding community, and how individuals relate to it.

That's a plenty large enough field to play in, and there's no danger of running out of meaningful work. For decades it was compelling to focus strictly on how people functioned in a community context. Where did they fall into the ditch, what skills were essential to getting out of the ditch, how to work conflict constructively, how to balance "I" and "we," how to work non-rationally—stuff like that was my milieu and the bulk of my consulting work has fallen within those lines of inquiry. I've even been around long enough to help shape what the questions are.

Gradually, however, I became aware of larger questions. In particular, what is right relationship between social interactions (the heart of community) and resource consumption (ecology) and how we make a living (economics)? What does an integrated package of sustainability look like?

As I became aware of the three-legged stool of sustainability—ecological social, and economic—it was immediately apparent that all three legs were not equally robust. The ecological thrust has been most prominent (the first Earth Day was 46 years ago, and I can even recall a conversation with my high school science teacher in the late '60s about the pros and cons of a new text book that approached biology through an ecological overview—a radical concept at the time). For many today, sustainability is tantamount to ecology. The first and only images they hold are of solar panels, spotted owls, and recycling barrels.

In recent decades though, there has been quite a bit of progress made in bringing into wider awareness my leg of the stool: social sustainability. I've invested heavily in understanding the nuts and bolts of cooperation. I've learned how it breaks down and how it can be salvaged or repaired. I've traveled all across the continent offering everything from workshops in cooperative theory to mouth-to-mouth resuscitation. Satisfyingly, over the span of my professional lifetime I've witnessed a decided uptick in awareness of social sustainability.

That brings us to the poor stepchild that is the third leg: economics. It's the one that's least written about and least well understood. In contemplating this, I believe a huge factor is that the progressive elements most inspired by a sustainable future have a marked tendency to suffer from arrested development. In particular, they have not gotten past the biblical admonition that "money is the root of all evil."

Sustainable economics necessarily requires one to get comfortable with the concept of fair exchange, but it's damn hard to navigate that territory if you find money—the primary medium of exchange—to be inherently grubby and soul crushing. To be clear, I'm not offering paeans to money; I'm saying it is what we make of it, and it's not going to work if all economic exchange is smeared with the oleaginous face cream of prostitution and exploitation.

2. The Big Canvass
Terry O'Keefe and I are going to be delivering a workshop at next May's National Cohousing Conference (May 19-21 in Nashville TN) entitled "Community as Economic Engine." In preparation for it we're working with the Coho Association of the US on an economic survey. 

We'll be finding out how many communities currently partner with their members to enhance their economic situation. Overwhelmingly, non-income-sharing groups (about 90% of the total) wash their hands when it comes to helping members meet their economic nut. Terry and I think they can—and should—do better. In addition to banging the drum, we'll roll up our sleeves and suggest ways to do it.

3. Carrier as Belwether
Last week President-elect Trump did some serious jawboning with Carrier, the huge HVAC company in Indiana. They were poised to close down gas furnace manufacturing operations in Indianapolis and move nearly 1000 jobs to Monterrey, Mexico, where Carrier could pay workers $3/hour instead of $25/hour—realizing a neat $65 million in annual savings. It would have been a no brainer except for the fact that Trump had made a big deal out how he was going to put a stop to this very thing—outsourcing US jobs to foreign countries.

Given that Indiana is a very red state (and the home of Vice President-elect Pence), Carrier's proposed move would have left a very red President-elect (take your pick between embarrassed or angry, though the latter seems easier to access from what I've seen).

In the end, Trump succeeded in getting Carrier to rescind their move. But what really happened? No new jobs were created; rather, Indiana Governor Pence saved jobs (in his state) by offering Carrier unspecified "major concessions" that compensated them enough to forego their putative labor savings. And it does not take an MBA from Wharton to connect the dots between this deal and the sensitivity of United Technologies (Carrier's parent company) to retaining its favorable position at the trough regarding lucrative contracts for jet engines and other defense-related equipment.

Because Carrier has annual gross profits of $4 billion, the Mexico move only represented a gain of 1.6%, which they were willing to put on the table in exchange for concessions and public relations credit (it's interesting to speculate on what value Carrier assigns to not being in Trump's cross hairs).

When the smoke clears what have we got? We can be sure that Carrier protected its primary mission: making money for its shareholders. And Trump came through on a campaign promise to stop outsourcing. But what does protectivism have to do with "making America great again"? Are manufacturing start-ups now more likely to site plants in Indiana than Mexico? I don't think so. How long will it be before another major company gets the bright idea to announce plans to move operations out of country, trolling for another round of "major concessions" because Trump needs to avoid the embarrassment of failing to keep an uneconomic campaign promise?

Trump held up the hands of time for 1000 jobs in America's heartland, but it is hardly a blueprint for a robust economy. Progressives need to stop ceding economic territory to an energetic vampire like Trump.

4. Intersection of Economic and Social
In our efforts to articulate a better world (not just complain about the injustices of the one we've got) little attention has been focused on how the social and economic can, and should, be allies. Fortunately, there is considerable overlap between the two. The skills needed to resolve differences creatively in consensus are essentially the same ones needed to sort out thorny issues in economic diversity.

We need to be doing a better job of integrating the various parts of our lives into a cohesive whole, not straining the seams. Suppose you have a dream job in the city that pays top dollar, coupled with an idyllic house in the burbs with a great school for your kids—but there's just one problem: these two gems are interconnected by a brutal, bumper-to-bumper 90-minute commute twice a day, five days a week. How integrated is that (and how's your blood pressure these days)?

5. Intersection of Work and Value
When people complain about their struggles to find work, I've learned that what they really mean is their struggles to find good work. And "good," I've learned, distills down to values match. Though salary, flex-time, security, benefits, and a boss who respects you all come into the conversation, the bottom line is whether the inherent nature of the work—the actual good or service produced—is consonant with what you value in life. 

Thus, the fundamental economic challenge can be boiled down to this: how can I be paid a decent wage for doing work that I believe in? Once you understand this, life becomes simpler. Yes, it's more difficult if you are risk averse and non-entrepreneurial (because it can be too scary to try living on less income in order to have a better values match, and there are fewer options if you have to depend on others to create a job that will work for you) but everyone has choices.

We are not raised to think this way. For that matter, we are not raised to contemplate what are values are, much less how to assess job opportunities for a match with them. Instead, we are taught to prioritize income and marketable skills, and then use the money to buy what we want. The model we are offered is that if each person maximizes their potential (makes as much money as possible) all boats will rise on the flood. But that's way too simplistic. Income in a vacuum is too often vacuous (read spirit killing, which can be very expensive).

To be fair, jobs are available in a spectrum; not just sorted into categories of good and evil. And there can be a world of difference between jobs that are value-neutral (perhaps domestic cleaning) and those that are value-negative (say, marketing inferior products). The power in this analysis is appreciating the full value of a good match—where work is life affirming, rather than a necessary evil that allows you to pay the rent and buy groceries. Once you taste work that is value-aligned it spoils you for settling again for something less. When your heart is in it, it doesn't feel like "work." Your battery doesn't drain as fast. You recover more quickly and you're a joy to be around. It's addictive (in a good way).

6. Disassociation of Money from Security
One of the biggest lessons I learned from community living was how to get a better handle on the concept of security. As a young adult I didn't think much about it. I focused more on opportunity and how to be a positive influence in the world. In an effort to recapitulate the combination of stimulation and support that I experienced in dormitory living as an undergraduate (at Carleton College, 1967-71), I stumbled onto community living at age 24 and never looked back.

When, through a combination of intimate misadventures, I would up leaving intentional community 40 years later, I looked up and discovered that a lifetime of being economically generative had left me with very little money in the bank. I had been living in income-sharing situations since 1974 and had not been accumulating anything in my name. While I was safely under the economic umbrella of partnerships (first my intentional community, Sandhill Farm, and later my marriage) I lost that protection when those associations ended.

My initial response was to simply go out and make more money. While that started off well, my vulnerability caught up with me when I got sick last winter and discovered I had cancer. While my bank account was starting to swell, I hadn't gotten very far before work was derailed and I was facing horrific medical bills—a complete financial reversal. Fortunately I was already on Medicare and had purchased a strong supplemental policy that provided a substantial cushion. 

For all of that however, I was still financially exposed and completely without the protection of my prior partnerships. As someone who had been active in the Communities Movement, I had been writing and presenting for years about the advantages of group living, especially if you redefined security in terms of relationships rather than bank accounts. Well, my cancer inadvertently afforded me the occasion to field test that theory.

Perhaps the most humbling experience of my life was the unabashed outpouring of love and support I received once word got out about my battle with cancer. I was completely bathed in caring energy—even from people I didn't know but whose lives had been touched by a workshop I once gave. This, I came to appreciate at a visceral level, was what it meant to redefine security in terms of relationships. No amount of money in the bank could substitute for what that meant to me, or the role it played in my being able to push the cancer into remission. It has been a team effort.

The cherry on top was that when I put out a discrete call for help with medical bills (through this blog last July), 30 friends responded and the gap was closed. Yes, money made a difference. But that was the medium; friends and relationships were the foundation.

If you are able to make this transition, it is incredibly freeing when it comes to how you budget. You need less income when you are not salting it away against a rainy day. If you can afford to work for less it widens the horizon in your search for work with an excellent values match. Depending on your circumstances you can even consider volunteer work. This is a quality of life issue, where bedrock is happiness.

7. Marriage of Entrepreneur and Non-entrepreneur
Although it took me about three decades to see this, it's useful to absorb the following reality about a typical cooperative group: in almost all cases there will be a significant minority of members who identify as entrepreneurial, and a clear majority who identify as not. This is an important insight because the profiles of these two groups don't align easily.

Entrepreneurs are risk tolerant and tend to not depend on the approbation of others to feel good about themselves. They are comfortable in their own company and tend to prefer low structure (read minimal red tape).

The majority are the reverse, and one of the main challenges  achieving group health is figuring out how these two disparate groups can play well with one another. It can be a bitch.

To add to the joy, community founders, almost by definition, tend to be entrepreneurial as pioneers. It takes a certain kind of craziness and audacity to envision a successful intentional community—much less attempt one—and no small amount of chutzpah to pull it off. That said, once a community is established it depends on a steady diet of settlers joining the experiment in order to sustain it, and settler qualities tend to be non-entrepreneurial. Talk about fun. (Did anyone promise that community was easy?)

Why hasn't more attention been given to this? Both are always going to exist and we need models for how they can be allies instead of irritants.

8. Integration of Entrepreneur and Community
Another angle on this same dynamic has to do with how the group relates to its risk-takers. Ironically, even though intentional communities are radical social experiments, they tend to be obsessed with their own stability, which leads to the development of a generally conservative atmosphere—not so much regarding politics as internal experimentation.

The upshot of this is that groups tend to view their entrepreneurs with a jaundiced eye (while we love them as our very own, we wish they wouldn't come up with so many boat-rocking ideas). Precious few communities have directly addressed this issue—perhaps because they don't understand that it's happening; perhaps because they're afraid it will lead to a witch hunt. 

As we know, however, that we resist persists. By failing to tackle the issue of risk management head on, the result is that it's decided in the trenches. Entrepreneurs adapt by either conducting end runs (under the theory that it's easier to get forgiven than to get permission) or by taking their energy elsewhere.

9. Difference Between a Good Idea and a Good Business
A lot of folks fail to understand that having good product sense is not the same as having good business sense. While having a superior product or service is a definite advantage, it doesn't guarantee black ink at the end of the year. The business world is full of cautionary tales about how the better product lost because it was outmarketed (think Beta versus VHS; or FireWire versus USB). 

To what extent are cooperative groups helping their members with business advice? Answer: not nearly enough. This problem needs to be worked from both ends. Entrepreneurs need to swallow their pride and ask for help (what do you mean it doesn't count if you get assistance?); cooperative groups need to get over thinking that helping to develop values-based business plans as contamination with filthy lucre (who, after all, is pure in this vale of tears?). The point of this is to help everyone. Not only will the entrepreneurs be rewarded, but as their businesses succeed they'll be better able to employ non-entrepreneurs, who want good jobs.

10. Local Answers not Federal
Circling back to my third point about Carrier, I believe that economics—just like politics—start at home; not with government subsidies. While markets can be as wide as make sense (and with today's information-based products that can be as far as broadband ethernet can reach, which is just about everywhere), the foundation of right exchange is local. Instead of doing everything myself (or doing without), I trade to you what I'm good at or have in surplus and get in exchange something that you're better at than I or can afford to share. If we both give good value we're in integrity and both of our lives have been enhanced. Everyone sleeps well at night. It's that simple.

Small towns die when they lose their economic base. When local stores are franchises and not locally owned (think Walmart), profits are siphoned off to out-of-town shareholders and wages drop to legal minimums. People are no longer working for Uncle Fred, Grandma Gutierrez, or Ole Johansson—all of whom care about whether your daughter is sick or your dog just had triplets; they're working for Lord Farquaad or his moral equivalent. The good news is that this trend can be reversed. Buy locally. Give a damn.

If the viability of our businesses was rooted in our home communities—instead of leveraged off of investment tax credits and accelerated depreciation allowances—we'd be inflation proof and wouldn't give a hoot what the wage rate was in Guadalajara.

It's something to think about.


Nenad Maljković said...

Actually, there's quite a lot going on in the new economy sphere. These resources migh interest you:

Anonymous said...

This is an especially important topic. "Eco"nomics and "eco"logy share a lot more than the same prefix; I believe that real gains cannot be made in one sphere without making gains in the other.

It is unfortunate that in the communities movement we often hear complaints about "big corporations" or "profit hungry businesses" without really thinking about what the speaker is complaining about. A corporation is just an ownership structure, and morally neutral.

And usually, corporations become enormous simply because they offer a better product or service than their small town competitors. Better in the sense of cheaper, or more consistent or more convenient. And large corporations are almost ALWAYS better places to work at than small companies - they offer benefits and advancement opportunities that small shops simply cannot.

This is one topic that needs to be discussed more in the communities movement.