Who’s Building the Do-It-Ourselves Economy?
Corbyn Hightower was doing everything right. She worked long hours selling natural skin care products, flying between cities to meet customers, staying in posh hotels. She pulled down a salary that provided her family of five with a comfortable home in a planned community, a Honda SUV, health insurance, and regular shopping trips for the best natural foods, clothes, shoes, and toys.
Then the recession hit. Her commissions dried up, and the layoff soon followed. Life for Corbyn, her stay-at-home husband, and three children changed quickly.
First the family moved to a low-rent house down the street from a homeless shelter. They dropped cable TV, Wi-Fi, gym membership, and most of the shopping. Giving up health insurance was the most difficult step—it seemed to Corbyn that she was failing to provide for her young daughters. Giving up the car was nearly as difficult.
As our economy goes through tectonic shifts, this sort of adaptation is becoming the new normal. Security for our families will increasingly depend on rebuilding our local and regional economies and on our own adaptability and skills at working together. At the same time, we need government to work on behalf of struggling families and to make the investments that create jobs now and opportunities for coming generations. That will require popular movements of ordinary people, willing to push back against powerful moneyed interests.
Where Are the Jobs?
How did we get to an economy in which millions are struggling?
Officially, the “Great Recession” ended in the second quarter of 2009. For some people, the recovery is well under way. Corporate profits are at or above pre-recession levels, and the CEOs of the 200 biggest corporations averaged over $10 million in compensation in 2010—a 23 percent increase over 2009.
But for most Americans, there’s no recovery, and some are confronting homelessness and hunger. Twenty-five million are unemployed, under-employed, or have given up looking for work. Forty-five percent of unemployed people have been without a job for more than 27 weeks, the highest percentage since the Bureau of Labor Statistics started keeping track in 1948. There’s a growing army of “99ers,” people who have been unemployed for more than 99 weeks and have exhausted all unemployment benefits.
Fifty-three percent of Americans say jobs and the economy are the most important issues facing the country; just 7 percent say the deficit is the most important. Yet budget cuts and austerity have replaced job creation in the national dialogue.
American workers have become expendable to many of the corporations that run the economy; NAFTA and other trade laws opened the floodgates of outsourcing to low-wage countries. Many of the jobs that can’t be outsourced are being eliminated, or hours, pay, and benefits are being cut.
As corporations amass greater power, wealth, and influence, they successfully lobby for tax breaks and federal subsidies and set the national policy agenda. As long as the giveaways continue, along with massive military spending, governments have to cut education, public services, and infrastructure investments—and the jobs that go with these public benefits.
Leaders in both parties tell us growth is what’s needed, but the evidence suggests growth alone won’t help most Americans. GDP has grown steadily and is now back to pre-recession levels.
But since the official end of the recession, virtually all of the new income—92 percent as of the first quarter of 2011—has gone to corporate profits, according to a May report by the Center for Labor Market Studies at Northeastern University. None of the increased GDP has gone to boost wages and salaries.
More importantly, since World War II, growth has been built on cheap energy—particularly petroleum—and low-cost dumping of the effluents of a wasteful global economy. Now the easy-to-pump oil is nearly used up, and the cost of extracting petroleum is rising. At the same time, we’ve used up the Earth’s capacity to absorb climate-changing gases and other forms of pollution. Changes in the delicate balance of atmospheric gases are already disrupting the climate, and extreme weather events are happening with increasing frequency. Growth has failed to yield prosperity, and the planet cannot bear more of it.
So how do we create an economy that provides dignified livelihoods to all who are willing to work, without undermining the natural systems we, and our children, rely on?
A real solution requires a vision that is both humble in terms of the material wealth we can expect and ambitious about the fairness, mutual support, and quality of life we can build.
Here is a three-part plan for building real prosperity in an age of limits:
1. Local Economies, Local Ecosystems
The corporate economy has failed to offer economic security to most Americans and has undermined the environment and the living standards of people around the world. Strong local and regional economies are the way to a sustainable and resilient recovery. Small businesses actually create more jobs and innovation than big corporations. And entrepreneurs with long-term stakes in their local environment and economy have both the means and the motivation to protect them. There are many simple ways individuals and communities can support the transition to local economies.
Buy local. By buying goods and services locally and regionally, we keep money circulating in the Main Street economy, where new jobs are most likely to be created. Shop at a big box store, and the money goes to corporate headquarters almost immediately. Buy local food and your money stays home. We can also generate energy locally. Farmers are earning extra income by installing windmills. In Cleveland, a university and the city government are contracting to buy the electricity generated by solar panels a worker-owned co-op installs on their buildings (see page 26). Investment in weatherization immediately creates local jobs while reducing energy payments that leave the community. State and local governments, too, can strengthen their economies, and ultimately their tax bases, by buying as locally as possible. Substitute local for “imported,” and you create local jobs built on the solid foundation of local demand.
Bank local, too. Capital is the life-blood of enterprise. When banks are located in the community, they come to know local businesses and what sorts of loans are likely to work. When banks hold the loans, rather than sell them, they have an incentive to make wise loans. Credit unions, community-rooted banks, and state banks (see page 46) invest in the local economy, instead of siphoning off our bank deposits to use for global speculation.
Start with strengths. Under the old economic development strategy, communities compete with each other for jobs by offering corporations ever greater tax breaks and concessions on health and safety regulations and union rights. This race-to-the-bottom strategy may yield occasional wins, but it’s a long-term loser. A more successful strategy is to build economies from the grassroots up, starting with existing assets. For some communities, their primary asset might be a vibrant local arts scene (see page 29). For others, it’s a natural resource, like forests or farmland. Or it might be a hospital, university, high-tech enterprise, or other “anchor institution” that isn’t going away (see page 26).
Start by finding ways to turn these assets into sustainable livelihoods. An unused building could provide a place for start-up farmers to try vertical farming, for example. Then look for ways to link these core enterprises to local customers, vendors, a skilled labor pool, and so on.
Use wasted resources. Instead of demolishing and landfilling obsolete buildings, local entrepreneurs are creating jobs by disassembling them and selling components. Other common wastes: used clothes and books and repairable appliances. Unharvested fruit trees. Church kitchens that sit empty most of the week but could be health department certified for food processing start-ups. Methane from landfills, which could heat homes instead of the climate. Front yards that could be farmed. Each wasted resource could be transfomed into a job.
Lies, Damned Lies,
Busting 3 big myths
about jobs today.
Do it cooperatively. Well-paid workers are a community asset, and even more so when they own their workplaces. Cooperative work arrangements are available not just to well-educated entrepreneurs. Home health care workers, house cleaners, grocery store clerks, and laundry workers have all become worker-owners of successful cooperatives. These workers tend to spend their paychecks, and with a steady family income they are more able to contribute to the well-being of their community. And, since they share in the profits of their enterprise, they develop a nest egg they can use for buying a home, educating their children, and helping relatives through difficult times.
Allow communities to control their resources. Community-controlled forests are more likely to be sustainably managed than corporate-controlled ones; sustainable agriculture is more labor-intensive but less polluting. Sustainable and fair practices create jobs that last while boosting local resilience.
Keep ownership human. When owners are workers, customers, or the community at large, an enterprise can operate in accordance with multiple values, such as human well-being, the good of future generations, and ecological health. Corporate owners are constrained by law to put profits first.
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