The Workers' Paradise A Discussion of Workers Cooperatives and Building the New Economy

July 26, 2010

The Work We Do Is The Solution: An Open Letter to Mayor Cieslewicz

Filed under: Uncategorized — John McNamara @ 11:50 am

To Mayor Dave Cieslewicz:

Recently, you drafted a five part essay on your economic strategy for the City of Madison and the economic community of the Metropolitan Statistical Area (MSA). Okay, you didn’t get so wonky as to use the phrase MSA, but I am sure most people reading your plans realize that the economic health of Madison affects Dane County and several other communities. As the second largest city in Wisconsin and the largest economy between the Milwaukee-Chicago corridor and the Twin Cities, Madison’s fate ties into the fate of a large part of Wisconsin and even parts of Illinois.

In your third essay, you made this point,

“I’ve said for my entire time in office that Madison can be both progressive and pro-business. I believe that now more than ever. Let’s use the Great Recession as a time to reevaluate how we do business with business and come out of it with both a better business climate and continued high standards to make sure that these investments improve our community as a whole.”

It is a great time to re-evaluate how we all do business. Chasing the mighty dollar has been the goal of civic leaders across the nation for centuries. This has had only limited benefits. Proving free land and low taxes to encourage growth has created a race to the bottom among cities by trading the future for short-term gains. One could argue that the TIF orgy of the mid-1990s and early 2000’s created the very housing bubble and the Great Recession. It is time to develop a more sustainable model of growth that will still provide good jobs but with a surety that the next generation will also have access to capital and sustainable incomes.

While Madison is never short on ideas, there are new opportunities in other cities that Madison must consider. The most prominent is happening in Cleveland, Ohio. Although the butt of jokes, they have become one of the most forward thinking cities. The development of the Evergreen Cooperative group has the potential to completely revitalize the industry base and working class neighborhoods without displacing a single person. This group consists of three industrial cooperatives: a laundry, an indoor organic garden, and a solar panel installation firm. All three are worker cooperatives, which expect to employ up to 500 workers each from the neighboring communities. This development project arose through the team work of the City of Cleveland, Case Western University and the University Hospital (in addition to a couple of other organizations). In case you missed the article, The Nation ran a story on them in their March 1, 2010 edition.

It is a neat model that creates “green collar jobs” in a way that offers long-term payback to the city. Using the worker co-op model ensures that the City’s investment will never leave the city. Worker owners simply won’t pick up and move to a state with lower labor costs since they are the labor. What makes this a great fit for Madison is that we are already one of the leading cities in the country when it comes to worker ownership.

While communities such as San Francisco Bay Area and Western Massachusetts, Minnesota and a couple of others have more worker coops, Madison has some of the oldest existing worker coops in the country: Nature’s Bakery, Community Pharmacy, Union Cab and Isthmus Engineering. In addition, WORT-FM’s staff collective, Just Coffee, and Lakeside Press demonstrate success for our economic model in a wide diversity of industries. Despite the stereotype of cooperatives, it is an market-based economic model that works everywhere (not just coffee shops and organic food stores). It is based on a strong identity of values, ethics and principles which make it a community based economy, not a profit driven economy.

Cleveland is not the only model. San Franciscans have been debating whether worker coop development should become an official part of the City’s strategy. The US Steelworkers have entered into an agreement with Mondragon (a “congress” of 180+ worker cooperatives from the Basque region of Spain representing over 100,000 worker and who control 1/3 of the Basque GNP) to establish industrial co-ops in the United States. If only a Mayor would invite the Steelworkers and Mondragon to set up shop . . . with some free land or TIF. . .   🙂

Of course, the problem with worker coop development is that the workers often don’t have the capital to enact their vision. They have sweat-equity and they have ideas. Fortunately, the State of Wisconsin has created structures to help communities work around this issue. Using new generation coop models (Ch. 193) for the start up phase (in which the city would provide start up capital and then be bought out through a transition period to a standard Ch. 185 coop) would allow the City to help workers get their business up and running. The payoff for the City would be a small return on the investment after the start up phase and a new permanent workforce and increased property taxes from the buildings utilized and developed by the coop. It is really better than a TIF district because it does not rob the School District of their funds.

In the summary of your five-part series on strategy, you made this comment:

“Madison is full of creative people with sometimes off beat ideas. Very often these ideas won’t work out, but sometimes they will and with wonderful outcomes. They aren’t just playing around, they’re often creating real businesses that employ people and create wealth.

The roll of Madison city government should be to work with them, encourage them and see where their creativity leads.”

It is my hope that you see worker cooperatives as part of the solution. It is one that needs that support of your economic development team. They may need to get an education on cooperatives. Fortunately, Madison is home to the UW Center for Co-operatives–one of the only US coop research centers. I am sure that they would be happy to set up training sessions for you and your staff (and I and others in the worker coop community would be willing as well).

Worker coops can and will flourish if the energy is there from your office to support them. Making worker cooperatives a cornerstone of your economic plan could revolutionize economic development in Madison and even get people outside to start talking of “the Madison Model”. Most importantly, however, it would help people create good jobs that will stay in Madison. It will create a “trickle up” economy in which those good jobs strengthen the entire MSA and provide the means to support our schools and public services.

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