Monday, February 8, 2010

Equity Unions as they relate to a "Public Asset Fund"

His "public asset fund" has very similar intentions, I think.

Let me comment on the concept as you have presented it:

For what it is worth, government ownership is not going to be very popular, and is unnecessary. Why do we need the government to own the assets? If we can turn the property and capital over to the government why can we not instead turn those assets directly over to workers' cooperatives with funds collected by the government. Why do we need the government to administer? They merely need to facilitate.

Secondly, we must be vigilant and careful about Capitalists selling or otherwise ceding obsolete capital assets to workers. ESOPS are a good idea for workers, but have disadvantages. They don't deal withe physical/economic realities of local disinvestment and they do not address the issues associated with Corporate/Union partnerships in damaging sectors such as military contracting, alcohol and tobacco production and distribution, etc.

Let me clarify, if not reiterate, the definition of a Bank is that it is investor owned. By contrast savings banks and credit unions are depositor owned.

Among the purposes of an equity union is to evolve us away from an investor "class", non-workers who live off capital gains and dividends. Rational and purposeful (for meeting community needs and reasonable wants) Equity participation, sharing, and granting would replace speculative equity investing, equity trading, and lending (usurious by definition and certainly in practice).

In essence, the main purpose of an Equity Union system would be to evolve the private sector into a quasi-public One.

We also need to abolish the Federal Reserve. Let the Treasury make direct allocations to community equity unions instead of allocating financial capital to Investor owned banks.

Please pass this communication on, if you deem such appropriate.

Let me know what Dave thinks of my ideas, and by all means encourage him to contact me directly.

Thanks for writing.

Take good care.

In Peace, Friendship, Community, Cooperation, and Solidarity,

Mike Morin

Saturday, February 6, 2010

A Re-introduction to the Concept of Equity Union(s)

The current Capitalist dominated system is dysfunctional both from an equity/fairness and economic and natural resource sustainability perspective.

The dominant paradigm in Capitalist financial business operations uses something called the discount rate which assumes that money will be worth less (eventually worthless) in the future, thus creating a necessity to extract profits exceeding a "hurdle" rate leading to unfair and unwise exploitation of workers, borrowers, and natural resources, and to rampant inflation.

The use of credit is not a good business or personal practice. In business, it should be discouraged because creditors have first claims on net revenues and hold liens on real property and capital assets. For "consumers", the use of credit is unwise because the system is set up to extract profits from interest thus assuring that when consumers use credit that they are losing money relative to inflation. Certainly the current foreclosure crisis in the USA is ample evidence of the inflation and the unfairness and unhealthiness of the mortgage lien process.

Credit Unions and Mutual Insurance companies are in theory attempts to institute non-profit economic democracies for their respective industries. However, because of the need to compete for customers, both of these relatively progressive financial service organization types are forced to play the same game that is basically destructive to individuals, families, communities, and the natural environment. Ideally, credit should only be used as a last resort, much more preferably not at all. We should replace all aspects of the extant financial system with an Equity Union. In some ways, a mutual insurance company is similar to an equity union. However, because such companies are required to realize profits in order to compete for "policy holders" (really investors), the companies that comprise the portfolios of the mutual insurance firms cannot be not-for-profit, can not be mutual organizations themselves.

In a not-for profit Equity Union financial services system based on principles of mutuality working in concert with ethical, wise, knowledgeable, and intelligent community, inter-community, inter-regional, and worldwide planning there would certainly be an important role for financial service workers.

A major impediment to such an Equity Union would be the competitive advantage of the current financial sector and the fear of the friction of change to those individuals and organizations. Dealing with this sector of "the" economy, it would be more feasible with regards to Capitalist resistance and more humane, to orderly and peacefully transition to an Equity Union, coordinated with ecologically sound economic planning.

I am writing and talking about transitioning slowly, methodically, and with the minimum amount of friction and hardship from a dysfunctional financial system, based on self-interest, to one designed to benefit everybuddy.

At risk of understatement, it will take a huge amount of work to educate folks to the need and benefits of such change and to communicate the basic Plan. Transition Planning will also be a very difficult process, but I see no alternative to the current, impending and worsening global economic, political, social, and natural environmental collapse.

The Peoples' Equity Union concept is designed to be a grass roots, popular choice "movement". I am organizing with individuals, workers, and shopkeepers in my neighborhood, adjoining neighborhoods, and through the inter-net to whomever I can attract an interest in the concept.

The focus is primarily local, yet regional, and global at the same time. It is my dream, not a hope yet, to encourage a critical mass of people to organize locally around a unifying mission, unifying principles, unifying strategies, and unifying tactics in order to minimize the amount of administration at the regional and wide cooperative populations.

The theory is that neighborhood locales, the neighborhood community/worker hybrid association will have maximum autonomy and will be guided only, in their inter-community and inter-economic sector relationships by regional Planning Boards and a Global Policy Committee.

We must replace the current equity trading systems, corporate conglomerate corporations, insurance companies, and usurious banking systems of the Capitalist status quo with a worldwide Peoples' Equity Union with branches in every community/neighborhood.

The goal is to be a true economic democracy: of, for, and by the people.


Concurrent with financial systems reform, where equity sharing and not-for-profit equity collaboration would replace the current financial paradigm of for-profit equity investing, equity trading, and usurious credit arrangements, we need to evolve to a different system with respect to residential and other real property occupation arrangements.

In lieu of rent or leases, people should be allowed to acquire equity in their abodes and business properties. For example, in the case of an apartment, if one paid $500 per month to a property management firm, let's say $50 per month would go to property maintenance, and another $40 to administration fees, insurance, etc. This would leave the resident with $410 of accumulated equity added to their account each month. If we had a large cooperative housing organization (preferably world-wide, and preferably the only form of property ownership) then when someone had to move or wanted to move, they could take their equity with them to the new property.

With regards to mortgages, they are horribly usurious and should be banned. The scenario related above would also replace the current system of financing "home ownership loans".

A huge problem that we are facing now is the terrible inflation in the market values of real property (and capital assets, for that matter). If we pooled our equity, pooled our assets, and collectively wrote off our liabilities, then we could significantly write down the market values of real and capital assets.

More on Equity Union(s)

In a not-for profit Equity Union financial services system based on principles
of mutuality working in concert with ethical, wise, knowledgeable, and intelligent community, inter-community, inter-regional planning would serve the needs of the people.

In local and inter-community equity unions, equity sharing would be the modus operandi. People with funds being held in equity unions would have the option of sharing in primarily worker owned community betterment projects based on the principles of quality of life, equity (which means ownership, and also means equality), humanity, and sustainability (which means there will be an economy and natural resources for the youth and the children, and for generations to come).

If the inflation spiral can be removed (and the cost of real and capital assets brought back to earth), then indigent and poor workers could hope to increase their equity holdings and quality of life assets and equity investors could hope to get their money back. Some endeavors, beyond poor workers enrichment, would be not-for-profit. That is, profits made beyond a pre-determined return to the poor workers, would be re-invested in more such worker/community betterment hybrid businesses (preferably cooperatives).

Equity investments in community businesses could not be sold to others, but could be bought back at par value (the price of the share of the stock when it was invested). Such would be discouraged, and disallowed if it was a qualified low-income/low wealth equity investor, who may, or may not if they were allowed to collect (limited) personal dividends.

Equity Union branches in low income/low wealth neighborhoods would be allowed to set up a (501)(c)(3) to receive donations to an equity fund for their neighborhoods, to be kept in a local Equity Union and the funds allocated (equity grants) by a Board committed to community betterment and the likely success of the endeavor(s).

Equity Union – An Example

Getting Started

Hi Mike,
(rest of letter deleted)

[By the way, I presently have more income than is best for my
lifestyle, and now have recently gotten my hands on some extra money.
I'm not used to this situation. Do you have any suggestions about
where to 'invest' for the greater good, keeping in mind that my main
concerns remain first 'global heating', and then generally shorter
paths to possible eutopias vs. possible extreme dystopias?]


Hi Dan,
(rest of letter deleted)

I, too, have some discretionary funds that I would like to put into trust
for public service and altruistic endeavors. Perhaps, you and I (and others if we can find them) should investigate creating a local Peoples' Equity fund. My idea on that is to see if we can open a group trust account in a Credit Union, where each trustee would have an individual account, yet allocations to community betterment projects could be done collectively, with each individual signing off on the amount that they want to dedicate to the project.

The idea would be that we would "invest" in community betterment projects with the care that we would expect to only get the par value of our "investment" back or we could choose to make individual and/or collective tax-deductible or maybe tax credit eligible contributions to "qualified" 501(c)(3) community betterment organizations (CBOs)

CBOs could be not-for-profit, non-profit or both.

The Relationship of Equity Union(s) to Credit Unions and Community Betterment Organizations

The equity union(s) are not to replace credit unions, but to work in concert with them.

The role of the Equity Union is to alter the allocation purposes and priorities of the Investment "Class" (i.e. the owners of Banks and Corporations and Traders on Wall Street and similar venues).

While credit unions primarily make mortgage loans, car loans, consumer loans, and and in some special cases loans to small businesses, an equity union (with an account in a community development credit union) would specifically be dedicated to making equity grants, equity participation, and equity sharing allocations to community betterment organizations (CBOs).

When a financial organization makes a loan, it has first claim on net revenues. In other words, before a workers' cooperative or a traditional sole proprietership, partnership, or corporation can pay themselves, they must first pay back the interest (and eventually principal) on the loan.

In an equity union participation (as differentiated from an outright grant), any dividends to the equity union participants would be paid back subsidiary to the interests of the worker owners or community/worker owners of the CBO firm. The arrangement would be negotiable. If the negotiation calls for no dividends, whatsoever, then that would be called equity sharing.

Equity shares/participations in a CBO could not be traded and could only be bought back by the members of the Equity Union at par value. In other words, no capital gains would be allowed.

Friday, February 5, 2010

Resource Planning

>Quote:Originally posted by TerraSapient

>Well said, and I agree with you on most of your >points. However, what we need to do and >
>what people are willing to do rarely align (coming >from the historical perspective)..

Mike Morin replies:

People are like lemmings, they are easily led. Look at the way they ran headlong into war in World War 2 and all the other cataclysms of our irrational history. The survival instinct is so fierce as to be extinguishing. The question is, are people now sufficiently knowledgeable and sentient enough to understand and reject the four hundred years of Capitalist/Industrial Revolution/Fossil-fueled/Colonialist Military and Economic Hegemony and accept the conscious and deliberate evolution that will be necessary to adjust to the resource scarce, over-populated future?

Given the consumerist/Corporatist driven realities of the Communications Media and the politicians of the USA and their allies (increasingly few), and the widely entrenched economic interests of much (many (with resources), if not most) of the population are the people reachable with these important messages and will they, can they, understand and recognize the historical exceptionalism of their lifestyles, and be persuaded to accept a rational, planned future for the benefit of the youth and children, and succeeding generations, without despairing about how it upsets their current routines?

Can leaders/educators be found to greatly assist in such an effort when most educators are the result of a Corporatist linear trajectory and a longstanding involvement in a progression of adaptation to one sort of conformism or another that has served to advance their selfish careers?

>Quote:Originally posted by TerraSapient:

> It isn't just about planners laying out guidelines for more appropriately designed urban fabrics >based on a resource scarcity, but about a cultural shift where people want to live in these kinds >of places, want to stop driving their cars, want to walk..


How do we go about affecting such a "cultural (r)evolution"?

>Quote:Originally posted by TerraSapient:

>the desire to drive everywhere will not change by simply running low on oil.


Yes, but the ability to drive will change if the price of oil spikes and then plateaus or continues to rise and/or the recession continues to deepen and fundamentally disrupts the effective demand of the middle and ownership "classes".We don't want an oil crisis because fossil fuels are a much too important resource/opportunity cost for more precious applications such as home heating, cooking, hot water, and electricity generation.

Perhaps a good policy to accompany a long-standing demand side plan implementation of rebuilding and retrofitting neighborhoods/villages and changing the fundamental ways and means by which goods and services are allocated to and within communities (to make them walkable, sustainable) would be to slowly but discernibly (and explained) raise the relative price of gasoline relative to oil's more important applications (a selective carbon tax, if you will, but it also could involve a quasi-public orientation of the oil companies (I suppose that we could nationalize them, though this would not be the optimal approach to advocate)).

Such a pricing/tax policy could also use additional revenues, if any, to subsidize and/or pay for the quasi-public/public works rebuilding efforts.

>Quote:Originally posted by TerraSapient:

> Not to mention that if we truly do have an oil crisis on our hands in the very near future
>(which I do believe is imminent) people are going to have a lot more to worry about than what >kind of energy source their personal automobiles will be running on, and therefore how far >their place of employment or the grocery store is from their home.


Yes, we may not have the time to implement such a long-term strategy. But, we should not abandon it, because as a geo-political overture to OPEC and contested fossil fuel reserves territories, it could go a long way toward making peace and thus helping to ensure a much longer lasting decline phase of the fossil fuel age.

>Quote:Originally posted by TerraSapient:

> Given the subject matter, I think we need to have an understanding of what kinds of >technologies are going to be influencing the built environment of the future before we can
> adequately plan for them. Planning for urban fabrics that are based on an expiring resource is >important, but if we truly want to plan for future generations, we cannot stop there and must >focus on what kinds of resources they will be utilizing as well.


There is little to nothing in the way of supply side solutions. The solutions will need to be relative to the long-term radical reduction of demand.

Thursday, February 4, 2010


The Mondragon model is an excellent one. It was actually established based on the basic principles of the International Cooperative Alliance (ICA), which evolved from the early cooperative communitarian/socialist and mutualist theorists and organizers who have been proposing and campaigning and yes fighting back (against Institutionalized Violence and Oppression) for centuries.

In its more recent history, Mondragon has strayed somewhat from some of its ideals due to its need to integrate into a larger Capitalist economy, which eschews externalities (social and environmental values, goals, and concerns). However, it's conception, early success, and its peaceful and productive response to historical antagonisms are instructive and exemplary.

I concur with Ivan that the active promotion of artisanry would be an important part of all economic development initiatives and folks following the Mondragon Operating Guidelines of Person Centered, Cooperation, Continual Improvement, and Community Commitment would help ascertain that such would occur.

Reading the article and assessing the economic realities brings to mind issues of economic paralysis associated with the inflated costs of doing business (the inflated costs of real and capital assets) and the difficulties associated with replicating the Mondragon success in today's very different economic environment.

One of the keys to the community wide success of Mondragon was was the Community Commitment Principle which states that among the mission of the Organization is "to create jobs and create community wealth (equity) are the irrevocable requirement of our community vocation". They did this by earmarking a percentage of revenues from successful workers' cooperatives to the start-up of new workers' cooperatives.

So where and how do we find and create the successful workers cooperatives willing to share in a like manner?

Wednesday, February 3, 2010

Response to Questions Regarding Equity Unions

Good questions, Bob.

To reach a eutopian (good place) socialist reality, it would be highly advantageous for every neighborhood village to have a local equity union, and it is important that each local have extensive inter-community relations, especially with the other neighborhood/villages in their region (defined as metropolitan area transposed on a watershed).

All deposits and donations in-kind would be voluntary (and members can participate to whatever extent they care to) and all equity union funds would be dedicated to community betterment programs and organizations consistent with the principles of the cooperative communitarian ecological economic redevelopment plan. Recipients of equity sharing/participation would be required to be workers' cooperatives or community/worker hybrid cooperatives (as a transition vehicle from the status quo to the desired).

The incentive is primarily altruistic and socialist, because it is the right thing to do. While equity unions are starting out, depositors would be at an acknowledged disadvantage relative to the traditionalist Capitalist game of exceeding the hurdle rate, that is getting a better return on their "investment" (equity union shares are participation SHARES (literally) and not investments) than the assumed discount rate. With the Capitalist system failing, such could be viewed as not a disadvantage but a social equitable participation in an inclusive, equitable, needs based, wellness-oriented, humane, peaceful, and sustainable culture. An advantage of values over monetary "value". An advantage of quality of life over a quantified standard of living.

When Equity Unions are the standard operating system, real ecological economic redevelopment will replace abstract concepts of economic "growth". Equity sharing and participation will replace equity speculation, equity trading, and lending.

Tuesday, February 2, 2010

Posted to the Pittsburgh Socialist Forum

I'm not from Pittsburgh, nor have I ever been there, but I suspect that it is like so many of urban areas in the Northern US, a place with much in the way of hollowed out, and for most intents and purposes abandoned residential and industrial districts overrun by now declining suburban sprawl which feeds into overactive and overzealous medical institutions and establishments and has built their gliitering steel-girded towers where a fraudulent Capitalist middle class and aristocracy carry on the chrade of trading paper, more likely in this day and age bytes and megabytes.

So what can a reformed Socialist economy do for an area that has no legitimate base remaining?

I suggest to you that there is much work to be done rebuilding the human environment in preparation for the long or precipitous decline in the fossil fuel age. We must move all communities towards relocalization of basic needs and it is imperative that we, as a nation, set goals such as reducing automobile usage by 80% in the next 20 to 40 years in order to free the remaining precious fossil fuels for more important applications such as home heating, cooking, and electricty for necessary applications (do we really need so much lighting?).

The keys to this massive energy demand side rebuilding program are the walkable neighborhood (i.e. rebuilding and/or retrofitting all neighborhoods with village centers so that most can get the things they need within walking distance of their homes) and the deliberate, planned, needs directed, cooperative and inter-community control of the production and distribution supply chains for all the peoples needs.

The first part of the solution proposed in the previous paragraph is nothing new. It has been an architectural/urban planning mantra called "new urbanism". Many speculative developments based on these principles have failed in the last generation. The reason? There are two, the irrationality with the way the profit-motivated economic system allocates resources, and the lack of affordability for most.

We get "mixed use" redevelopments in which the commercial sectors are irrelevant to the needs of the gentrified clientele. They almost always build parking garages so that the bourgeoise residents of new urbanist projects can ignore the lack of available necessities in their neighborhood and are still "free to vote in the marketplace".

We all know that Socialism is Labor employing capital to meet the needs of the people, starting with those most in need. The allocation of resources to evolve to such a eutopia (good place) has to be rationally distributed in a principled manner.

It can be done, but before a plan can be implemented (realized), it needs to be conceived, developed, communicated, and accepted (recognized).

To place the payment burden on governments is not realistic or even optimal. What is needed is the recognition and commitment and dedication of and for the evolution of the private sector to a quasi-public one (working in coordination with Government safety-net, fostering, and facilitating capabilities). The vehicle for the economic/financial transition is an Equity Union. With such an Institution, equity sharing would replace equity speculation, equity trading, and lending.

That's enough for now. I hope that we can discuss and push the agenda forward. I will post a copy of this essay in the Discussion Section of this Group.