Why the Gates-Buffett Billionaires Should Create a Social Private Equity Firm
http://socialentrepreneurship.change.org/blog/view/why_the_gates-buffett_billionaires_should_create_a_social_private_equity_firm
by Nathaniel Whittemore June 17, 2010 01:25 PM (PT)
Social Entrepreneurship
The big news this week is the Giving Pledge, a campaign led by Warren Buffett and Bill and Melinda Gates to get the worlds 400 wealthiest to commit 50% or more of their wealth to social causes. I think that for some of these new givers, social entrepreneurship could be a better field for them to deploy their talent and treasure than more the more traditional philanthropic fancies of the rich. Believe it or not, I think the single best thing they could do to supercharge social entrepreneurship is to create a social private equity firm.
I wrote yesterday about both my enthusiasm and my worries for the new injection of resources -- which ultimately, if all 400 on the list actually committed 50%, would be more than $600 billion. My worry is that the not-insignificant challenge of distributing so much wealth effectively will end up pushing many of the new philanthropists to predictable, known, and often well-supported giving.
The better game to me seems to be in actually trying to deploy these resources to transform entire cause areas, and perhaps shift the systems by which social change efforts are created and supported as a whole. To that end, I think a deeper enabling of the social entrepreneurship field could be a great bet. And when I think about what this field needs there is something that has recently been standing out to me above all else.
We need plausible paths for company exits that don't undermine the social or environmental mission.
An "exit" refers to an event like a merger with a larger company or a listing on a public stock exchange. These "exits" give founders and early investors liquidity, or financial return on their capital or time invested. Ultimately, the shape and size of exits within a given market are the key factor in determining the risk and reward of a venture investment. When the exits in a space are bigger or more predictable, investors are more likely to take risks and invest in companies. When exits are smaller or less predictable, the reverse is true and getting investors to take risks on companies is harder.
The situation is even more complicated in the social venture space because of the added priorities of social and environmental impact. For a socially-focused company to list itself on a public exchange, it means that it accepts its primary responsibility to be its fiduciary responsibility to its shareholders. While there are some publicly traded companies that have embedded social good as part of their business, the pressure to increase dividends to shareholders at all costs is immense, and not necessarily healthy for the social goals of a company. What's more, it is only very large companies (usually more than $50 million in annual revenue) that are appropriate for stock exchanges anyway.
Mergers with larger companies seem like a better fit for many socially focused companies -- particularly those in the food or consumer space where there are actually large established companies with capacity to and interest in acquiring smaller companies. The challenge in those arrangements is that often those larger corporations do not share the same commitment to social and environmental objectives -- particularly if they increase the cost of doing businesses.
The problem with the lack of good options for exits for social businesses is that it increases the risk for social investors and creates a barrier for new early stage investors in the field. For example, a social venture capital firm like Good Capital tries to raise a venture fund to invest in young companies, the lack of plausible exit opportunities means that there will be fewer people willing to invest in that fund.
I wonder if part of the answer may be to create late stage private equity firms focused on social as well as financial impact. Private equity is sort of a banner term, but generally refers to firms that buy controlling stakes in existing companies, and then increases the profits of those companies in order to pay themselves back. Although the public has gotten used to certain derivitives of the private equity model focused on buying distressed companies and then turning them around to sell again, that's not necessarily the model a social private equity firm would have to take.
What I can imagine is an institutional actor whose specialty is helping great social businesses with good revenues get even bigger while retaining their social and environmental missions. Bigger is not necessarily better. These types of firms would bring companies into their portfolio by acquiring some of the stock that had previously been held by investors and founders, in that way providing that liquidity that is missing from the current social finance system without compromising the social mission. This would create more incentives for early stage social investors, and provide social entrepreneurs more plausible returns that could increase the variety of the people thinking about social businesses.
I think that any firm like this would have to be financed by people who were both financial savvy, socially committed, and generally patient. It would need to be staffed by people who deeply understood the social impact landscape of the fields in which they were investing, as well as by people with experience in traditional private equity.
I think it could be awesome. Imagine Benetech founder and CEO Jim Fruchterman running a firm like this, supported by (Fortune 400 member) David Rubenstein from the Carlyle Group (the largest private equity firm in the world), and funded by everyone from Sergey Brin to Michael Bloomberg. I think it could be transformational, and would be a perfect fit for leveraging not only the capital but the broader array of talent and connections of the new Gates-Buffett Giving Pledge group.
Photo credit: David Rubenstein via the World Economic Forum
Thursday, June 24, 2010
NEW BREAK-THROUGH FOR START-UP LOANS AND EQUITY INVESTMENTS
A new form of company and a change in IRS regulations will likely open up funding for business start-ups and grow-ups. The type of legal entity is called a “L3C” which is a limited liability company or LLC. They are also called, “social benefit entrepreneurial enterprises” (SBEE). Thus far, Vermont and Michigan have adopted laws which permit the formation of the L3C and similar legislation is pending in several other states as bi-partisan measures. The key is that the L3C is formed for the purpose of social benefits – defined by 501.c.3 laws. Profit cannot be the main purpose, but the law does not prohibit profit distribution to the members of the LLC (which for tax purposes is usually treated as a business partnership).
The key result of achieving this status is that 501.c.3's are permitted to invest or loan funds to the L3Cs. The catch is that a prudent donor will want a “private letter” issued by the IRS which recognizes the LLC as a L3C entity. These letters are expensive and time consuming to get. However, there is legislation pending in Congress which changes the method of qualifying. A special unit of IRS will be set-up to deal with these types of qualifications (not the IRS attorneys). Generally a form, correctly filled in, will be submitted to the new unit which will basically rubber stamp its approval, putting the L3C in the proper slot to receive funds from 501.c.3s.
Private foundations are required to disburse five percent of their capital each year. Now those funds are simply given away. The new approach does give the foundations the ability to recoup the principal and earn some return on the principal. This change should generate considerable funding of SBEEs.
To find our more about SBEE L3Cs, please visit Wikipedia.org, at: http://en.wikipedia.org/wiki/Social_entrepreneurship, or Google “social benefit entrepreneurial enterprise”. See Social Velocity at: http://www.socialvelocity.net/2009/02/changing-nonprofit-finance-the-other-side-of-the-story/ A great talk on the subject by Mark Lane, a tax attorney, entitled, [Introducing L3C - Part 1] L3Cs: Social Enterprise's Powerful, New Capital Formation Tool, starts on Youtube at: http://www.youtube.com/watch?v=AZ9uQmVvtjA . Don't miss the question and answer parts.
Maryland has joined the states which now have approved L3C social benefit entrepreneurial enterprises: Maryland First State in Union to Pass Benefit Corporation Legislation, http://www.csrwire.com/press/press_release/29332-Maryland-First-State-in-Union-to-Pass-Benefit-Corporation-Legislation .
A certifying/branding organization has been formed to provide due dilegence and rating of L3C: Become a B Corporation,http://www.bcorporation.net/become
There are several financial institutions which have adopted the B corporation ethics: http://www.bcorporation.net/community/financial
Jim Miller
jimmiller5417@yahoo.com
A new form of company and a change in IRS regulations will likely open up funding for business start-ups and grow-ups. The type of legal entity is called a “L3C” which is a limited liability company or LLC. They are also called, “social benefit entrepreneurial enterprises” (SBEE). Thus far, Vermont and Michigan have adopted laws which permit the formation of the L3C and similar legislation is pending in several other states as bi-partisan measures. The key is that the L3C is formed for the purpose of social benefits – defined by 501.c.3 laws. Profit cannot be the main purpose, but the law does not prohibit profit distribution to the members of the LLC (which for tax purposes is usually treated as a business partnership).
The key result of achieving this status is that 501.c.3's are permitted to invest or loan funds to the L3Cs. The catch is that a prudent donor will want a “private letter” issued by the IRS which recognizes the LLC as a L3C entity. These letters are expensive and time consuming to get. However, there is legislation pending in Congress which changes the method of qualifying. A special unit of IRS will be set-up to deal with these types of qualifications (not the IRS attorneys). Generally a form, correctly filled in, will be submitted to the new unit which will basically rubber stamp its approval, putting the L3C in the proper slot to receive funds from 501.c.3s.
Private foundations are required to disburse five percent of their capital each year. Now those funds are simply given away. The new approach does give the foundations the ability to recoup the principal and earn some return on the principal. This change should generate considerable funding of SBEEs.
To find our more about SBEE L3Cs, please visit Wikipedia.org, at: http://en.wikipedia.org/wiki/Social_entrepreneurship, or Google “social benefit entrepreneurial enterprise”. See Social Velocity at: http://www.socialvelocity.net/2009/02/changing-nonprofit-finance-the-other-side-of-the-story/ A great talk on the subject by Mark Lane, a tax attorney, entitled, [Introducing L3C - Part 1] L3Cs: Social Enterprise's Powerful, New Capital Formation Tool, starts on Youtube at: http://www.youtube.com/watch?v=AZ9uQmVvtjA . Don't miss the question and answer parts.
Maryland has joined the states which now have approved L3C social benefit entrepreneurial enterprises: Maryland First State in Union to Pass Benefit Corporation Legislation, http://www.csrwire.com/press/press_release/29332-Maryland-First-State-in-Union-to-Pass-Benefit-Corporation-Legislation .
A certifying/branding organization has been formed to provide due dilegence and rating of L3C: Become a B Corporation,http://www.bcorporation.net/become
There are several financial institutions which have adopted the B corporation ethics: http://www.bcorporation.net/community/financial
Jim Miller
jimmiller5417@yahoo.com
Thursday, May 13, 2010
CURRENT FINANCIAL RISK MANAGEMENT = “JUST SAY NO”
CURRENT FINANCIAL RISK MANAGEMENT = “JUST SAY NO”
Let's bring prudence into the financial services market and use risk management so we can say “yes”.
By Jim Miller
I was a customer of Bank of America since age seven when my parents opened a savings account for me. During my mid-20's I asked BofA for a $1200 loan with which to buy a 1956 Chevy two door hard top – a primo car easily worth $2500. In turning me down, the loan officer said the car was too old. – No loan, no risk. I immediately close all of my accounts with BofA and have never done business with it since then.
Today, business failure is often triggered by the refusal of banks to make business loans – in fact they accelerate business failure by cutting down the lines of credit and calling debt due. FreddieMac and FannyMae own hundreds of thousands of homes and other properties, and more foreclosures are in the pipeline. All of the lending is based on “safety” of the loan which means the legal right to take assets away from the borrower. Financial statements are used more for the depth of net available assets a borrower has and credit ratings tell how much other debt is against those assets.
Foreclosures are caused mostly by job loss Lost homes and lost business contribute to foreclosures and a bad credit rating for the home owner and business owner. Banks fail and are taken over by FDIC, then sold to BofA and other financial monsters. It is like the smaller banks help dig their own graves then fall into them by using asset lending followed by foreclosure.
When banks, homeowners and businesses hit a cash flow emergency, that emergency usually triggers the failure. A company at the hinge point near failure, has little chance of selling equity shares or obtaining bridge financing – so they fail and the equity owners lose their investments. Using Chapter 13 is not much of a solutions – it is a long, costly and devastating experience, the result of which is a major hit on the credit rating.
So what can be done to create an economic environment in which investors, banks and other financial institutions can avoid unnecessary risk so they can say “yes”? Two steps need to be taken: (1) at least half of business enterprises need to be or become worker cooperatives with quadruple “bottom lines” (People, Planet, Profits and Principles) and (2) a means of buying, selling, trading and transferring financial instruments in a secure, honest and well-managed manner, such a system must be found and implemented. Let's take each solution, one at a time:
WORKER COOPERATIVES
A worker cooperative is a private capital-based company wherein the investors are the workers who manage themselves in a democratic legal setting. If our current way of financing and managing businesses is “top-down capital”, then a worker cooperative is “bottom-up capital”. The primary worker cooperative candidate for the Social Benefit Investment Exchange (SBIE) is the low profit, limited liability company (L3C), also known as a social benefit entrepreneurial enterprise (SBEE). Here are some of the hallmarks for worker cooperatives:
Worker equity. Workers put in most of the equity capital, usually a great deal of it is sweat capital. Each worker has one vote.
Failure prevention. The risk of failure is directly upon those who can do the most to prevent failure; hence, less chance of failure
Reserve account. By transferring some of the profit each quarter to a reserve account, a financial cushion is created which prevents or reduces cash flow emergencies which would otherwise threaten the business.
Oversight. As a self-managed company, the level of over-sight greatly increases.
Local profit turning. Profits tend to stay within the community in which the business is located, thus turning several times to the benefit of other businesses and their workers.
Charitable giving. Typically, ten percent of the profits are directly invested in local charities.
Equality of voting power. Part of the profits are assigned to each worker each quarter to his/her capital account, which is used by the company as working capital. When the worker quits or retires, his/her capital account must be either paid to the worker or converted to Class C shares which, collectively can vote for only one-third of the governing board (Council of Managers or Board of Directors).
Wage differentials. No worker can be paid more than three or four times the lowest paid worker. Workers can earn additional shares by advancing suggestions which improve the performance of the company.
Work and pay equality. Workers who are in supervisory roles earn their normal base pay.
Transparency. The financial records are available for all workers to examine online and all financial transactions are recorded, without exception.
Transactional security. Class C shares may be traded on the Social Benefit Investment Exchange directly between seller and buyer in a secure transaction through the business escrow of SBIE. Registration of the instruments of ownership with SBIE provides for a chain of title.
Critical due diligence. New financial issues by a SBEE are vetted by the Council of Advisors of SBIE and are subject to a due diligence examination by the SBIE Ombudsman.
Bridge loans. SBIE is a source of emergency lending to bridge unforeseen emergencies of the SBEE. The amount of this fund will grow over time. This reserved will be funded internally by using twenty-five percent of the net profits.
Credit union. SBIE and the worker cooperatives, will sponsor the formation of a credit union for worker savings and personal lending to members.
A nation of savers. Our nation has become a population of consumers, riding on an increasingly higher pile of debt. We need to change from consuming to producing (mostly knowledge products and services). We need to become a saving nation like the Japanese. We need to reduce the personal, business and governmental debt. We can accomplish this goal by increasing the middle class and providing incentives for parents and children to save for college. To make this shift, requires family income to rise.
Educational Savings. Savings are more likely when the out-go is less than the in-come. Poverty wage workers seldom have that choice. By eliminating the high compensation of the top side of top-down capital business and paying the workers with this savings, a SBEE can encourage workers to create educational and personal savings accounts.
Synergistic effect. The profits allocated to stock dividends and interest payment which accrue to absentee capital owners, typically used by the payees for expenditures in locales other than the one in which the earning were made. In contrast, profits spent in the community in which earned “turn” several times in the community. This shift creates a synergistic effect on business formations and growth in the community when profits are paid to the local workers.
THE SOCIAL BENEFIT INVESTMENT EXCHANGE (SBIE)
Picture the NYSE with kiosks surrounded by gangs of shouting traders. Now picture the SBIE humming merrily away on a stack of RAID blade servers which run on a Linus platform and serves Personal Brain-based “front office” and the non-traditional database of AskSAM running on an Apache server, which serves the “back office”. The IT techs whisper commands into a voice recognition server when administration commands are given to the system. Investors can access their accounts in any instrument traded on SBIE by any digital device. Here are the main points:
Matching. The main role of SBIE is to match buyers and sellers, thus increasing the liquidity of investments in L3C or SBEE equity and debt capital. Full disclosure and secure transactions are essential to this process.
Transparency. SBEEies are required to respond immediately to any concern raised by the SBIE Ombudsman. The financial records of each SBEE are totally transparent to the registered investors. Existing issues are generally traded between principals.
The Market. A SBEE may elect a private sale to designated buyers of a new issue, or may post the issue for auction. No futures are traded. No broker/dealers are allowed.
Issue offerings. If the issue can qualify as an exempt private offering, that will reduce the securities compliance costs. If the issue does not qualify for a private offering, it can be offered in a public offering. Most of the issues will be private, intra-state offerings. There is also the use of a business partnership – either an LLP or a Chapter S corporation – where all of the investors are active partners. Depending on the state of domicile, these other types of business entities may not comply with the L3C statutes and tax treatments. Each type will require careful evaluation by a tax attorney.
Ombudsman.
The Securities and Exchange Commission, along with the U. S. Attorneys, are the “cops on the beat” in the securities industries. SEC even uses its “cease and desist” powers to stop illegal sales of securities. Starting a criminal investigation or grand jury hearings often can stop pending illegal securities sales. However, these agencies are “after the fact” actors and typically only find a wasteland – plenty of financial victims and the lack of assets to make reparations.
The SBIE Ombudsman has two roles, the chief among them is the initial and continuing due diligence investigations of the SBEE and its securities issues. The secondary role is that of investigator, arbiter and mediator. The key to reducing loss is early intervention, based on “tips” from investors and workers in the SBEEies. Rather than wait until the damage is done, the Ombudsman (or gender neutral “Ombuds”) takes action early enough to prevent a SBEE from sliding into a cash emergency or other failure mode. The remedies which the Ombudsman can bring to bear are:
De-listing a securities issue from SBIE
De-listing a SBEE
Giving public notice to all investors about the Ombuds' actions.
Requesting an investigation by state and federal agencies of the actions of an SBEE which may have violated securities laws.
Giving counsel to the management of an SBEE.
Conducting a more rigorous due diligence.
Arbitrating or mediating a dispute.
Reviewing the internal operations of SBIE and making recommendations to the workers and investors.
Recommending that a specific worker for SBIE or an SBEE be fired or suspending pending an investigation.
Issue subpoenas to compel production of records and the giving of testimony.
Appoint a Special Master and arrange for the Special Masters expenses.
Recommend a general assignment for benefit of creditors for a failing SBEE and the appointment of a trustee and the funding of the Trustee's operation.
Require rescission of any act (or omission) by an SBEE in contravention of the SBEE's Code of Honor or of SBIE written policies. Recommend proper restoration.
SBIE's “full faith and credit” rides upon the diligent performance of duties by the Ombudsman. The Ombudsman must be as independent as possible and should be appointed by the SBIE General Assembly, based on recommendations of the Council of Advisors. The Ombudsman should report to the General Assembly as his/her appointing authority and work closely with the Council of Advisors and the Council of Managers. The ideal Ombudsman would be a retired attorney who has spent many years as a prosecutor or plaintiff's attorney in the field of securities frauds and has a pro-active attitude.
Trader Board. Many companies which have invested labor and materials in inventory, sometimes have excess inventory which is no longer salable as the inventory used to be. Factory seconds and over-stock typically are sold through factory outlets or liquidators. SBIE will help remedy this situation by providing a barter board where SBEEies can list their “want to sell” and buyers can list their “want to buy” items for cash, Class C shares, or barter. Wood Planet is typical of these boards. Also Craigslist is also an example of a trading board – or more of a classified ad board. The SBIE barter board will also index other trader boards.
The main goal is to grow an economically strong middle class for America – a class which has been systematically attacked by oligopolies, top-down managed corporations, and the casino stock exchanges plus a catastrophic spending spree engineered by the Federal Reserve and the member banks. A secondary goal is to bring prudence into the financial services market other than by “just say no”.
Jim Miller
jimmiller5417@yahoo.com
May 11, 2010
Other articles by Jim Miller on SBIE and SBEE:
The Mission of Social Benefit Investment Exchange (SBIE) [ http://sbic.wetpaint.com/page/The+Mission+of+Social+Benefit+Investment+Exchange+%28SBIE%29 ]
Try Social Benefit investing -- You Might Like It. [ http://sbic.wetpaint.com/page/TRY+SOCIAL+BENEFIT+INVESTING+--+YOU+MIGHT+LIKE+IT.+ ]
Change for the Better [ http://sbic.wetpaint.com/page/CHANGE+FOR+THE+BETTER ]
Legal structure of SBIE [ http://sbic.wetpaint.com/page/LEGAL+STRUCTURE+OF+SBIE ]
This article on the web:
http://sbic.wetpaint.com/page/CURRENT+FINANCIAL+RISK+MANAGEMENT+%3D+%E2%80%9CJUST+SAY+NO%E2%80%9D
Let's bring prudence into the financial services market and use risk management so we can say “yes”.
By Jim Miller
I was a customer of Bank of America since age seven when my parents opened a savings account for me. During my mid-20's I asked BofA for a $1200 loan with which to buy a 1956 Chevy two door hard top – a primo car easily worth $2500. In turning me down, the loan officer said the car was too old. – No loan, no risk. I immediately close all of my accounts with BofA and have never done business with it since then.
Today, business failure is often triggered by the refusal of banks to make business loans – in fact they accelerate business failure by cutting down the lines of credit and calling debt due. FreddieMac and FannyMae own hundreds of thousands of homes and other properties, and more foreclosures are in the pipeline. All of the lending is based on “safety” of the loan which means the legal right to take assets away from the borrower. Financial statements are used more for the depth of net available assets a borrower has and credit ratings tell how much other debt is against those assets.
Foreclosures are caused mostly by job loss Lost homes and lost business contribute to foreclosures and a bad credit rating for the home owner and business owner. Banks fail and are taken over by FDIC, then sold to BofA and other financial monsters. It is like the smaller banks help dig their own graves then fall into them by using asset lending followed by foreclosure.
When banks, homeowners and businesses hit a cash flow emergency, that emergency usually triggers the failure. A company at the hinge point near failure, has little chance of selling equity shares or obtaining bridge financing – so they fail and the equity owners lose their investments. Using Chapter 13 is not much of a solutions – it is a long, costly and devastating experience, the result of which is a major hit on the credit rating.
So what can be done to create an economic environment in which investors, banks and other financial institutions can avoid unnecessary risk so they can say “yes”? Two steps need to be taken: (1) at least half of business enterprises need to be or become worker cooperatives with quadruple “bottom lines” (People, Planet, Profits and Principles) and (2) a means of buying, selling, trading and transferring financial instruments in a secure, honest and well-managed manner, such a system must be found and implemented. Let's take each solution, one at a time:
WORKER COOPERATIVES
A worker cooperative is a private capital-based company wherein the investors are the workers who manage themselves in a democratic legal setting. If our current way of financing and managing businesses is “top-down capital”, then a worker cooperative is “bottom-up capital”. The primary worker cooperative candidate for the Social Benefit Investment Exchange (SBIE) is the low profit, limited liability company (L3C), also known as a social benefit entrepreneurial enterprise (SBEE). Here are some of the hallmarks for worker cooperatives:
Worker equity. Workers put in most of the equity capital, usually a great deal of it is sweat capital. Each worker has one vote.
Failure prevention. The risk of failure is directly upon those who can do the most to prevent failure; hence, less chance of failure
Reserve account. By transferring some of the profit each quarter to a reserve account, a financial cushion is created which prevents or reduces cash flow emergencies which would otherwise threaten the business.
Oversight. As a self-managed company, the level of over-sight greatly increases.
Local profit turning. Profits tend to stay within the community in which the business is located, thus turning several times to the benefit of other businesses and their workers.
Charitable giving. Typically, ten percent of the profits are directly invested in local charities.
Equality of voting power. Part of the profits are assigned to each worker each quarter to his/her capital account, which is used by the company as working capital. When the worker quits or retires, his/her capital account must be either paid to the worker or converted to Class C shares which, collectively can vote for only one-third of the governing board (Council of Managers or Board of Directors).
Wage differentials. No worker can be paid more than three or four times the lowest paid worker. Workers can earn additional shares by advancing suggestions which improve the performance of the company.
Work and pay equality. Workers who are in supervisory roles earn their normal base pay.
Transparency. The financial records are available for all workers to examine online and all financial transactions are recorded, without exception.
Transactional security. Class C shares may be traded on the Social Benefit Investment Exchange directly between seller and buyer in a secure transaction through the business escrow of SBIE. Registration of the instruments of ownership with SBIE provides for a chain of title.
Critical due diligence. New financial issues by a SBEE are vetted by the Council of Advisors of SBIE and are subject to a due diligence examination by the SBIE Ombudsman.
Bridge loans. SBIE is a source of emergency lending to bridge unforeseen emergencies of the SBEE. The amount of this fund will grow over time. This reserved will be funded internally by using twenty-five percent of the net profits.
Credit union. SBIE and the worker cooperatives, will sponsor the formation of a credit union for worker savings and personal lending to members.
A nation of savers. Our nation has become a population of consumers, riding on an increasingly higher pile of debt. We need to change from consuming to producing (mostly knowledge products and services). We need to become a saving nation like the Japanese. We need to reduce the personal, business and governmental debt. We can accomplish this goal by increasing the middle class and providing incentives for parents and children to save for college. To make this shift, requires family income to rise.
Educational Savings. Savings are more likely when the out-go is less than the in-come. Poverty wage workers seldom have that choice. By eliminating the high compensation of the top side of top-down capital business and paying the workers with this savings, a SBEE can encourage workers to create educational and personal savings accounts.
Synergistic effect. The profits allocated to stock dividends and interest payment which accrue to absentee capital owners, typically used by the payees for expenditures in locales other than the one in which the earning were made. In contrast, profits spent in the community in which earned “turn” several times in the community. This shift creates a synergistic effect on business formations and growth in the community when profits are paid to the local workers.
THE SOCIAL BENEFIT INVESTMENT EXCHANGE (SBIE)
Picture the NYSE with kiosks surrounded by gangs of shouting traders. Now picture the SBIE humming merrily away on a stack of RAID blade servers which run on a Linus platform and serves Personal Brain-based “front office” and the non-traditional database of AskSAM running on an Apache server, which serves the “back office”. The IT techs whisper commands into a voice recognition server when administration commands are given to the system. Investors can access their accounts in any instrument traded on SBIE by any digital device. Here are the main points:
Matching. The main role of SBIE is to match buyers and sellers, thus increasing the liquidity of investments in L3C or SBEE equity and debt capital. Full disclosure and secure transactions are essential to this process.
Transparency. SBEEies are required to respond immediately to any concern raised by the SBIE Ombudsman. The financial records of each SBEE are totally transparent to the registered investors. Existing issues are generally traded between principals.
The Market. A SBEE may elect a private sale to designated buyers of a new issue, or may post the issue for auction. No futures are traded. No broker/dealers are allowed.
Issue offerings. If the issue can qualify as an exempt private offering, that will reduce the securities compliance costs. If the issue does not qualify for a private offering, it can be offered in a public offering. Most of the issues will be private, intra-state offerings. There is also the use of a business partnership – either an LLP or a Chapter S corporation – where all of the investors are active partners. Depending on the state of domicile, these other types of business entities may not comply with the L3C statutes and tax treatments. Each type will require careful evaluation by a tax attorney.
Ombudsman.
The Securities and Exchange Commission, along with the U. S. Attorneys, are the “cops on the beat” in the securities industries. SEC even uses its “cease and desist” powers to stop illegal sales of securities. Starting a criminal investigation or grand jury hearings often can stop pending illegal securities sales. However, these agencies are “after the fact” actors and typically only find a wasteland – plenty of financial victims and the lack of assets to make reparations.
The SBIE Ombudsman has two roles, the chief among them is the initial and continuing due diligence investigations of the SBEE and its securities issues. The secondary role is that of investigator, arbiter and mediator. The key to reducing loss is early intervention, based on “tips” from investors and workers in the SBEEies. Rather than wait until the damage is done, the Ombudsman (or gender neutral “Ombuds”) takes action early enough to prevent a SBEE from sliding into a cash emergency or other failure mode. The remedies which the Ombudsman can bring to bear are:
De-listing a securities issue from SBIE
De-listing a SBEE
Giving public notice to all investors about the Ombuds' actions.
Requesting an investigation by state and federal agencies of the actions of an SBEE which may have violated securities laws.
Giving counsel to the management of an SBEE.
Conducting a more rigorous due diligence.
Arbitrating or mediating a dispute.
Reviewing the internal operations of SBIE and making recommendations to the workers and investors.
Recommending that a specific worker for SBIE or an SBEE be fired or suspending pending an investigation.
Issue subpoenas to compel production of records and the giving of testimony.
Appoint a Special Master and arrange for the Special Masters expenses.
Recommend a general assignment for benefit of creditors for a failing SBEE and the appointment of a trustee and the funding of the Trustee's operation.
Require rescission of any act (or omission) by an SBEE in contravention of the SBEE's Code of Honor or of SBIE written policies. Recommend proper restoration.
SBIE's “full faith and credit” rides upon the diligent performance of duties by the Ombudsman. The Ombudsman must be as independent as possible and should be appointed by the SBIE General Assembly, based on recommendations of the Council of Advisors. The Ombudsman should report to the General Assembly as his/her appointing authority and work closely with the Council of Advisors and the Council of Managers. The ideal Ombudsman would be a retired attorney who has spent many years as a prosecutor or plaintiff's attorney in the field of securities frauds and has a pro-active attitude.
Trader Board. Many companies which have invested labor and materials in inventory, sometimes have excess inventory which is no longer salable as the inventory used to be. Factory seconds and over-stock typically are sold through factory outlets or liquidators. SBIE will help remedy this situation by providing a barter board where SBEEies can list their “want to sell” and buyers can list their “want to buy” items for cash, Class C shares, or barter. Wood Planet is typical of these boards. Also Craigslist is also an example of a trading board – or more of a classified ad board. The SBIE barter board will also index other trader boards.
The main goal is to grow an economically strong middle class for America – a class which has been systematically attacked by oligopolies, top-down managed corporations, and the casino stock exchanges plus a catastrophic spending spree engineered by the Federal Reserve and the member banks. A secondary goal is to bring prudence into the financial services market other than by “just say no”.
Jim Miller
jimmiller5417@yahoo.com
May 11, 2010
Other articles by Jim Miller on SBIE and SBEE:
The Mission of Social Benefit Investment Exchange (SBIE) [ http://sbic.wetpaint.com/page/The+Mission+of+Social+Benefit+Investment+Exchange+%28SBIE%29 ]
Try Social Benefit investing -- You Might Like It. [ http://sbic.wetpaint.com/page/TRY+SOCIAL+BENEFIT+INVESTING+--+YOU+MIGHT+LIKE+IT.+ ]
Change for the Better [ http://sbic.wetpaint.com/page/CHANGE+FOR+THE+BETTER ]
Legal structure of SBIE [ http://sbic.wetpaint.com/page/LEGAL+STRUCTURE+OF+SBIE ]
This article on the web:
http://sbic.wetpaint.com/page/CURRENT+FINANCIAL+RISK+MANAGEMENT+%3D+%E2%80%9CJUST+SAY+NO%E2%80%9D
Saturday, March 27, 2010
MONDRAGON Cooperative Corporation -- the most successful co-op on Earth
The Mondragon Cooperative Experiences Success
* The BBC Documentary (early 1980's) on MCC http://video.google.com/videoplay?docid=7565584850785786404&hl=en
* The Mondragon Cooperatives as Business Models for the 21st Century http://video.google.com/videoplay?docid=-6348598461397509798&hl=en
Join us for a special evening with Praxis Peace Institute Founding Director, Georgia Kelly, as she discusses the unique collaborative business model of the Mondragon Cooperatives located in the Basque country of Spain. Founded in 1955, Mondragon now encompasses 264 businesses and employs more than 100,000 worker-owners. It is a highly successful cooperative model with over 50 years of proven success. They have established research centers, bank and credit unions, a university, youth cooperatives, and small to large businesses. This presentation will cover the ethics and vision of Mondragón as well as unique success stories that are an inspiration to those seeking alternatives to business-as-usual. The goal of the Mondragón Cooperatives is to create community through economic relationships and to transform society through conscious economic practices.« Email this video Report problem Download video - iPod/PSP| Embed video
* Mondragon Corporation in 2008 http://video.google.com/videoplay?docid=3804719037450986958&hl=en
Mondragon Cooperative Part One http://www.youtube.com/watch?v=NORmQ8zaL1c
Mondragon Cooperative Part Two http://www.youtube.com/watch?v=TpdoNzXGmxM
Corporativo Grupo ULMA Inglés http://www.youtube.com/watch?v=Aw4GE7ikEyI
Corporativo Grupo ULMA Castellano http://www.youtube.com/watch?v=QsKMeizpl8A&feature=related
Corporativo Grupo ULMA francés http://www.youtube.com/watch?v=7mwb0Vj_KVY&feature=related
* Mondragon aas a model: http://video.google.com/videoplay?docid=7565584850785786404&hl=en#docid=-6348598461397509798
* Mondragon -- Corporate Values 2006: http://video.google.com/videoplay?docid=7565584850785786404&hl=en#docid=-7773894254367283469
* Mondragon in 2008: http://video.google.com/videoplay?docid=7565584850785786404&hl=en#docid=3804719037450986958
* Mondragon in 2009: http://vimeo.com/7479644
* Mondragon and United Steel Workers collaboration: http://www.usw.org/media_center/releases_advisories?id=0234
* The BBC Documentary (early 1980's) on MCC http://video.google.com/videoplay?docid=7565584850785786404&hl=en
* The Mondragon Cooperatives as Business Models for the 21st Century http://video.google.com/videoplay?docid=-6348598461397509798&hl=en
Join us for a special evening with Praxis Peace Institute Founding Director, Georgia Kelly, as she discusses the unique collaborative business model of the Mondragon Cooperatives located in the Basque country of Spain. Founded in 1955, Mondragon now encompasses 264 businesses and employs more than 100,000 worker-owners. It is a highly successful cooperative model with over 50 years of proven success. They have established research centers, bank and credit unions, a university, youth cooperatives, and small to large businesses. This presentation will cover the ethics and vision of Mondragón as well as unique success stories that are an inspiration to those seeking alternatives to business-as-usual. The goal of the Mondragón Cooperatives is to create community through economic relationships and to transform society through conscious economic practices.« Email this video Report problem Download video - iPod/PSP| Embed video
* Mondragon Corporation in 2008 http://video.google.com/videoplay?docid=3804719037450986958&hl=en
Mondragon Cooperative Part One http://www.youtube.com/watch?v=NORmQ8zaL1c
Mondragon Cooperative Part Two http://www.youtube.com/watch?v=TpdoNzXGmxM
Corporativo Grupo ULMA Inglés http://www.youtube.com/watch?v=Aw4GE7ikEyI
Corporativo Grupo ULMA Castellano http://www.youtube.com/watch?v=QsKMeizpl8A&feature=related
Corporativo Grupo ULMA francés http://www.youtube.com/watch?v=7mwb0Vj_KVY&feature=related
* Mondragon aas a model: http://video.google.com/videoplay?docid=7565584850785786404&hl=en#docid=-6348598461397509798
* Mondragon -- Corporate Values 2006: http://video.google.com/videoplay?docid=7565584850785786404&hl=en#docid=-7773894254367283469
* Mondragon in 2008: http://video.google.com/videoplay?docid=7565584850785786404&hl=en#docid=3804719037450986958
* Mondragon in 2009: http://vimeo.com/7479644
* Mondragon and United Steel Workers collaboration: http://www.usw.org/media_center/releases_advisories?id=0234
DEMOCRACY IN THE WORKPLACE
Please learn about worker cooperatives by watching this documentary on the Rainbow Grocery and the Cheese Board: http://video.google.com/videoplay?docid=-4765137760763676264&q=democracy+in+the+workplace&total=14&start=0&num=10&so=0&type=search&plindex=1
ECONOMIC IMPACT OF COOPERATIVES
Executive Summary
http://reic.uwcc.wisc.edu/overview
http://reic.uwcc.wisc.edu/overview
Project Purpose
The cooperative ownership model is used in a wide variety of contexts in the United States, ranging from the production and distribution of energy to delivery of home health care services for the elderly. Although cooperative businesses have been responsible for many market innovations and corrections of market imperfections, little is known about their impact as an economic sector. Until this project, no comprehensive set of national-level statistics had been complied about U.S. cooperative businesses, their importance to the U.S. economy, or their impact on the lives and businesses of American citizens.
This report describes and quantifies the magnitude of economic activity accounted for by U.S. cooperative businesses. It describes the legal and economic characteristics that were used to define cooperative firms; methods used to measure cooperative activity across all sectors of the US economy; and approaches developed to collect appropriate data. Finally, it provides a census of cooperatives, summarizes the extent of their activity by economic sector, and measures their impact on aggregate income and employment.
Project Partners
The project is funded by the U.S. Department of Agriculture with matching support from the National Cooperative Business Association and its members, and the State of Wisconsin’s Department of Agriculture, Trade, and Consumer Protection. In-kind support is provided by the University of Wisconsin Center for Cooperatives and the Departments of Agricultural and Applied Economics and Consumer Science at the University of Wisconsin-Madison.
Data Collection
To estimate the impact of cooperatives, conducting a census of U.S. cooperatives was necessary. Cooperatives were located through lists maintained by trade associations, the USDA, and academic colleagues; through web searches; and through Guidestar, a searchable database of nonprofit organizations. In all, our search identified 29,284 cooperatives in the U.S. economy. Surveys using standardized survey instruments and a uniform sampling methodology, were then conducted to collect key business indicators from individual cooperatives. The surveys targeted firms in commercial sales and marketing, social and public services, financial services, and utilities. We surveyed 16,151 cooperatives.
Methodology
When businesses use capital, labor, and other inputs to create and sell a product or service, they create economic activity. The direct impact of this activity for the cooperatives in this study is measured by examining the revenue generated by selling output; income paid to owners and workers (wages, benefits, patronage refunds, and dividends); and number of jobs.
The study uses input-output analysis is used to examine how these direct economic impacts ripple through the economy to generate additional indirect and induced impacts. Conceptually, indirect impacts measure the ripple effect that results from connections with other businesses: induced impacts measure spending by the cooperative’s labor force and its owners with the wages and dividends (or "patronage refunds") they earn. The study uses IMPLAN, an input-output modeling system, to measure these secondary impacts.
We conservatively estimate economic impacts in our analysis. At every turn, we have taken steps to ensure that , we underestimate the aggregate wage, employment, revenue, and income impacts of cooperative business. For example, we used wages and benefits as a proxy for input expenditure, rather than revenue. This is apparent in our impact estimates where induced impacts are always larger than indirect impacts. We have applied this rule uniformly across each of the 17 economic sectors in our study, fully recognizing that we may sometimes underestimate indirect economic impacts. This approach is particularly likely to underestimate the full economic impact of lenders in our Financial Services sector. Banks lend to consumers and businesses that in turn invest in various projects ranging from home repair to the launch of an entirely new business. In principle, some portion of the value of these projects could be attributed to banks in assessing their economic impact. We do not attempt to do this, as that method would require significant additional data collection and a methodological approach for separating the impact of banks per se from the projects they fund.
Results
Nearly 30,000 U.S. cooperatives operate at 73,000 places of business throughout the U.S. These cooperatives own >$3T in assets, and generate >$500B in revenue and >$25B in wages. Extrapolating from the sample to the entire population, the study estimates that cooperatives account for nearly $654B in revenue, >2M jobs, $75B in wages and benefits paid, and a total of $133.5B in value-added income.
Americans hold 350M memberships in cooperatives which generate nearly $79B in total impact from patronage refunds and dividends. Nearly 340M of these memberships are in consumer cooperatives.
Cooperative firms are fundamentally different from other forms of business organization. Assessment of economic impact solely in terms of the magnitude of business activity provides an incomplete perspective on the total impact of cooperatives. To initiate study on these more complex impacts, we prepared a series of eight discussion papers. They address methodological and empirical approaches for exploring deeper issues on the economic and social significance of cooperatives, and, in part, will form the basis for subsequent phases of this research project.
‹ Overview
THE JOURNEY HOME – THE EXPONENTIAL POWER OF COMMUNITY
THE JOURNEY HOME – THE EXPONENTIAL POWER OF COMMUNITY
We need a system which reduces the family's cost of living, yet increases the annual net positive cash and product flow to the family. The eco-village promotes this result. The Industrial Revolution provided much of the answer to old problems of production, wealth and poverty by expanding production to meet market demands for new products or more of the old products. Years ago, a person starting as a janitor, and possessing the will and skill to aspire to high paid jobs, could often ascend the ladder and maybe become the CEO. Now managers are in a race to use impoverished labor (here and abroad), and by banks which are complicit by withholding loans to innovative start-up and grow-up businesses.
This approach to personal and corporate industrial transition was dealt a mortal blow when company managers replaced skill and unskilled workers with newer and better machines. The blow even fell harder as many USA industries shut down and moved to China and other slave labor lands. The only “bright spot” was the transportation industry and the middlemen. Sea-going container ships reaped a healthy profit on the transport of a loaded cargo containers from China to the ports of the world at a charge of $3,000 a few years ago, from China ports to, say, Portland, OR. Now the charge is $15,000.
“Cheap Oil” initially provided the lubricant for the $3,000 cost and when it became “not cheap”, higher transportation prices cost the Chinese companies and the buyers a great deal more, which dug into profits and raised prices to the consumer. This trend drove companies to seek even cheaper labor and replace labor with machines. Most of the rise in oil costs benefit the oil producing nations, the oil refiners and shippers, and, of course, the middlemen and speculators. Middle East kingdoms have so much money, they are now buying vast crop lands in poor countries as a hedge against the decreasing agricultural products produced in their homelands.
Cheap oil also had a major impact on the population. As has been pointed out by many well-informed authors, cheap oil produced massive pollution, grid-lock rush hour traffic, and our “throw-away” rampant consumerism. Cities have for the past 80 or more years, been designed for the benefit of the internal combustion-powered vehicles, not people. Read: Hard-wired Traffic, by George Monbot, http://masallp.wetpaint.com/page/HARD-WIRED+TRAFFIC.
Municipal and rural planners and their legislative cohorts, have so resolutely subscribed to the “Ghettoization” approach to planning, that most cities will have to depopulate in order that most of the cities can be re-planned and rebuilt along the Eco-village concept. Current planners attempt to “fix” the problems of intra-city transportation by building more and wider roads, by creating expressways for buses, light rail and multi-passenger cars. Please read: Planning as if People Mattered: http://masallp.wetpaint.com/page/PLANNING+AS+IF+PEOPLE+MATTERED. These expensive, stop-gap measures are bound to fail, as the residential suburban sprawl proceeds along the path of the expanding freeway system. Please read: Dumbbell Planning versus Integrated Community Planning: http://masallp.wetpaint.com/page/DUMBBELL+PLANNING+VERSUS+INTEGRATED+COMMUNITY+PLANNING
The thesis of this article is that we need to change the “leadership” at all levels. A good start is the election of Barack Obama, but this step is not sufficient. We need to change the local leadership which has control of land use regulations, and extend that change to include the state levels. We need to “make a place at the table” for a different style of earning and having a decent living, that of the intentional community (IC), or Eco-village. Please read: History of Worker Cooperation in America: http://masallp.wetpaint.com/page/HISTORY+OF+WORKER+COOPERATION+IN+AMERICA
Now, the eco-villages are few and far between and have little economic, social, and political impact on the greater society. The “popular mind” dismisses these experimental communities as “hippie towns” or “cult villages”. If you want to know how small, worker cooperative “capitalist” (the bottom-up variety) businesses work rather well, please watch the Rainbow Grocery and the Cheese Board video: http://video.google.com/videosearch?q=rainbow+grocery&emb=0&aq=0&oq=rainbow+groce#q=rainbow+grocery&emb=0&aq=0&oq=rainbow+groce&start=10
This characterization only proves that the “popular mind” is grossly uninformed. By not allowing for change, our populations are headed into the coming “perfect storm” that of a global economic meltdown, a global Katrina. Please read: Lester Brown’s new book, Plan B 4.0: Mobilizing to Save Civilization, http://www.earth-policy.org/index.php?/press_room/C68/pb4_ch6_datarelease/
In reality, most of the ICs are well managed communities. The Anabaptist communities of the Amish, Mennonite, and Hutterites, have been self-sufficient and sustainable over 400 years. Economic-based, worker cooperative, Mondragon Cooperative Corporation has been very successful over fifty years. Please watch: The Mondragon Experiment by BBC: http://video.google.com/videoplay?docid=7565584850785786404&hl=en# For an even deeper look at Mondragon and how it can be used as a model for a USA equivalent, please read: http://masallp.wetpaint.com/page/Mutual+Aid+Society,+Mondragon+and+More. Findhorn Foundation, Scotland, has been successful for over 50 years. Please visit http://www.findhorn.org/index.php?tz=240 and watch the video: http://www.facebook.com/findhornfoundation .
Most, if not all, of the Intentional Communities have had scant capital upon which to build an economic infra-structure. Those which have survived, have grown slowly and depended on outside income brought in by members who also have a job or a business “outside” the community (where permitted) and have had to fight local zoning and land use regulations.
Rural America, especially the family farm, has suffered most from the “industrialization” of agriculture. Please read: The Evisceration of Rural America: http://masallp.wetpaint.com/page/THE+EVISCERATION+OF+RURAL+AMERICA Rural America must under go massive transition from mono-cropping, industrialized chemical treatment of plants and soil, to a holistic foundation for food and feed. Please read: Heartland Renaissance: http://masallp.wetpaint.com/page/HEARTLAND+RENAISSANCE
Local governments and some state authorities have created and continue to maintain massive regulatory barriers to the formation and operation of ICs. Please read: Cluster Development: http://masallp.wetpaint.com/page/CLUSTER+DEVELOPMENT. Regulations must be changed to allow for the creation of multiple eco-villages, such a suggested by the Eco-Campus. Please read: The Eco-Campus: http://masallp.wetpaint.com/page/ECO-CAMPUS. This status quo must change. Please read: Transition United States: http://www.transitionus.org/ . We need to re-create an ebullient America in the form of thousands of Coherent Communities. Please read: The Coherent Community: http://masallp.wetpaint.com/page/A+COHERENT+COMMUNITY. Thanks to:
Jim Miller jimmiller5417@yahoo.com September 29, 2009
- We can plan ahead and survive, or we can not plan ahead and not survive. Your choice.
- By Jim Miller
- September 29, 2009
We need a system which reduces the family's cost of living, yet increases the annual net positive cash and product flow to the family. The eco-village promotes this result. The Industrial Revolution provided much of the answer to old problems of production, wealth and poverty by expanding production to meet market demands for new products or more of the old products. Years ago, a person starting as a janitor, and possessing the will and skill to aspire to high paid jobs, could often ascend the ladder and maybe become the CEO. Now managers are in a race to use impoverished labor (here and abroad), and by banks which are complicit by withholding loans to innovative start-up and grow-up businesses.
This approach to personal and corporate industrial transition was dealt a mortal blow when company managers replaced skill and unskilled workers with newer and better machines. The blow even fell harder as many USA industries shut down and moved to China and other slave labor lands. The only “bright spot” was the transportation industry and the middlemen. Sea-going container ships reaped a healthy profit on the transport of a loaded cargo containers from China to the ports of the world at a charge of $3,000 a few years ago, from China ports to, say, Portland, OR. Now the charge is $15,000.
“Cheap Oil” initially provided the lubricant for the $3,000 cost and when it became “not cheap”, higher transportation prices cost the Chinese companies and the buyers a great deal more, which dug into profits and raised prices to the consumer. This trend drove companies to seek even cheaper labor and replace labor with machines. Most of the rise in oil costs benefit the oil producing nations, the oil refiners and shippers, and, of course, the middlemen and speculators. Middle East kingdoms have so much money, they are now buying vast crop lands in poor countries as a hedge against the decreasing agricultural products produced in their homelands.
Cheap oil also had a major impact on the population. As has been pointed out by many well-informed authors, cheap oil produced massive pollution, grid-lock rush hour traffic, and our “throw-away” rampant consumerism. Cities have for the past 80 or more years, been designed for the benefit of the internal combustion-powered vehicles, not people. Read: Hard-wired Traffic, by George Monbot, http://masallp.wetpaint.com/page/HARD-WIRED+TRAFFIC.
Municipal and rural planners and their legislative cohorts, have so resolutely subscribed to the “Ghettoization” approach to planning, that most cities will have to depopulate in order that most of the cities can be re-planned and rebuilt along the Eco-village concept. Current planners attempt to “fix” the problems of intra-city transportation by building more and wider roads, by creating expressways for buses, light rail and multi-passenger cars. Please read: Planning as if People Mattered: http://masallp.wetpaint.com/page/PLANNING+AS+IF+PEOPLE+MATTERED. These expensive, stop-gap measures are bound to fail, as the residential suburban sprawl proceeds along the path of the expanding freeway system. Please read: Dumbbell Planning versus Integrated Community Planning: http://masallp.wetpaint.com/page/DUMBBELL+PLANNING+VERSUS+INTEGRATED+COMMUNITY+PLANNING
The thesis of this article is that we need to change the “leadership” at all levels. A good start is the election of Barack Obama, but this step is not sufficient. We need to change the local leadership which has control of land use regulations, and extend that change to include the state levels. We need to “make a place at the table” for a different style of earning and having a decent living, that of the intentional community (IC), or Eco-village. Please read: History of Worker Cooperation in America: http://masallp.wetpaint.com/page/HISTORY+OF+WORKER+COOPERATION+IN+AMERICA
Now, the eco-villages are few and far between and have little economic, social, and political impact on the greater society. The “popular mind” dismisses these experimental communities as “hippie towns” or “cult villages”. If you want to know how small, worker cooperative “capitalist” (the bottom-up variety) businesses work rather well, please watch the Rainbow Grocery and the Cheese Board video: http://video.google.com/videosearch?q=rainbow+grocery&emb=0&aq=0&oq=rainbow+groce#q=rainbow+grocery&emb=0&aq=0&oq=rainbow+groce&start=10
This characterization only proves that the “popular mind” is grossly uninformed. By not allowing for change, our populations are headed into the coming “perfect storm” that of a global economic meltdown, a global Katrina. Please read: Lester Brown’s new book, Plan B 4.0: Mobilizing to Save Civilization, http://www.earth-policy.org/index.php?/press_room/C68/pb4_ch6_datarelease/
In reality, most of the ICs are well managed communities. The Anabaptist communities of the Amish, Mennonite, and Hutterites, have been self-sufficient and sustainable over 400 years. Economic-based, worker cooperative, Mondragon Cooperative Corporation has been very successful over fifty years. Please watch: The Mondragon Experiment by BBC: http://video.google.com/videoplay?docid=7565584850785786404&hl=en# For an even deeper look at Mondragon and how it can be used as a model for a USA equivalent, please read: http://masallp.wetpaint.com/page/Mutual+Aid+Society,+Mondragon+and+More. Findhorn Foundation, Scotland, has been successful for over 50 years. Please visit http://www.findhorn.org/index.php?tz=240 and watch the video: http://www.facebook.com/findhornfoundation .
Most, if not all, of the Intentional Communities have had scant capital upon which to build an economic infra-structure. Those which have survived, have grown slowly and depended on outside income brought in by members who also have a job or a business “outside” the community (where permitted) and have had to fight local zoning and land use regulations.
Rural America, especially the family farm, has suffered most from the “industrialization” of agriculture. Please read: The Evisceration of Rural America: http://masallp.wetpaint.com/page/THE+EVISCERATION+OF+RURAL+AMERICA Rural America must under go massive transition from mono-cropping, industrialized chemical treatment of plants and soil, to a holistic foundation for food and feed. Please read: Heartland Renaissance: http://masallp.wetpaint.com/page/HEARTLAND+RENAISSANCE
Local governments and some state authorities have created and continue to maintain massive regulatory barriers to the formation and operation of ICs. Please read: Cluster Development: http://masallp.wetpaint.com/page/CLUSTER+DEVELOPMENT. Regulations must be changed to allow for the creation of multiple eco-villages, such a suggested by the Eco-Campus. Please read: The Eco-Campus: http://masallp.wetpaint.com/page/ECO-CAMPUS. This status quo must change. Please read: Transition United States: http://www.transitionus.org/ . We need to re-create an ebullient America in the form of thousands of Coherent Communities. Please read: The Coherent Community: http://masallp.wetpaint.com/page/A+COHERENT+COMMUNITY. Thanks to:
- Lester Brown ( Plan B 4.0: Mobilizing to Save Civilization, http://www.earth-policy.org/index.php?/press_room/C68/pb4_ch6_datarelease/),
- Naomi Klein, The Shock Doctrine (http://www.naomiklein.org/shock-doctrine) ,
- Amy Goodwin, Democracy Now (http://www.democracynow.org),
- Lavaca.org, Sin Patron ( http://www.amazon.com/Sin-Patr%C3%B3n-Argentinas-Worker-Run-Factories/dp/1931859434/ref=sr_1_1?ie=UTF8&s=books&qid=1254249085&sr=8-1 )
- Richardo Semler, Maverick (http://en.wikipedia.org/wiki/Ricardo_Semler ) (Warner Books,1993, p. 180; ISBN 0-446-51696-1 )
- and many other responsible, articulate, investigative and rational authors.
- The World Plan for the Garden of Eat'n: http://masallp.wetpaint.com/page/WORLD+PLAN+FOR+GARDEN+OF+EAT%27N
- Feeding 9 Billion People (excerpts are annotated) http://masallp.wetpaint.com/page/FEEDING+9+BILLION+PEOPLE
- Our Journey Home: the Power of Community: http://masallp.wetpaint.com/page/OUR+JOURNEY+HOME%3A+THE+POWER+OF+COMMUNITY
Jim Miller jimmiller5417@yahoo.com September 29, 2009
CLUSTER DEVELOPMENT
Are you willing to engage in a networked discussion concerning smart growth using clustered living and jobs -- basically, "Live where you work and work where you live”. -- an “Eco-campus”?
The great impediment to the implementation of this concept is the existing zoning and land use regulations which often prohibit mixed uses, such as residential and light industry, farming and light industry and clustered housing in combination with farming and light industry.
The "Eco-campus" approach can be used to reduce dependence on local transportation, reduce urban sprawl and improve the economic viability of many rural, mostly farm, communities. An example would be the combination of a campus setting which would include residential, commercial, light industrial, farming and ranching, clinics, schools and utility systems.. Builders would build an entire mini-community rather than just track homes.
The basic shift is from the individually owned residence to one similar to the condominium approach in that the limited liability partnership would own the land and all buildings and all members of the workforce would be partners in the partnership. Many intentional communities have used these approaches for years with moderate success. The big difference is that the Eco-Campus plan would add significant economic underpinnings to the community by combining food production, light industrial production, residential uses, and other production. This approach solves the "leaky barrel" problem and allows for a "trade surplus" in favor of the LLP. The point is for the community to become as self-sufficient and sustainable as much as possible.
What we need is to create a good working model on the ground, then promote it to the governing bodies involved in land use and zoning regulations. Such fully integrated residential/business/industrial/farm clusters have been the model for over 400 years in the Anabatists communities (Amish, Mennonite, Hutterite) . There are other good models, namely Mondragon Community Corporation (Spain) and Findhorn Foundation (Scotland).
Best Regards,
James E. Miller
jimmiller5417@yahoo.com
OTHER SIMILAR ARTICLES
[A] COHERENT COMMUNITY
COLLABORATION USING BLOGS FOR STUDENT GROUP ASSIGNMENTS
DUMBBELL PLANNING VERSUS INTEGRATED COMMUNITY PLANNING[THE] ECONO CAMPUS
HARD-WIRED TRAFFIC
HARD-WIRED TRAFFIC
Hard-wired Traffic Jams
http://www.monbiot.com/archives/1998/01/07/hard-wired-traffic-jams/ Posted January 7, 1998
The Government’s transport policies are being destroyed by its housebuilding plans
By George Monbiot. Published in The Guardian 7th January 1998.
Four hundred and nineteen MPs think traffic reduction is a good idea. They are supporting the Road Traffic Reduction Bill, due for debate at the end of this month. But, while the transport ministers Gavin Strang and Glenda Jackson have both signed up, their colleagues in the Department of the Environment, Transportation.
At least no one can accuse Richard Caborn, the Planning Minister, or Nick Raynsford, the Minister for Construction, of inconsistency. In November, Richard Caborn announced that half the 4.4 million new homes he claims are needed in England will be built in the countryside. Nick Raynsford has repeatedly stressed his enthusiasm for new suburban developments. Their plans, if implemented, will lay waste to their department’s commitment to “integrated transport”, of which last year’s green paper made such resolute boasts. The department brought together just seven months ago to ensure that transport planning and environmental planning don’t conflict already seems to be pulling itself apart.
The main component of future traffic management is effective development control.
Disaggregated, low-density housing of the kind Raynsford and Caborn envisage is impossible to serve with efficient public transport. Even without taking its new housing figures into account, the DETR’s projections already show rural traffic increasing substantially faster than urban traffic. The government can tax, cajole and antagonise car drivers as much as it likes, but the people of the new suburban sprawl will have no choice but to stay behind the wheel. Traffic jams will be hardwired.
The battle over new housing has been portrayed, notably by Professor Peter Hall, whose increasingly crude and bizarre public statements lend a bogus intellectual authority to Caborn’s plans, as a narrow environmental problem: humans vs newts. But the principal hazard of suburban sprawl is a crisis of social provision. Inadequate transport is one of the greatest sources of deprivation in rural areas. If you live in the countryside and have no car (and one third of British households have no access to a car) you can forget about shopping, forget about services and forget about employment.
Greenfield land on the fringes of cities is being used by some local authorities as a dustbin for the poor. Without shops, with miserably inadequate and expensive public transport, these new out-of-town, out-of-sight and out-of-mind estates are turning into gigantic poverty traps. When the rich flee to their rather more congenial rural enclaves, the flow of wealth is further choked. Urban decay and ghettoisation become almost ineradicable.
Ironically, one of the factors limiting the provision of houses in cities is the extraordinarily generous allowance both local authorities and central government make for the car. Some councils insist that as many as three off-road parking spaces be allocated to every new home. When the London Borough of Islington tried to halve its parking requirements, the Government Office for London, now part of the DETR, forbade it to do so. A study published this week by the London Planning Advisory Committee and the DETR shows that reducing the parking requirement is one of the principal means by which London could accomodate nearly all its new households in good quality, low-rise homes with gardens, without having to make use of new development land.
But do the ministers for planning and construction want to know? Both have made speeches which suggest that they are listening rather too hard to the House Builders’ Federation and the Property Industry Forum, which swing inordinate weight within the DETR. Property companies have bought vast tracts of land on the fringes of towns and cities in the hope of getting planning permission for new housing there, raising its value several hundredfold. It is easier and far more profitable to build on greenfield sites than on urban wastes. Developers have little interest in constructing new towns (which could, conceivably, both generate their own economies and make use of effective public transport) and every interest in the much cheaper option of investing in suburban sprawl.
John Prescott has to decide whether he wants the DETR to become a department for integration - of transport, development and prosperity - or a department for physical, economic and social fragmentation. If he is serious about pursuing the first option, then nothing needs more urgent integration than his contumacious ministers.
http://www.monbiot.com/archives/1998/01/07/hard-wired-traffic-jams/ Posted January 7, 1998
The Government’s transport policies are being destroyed by its housebuilding plans
By George Monbiot. Published in The Guardian 7th January 1998.
Four hundred and nineteen MPs think traffic reduction is a good idea. They are supporting the Road Traffic Reduction Bill, due for debate at the end of this month. But, while the transport ministers Gavin Strang and Glenda Jackson have both signed up, their colleagues in the Department of the Environment, Transportation.
At least no one can accuse Richard Caborn, the Planning Minister, or Nick Raynsford, the Minister for Construction, of inconsistency. In November, Richard Caborn announced that half the 4.4 million new homes he claims are needed in England will be built in the countryside. Nick Raynsford has repeatedly stressed his enthusiasm for new suburban developments. Their plans, if implemented, will lay waste to their department’s commitment to “integrated transport”, of which last year’s green paper made such resolute boasts. The department brought together just seven months ago to ensure that transport planning and environmental planning don’t conflict already seems to be pulling itself apart.
The main component of future traffic management is effective development control.
Disaggregated, low-density housing of the kind Raynsford and Caborn envisage is impossible to serve with efficient public transport. Even without taking its new housing figures into account, the DETR’s projections already show rural traffic increasing substantially faster than urban traffic. The government can tax, cajole and antagonise car drivers as much as it likes, but the people of the new suburban sprawl will have no choice but to stay behind the wheel. Traffic jams will be hardwired.
The battle over new housing has been portrayed, notably by Professor Peter Hall, whose increasingly crude and bizarre public statements lend a bogus intellectual authority to Caborn’s plans, as a narrow environmental problem: humans vs newts. But the principal hazard of suburban sprawl is a crisis of social provision. Inadequate transport is one of the greatest sources of deprivation in rural areas. If you live in the countryside and have no car (and one third of British households have no access to a car) you can forget about shopping, forget about services and forget about employment.
Greenfield land on the fringes of cities is being used by some local authorities as a dustbin for the poor. Without shops, with miserably inadequate and expensive public transport, these new out-of-town, out-of-sight and out-of-mind estates are turning into gigantic poverty traps. When the rich flee to their rather more congenial rural enclaves, the flow of wealth is further choked. Urban decay and ghettoisation become almost ineradicable.
Ironically, one of the factors limiting the provision of houses in cities is the extraordinarily generous allowance both local authorities and central government make for the car. Some councils insist that as many as three off-road parking spaces be allocated to every new home. When the London Borough of Islington tried to halve its parking requirements, the Government Office for London, now part of the DETR, forbade it to do so. A study published this week by the London Planning Advisory Committee and the DETR shows that reducing the parking requirement is one of the principal means by which London could accomodate nearly all its new households in good quality, low-rise homes with gardens, without having to make use of new development land.
But do the ministers for planning and construction want to know? Both have made speeches which suggest that they are listening rather too hard to the House Builders’ Federation and the Property Industry Forum, which swing inordinate weight within the DETR. Property companies have bought vast tracts of land on the fringes of towns and cities in the hope of getting planning permission for new housing there, raising its value several hundredfold. It is easier and far more profitable to build on greenfield sites than on urban wastes. Developers have little interest in constructing new towns (which could, conceivably, both generate their own economies and make use of effective public transport) and every interest in the much cheaper option of investing in suburban sprawl.
John Prescott has to decide whether he wants the DETR to become a department for integration - of transport, development and prosperity - or a department for physical, economic and social fragmentation. If he is serious about pursuing the first option, then nothing needs more urgent integration than his contumacious ministers.
THE EVISCERATION OF RURAL AMERICA
By Jim MillerThe evisceration of rural America over the past 100 years or so has proceeded on several fronts, some simultaneously. There is light at the end of the tunnel and it isn’t a train. Skip to No. 13 below.
- Industrial Drain:
Over the past 100 years, the youth of the town have gone to college or moved to the industrial cities in search of “a better life”. This “cheap” labor has been expropriated to build the Industrial Machine. http://www.ruraleship.org/content/pdf/ordeval.pdf “Cheap labor” remains the family members supplemented by legal and illegal migrants from Mexico and other impoverished countries.
- Generational Shift of Assets
As the farmers and ranchers die, their assets are most often distributed to the next generation who have moved away, established themselves in jobs and a family elsewhere and have no need or intention of continuing the farming or ranching enterprise of their parents. Those lands often pass in to the hands of residential developers or other buyers who change the use of the land. http://www.ruraleship.org/content/pdf/ordeval.pdf
- Tax Bite
Typically, the farm passes to the next generation at a time when the circumstances require that it be sold to pay the federal and state estate taxes. The tax bite removes assets from the control of the next generation even if that generation continues the farming or ranching enterprise. Because of the cash requirement, land is sold at less than current value and the continued farm enterprise is strapped for cash for years to come. The replacement cost of adding new farm land later after the tax bite, is typically much more expensive than what was sold, thus making such purchases uneconomic or, if bought, severally impacts profitability.
- Consolidation
Farming has not been profitable since WWII, for most family farms. Retirement, bankruptcy, divorce, crop failure, drought, and death have all speeded the transfer of assets to large, Agri-corporations, managed from the polished desks in our major cities. The mega-agribusiness operators do not typically support local enterprises in a town. Due to the size and sophistication, the corporate owner buys direct from the factory and uses low paid, hired manager and farm works to produce the crops.
- Mining the Soil
The use of industrial chemicals to foster high production fits well with the mentality of the mega-agribusinesses. Industrial Insecticides, pesticides, herbicides, fungicides all destroy the viability of the soil by killing the soil savers – the micro-organisms which feed the plants.
The focus of much corporate farming is in the production of comedies where large crops are produced by large, expensive machines operated by few workers. Bio-dynamic farming has been around for centuries, but only in the past 30 years has it “taken root”. The clamor for quick results and quick profits has kept bio-dynamic farm management on the periphery of food and fiber production.
Walters, Charles, Weeds – Control Without Poisons; Acres, U.S.A., Austin, TX, [ed. 1999] Sheaffer, C. Edgar, V.M.D., Homeopathy for the Herd - A Farmer’s Guide to Low-Cost, Non-Toxic Veterinary Care of Cattle; Acres, U.S.A., Austin, TX [ed. 2003] Kinsey, Neal & Walters, Charles; Hands-on Agronomy; Acres, U.S.A., Austin, TX [ed. 1999] Salatin, Joel; Pastured Poultry Profit$; Polyface, Inc., Swoope, VA [ed/ 1999]
- Shift in Labor Force
As the small towns wither on the vine, and farm production decreases, often the major employers are government agencies – health, welfare, power generation, road departments and social service agencies. The need for more health and welfare is often a function of the descent into poverty of the inhabitants of many rural towns. In an effort to avoid benefit costs and to lower wage costs, many employers resort to having many, part-time works. This works to the disadvantage of the labor force, members of which are then forced to take two or three jobs in order to survive. http://www.ruraleship.org/content/pdf/ordeval.pdf
The effect of the enlarged presents of government is to shift the labor force from independent and semi-independent farm and ranch enterprises, to the more information intensive and technical government jobs. Thus, the farming and ranching skills in the local workforce erode.
- Lack of Small Enterprise Leadership
As the older generation retires, sells the farm and moves to Florida or California, the leadership built upon the foundation of private farm and small business enterprises evaporates and is not replaced by the college educated, younger generation. Leadership is then drawn from the ranks of the corporate farmer, from government sources and from the ill-informed. The focus changes and is skewed away from farming and toward “bigness” and “professional management”.
- Grants and Loans to the “rescue” – Not
After the worst has set-in, the remaining town councils race to obtain grants from State and Federal agencies. The grants are usually of the “spot remover” type, that is, are single purpose – build a fire station, improve drinking water, build a levee against floods, and low income (apartment) housing. Few, if any grants are available from government and private funders, to make fundamental changes in the productivity of the farm lands of the entire community or region.
Loan programs still require assets having a 30% value greater than the real property. The borrower must demonstrate that the gross return will pay the mortgage or rent, the operational costs, the debt service and return sufficient profit to support the personal and family needs of the borrower. Even if the farmer obtains the loan, one or two bad crop years will often result in foreclosure of the loan. The public agency or bank then has land which it does and cannot farm or ranch. Again the likely cash-rich buyer is the corporate wealth controlled by the polished desk boys and girls.
- “FREE TRADE” AINT FREE
- The best argument against free trade I have read yet:
“Dena Hoff is a farmer in Glendive, Montana. She chairs the Free Trade Task Force for the National Family Farm Coalition.
The National Family Farm Coalition was founded in 1986 to bring
together farmers and others to strengthen family farms and rural
communities. NFFC organizes national projects focused on preserving and strengthening family farms and serves as a network for groups opposing corporate agriculture. Membership consists of 33 grassroots farm, resource conservation, and rural advocacy groups from 33 states.
The following essay is from Shafted: Free Trade and America's Working Poor, a new book by FoodFirst Books.
’I am a family farmer from eastern Montana and a member of the
National Family Farm Coalition, which was founded to bring together farmers and others to strengthen family farms and rural communities.
Free trade is no longer about an exchange of commodities between
countries -- wheat for coffee or bananas. What free trade is really about is procuring the unregulated movement of unlimited amounts of capital anywhere in the world. To this end, farm families have become pawns in a dangerous game played by powerful people who trade away the futures of the next generations of farm families, who neither understand nor consent to the rules of the game.
When Congress gives up the right to debate and amend trade
agreements, they stop any meaningful participation by the American people in decisions that will affect every facet of their lives, as well as the lives of every person on this planet.
Free trade is no longer an economic issue. It is a moral issue.
Valuing trade over all, including citizens' right to participate in trade decisions and to hope that free trade can be fair trade, is wrong.
Will U.S. trade policy mean that farm prices will be above the cost of production for all farmers worldwide? Will countries have the right to determine domestic food and farm policies to benefit their own citizens? Will there be family farms for my own children and other farm children who want to farm? Will countries have the right to protect the public health and welfare of their citizens if their regulations deny a profit to a corporation?
Unless you can answer an unequivocal "yes" to each question,
something is morally wrong with our current trade policy.
In the nearly 10 years since NAFTA, the facts show that the impacts to family farmers and ranchers in the United States, Canada and Mexico have been disastrous. Yet we stand ready to export this disaster to the rest of the Western Hemisphere.
I urge you, for the sake of a healthy rural America, to finally lift up your voices and say what family farmers have known for nearly 10 years of NAFTA -- the emperor has no clothes!
A trade policy that is secret and undemocratic and that ignores the impacts on family farms, workers and the environment is a slap in the face to every American who believes he or she lives in a country that proclaims liberty and justice for all.
Please take a hard look at all we stand to lose as a people and as a nation. Review the broken promises of NAFTA and pledge to work for fair trade agreements negotiated for the good of all. Our future depends on your commitment to making all trade fair trade.’”
Published: Sep 08 2003; http://www.tompaine.com/feature2.cfm/ID/8800
- Mexico has one of the worst environmental records in the western hemisphere. Leaking battery acid from an old U. S. owned battery factory flows through residential neighborhoods. The few environmental laws on the Mexican statute books are simply not enforced. Wages and working conditions are abysmal. How can the family farmer or local business compete against low cost Mexican labor? How can the U.S. workers, farm owners and businesses adhere to our very demanding environmental laws at great cost to us, yet try to compete with production taking place in Mexico and other countries which have no environmental policy and no enforcement? We are at severe disadvantage. NAFA has translated poor working conditions and environmental disaster in Mexico into economic disaster for U. S. citizens in all walks of life. The U. S. needs to pull the plug on NAFTA and GATT.
- DEADLY EMBRACE
USDA has a “Beginning Farmer” program. Universities and colleges have agricultural departments dedicated to teaching ourselves how to farm and what to farm. Extension agents and other state-sponsored programs focus on commodity farming – how to get the most out of the land, as quickly as possible and at the lowed unit cost. This is good?
The mega agri-corps have this focus in mind also – huge farms, huge tractors, huge quantities of industrial chemicals to kill critters and grow food and fiber. Because of the “economy of scale” (read oligopoly), these mega-agri-corps are vertically integrated and control prices to a large extent, on both ends of the chain – the producing and the retail.
So, if the mega-agri-corps want more profit, they lower the price of the raw materials – the commodities to the point of no profit or even a loss. This approach allows the commodity market to be filled by commodities produced by, guess who, -- the poverty level family farmer. Whether the small commodity farmer knows it or not, he/she is a wage slave to the mega-agri-corps even though he/she does not sell to them. Selling into the commodity market under these circumstances is a deadly embrace for the small farmer, especially when one considers that the risk of crop failure as always there and “belongs” to the small farmer.
- DEATH SPIRAL
The more the small farmer grows, the greater the supply nationally which drives prices down, creating a short fall in revenue for the farmer. To make up for this short fall, the farmer redoubles his/her efforts to grow more commodities. However, bigger is not better – it only leads, on a large scale – to lower prices and less return to the farmer.
Soil bank programs have attempted to reduce supply by taking land out of commodity production. Farmers get paid for not farming -- a novel idea. I wish I could have been paid for not practicing law. I’m just thinking of all those cases I would not have tried. Or extend to the welfare system – pay mothers on welfare not to have anymore babies. How about paying government workers not to work; that would probably not work since they are not productively working now.
It is true that most of the soil bank payments by the Feds go to the mega-agri-corps. These tax dollars allow them to buy more foreclosed family farms, thus adding to their “bigness” – Shades of “Grapes of Wrath”. Because they bought the land “cheap”, their return is greater than for the farmer who had to pay market price for the farmland.
- FARM SUBSIDIES FOR THE RICH
”Biggest growers pocket 71 percent of U.S. farm subsidies
Tuesday, September 09, 2003
By Charles Abbott, Reuters
WASHINGTON - The biggest American farmers received 71 percent of U.S. farm subsidies since 1995, environmentalists said Tuesday in a report that could fuel the fight in Congress for tighter limits on farm supports.
Activists say mammoth payments to large operators gives them the cash to out-bid their smaller neighbors for land and equipment. The result is higher operating costs but no improvement in farm income.
According to the Environmental Working Group, the top 10 percent of
U.S. growers collected an average $278,932 a year. Their share of
payments steadily grew from 1995, when the elite group of farmers got 55 percent of government payments.
Billions of dollars are funneled to American grain, cotton, and
soybean growers each year. Farmers and ranchers also receive federal
money to idle environmentally sensitive land or to control manure
run-off from fields and feedlots.
"The ability of the family farmer to survive and make a living is
plummeting," said Chuck Hassebrook of the Center for Rural Affairs in Walthill, Neb. "Farm programs are doing as much to subsidize large farmers as to drive smaller farmers out of business."
Iowa Republican Charles Grassley planned to ask for a Senate vote in
coming weeks for a "hard" cap on farm subsidies, now set at $360,000
a year but easily circumvented. An aide said Grassley wanted a limit
in the range of $275,000-$300,000 that would end ways to exceed the
limit.
"It's not surprising to me that concentration is increasing," said
Grassley. "Hopefully this information will prove it's time to act and enact legitimate, reasonable payment limits."
The Environmental Working Group, a Washington-based activist
organization, released its report as the World Trade Organization was meeting in Mexico to discuss how to cut farm subsidies in rich
nations, which spend a combined $300 billion annually on their
growers.
MORE: http://www.enn.com/news/2003-09-09/s_8208.asp
Environmental Working Group said it would make available on the
Internet its figures, based on U.S. Agriculture Department records,
at http://www.ewg.org/farm2/home.php.”
Crop supports help the rich more than the poor farmers.
“ Montana farm profits fell by 36 percent in 2002, to the lowest level in more than a decade. Plus, the industry would have seen no profits at all without government subsidies.”
“ The state’s roughly 16,000 farmers and ranchers earned a profit of $215.6 million during the year. They took direct government payments of $256.1 million, according to an annual report from the Montana Agricultural Statistic Service. That means without the subsidies, farmers would have lost $43.5 million.
****
“ Even with subsidies, lots of farmers have a hard time making a living, Griffith said, noting that 40 percent of household income on commercial farms comes from non-farm sources.
****
“ In Montana, about 10 percent of farmers gather about 55 percent of subsidies. The other 45 percent of the money is spread among the remaining 90 percent of farmers.
“ Bitter Harvest”, Bozeman Daily Chronicle, Monday, December 24, 2003, Pg. A1, by Scott McMillion.
- Solutions abound, but there are few takers
- The Hyperactive Community Development Organization http://www.ruraleship.org/content/pdf/ordeval.pdf
- Change the economic base from farming and ranching to IT, manufacturing and/or conservation or some combination thereof.
- Farm and ranch for niche markets and “value added” production. For example see: http://www.uaex.edu/depts/OSLD/Focus_Programs/Animal_Ag.asp Google the subject at: http://www.google.com/search?as_q=&num=100&hl=en&ie=UTF-8&oe=UTF-8&btnG=Google+Search&as_epq=farm+value+added+production&as_oq=&as_eq=&lr=lang_en&as_ft=i&as_filetype=&as_qdr=all&as_occt=any&as_dt=i&as_sitesearch=&safe=images
- Fight Fire with Fire.
Farmers, through cooperatives and other business combinations, can vertically integrate and cut out the middlemen. While some members of the farming community decry the concept of vertical integration – they really are decrying the use of this economic tool by the mega-agri-corps. The tool as such, has no morality – any more than a tractor or truck. One of the solutions to maintaining the profitability of the family farm is for it to integrate vertically.
What? Integrate? Lose my “independence”? We hear many similar responses by the independent minded farmer/rancher. Those who insist on “doing my own thing” can do so in splendid isolation –and—suffer the consequences of low or no profit from such independent efforts.
The ONLY way farmers can beat the mega-agri-corps is to fight fire with fire. The farmers must join and become part of professionally managed coops or other businesses forms which provide the muscle to compete with the Con-Agra’s of the world. This approach will work wonders for the small farmer. For example, see:
Anyone interested in this approach can Google the subject and find out how this approach has been very successful for a large numbers of farmer dairymen and ranchers. See: http://www.google.com/search?as_q=&num=100&hl=en&ie=UTF-8&oe=UTF-8&btnG=Google+Search&as_epq=farm+cooperative&as_oq=&as_eq=&lr=lang_en&as_ft=i&as_filetype=&as_qdr=all&as_occt=any&as_dt=i&as_sitesearch=&safe=images
The only problem with most of these coop is that they are still focused on one or a handful of commodities and they deal mostly with the producer-to-wholesaler part of the food chain. I have yet to see any of them fully vertically integrate to and including the retail level. Having said that, there is one company in Montana which provides one of the best examples of producer to consumer. See Wheat Montana: http://www.wheatmontana.com/. My reservation about Wheat Montana is that it basically deals with only grain crops.
Many retail mercantile stores, such as Sears, Home Depot, Costco and other big boxes, have vertically integrated by purchasing their suppliers who are manufacturers. Why the food and fiber industry has not followed this lead is a mystery. The “Fire” with which the small farmer must fight is the same fire used by the mega-agri-corps to burn down the family farm = vertical integration. Only ours will be a “back-fire”.
Waiting for Congress to “do something” is nearly useless. We and our grandchildren will have died waiting for Congress to act.
We must DO IT OURSELVES.1
We must provide the leadership. As General Patton said, “Lead, follow or get out of the way.” We need not sacrifice our economic lives and those of our children to the gasping clutches of special interest, Congress members on the take, and monster combinations of mega-agri-business. Again Patton: “I don’t want to die for my country; I want that other son-of-a-bitch over there to die for his country.”
- Vote into Congress, Senators and Congress members who will vote out NAFTA, end farm subsidies to the giant agribusinesses, and go after the combinations in restraint of trade (read, global companies). Vote out of Congress those to “go along to get along.” Read about Paul Steckle and some of his fellow MP’s voting against the party line when it came to gun control issues in Canada.
“Steckle and a handful of other rural Liberals extended their version of the political finger and voted with the Opposition.” A Liberal who bucks the party line http://www.agpub.on.ca/iss/99/apr/leabop5.htm
- Bigger isn’t better.
"Bigger is good, even if it don't work" -- the Archie Bunker mindset.
The race for “bigger” which started in the 50’s has created its own nightmare. Anna Barns, Moderator of the CSA forum at http://www.prairienet.org/discussion/ She comments:
“ Think about how much corn got dumped on the ground this fall because elevators didn't have a place for it and how many small farms have gone out of business in the last 20 years. Do we need to grow more corn? What if we put all those farmers back on the land with a couple of hundred turkeys, a few pigs, and a few cattle?” **** “Farm management research shows that diversified operations are the most successful in the long run. So why wouldn't it make the most sense instead of paying people to grow corn we don't really have markets for and absorbing farm bankruptcy debt from farmers who got wiped out in the last pork price bust, etc., to keep people on the farms in diversified operations in the first place?”
- Intellectual property resources.
The World Wide Web abounds with enormous tidbits of information and mis-information. The use of Google is how you find and get to tidbits very quickly. I used Google so much that its Advance Search page is now my home page: http://www.google.com/advanced_search?hl=en
There are hundreds of thousands of searchable databases, usually multiple databases on any given subject. Governments, especially the Federal, have a fixation on housing information – this is good.
- For instance, the Congressional Record for the years 1983 through 2002 is searchable: http://www.gpoaccess.gov/cri/index.html. As an example, go to: http://frwebgate1.access.gpo.gov/cgi-bin/waisgate.cgi?WAISdocID=39895011032+0+0+0&WAISaction=retrieve and then down to “Articles and editorials” which have been inserted into the Congressional Record by a member of Congress. Here are just a few of the articles – you get the idea. Hunting down relevant tidbits is fun and rewarding – if you have the time and interest:
Ag Crisis Kills Faith--The American Dream Suffers, 3009 [21FE] Agriculture Focus, 32242 [18NO] Agriculture Is My Bread and Butter, and Yours Too, 5737 [20MR] Aid Money Easier To Get Than To Spend, 32376 [19NO] Alexander Nunn--A Nobel Man, 1892 [6FE] Alien Farm Workers Fear Immigration Law Change, 29300 [28OC] America's Farmers Down the Tubes?, 1729 [5FE] Ancient Task Reaffirms Rich New Mexican Past, 12665 [20MY] Another Critical Season for Sugar, 3579 [26FE] Are You Ready for $2.40 Wheat and $2 Corn?, 2459 [19FE] Argentina's New Breed of Farmers Are Paring U.S. Grower's Markets, 3639 [26FE] As Farms Grow Few, Towns Go To Seed, 36115 [11DE] Axing Farm Exports, 8131 [17AP] Banker Blames Government Inaction, Debt, 37581 [18DE]
Too bad these articles are not clickable [hyperlinked]. You can read them in the Congressional Record at the central library in most major cities (federal repository).
- The Library of Congress has gone digital for several years: http://www.loc.gov/. Try searching using the keyword search engine from the home page [upper right-hand corner]. Using “farm vertical integration” the search returned the following document count: farm(4256) vertical(1125) integration(3850) farm vertical...(71) Unfortunately, most of the entries digitize only the table of contents and are very cryptic. Not a good, quick research tool, but the depth is awesome.
- More to come as I have time and come across more good websites. Your suggestions, additions, editing and critical (but well thought-out) comments are welcome.
Contact Jim Miller, 530 NW 13th St., Corvallis, OR 97330; Wired: 541-757-9797; wireless: 541-971-003; email: JimMiller5417@yahoo.com
1 “You’re gonna make it on your own!” Jessie Ventura’s Vision for Minnesota. http://www.mainserver.state.mn.us/governor/self_sufficient.html
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