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Gailbraithe wrote:I'm not sure I'd call a business with 300+ employees (the average size of firms within Mondragon) "small businesses" -- I work for a small business and work with many other small businesses, and most have under 50 employees.

The definition by the United States government appears to usually be less than 500 employees (it depends on the industry).

And obviously the government plays a vital role in determining the nature of businesses that flourish. Phyrxises may gleefully attack me as a Stalinist for suggesting that the government should align the tax code and regulatory environment to favor democratic workplaces, but he does so only by ignoring the reality that the government currently aligns the tax code and regulatory environment to favor his preferred schema: where a tiny wealthy elite is allowed to live off the labor of thousands, and those thousands who have their labor stolen are allowed to live in dire poverty.

Why exactly would Phryxis want there to be an "overclass" ruling over everyone and making them live in poverty? That's silly.

The primary disadvantage that co-operatives face when competing with capitalist firms is this: Capitalist firms can more easily shift costs to other participants in the market against the will and desire of those other participants. These are called externalities.

For example, imagine General Motors finds itself competing with Co-Operative Motors in the same markets. Both are producing cars of equivalent value and sold at similar prices. GM decides to engage in a price war, and cuts the cost of their cars by 35% -- completely obliterating their profit per car. In order to re-coup the loses they incur, they "downsize" their workforce -- laying off tens of thousands of workers. Co-Operative Motors, being owned by its employees, can't engage in such "downsizing" and thus can only pray that GM can't keep up the price war long enough to drive them out of the market.

Hmm. This wouldn't be considered an externality by my experience with the use of the term, but I think I understand the point you're trying to make. There are two problems I have with it: the first is the idea that it's General Motor's responsibility to look out for the welfare of their employees on a personal level, the second is the idea that "downsizing" is something that shouldn't be done. I suppose I would also have to call into question the reason for GM having fired these workers as well. Were they worth more to the company than they were being payed? If so there doesn't seem to be a very good reason to have fired them, that's only putting them deeper in the red. Were they worth less? In that case why would they have been kept around until the price war? Good PR?

Most of the time, your employer isn't claiming to be your new family. If they are, they should probably stop, because they're probably not going to be very good at it. Now, I'm not saying that a person's employer should never accommodate their employees, or that an employer may mislead them. Some degree of accommodation (by both parties) is generally necessary for any in-depth relationship to work, and deception in social situations is generally unethical as well. However, I see no reason an employer should be expected to keep employees on staff when they don't wish to do so. Nor do I see a reason for an employer to expect that employees who do not wish to continue working for them continue to do so nonetheless. I actually find the left's stance on this to be a little hypocritical. They condemn the idea of "corporate serfdom", and an employee's loyalty to their company, while at the same time praising corporate pension plans, benefits, and what is essentially "loyalty" of the employer to the employee. But you can't seriously expect the this kind of unreciprocated love to fly, it makes for a inconsistent standard of ethics.

Now, you may say that it's still quite a hardship to be a GM employee who has just been fired. And it would probably be at this point in time. However, General Motors can't be held responsible for public policy or the state of the economy, at least not past the point where it lobbies for changes in this regard. Whether the problem is a lack of unemployment insurance or a crippled job market, this is out of the scope of any specific employer. They aren't a job agency.

On a broader scale, an economy cannot function well at all if the firms it is comprised of refuse to fire any of their employees. It's imposing a huge amount of inflexibility. A firm that needed a great number of people at one point in time but then came to need less and less would be forced to become increasingly inefficient. Prices would rise, investment would fall, causing there to be fewer and fewer new job openings. You'd have a recipe for the same sort of unemployment and poverty you're trying to avoid. Not to mention that these unemployed people would be willing to give up potential stock in a company for a shot at a decent job, which would be an unbearable strain on any socialist (communist? syndicalist? I'm not exactly sure what you would consider yourself) society that didn't want to degenerate into, well, a type of police state.

Not that I'm entirely convinced a co-op wouldn't be willing to fire its employees.

But the people are really going to feel the cost of GM's tactics are not Co-Op Motors, but the tens of thousands of hard-working people who have had their economic viability dispossed of in order to serve the profit margins of the elites who own GM. And the thousands of people who work for small businesses that cater to those employees. In other words, the cost of GM's tactics is the destruction of American towns like Flint, Michigan and the ruination of American society.

This becomes even more problematic when the state creates tax incentives and trade policies that enable GM to never hire back those tens of thousands of Americans, and instead allows them to replace those employees with cheaper labor from countries with oppressive regimes that are willing to bear the cost of suppressing labor value for GM.

Another example of externalities is found in the Kentucky coal mines. If the coal miners ran things, there would be no expense spared on safety equipment. But under the authoritarian arrangements of capitalism, the mine owners may elect to keep costs down (and thus profits up) by forcing unsafe working conditions on employees. Those unsafe working conditions in turn create costs for the state (mostly in terms of health costs, plus rescue efforts from collapsed mines), which are in turn paid for by all of us.

You can see these externalities being created in almost every large corporation, generally in the form of pollution that society must pay to clean up, instability in American communities held hostage by corporations, and ever increasing social costs of supporting the employees of firms that refuse to treat their employees fairly -- such as the several studies that have found that Wal-Mart destroys local economies and its own employees are often heavy users of publicly-funded social services.

The criticism of the coal mine operators being able to shift costs on to the public was a good one. However, I have two big problems with what seems to be your point here. The first is that you seem to assume that non-co-ops are, in all cases, unethical, and that co-ops are, in all cases ethical. However, I don't see a whole lot of reason to assume this. There have been plenty of corporations, usually owned very heavily by one or two individuals, that make strides towards acting ethically, even at the expense of potential profits. Corporations that are primarily held by a huge body of investors, on the other hand, rarely seem to make strides towards ethicality (which is not to say that they're usually unethical), because any sense of personal responsibility it dispersed (and most of the "owners" are probably not paying close attention to the firm's activities at all). However, dispersal of blame and disinterest in collective activities are problems with democracy in general, and they would be present to a degree in a "worker's democracy" as well.

While I would expect the average co-ops to be more "ethical" in leadership than the average non-co-op corporations, this would be a likely result of being smaller and being more likely to attract people to it who consider such ethics to be important (modern communists may be a lot of things, but amoral generally isn't one of them). Unions, however, are generally considered to be a type of "proto-syndicalism", and while I'm not going to go off on a tirade about unions being corrupt, greedy deadweights on America's success, I think you'll find that most of the population would not be inclined to consider them especially trustworthy.

The second problem I have is that the implication of all this seems to be that the only way socialism can come about is through the prohibition (or set of impositions with the same end in mind) of private ownership. This is, in my mind (and probably in that of most of the western hemisphere), unacceptably totalitarian. And frankly, absurd from any pragmatic point of view. No one is going to follow a guy who says that his radical plan for reforming society will totally work, but that he can't back this up until it's enacted everywhere, all the time. It's similar to the attempt at blaming the fall of communism on that fact that capitalism was present at the same time; regardless of the merit of this argument (I would say there's little), it's simply not going to convince anyone to risk absolutely everything trying to give it another chance.

There was a book (or short story) I heard about (I haven't actually read it myself), which I think was called The Anarchists. The protagonist, and individualistic anarchist, asks a group of collectivistic anarchists if a society of individualistic anarchists would be allowed to live alongside the collectivists, should the collectivists rise to power. The protagonist notes that he himself, an individualist would have no problem with a group of collectivists living alongside him. The collectivists, however struggle with the question, and answer that in a society where collectivistic anarchism reigns, there would be no desire to go back to the dark ages of individualism. Their system would be too clearly superior. The protagonist is insistent, however; what if they wanted to nonetheless form an individualistic society. His question is never satisfactorily answered. (I read this, I should repeat, second hand.)

I know Rothbard has expressed sentiments similar to the protagonist of that story. In my experiences with the libertarian (far) left, the question is not satisfactorily answered when the libertarian right brings it up either.

And what is the counter-argument? It always boils down to "If we don't let a tiny elite abuse us, steal from us, and slowly choke the life from our society, then the sky will fall and everything will be destroyed in some vague, unspecified way."

I say its bull. We are a free country, a free people, and we do not need an overclass. What we need is some fundamental respect for our humanity in the workplace. We need systems that recognize we work for our own benefit, not to be cogs in a machine that creates profit for people who have no loyalty to us and would happily let us all die if it made them an extra penny.

Why must a society either be ruled by an all-powerful "overclass", or be composed entirely of co-ops? Is it so difficult to imagine a world where corporations are owned in significant amounts by basic employees, management, outside investors (big time or small time), retired employees/managers, the company's founder, consumers who took a great interest in the product, and so forth? I don't see why I'm forced to choose between a rigidly enforced system of equal ownership of capital within whatever corporation I'm currently working for, and slaving in the acid mines for an obese robber-baron with a top hat and a cigar. Sweden, Canada, and Switzerland are all pretty nice places to live. Far nicer than Soviet Russia or anarchist Spain ever could have been.

I'm going to repeat my usual statement when this topic emerges:

Income taxes (and Estate/gift) are the only progressive taxes in America. All other taxes are either slightly or strongly regressive.

Payroll, property, sales, excise, and service taxes all hit the poor harder than the rich. Add in things like lottery tickets and governmental fees (license plates and the like) and the working poor end up spending a pretty healthy chunk of their income supporting the various levels of government.

Progressive income taxes are one of those things for which there is no really knock out reason to use, but there are also no really workable alternatives. The best defenders of it basically admit that they can't prove that it's the best, but it's also never been seriously threatened.

Orkeosaurus wrote:Why exactly would Phryxis want there to be an "overclass" ruling over everyone and making them live in poverty? That's silly.

I have no idea. You're right, it seems silly. But when I suggested that it was entirely possibly to have a fully functioning free market without supporting a overclass through tyrannical workplace arrangements, his response was to begin sending me harrasing PMs and calling me a Stalinist. From his epically emotional overreaction, I can only surmise he is a deeply committed to the existence of a wealthiest 1% that dominates all of society.

Hmm. This wouldn't be considered an externality by my experience with the use of the term, but I think I understand the point you're trying to make. There are two problems I have with it: the first is the idea that it's General Motor's responsibility to look out for the welfare of their employees on a personal level,

Okay. I can't really think of a strong logical reason why employers should not view their employees as subhuman cogs in a machine to be treated as nothing but numbers, but it is a position that seems to lack any and all sense of compassion, and only makes sense to me in a world where one assumes that things are worth more than people.

It begs the very question: what is the point of society? Are we bound together, our destinies and fortunes intertwined and connected, and thus should we all act with compassion towards each other, and seek to find the most ethical arrangements between us...or are we at war with one another? Are you my brother, or my enemy? Because if all that matters is things, then isn't the businessman who cares nothing for his employees fate only a more timid, craven and cowardly form of the ganglord who cares nothing for anyone? Isn't the capitalist who would throw his employees to the wolves only a less honest form of the dictator who sics his wolves on his citizens?

If we are not in this together, then isn't anyone who demonstrates mercy and compassion, who cares about his fellow man, just a sucker? A fool being taken for a ride? Call me an idealist, but I reject that kind of cynicism, and I reject social darwinism, and all of these schema that would have us believe that our individual success only comes at the price of the suffering of others.

Most of the time, your employer isn't claiming to be your new family. If they are, they should probably stop, because they're probably not going to be very good at it. Now, I'm not saying that a person's employer should never accommodate their employees, or that an employer may mislead them. Some degree of accommodation (by both parties) is generally necessary for any in-depth relationship to work, and deception in social situations is generally unethical as well. However, I see no reason an employer should be expected to keep employees on staff when they don't wish to do so. Nor do I see a reason for an employer to expect that employees who do not wish to continue working for them continue to do so nonetheless. I actually find the left's stance on this to be a little hypocritical. They condemn the idea of "corporate serfdom", and an employee's loyalty to their company, while at the same time praising corporate pension plans, benefits, and what is essentially "loyalty" of the employer to the employee. But you can't seriously expect the this kind of unreciprocated love to fly, it makes for a inconsistent standard of ethics.

A corporation is not a person. The moderate left (i.e. "liberals," aka Democrats) encourages a view of corporations as collective enterprises created by legal fiat to serve as engines of economic growth that benefits society at large. The right encourages a view of corporations as individual enterprises created by the Sheer Will Of Great Men that are only ever intended as benefit to those Great Men, and all of the employees who actually do the vast majority of the work in those collective enterprises are just faceless, identitless, and meaingless dehumanized cogs who should be grateful they are allowed to work.

Now, you may say that it's still quite a hardship to be a GM employee who has just been fired. And it would probably be at this point in time. However, General Motors can't be held responsible for public policy or the state of the economy, at least not past the point where it lobbies for changes in this regard. Whether the problem is a lack of unemployment insurance or a crippled job market, this is out of the scope of any specific employer. They aren't a job agency.

All of which is true, but there is no reason why we should allow firms like GM to dominate the economy (which we do, as we've bailed out GM and other auto-makers several times), when GM could just as easily be replaced with a Mondragon style co-op that has internalized economic incentives to maximize employment.

On a broader scale, an economy cannot function well at all if the firms it is comprised of refuse to fire any of their employees. It's imposing a huge amount of inflexibility. A firm that needed a great number of people at one point in time but then came to need less and less would be forced to become increasingly inefficient. Prices would rise, investment would fall, causing there to be fewer and fewer new job openings. You'd have a recipe for the same sort of unemployment and poverty you're trying to avoid. Not to mention that these unemployed people would be willing to give up potential stock in a company for a shot at a decent job, which would be an unbearable strain on any socialist (communist? syndicalist? I'm not exactly sure what you would consider yourself) society that didn't want to degenerate into, well, a type of police state.

First of all, there is a difference between firing employees and downsizing them. I think its disingenous to conflate the terms, since firing assumes that the worker has performed poorly, when downsizing is generally more about temporarily padding profits for shareholder benefit. It's not that corporations lose money if they don't downsize, it's that they make slightly less money. So long-term social stability is sacrificed for quarterly gains. Often these same people are later hired back, but more and more they are being hired back in despotic countries overseas.

The Mondragon system is designed in such a way that downsizing is not profitable -- because every employee is part-owner of the company, when that employee leaves they take some portion of the company's liquid capital with them. So while a capitalist corporation can fire 20% of its employees and see capital gains in terms of lower labor costs, a cooperative corporation would lose 20% of its operating capital along with those employees. In a cooperative system people own their jobs, and you can just alienate them from their job without paying them the actual value of the labor they contributed (not the exploited value achieved through employment contracts).

Now, the reason the scenario you describe does not play out with Mondragon is the very reason Mondragon started as 12 men and is now 82,000. Because when a division within Mondragon becomes less profitable, and less people are need to do the work to meet the demand, rather than lay off people the central planning committee of Mondragon (which is the exact same thing as board of directors, so don't go freaking out about the term) develops new businesses and transfers employees from the declining division into the new division.

It extremely adverse conditions, employees often agree to pay freezes and keep on idle employees at a decreased pay rate rather than fire them, as often enough these idle employees are friends and neighbors.

The criticism of the coal mine operators being able to shift costs on to the public was a good one. However, I have two big problems with what seems to be your point here. The first is that you seem to assume that non-co-ops are, in all cases, unethical, and that co-ops are, in all cases ethical. However, I don't see a whole lot of reason to assume this. There have been plenty of corporations, usually owned very heavily by one or two individuals, that make strides towards acting ethically, even at the expense of potential profits. Corporations that are primarily held by a huge body of investors, on the other hand, rarely seem to make strides towards ethicality (which is not to say that they're usually unethical), because any sense of personal responsibility it dispersed (and most of the "owners" are probably not paying close attention to the firm's activities at all). However, dispersal of blame and disinterest in collective activities are problems with democracy in general, and they would be present to a degree in a "worker's democracy" as well.

First, my point is not that capitalist corporations are always unethical and co-ops are always ethical, but that co-ops are generally more ethical than capitalist firms. Second, you are entirely right that dispersal of blame and disinterest in collective activities are a problem with democracies in general (though less of a problem than in plutocracies). I would never suggest that Mondragon style co-ops will solve every problem, but I am not interested in making best the enemy of better.

What I think you're discounting however is the effect that worker ownership would have on some of the pressing problems of corporations. Let's use worker safety as an example. Currently the only constraint on employers regarding worker safety is pressure brought to bear by the government through the means of OSHA and state regulators, unless it is a union workplace, in which case additional pressure is brought to bear by unions. But the unions tend to lean on the government more, as that gets better results than leaning on employers. The end result is often one-size fits all safety regulations that are tailored to benefit the most powerful corporations, and can be onerous to smaller firms. The actual needs of the workers are only minimally concerned.

With worker-ownership the ultimate decision making power over the specific safety regulations lies with the people who have the most rational concern for the safety of workers: the workers! The capitalist system asks us to believe that employers will have the best interests of workers in their hearts as they make decision about safety budgeting, and liberalism asks us to believe that government hacks who have never worked on a factory floor, or in a mine, or in a processing plant, can know in anything but the vaguest sense what is best for every workplace.

While I would expect the average co-ops to be more "ethical" in leadership than the average non-co-op corporations, this would be a likely result of being smaller and being more likely to attract people to it who consider such ethics to be important (modern communists may be a lot of things, but amoral generally isn't one of them).

Co-ops tend to be more ethical only because worker-ownership puts a greater priority on the actual needs of workers, rather than putting worker's needs in the hands of distant and disinterested shareholders, and worker's need safe communities, health care, pensions, safe workplaces, etc. Thus they will attend to those priorities. And the power of a co-op system like Mondragon is that if the employees need health care, the co-op doesn't just pay some other company to provide it - instead it creates its own internal insurance company, and then sells insurance to outsiders. It creates its own community clinics, and then does pro bono community health care to meet it's commitment to socially beneficial spending (which under Spanish law is 10% of gross spending, the minimum to qualify as a corporate co-op and gain the much lower tax rate of such co-ops). Worker's need schools for their children, and guess who funds their construction? The workers. And they really make out like bandits if they have construction divisions that can build schools and clinics. By internalizing and profitizing on its own need to meet worker's selfish needs, the co-operative creates what appears to be a more ethical person. Whereas the legal structure of the capitalist corporation creates a sociopath that treats people as objects to its own ends, the legal structure of the co-operative corporation creates a philanthropist who paradoxically profits from altruism.

The second problem I have is that the implication of all this seems to be that the only way socialism can come about is through the prohibition (or set of impositions with the same end in mind) of private ownership. This is, in my mind (and probably in that of most of the western hemisphere), unacceptably totalitarian. And frankly, absurd from any pragmatic point of view. No one is going to follow a guy who says that his radical plan for reforming society will totally work, but that he can't back this up until it's enacted everywhere, all the time. It's similar to the attempt at blaming the fall of communism on that fact that capitalism was present at the same time; regardless of the merit of this argument (I would say there's little), it's simply not going to convince anyone to risk absolutely everything trying to give it another chance.

Well, I'm a free market socialist. I definitely believe in private ownership. And worker-ownership is private ownership. It takes some pretty wild mental gymnastics to convince yourself that 5000 people owning a share in a business with 5000 employees is private ownership unless it's the same 5000 people.

And I'm not claiming that it has to be enacted everywhere all the at the same time. I've never said anything of the sort. If you want me to lay out some sort of realistic scenario for how these changes could be made without any need to resort to violence or totalitarianism, here's what I think would be the best possible route:

1. It is 2016 and the latest Wall Street scheme to manipulate the money supply has blown up in their face. General Motors has slid into bankruptcy again and has come crawling to Washington for another bailout.

2. President Ihaveballs saids "Nope. You must be allowed to fail." Then citing the pressing need to not allow the hundreds of thousands of people who rely on the existence of General Motors to fall into dire poverty, he invokes eminent domain and purchases the former properties of the now defunct General Motors. The government officially owns GM outright.

3. A charter is drawn up reorganizing the United Autoworkers of America as the new labor management team for the new General Motors Co-Operative Cooperation. The government sells the GMCC all of the former properties of GM for pennies on the dollar, probably with money loaned to the GMCC by the government. Much of the former GM management team will remain in place.

4. Meanwhile the tax law is altered to create a tax shelter to encourage the profitability of co-op corporations, allowing them to operate essentially tax-free (like non-profits) so long as they meet minimum requirements to qualify as a co-op corporation. Along with this would be changes to the income tax code that would largely exempt worker-owners from income taxes.

5. Communities with large idle workforces and many abandoned factory sites could be revitalized through judicious use of eminent domain to transfer ownership of distressed industrial properties to co-ops founded with government seed money.

There was a book (or short story) I heard about (I haven't actually read it myself), which I think was called The Anarchists. The protagonist, and individualistic anarchist, asks a group of collectivistic anarchists if a society of individualistic anarchists would be allowed to live alongside the collectivists, should the collectivists rise to power. The protagonist notes that he himself, an individualist would have no problem with a group of collectivists living alongside him. The collectivists, however struggle with the question, and answer that in a society where collectivistic anarchism reigns, there would be no desire to go back to the dark ages of individualism. Their system would be too clearly superior. The protagonist is insistent, however; what if they wanted to nonetheless form an individualistic society. His question is never satisfactorily answered. (I read this, I should repeat, second hand.)

That seems like a inherently unanswerable question. What is an "individualistic society?" It seems like an oxymoron. Also "collectivist anarchists" seems like a loaded term. If the question is: In a society where the majority of industry is organized collectively through democratic workplaces, can a person work for someone else as an employee, or work for themselves as a freelancer? Then the answer is yes, of course they can.

Why must a society either be ruled by an all-powerful "overclass", or be composed entirely of co-ops? Is it so difficult to imagine a world where corporations are owned in significant amounts by basic employees, management, outside investors (big time or small time), retired employees/managers, the company's founder, consumers who took a great interest in the product, and so forth? I don't see why I'm forced to choose between a rigidly enforced system of equal ownership of capital within whatever corporation I'm currently working for, and slaving in the acid mines for an obese robber-baron with a top hat and a cigar. Sweden, Canada, and Switzerland are all pretty nice places to live. Far nicer than Soviet Russia or anarchist Spain ever could have been.

I've never suggested that it is an either/or. You're ascribing an extreme position to me when it's completely unjustified. I've only said that the Mondragon system is really good, solves a lot of problems, and its adoption should be encouraged in America as part of a recovery plan. I have never suggest taking anyone's property*, or forcing anyone to do anything.

I even agree with you that Sweden, Switzerland and Canada are all nice places to live. I am not an extremist, I vote Democrat because while I definitely think embracing Mondragon style co-ops and democratic workplaces is more in keeping with American values of small government and free markets, I am perfectly willing to compromise and settle for capitalist corporations strongly regulated by a welfare-oriented government.

*In fairness I am expecting the government to play a role in creating and encouraging the growth of democratic workplaces, and some people will inevitabely argue that all taxation is theft and that by arguing for such a role by the government I am calling for the government to steal people's property, blah blah blah. I think that's a irrational argument that blatantly ignores reality and refuses to make any concessions towards it. Government support of the capitalist corporate model is a significant contributing factor -- perhaps the most significant factor -- for its dominance of American commerce. That will not change unless the government is specifically redirected towards reshaping the economy. The idea that the government can simply be done away with and the capitalist corporate model left in place without the state to support it is a right libertarian pipe dream.

Gailbraithe wrote:From his epically emotional overreaction, I can only surmise he is a deeply committed to the existence of a wealthiest 1% that dominates all of society.

A more reasonable deduction would be that he strongly dislikes you. That may be the result of your commitment to a certain set ideas, but I suspect it has more to do with your tendency to present your 'arguments' as being intrinsically correct while brow-beating anyone that disagrees.

Gailbraithe wrote:
It begs the very question: what is the point of society? Are we bound together, our destinies and fortunes intertwined and connected, and thus should we all act with compassion towards each other, and seek to find the most ethical arrangements between us...or are we at war with one another?

Interestingly, its possible for a state of war to be the most ethical arrangement between two actors. In fact, a state of war can only be reached if 'our destinies are intertwined.' The fact that two things are connected does not imply that those two things should act with compassion towards one another.

Gailbraithe wrote:
Because if all that matters is things, then isn't the businessman who cares nothing for his employees fate only a more timid, craven and cowardly form of the ganglord who cares nothing for anyone? Isn't the capitalist who would throw his employees to the wolves only a less honest form of the dictator who sics his wolves on his citizens?

No, if all that matters is 'things', I take that to mean economic profit, then the sort of epithets which describe a person in a negative fashion because of his morally dubious methods would be inapplicable.

Gailbraithe wrote:
The right encourages a view of corporations as individual enterprises created by the Sheer Will Of Great Men that are only ever intended as benefit to those Great Men, and all of the employees who actually do the vast majority of the work in those collective enterprises are just faceless, identitless, and meaingless dehumanized cogs who should be grateful they are allowed to work.

That's a ridiculous misrepresentation of the general, conservative understanding of corporations. Certainly some people do believe that, notably objectivists, but its hardly the standard line.

Gailbraithe wrote:
The Mondragon system is designed in such a way that downsizing is not profitable -- because every employee is part-owner of the company, when that employee leaves they take some portion of the company's liquid capital with them. So while a capitalist corporation can fire 20% of its employees and see capital gains in terms of lower labor costs, a cooperative corporation would lose 20% of its operating capital along with those employees.

That's not how it works. Mondragon pays its employees just like any other corporation. Those employees can decide to reinvest in the cooperative if they wish, and they're the only people allowed to do so, but there is no obligation involved. As such, if a Mondragon employee reinvest in the collective that money belongs to the collective from that point forward; it doesn't leave with the employee if that employee decides to leave in the future. What this means for Mondragon is that there is still a strong economic incentive to downsize where it is assumed that productivity can be maintained as the net loss incurred by the cooperative is unlikely to amount to more than the total wages of the worker. What prevents this from happening on a regular basis is the strong emphasis on a particular corporate culture, not economic incentives.

Gailbraithe wrote:
With worker-ownership the ultimate decision making power over the specific safety regulations lies with the people who have the most rational concern for the safety of workers: the workers! The capitalist system asks us to believe that employers will have the best interests of workers in their hearts as they make decision about safety budgeting, and liberalism asks us to believe that government hacks who have never worked on a factory floor, or in a mine, or in a processing plant, can know in anything but the vaguest sense what is best for every workplace.

That's not even true of Mondragon. The majority of corporate safety regulations are designed by people specifically employed to develop them, with the 'one worker, one vote' principle applying only to the process of electing representatives in a manner not unlike the way in which the governing bodies of unions are determined. Combine this with a highly centralized decision making apparatus, and a tendency to hire non-member workers in order to avoid dealing with the increased costs of doing business within the corporation, and the case for co-operatives begins to look a lot less compelling.

Gailbraithe wrote:
And the power of a co-op system like Mondragon is that if the employees need health care, the co-op doesn't just pay some other company to provide it - instead it creates its own internal insurance company, and then sells insurance to outsiders.

One then wonders why Mondragon doesn't have an internal insurance company to service its non-Spanish elements.

Frazzled wrote:

Gorgeous Gary Golden wrote:People need to get off the stupid "redistribution of wealth" and "spread the wealth around" crap, it just got annoying after we heard it from the Tea Party 10 million times.

truth hurts.

And the repetition of tired, old narratives with no foundation in reality are annoying. Considering I was annoyed and not hurt by the statement...



Automatically Appended Next Post:

Phryxis wrote:The level of rhetorical chaff in this particular debate is infuriating.

"Redistribution of wealth" is a bad term. It's obvious that we're doing it all the time already, and it's necessary in any society that wishes to deal with its poor in a fashion besides "kill them if they get uppity."

So it's not universally bad, but it's still a matter of degrees and outcomes. If it's excessive and stifles commerce, it's bad. But to some extent, it's better to just pay people, even lazy worthless people, what it takes for them to not be a detriment to themselves and to society. While it might be morally upsetting to some, it's actually better to pay a guy $1000 to shut up and sit in his house than it is to pay $2000 to replace the thing he stole cause he was angry you wouldn't give him $1000.

I'm also completely sick of "the rich need pay their fair share." It's such class-warfare hate jabber, it demeans anybody who says it. The top 1% of all earners in America pay 40% of all taxes. They're paying FAR more than their "fair share." I never ran the numbers exactly, but I'd speculate that if you're not in the top 5% of all earners, you're probably getting more in terms of goods and services for your tax dollars than you're putting in. So, bascally, 95% of Americans are paying LESS than their "fair share," and the only people paying their fair share ARE the rich.

(and, of course, how you value the provided goods and services is up to you, but if we assume that everyone benefits equally from those goods and services, then the vast majority get out more than they put in)

It's not about what's "fair." It's about what's "effective."

It's about maximizing tax revenue. You tax in a way that maximizes your revenue over as long a term as possible. If taxing the top 1% even more is possible, and won't cripple spending over the long term, I'm all for it. If lowering taxes on the rich would actually increase revenue, again, I'm all for it.

I'm not claiming to be a macroecnomic genius, I'm not saying I know how to set up the rates and brackets...

I'm just saying that if all people do is argue about "fairness" and class warfare BS, that's asking all the wrong questions, there's NO way to get the right answer.

Yeah, I agree with most of what you're saying. You're absolutely right that it isn't about what's fair, it's about what's effective. A flat tax simply doesn't work, there isn't a tax rate possible that could sustain government and not starve the poor. The only workable state is one where the rich pay more than the poor.

You're also right that the idea that rich don't pay their fair share is nonsense, because that 'fair' is nonsense. It is a very strange idea people have that what is in their paycheque is their's by right, and that taking more than what is taken from another person in taxes is theft. What you are paid is not what you earn, is a finance manager earning $100k 25% more deserving than the engineer on $80k? It's just what the market pays, and the market is no more than the rules and regulations built by society, built through its government. Tax is just another part of that.


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Polonius wrote:Progressive income taxes are one of those things for which there is no really knock out reason to use, but there are also no really workable alternatives. The best defenders of it basically admit that they can't prove that it's the best, but it's also never been seriously threatened.

The knock out is South America. Where flat taxes have been tried they've led to incredible budget deficits almost overnight. You just can't set a flat tax rate that won't starve the poor, but can still generate enough money to keep government going.

I didn't think the US government had a salary control law.

sebster wrote:

Polonius wrote:Progressive income taxes are one of those things for which there is no really knock out reason to use, but there are also no really workable alternatives. The best defenders of it basically admit that they can't prove that it's the best, but it's also never been seriously threatened.

The knock out is South America. Where flat taxes have been tried they've led to incredible budget deficits almost overnight. You just can't set a flat tax rate that won't starve the poor, but can still generate enough money to keep government going.

Gailbraithe wrote:I have no idea. You're right, it seems silly. But when I suggested that it was entirely possibly to have a fully functioning free market without supporting a overclass through tyrannical workplace arrangements, his response was to begin sending me harrasing PMs and calling me a Stalinist. From his epically emotional overreaction, I can only surmise he is a deeply committed to the existence of a wealthiest 1% that dominates all of society.

I would surmise that he strongly disagrees with your understanding of capitalism.

Okay. I can't really think of a strong logical reason why employers should not view their employees as subhuman cogs in a machine to be treated as nothing but numbers, but it is a position that seems to lack any and all sense of compassion, and only makes sense to me in a world where one assumes that things are worth more than people.

It begs the very question: what is the point of society? Are we bound together, our destinies and fortunes intertwined and connected, and thus should we all act with compassion towards each other, and seek to find the most ethical arrangements between us...or are we at war with one another? Are you my brother, or my enemy? Because if all that matters is things, then isn't the businessman who cares nothing for his employees fate only a more timid, craven and cowardly form of the ganglord who cares nothing for anyone? Isn't the capitalist who would throw his employees to the wolves only a less honest form of the dictator who sics his wolves on his citizens?

If we are not in this together, then isn't anyone who demonstrates mercy and compassion, who cares about his fellow man, just a sucker? A fool being taken for a ride? Call me an idealist, but I reject that kind of cynicism, and I reject social darwinism, and all of these schema that would have us believe that our individual success only comes at the price of the suffering of others.

I'm not a social darwinist or even much of a cynic, but I do think that non-stop compassion is going to end up being an imposition in the end. People are neither strongly motivated to help each other out not very good at figuring out what other people need, at least when you get past close friends and family. I think that having a "business relationship" is often what ultimately maximises the utility of both parties.

A corporation is not a person. The moderate left (i.e. "liberals," aka Democrats) encourages a view of corporations as collective enterprises created by legal fiat to serve as engines of economic growth that benefits society at large. The right encourages a view of corporations as individual enterprises created by the Sheer Will Of Great Men that are only ever intended as benefit to those Great Men, and all of the employees who actually do the vast majority of the work in those collective enterprises are just faceless, identitless, and meaingless dehumanized cogs who should be grateful they are allowed to work.

I don't know that the legal structure of the corporation is vital to my point, the defining feature of that seems to be limited liability. The idea of the worker and the capitalist functions even when the capitalist is a single factory-owner, rather than a group of stockholders, doesn't it?

First of all, there is a difference between firing employees and downsizing them. I think its disingenous to conflate the terms, since firing assumes that the worker has performed poorly, when downsizing is generally more about temporarily padding profits for shareholder benefit. It's not that corporations lose money if they don't downsize, it's that they make slightly less money. So long-term social stability is sacrificed for quarterly gains. Often these same people are later hired back, but more and more they are being hired back in despotic countries overseas.

I didn't mean to bring the possibility of poor workers being hired up, as I agree they aren't the issue. However, I disagree with the idea that corporations never fail because of a failure to get rid of excess employees. They fail for a lot of reasons, and it's unlikely that any one factor killed them at any given time, but I see no reason for keeping too many employees on board to be exempt from the inefficiencies that whittle one down.

The Mondragon system is designed in such a way that downsizing is not profitable -- because every employee is part-owner of the company, when that employee leaves they take some portion of the company's liquid capital with them. So while a capitalist corporation can fire 20% of its employees and see capital gains in terms of lower labor costs, a cooperative corporation would lose 20% of its operating capital along with those employees. In a cooperative system people own their jobs, and you can just alienate them from their job without paying them the actual value of the labor they contributed (not the exploited value achieved through employment contracts).

Now, the reason the scenario you describe does not play out with Mondragon is the very reason Mondragon started as 12 men and is now 82,000. Because when a division within Mondragon becomes less profitable, and less people are need to do the work to meet the demand, rather than lay off people the central planning committee of Mondragon (which is the exact same thing as board of directors, so don't go freaking out about the term) develops new businesses and transfers employees from the declining division into the new division.

It extremely adverse conditions, employees often agree to pay freezes and keep on idle employees at a decreased pay rate rather than fire them, as often enough these idle employees are friends and neighbors.

Dogma's appraisal of the employment conditions of Mondragon seem to differ from yours, so I suppose I'll let you two resolve that (I don't know much about it, I've never been to Spain).

First, my point is not that capitalist corporations are always unethical and co-ops are always ethical, but that co-ops are generally more ethical than capitalist firms. Second, you are entirely right that dispersal of blame and disinterest in collective activities are a problem with democracies in general (though less of a problem than in plutocracies). I would never suggest that Mondragon style co-ops will solve every problem, but I am not interested in making best the enemy of better.

What I think you're discounting however is the effect that worker ownership would have on some of the pressing problems of corporations. Let's use worker safety as an example. Currently the only constraint on employers regarding worker safety is pressure brought to bear by the government through the means of OSHA and state regulators, unless it is a union workplace, in which case additional pressure is brought to bear by unions. But the unions tend to lean on the government more, as that gets better results than leaning on employers. The end result is often one-size fits all safety regulations that are tailored to benefit the most powerful corporations, and can be onerous to smaller firms. The actual needs of the workers are only minimally concerned.

With worker-ownership the ultimate decision making power over the specific safety regulations lies with the people who have the most rational concern for the safety of workers: the workers! The capitalist system asks us to believe that employers will have the best interests of workers in their hearts as they make decision about safety budgeting, and liberalism asks us to believe that government hacks who have never worked on a factory floor, or in a mine, or in a processing plant, can know in anything but the vaguest sense what is best for every workplace.

While this makes sense, I'll once again note that dogma seems skeptical of this idea's accuracy, and perhaps more importantly add that a similar degree of synchronization between wokers and management about working conditions may be able to be achieved simply through the workers having a significant presence in stockholding (and on the board of directors, of course). This need not require 100% ownership, however, or even more than, say, 20%.

Co-ops tend to be more ethical only because worker-ownership puts a greater priority on the actual needs of workers, rather than putting worker's needs in the hands of distant and disinterested shareholders, and worker's need safe communities, health care, pensions, safe workplaces, etc. Thus they will attend to those priorities. And the power of a co-op system like Mondragon is that if the employees need health care, the co-op doesn't just pay some other company to provide it - instead it creates its own internal insurance company, and then sells insurance to outsiders. It creates its own community clinics, and then does pro bono community health care to meet it's commitment to socially beneficial spending (which under Spanish law is 10% of gross spending, the minimum to qualify as a corporate co-op and gain the much lower tax rate of such co-ops). Worker's need schools for their children, and guess who funds their construction? The workers. And they really make out like bandits if they have construction divisions that can build schools and clinics. By internalizing and profitizing on its own need to meet worker's selfish needs, the co-operative creates what appears to be a more ethical person. Whereas the legal structure of the capitalist corporation creates a sociopath that treats people as objects to its own ends, the legal structure of the co-operative corporation creates a philanthropist who paradoxically profits from altruism.

Well, it's easy to be altruistic when other people are subsidizing your altruism...

Well, I'm a free market socialist. I definitely believe in private ownership. And worker-ownership is private ownership. It takes some pretty wild mental gymnastics to convince yourself that 5000 people owning a share in a business with 5000 employees is private ownership unless it's the same 5000 people.

Okay. I've talked to people who seem to have pretty much the same views as you but who consider "private ownership" to be a great evil, so I'm never quite sure where to stand terminology-wise.

And I'm not claiming that it has to be enacted everywhere all the at the same time. I've never said anything of the sort. If you want me to lay out some sort of realistic scenario for how these changes could be made without any need to resort to violence or totalitarianism, here's what I think would be the best possible route:

1. It is 2016 and the latest Wall Street scheme to manipulate the money supply has blown up in their face. General Motors has slid into bankruptcy again and has come crawling to Washington for another bailout.

2. President Ihaveballs saids "Nope. You must be allowed to fail." Then citing the pressing need to not allow the hundreds of thousands of people who rely on the existence of General Motors to fall into dire poverty, he invokes eminent domain and purchases the former properties of the now defunct General Motors. The government officially owns GM outright.

3. A charter is drawn up reorganizing the United Autoworkers of America as the new labor management team for the new General Motors Co-Operative Cooperation. The government sells the GMCC all of the former properties of GM for pennies on the dollar, probably with money loaned to the GMCC by the government. Much of the former GM management team will remain in place.

4. Meanwhile the tax law is altered to create a tax shelter to encourage the profitability of co-op corporations, allowing them to operate essentially tax-free (like non-profits) so long as they meet minimum requirements to qualify as a co-op corporation. Along with this would be changes to the income tax code that would largely exempt worker-owners from income taxes.

5. Communities with large idle workforces and many abandoned factory sites could be revitalized through judicious use of eminent domain to transfer ownership of distressed industrial properties to co-ops founded with government seed money.

*In fairness I am expecting the government to play a role in creating and encouraging the growth of democratic workplaces, and some people will inevitabely argue that all taxation is theft and that by arguing for such a role by the government I am calling for the government to steal people's property, blah blah blah. I think that's a irrational argument that blatantly ignores reality and refuses to make any concessions towards it. Government support of the capitalist corporate model is a significant contributing factor -- perhaps the most significant factor -- for its dominance of American commerce. That will not change unless the government is specifically redirected towards reshaping the economy. The idea that the government can simply be done away with and the capitalist corporate model left in place without the state to support it is a right libertarian pipe dream.

(Consolidating these for the sake of convenience.) I wasn't taking you for a revolutionary. However, this plan still has the same sort of blunt "it will work because I'll force people to make it work" attitude that I was trying to criticise. It's one thing to attempt to crack down on unethical businesses practices, but it's quite another to declare that capitalism will always lead to unethical businesses practices, and try and hamstring that instead.

Now, I know you say that taxation isn't theft, but changes in tax code are changes in the way the government forces people to do things. The theoretical necessity of imposing extra difficulty on capitalist structure seems to say that you don't think the co-ops will survive even with the changes that can be widely agreed upon (prohibitions on pollution, for example) in place. And I still can't accept that. It's still too much a call for a leap of faith, and it's still to totalitarian, in the sense that you believe that the mere presence of the structure you disagree with is something that requires the government to take action against it.

That seems like a inherently unanswerable question. What is an "individualistic society?" It seems like an oxymoron. Also "collectivist anarchists" seems like a loaded term. If the question is: In a society where the majority of industry is organized collectively through democratic workplaces, can a person work for someone else as an employee, or work for themselves as a freelancer? Then the answer is yes, of course they can.

I think the distinction between "individualism" and "collectivism" was, in this sense, the difference between support of a market and opposition to the market, in which case you may still have been considered an individualist yourself. (A mutualist, I guess? Not an anarchist it would seem, though.)

I've never suggested that it is an either/or. You're ascribing an extreme position to me when it's completely unjustified.

Sorry, once again I wasn't entirely sure what your idea was.

I've only said that the Mondragon system is really good, solves a lot of problems, and its adoption should be encouraged in America as part of a recovery plan. I have never suggest taking anyone's property*, or forcing anyone to do anything.

I even agree with you that Sweden, Switzerland and Canada are all nice places to live. I am not an extremist, I vote Democrat because while I definitely think embracing Mondragon style co-ops and democratic workplaces is more in keeping with American values of small government and free markets, I am perfectly willing to compromise and settle for capitalist corporations strongly regulated by a welfare-oriented government.

Well, I doubt we'll actually end up changing each other minds on the issue, but it was nice talking to you anyways.

I'm surprised that with all this talk that the Veil of Ignorance never came up in relation to the creation of tax systems. I might have just missed it though. You guys are rather boring, after all.

Polonius wrote:I should have said that there is no really ironclad theoretical defense. In a theoretical, justice and fairness sense, it's not clear cut that we should have progressive taxes. Every practical consideration, however, supports the idea.

Yeah, fair point then. I mean, I could make a bunch of theoretical points for why taxes should be progressive, but you're right that other people could make arguments to oppose that and no-one would get anywhere. The real point, as you've said, is that it isn't practical to have a non-progressive tax.

Orkeosaurus wrote:I'm not a social darwinist or even much of a cynic, but I do think that non-stop compassion is going to end up being an imposition in the end. People are neither strongly motivated to help each other out not very good at figuring out what other people need, at least when you get past close friends and family. I think that having a "business relationship" is often what ultimately maximises the utility of both parties.

And the point you seem to be missing is that the Mondragon system empowers workers to take care of their own needs. It's the capitalist system that you are defending that require one person (the owner) to determine what others (employees) need, but as you note this is difficult. Often employers decide that their need for a need yacht is more pressing than their employee's need to provide healthcare for their children, and this is exactly how we end up in the situation we currently find ourselves in -- with shareholders deciding that CEOs need to be paid millions per year, and workers wages stagnant for decades.

Dogma's appraisal of the employment conditions of Mondragon seem to differ from yours, so I suppose I'll let you two resolve that (I don't know much about it, I've never been to Spain).

Dogma is a liar who makes up facts to support his agenda. I see no reason to give any credence to anything dogma says, certainly not when he offers no citiations, and appears to be engaging in his typical disingenuous nonsense. For example, he claims that Mondragon "pays its employees just like any other corporations," which is about as accurate a claim as saying "Soviet Russia treated its citizens just like any other European democracy." It's wrong on so, so many levels, and more to the point, said in such matter-of-fact manner when it's really a matter of dogma's fantasy. But this douche always claims Murray Rothbard isn't a libertarian, so seriously, screw him. He can join the conversation when he stops being a bold-faced lying hack.

While this makes sense, I'll once again note that dogma seems skeptical of this idea's accuracy, and perhaps more importantly add that a similar degree of synchronization between wokers and management about working conditions may be able to be achieved simply through the workers having a significant presence in stockholding (and on the board of directors, of course). This need not require 100% ownership, however, or even more than, say, 20%.

Again, let's wait until dogma actually demonstrates that he knows jack before considering his entirely specious claims. As for your point: Sure, but there's no pressure on corporations to change in that matter. So again, that's the point of supporting co-ops -- it creates pressure on capitalist firms to be more democratic and give worker's a greater say in how the value created by their labor is dispersed. Labor votes with its feet, and in lieu of laws that prevent workers from quitting, capitalist firms will need to be more democratic to compete.

Co-ops tend to be more ethical only because worker-ownership puts a greater priority on the actual needs of workers, rather than putting worker's needs in the hands of distant and disinterested shareholders, and worker's need safe communities, health care, pensions, safe workplaces, etc. Thus they will attend to those priorities. And the power of a co-op system like Mondragon is that if the employees need health care, the co-op doesn't just pay some other company to provide it - instead it creates its own internal insurance company, and then sells insurance to outsiders. It creates its own community clinics, and then does pro bono community health care to meet it's commitment to socially beneficial spending (which under Spanish law is 10% of gross spending, the minimum to qualify as a corporate co-op and gain the much lower tax rate of such co-ops). Worker's need schools for their children, and guess who funds their construction? The workers. And they really make out like bandits if they have construction divisions that can build schools and clinics. By internalizing and profitizing on its own need to meet worker's selfish needs, the co-operative creates what appears to be a more ethical person. Whereas the legal structure of the capitalist corporation creates a sociopath that treats people as objects to its own ends, the legal structure of the co-operative corporation creates a philanthropist who paradoxically profits from altruism.

Well, it's easy to be altruistic when other people are subsidizing your altruism...

But they are subsidizing their own altruism. I mean, that was a completely unreasonable point you just offered.

(Consolidating these for the sake of convenience.) I wasn't taking you for a revolutionary. However, this plan still has the same sort of blunt "it will work because I'll force people to make it work" attitude that I was trying to criticise. It's one thing to attempt to crack down on unethical businesses practices, but it's quite another to declare that capitalism will always lead to unethical businesses practices, and try and hamstring that instead.

The authoritarian structure of the capitalist firm does always lead to unethical business practices. It is an inherent flaw in the system, and the evidence for that is so overwhelming it takes rose-colored blast shielding to not see it.

Now, I know you say that taxation isn't theft, but changes in tax code are changes in the way the government forces people to do things. The theoretical necessity of imposing extra difficulty on capitalist structure seems to say that you don't think the co-ops will survive even with the changes that can be widely agreed upon (prohibitions on pollution, for example) in place. And I still can't accept that. It's still too much a call for a leap of faith, and it's still to totalitarian, in the sense that you believe that the mere presence of the structure you disagree with is something that requires the government to take action against it.

The problem I have with your argument is that you seem to be operating in tacit denial of an obvious fact: That the modern corporations that dominate the market also dominate the government, and that the entire structure of business law, the tax code, government procurement, etc. have all been stacked to benefit corporations. Do I think co-ops will need government protection in the short term? Yes, but only because they must compete with capitalist firms that are heavily subsidized by the government themselves.

sebster wrote:

Polonius wrote:I should have said that there is no really ironclad theoretical defense. In a theoretical, justice and fairness sense, it's not clear cut that we should have progressive taxes. Every practical consideration, however, supports the idea.

Yeah, fair point then. I mean, I could make a bunch of theoretical points for why taxes should be progressive, but you're right that other people could make arguments to oppose that and no-one would get anywhere. The real point, as you've said, is that it isn't practical to have a non-progressive tax.

The French tried a non-progressive tax system and it worked for quite a while, but it ended badly.

Dogma is a liar who makes up facts to support his agenda.

Modquisition on.
Most said this day would never come. Some said it would be Seventh Sign of the Apocalypse, that soon after we'd see Democrats espousing the virtues of the free market, Frazzled inviting others onto his lawn, and weiner dogs not having breath so bad it could melt plate steel. But this day is here. Frazzled must defend Dogma.

That is a direct attack on another poster, beyond the stretched boundaries of even the OT Zone. a private message will be coming. But to all, attacks on other posters is not permitted, even Dogma.

Gailbraithe wrote:
Dogma is a liar who makes up facts to support his agenda.

Do you have any support for this, aside from your word?

Gailbraithe wrote:
I see no reason to give any credence to anything dogma says, certainly not when he offers no citiations, and appears to be engaging in his typical disingenuous nonsense.

Wait, are you implying that citations are something other appeals to authority, and statements of accreditation? Because they really aren't; citing another work does not magically make your own work correct. I believe I've said this to you before, but if you were at all familiar with academic procedure and methodology, then you would already know this. Of course, its possible that you do know it, and are instead behaving in the disingenuous fashion that you accuse me of. Of course, that sort of things would also be consistent with your self-righteous insistence on demanding citations from other while offering few, if any, of your own.

Gailbraithe wrote:
For example, he claims that Mondragon "pays its employees just like any other corporations," which is about as accurate a claim as saying "Soviet Russia treated its citizens just like any other European democracy."

Modragon's method of determining pay is unique to its particular corporate culture, but the actual act of paying a wage is not at all distinct from the same action in any other corporate structure. It is this comparabiiliy that I was referring to. Of course, you're welcome to make an attempt to prove me wrong, but I doubt you'll even try as you're most likely fully aware that I'm correct.

Gailbraithe wrote:
But this douche always claims Murray Rothbard isn't a libertarian, so seriously, screw him. He can join the conversation when he stops being a bold-faced lying hack.

Murray Rothbard helped define modern libertarianism, but he himself was not a libertarian. Shocking, I know, but simply contributing to the literature surrounding a certain ideology does not make one a devotee of that ideology. Murray Rothbard was an anarchist, this is not the same thing as a libertarian.

Frazzled wrote:

Dogma is a liar who makes up facts to support his agenda.

Modquisition on.
Most said this day would never come. Some said it would be Seventh Sign of the Apocalypse, that soon after we'd see Democrats espousing the virtues of the free market, Frazzled inviting others onto his lawn, and weiner dogs not having breath so bad it could melt plate steel. But this day is here. Frazzled must defend Dogma.

That is a direct attack on another poster, beyond the stretched boundaries of even the OT Zone. a private message will be coming. But to all, attacks on other posters is not permitted, even Dogma.

So when dogma lies, no one is allowed to point that out, and yet dogma, Monster Rain, and Phyrxis can make constant direct attacks on me without any fear of reprisal. Gotcha.

Real fair system we've got going here.

Gailbraithe wrote:

Frazzled wrote:

Dogma is a liar who makes up facts to support his agenda.

Modquisition on.
Most said this day would never come. Some said it would be Seventh Sign of the Apocalypse, that soon after we'd see Democrats espousing the virtues of the free market, Frazzled inviting others onto his lawn, and weiner dogs not having breath so bad it could melt plate steel. But this day is here. Frazzled must defend Dogma.

That is a direct attack on another poster, beyond the stretched boundaries of even the OT Zone. a private message will be coming. But to all, attacks on other posters is not permitted, even Dogma.

So when dogma lies, no one is allowed to point that out, and yet dogma, Monster Rain, and Phyrxis can make constant direct attacks on me without any fear of reprisal. Gotcha.

Real fair system we've got going here.

Methinks galby hasn't been around to see past conversations between Dogma and myself....
I admit it... Dogma and I are secretly best bros. In fact, he's now really a barbeque eating, tobacco chewing redneck who hates dem commie pinkos. he even has weiner dogs.

It would help if you were to actually support the accusation that I'm lying. It would also help if I had ever attacked you via PM, or attacked you in public without provocation.

Regardless, I find it interesting that you haven't addressed the fact that Spain's national health care system, coupled with the presence of significant tax breaks for cooperatives and their employees, effectively serve to artificially subsidize Mondragon. Compare this to the US system which, although you vaguely claim otherwise, does not make any distinction between cooperatives and capitalist corporations; meaning that neither can be considered significantly advantaged.

Even if dogma lies (wich i don't believe he does ) he doesn't go around calling other posters liars.

youbedead wrote: dogma lies

Is it just me or is that quite humorous in a "hmmm" sort of way.

dogma wrote:It would help if you were to actually support the accusation that I'm lying. It would also help if I had ever attacked you via PM, or attacked you in public without provocation.

Perhaps I am being unfair. Perhaps you are not lying. But it does appear that your claims are not parallel with reality and do not appear to be based on anything other than the power of bland assertion.

Regardless, I find it interesting that you haven't addressed the fact that Spain's national health care system, coupled with the presence of significant tax breaks for cooperatives and their employees, effectively serve to artificially subsidize Mondragon. Compare this to the US system which, although you vaguely claim otherwise, does not make any distinction between cooperatives and corporations; meaning that neither can be considered significantly advantaged.

Like this statement.

First of all, Mondragon-style co-operatives receive an advantageous tax rate from the Spainish government because they devote 10% of their gross profits to socially responsible spending, which reduces the need for the Spanish government to subsidize that spending. So it is disingenuous to claim that Mondragon is being subsidized by its lower tax rate when that lower tax rate is only offered because the Mondragon system reduces the burden of social spending on the government. If capitalist firms were as devoted to community enhancing spending as the Mondragon-style co-ops, then they would receive a lower tax rate as well.

Second, your claim that the US system does not make any distinctions between co-operatives and corporations is completely false. I'd challenge you to prove the assertion, but I have no reason to believe that it would be worth the effort, since you'll find some weaselly way to avoid defending your claim. Instead you'll just say it's true, but it's clearly not.

Gailbraithe wrote:
Perhaps I am being unfair. Perhaps you are not lying. But it does appear that your claims are not parallel with reality and do not appear to be based on anything other than the power of bland assertion.

I'm still waiting for you to provide a significant piece of evidence in order to justify your odd sense of superiority.

Gailbraithe wrote:
First of all, Mondragon-style co-operatives receive an advantageous tax rate from the Spainish government because they devote 10% of their gross profits to socially responsible spending, which reduces the need for the Spanish government to subsidize that spending.

The 10% requirement may offset the reduction in tax burden, but given that it is only applied to the corporation, and not its owners, the actual relief provided by the relevant breaks is likely much higher. Remember, that if Mondragon were taxed in line with other corporation not only would the collective entity's assessment be more severe, but so to would those of the individual investors; who also receive tax breaks due to their place of employment. Take this in the context of the massively indebted Spanish state, the national health care system, and the other, assorted social services provided by the federal parliament and its hard to imagine that any real economic calculus would indicate that Mondragon doesn't benefit significantly from the welfare state.

Gailbraithe wrote:
So it is disingenuous to claim that Mondragon is being subsidized by its lower tax rate when that lower tax rate is only offered because the Mondragon system reduces the burden of social spending on the government. If capitalist firms were as devoted to community enhancing spending as the Mondragon-style co-ops, then they would receive a lower tax rate as well.

No, that's not disingenuous. Simply because you want there to be a 1 to 1 exchange regarding special burdens and the nominal tax rates does not itself indicate that one exists. This is a matter of economics, not philosophy.

Now, before you state that I'm somehow arguing from on high, I'll remind you that I'm merely questioning your own apparent desire to gloss over the facts that are least favorable to your argument without so much as hinting that your qualitative assessment could be mistaken.

Gailbraithe wrote:
Second, your claim that the US system does not make any distinctions between co-operatives and corporations is completely false. I'd challenge you to prove the assertion, but I have no reason to believe that it would be worth the effort, since you'll find some weaselly way to avoid defending your claim. Instead you'll just say it's true, but it's clearly not.

See, that's not how it works. Its impossible to prove the absence of something, as there can never be definitive evidence that said thing isn't "hiding over the next ridge". This is why positive statements, like 'The US system not only distinguishes between capitalist corporations and cooperative corporations, but actively favors the former.' require support. It is no great revelation to suggest that something doesn't exist when there is no evidence of its existence. Now, if you were to provide substantiation for your assertion, then I would be forced to either refute or, accept that substantiation.

To that end, I'd like you to support your assertion that the US system favors capitalist corporations. I would suggest looking at tax law in order to find any sort of corporate classification that is, at least, similar to a cooperative.

dogma wrote:

Gailbraithe wrote:
Second, your claim that the US system does not make any distinctions between co-operatives and corporations is completely false. I'd challenge you to prove the assertion, but I have no reason to believe that it would be worth the effort, since you'll find some weaselly way to avoid defending your claim. Instead you'll just say it's true, but it's clearly not.

See, that's not how it works. Its impossible to prove the absence of something, as there can never be definitive evidence that said thing isn't "hiding over the next ridge". This is why positive statements, like 'The US system not only distinguishes between capitalist corporations and cooperative corporations, but actively favors the former.' require support. It is no great revelation to suggest that something doesn't exist when there is no evidence of its existence. Now, if you were to provide substantiation for your assertion, then I would be forced to either refute or, accept that substantiation.

To that end, I'd like you to support your assertion that the US system favors capitalist corporations. I would suggest looking at tax law in order to find any sort of corporate classification that is, at least, similar to a cooperative.

@ dogma: This is infuriatingly lazy of you, I was enjoying your point counter point but to dodge such an interesting question like this is disappointing. So I'll step in.

@ Gailbraithe: The US tax system does not make any distiction between what you identify as co-op corporations and capatilist corprations, in fact as far as I can tell the only distinction between the two is in your head. A corporation is simply an entity who's assets are liquid and are not owned soley by an individual or a single group of people, but rather by people identified as shareholders whos ownership of the company is determined by their financial contribution to the company. What you call a co-operative corporation is simply a privatley traded one (Or a partnership, maybe a conglomorate it's hard to say with you being so vauge), and there is no tax incentive indicating that either choice is favored by the US government.

Actualy given the semi-graduated income tax which is also based on income and assets owned throughout the year and not on current level of prosperity, I could argue the opposite. Mainly because taxes are based on percentages but are done so that in the end those that own more of a company (which is easy if it is traded privately) end up with more disposable income then those who trade publically, assuming the two companies being compared had the same end of year bottom line. Also in the case of publicly traded stocks an owners assets could depreciate rapidly if another shareholder dumps their assets at a high rate, there is very little in US law preventing a person from selling his shares below cost despite it being devistating to everyone else, but the very nature of a privately traded corporation prevents this.

For smaller businesses, most financial planners argue that being organized as an LLC while chosing to be taxed as an S corporation is the most flexible and beneficial. You have to meet certain requirements like no more than 100 unrelated shareholders, all US ownership, not publicly traded, etc. but you avoid double taxation (C corps pay income tax, than shareholders pay tax on dividends, while S corps simply pass all profit and loss pro-rata to share holders).

Subchapter S in general favors small, closely held corporations.

On the whole though, the government doesn't care "why" the owners of a company own it, which is what a coop is essentially measured by.

and under the rules of logic, when a party says "there is no X," the easiest way to disprove it is to simply produce X. If the government really distinguished between coops and other businesses, why not simply provide proof.

For example, if I were to say "The constitution doesn't mention religion" there is no way I can really prove my statement. But it can be easily disproved by citing the first amendment (along with other clauses). Gailbraithe seems to be implying that there is copious evidence of such a distinction, meaning expecting the production of it isn't out of line.

ComputerGeek01 wrote:
@ dogma: This is infuriatingly lazy of you, I was enjoying your point counter point but to dodge such an interesting question like this is disappointing. So I'll step in.

Why is that lazy? Gailbraithe has been quite clear in that he does not accept my suppositions as representative of fact, as such it seems like it would be a waste of both my time, and his, for me to present some light detail on US tax law. As I said above, it isn't possible to prove the absence of something. Now, if he were to accept my word regarding the nature of US law, the conditions would be different.

That said, I would be happy to discuss the specifics of Gailbraithe's claim with him, but I can't really do that if he doesn't indicate just how he feels the US system favors capitalist corporations. Not without writing some kind of treatise on US tax law, anyway.

ComputerGeek01 wrote:
@ Gailbraithe: The US tax system does not make any distiction between what you identify as co-op corporations and capatilist corprations, in fact as far as I can tell the only distinction between the two is in your head. A corporation is simply an entity who's assets are liquid and are not owned soley by an individual or a single group of people, but rather by people identified as shareholders whos ownership of the company is determined by their financial contribution to the company. What you call a co-operative corporation is simply a privatley traded one (Or a partnership, maybe a conglomorate it's hard to say with you being so vauge), and there is no tax incentive indicating that either choice is favored by the US government.

Yes, under the US system an organization like Mondragon would be regarded in the same light as any other corporate body; albeit one with a fairly unique group of shareholders. That said, Mondragon isn't a standard cooperative as it features an explicit delineation between workers and management, as well as the type of centralized control one would expect in a capitalist corporation. I'm not entirely certain, but I expect that the closest approximation under US law would the C Corporation as Mondraagon employees do pay incomes taxes on their stock options after a certain threshold (12,000 Euros?).

What makes Mondragon, and Spanish law, unique are the additional tax breaks afforded to the employees of the cooperative. In the US a C Corporation suffers from double taxation; paying out both at the corporate and shareholder levels. Mondragon does this as well, but the tax rates for each entity are markedly lower than those C Corporations when considered as a percentage of the comparable tax rates of capitalist entities. Gailbraithe posits that this discrepancy is made up for by the additional 10% burden of community investment levied against corporations like Mondragon, but it seems to me as though that is unlikely. If I recall correctly the Spanish corporate tax rate is 35%, while cooperatives like Mondragon are taxed at a rate of 10%. Even with the imposition of a 10% levy for social investment the resultant burden is 15% lower than the standard corporate tax rate.

Polonius wrote:For smaller businesses, most financial planners argue that being organized as an LLC while chosing to be taxed as an S corporation is the most flexible and beneficial. You have to meet certain requirements like no more than 100 unrelated shareholders, all US ownership, not publicly traded, etc. but you avoid double taxation (C corps pay income tax, than shareholders pay tax on dividends, while S corps simply pass all profit and loss pro-rata to share holders).

Subchapter S in general favors small, closely held corporations.

On the whole though, the government doesn't care "why" the owners of a company own it, which is what a coop is essentially measured by.

and under the rules of logic, when a party says "there is no X," the easiest way to disprove it is to simply produce X. If the government really distinguished between coops and other businesses, why not simply provide proof.

For example, if I were to say "The constitution doesn't mention religion" there is no way I can really prove my statement. But it can be easily disproved by citing the first amendment (along with other clauses). Gailbraithe seems to be implying that there is copious evidence of such a distinction, meaning expecting the production of it isn't out of line.

I'm way outside my area of expertise here, unlike dogma (who is clearly an authoritative expert in absolutely everything that ever was), this review of tax law as it regards co-operatives seems to indicate that there is some significant differences in how co-operatives are treated under tax laws.

Moreover, there is the issue of corporate subsidies that support the top tier corporate entities that dominate the economy. I find it a bit tedious to be asked to offer evidence that American corporations receive subsidies from the government. It's a bit like being asked to provide evidence that the sky is often blue, or that birds occasionally sing. Here's one example, in which the government subsidized a 37 million dollar project that essentially amounts to expanding one Wal-Mart's driveway.

How many examples do you need? They are like drops of rain, endless in supply. Right-wing ideologues will nit-pick at every single raindrop, try to convince you that it doesn't exist, that it's just a drop of water in the sky and not at all connected to any other drop of water in the sky, all in an effort to obfuscate the storm bearing down on us...

Gailbraithe wrote:
this review of tax law as it regards co-operatives seems to indicate that there is some significant differences in how co-operatives are treated under tax laws.

Ah, yeah, I forgot about sub-chapter T. Cooperatives in the United States are regarded as pass-through entities in that they aren't required to pay taxes on income from the patronage of members. In that sense they're somewhat like a variation on a partnership, however, unlike a partnership, a cooperative is required to pay taxes on the income derived from the patronage of non-members. The argument over whether or not this disadvantages cooperatives when compared to more conventional corporations is complicated, but in my view they're on essentially equal footing. This position is supported by the proliferation of cooperatives in certain sectors of the US economy; notably in the form of credit unions.

Gailbraithe wrote:
Moreover, there is the issue of corporate subsidies that support the top tier corporate entities that dominate the economy. I find it a bit tedious to be asked to offer evidence that American corporations receive subsidies from the government. It's a bit like being asked to provide evidence that the sky is often blue, or that birds occasionally sing. Here's one example, in which the government subsidized a 37 million dollar project that essentially amounts to expanding one Wal-Mart's driveway.

Were it actually Walmart's driveway, and not state property, I would agree with your point. However, under the circumstances, I don't see how this is any different from any other federal program shifting the burden of public need away from corporate actors. Even something like national health care is far more favorable to large businesses than it is to small establishments; that's simply a natural consequence of scale. Even then, the issue isn't whether or not the state subsidizes corporations, because the state subsidizes nearly all business activity in the US, instead the issue is whether or not one particular category of business benefits from those subsidies more than others.

Moreover, I'm not sure that citing individual instances of what you view as corporate subsidies is the best way of supporting your argument. Certainly some kind of amalgamated statistic would be far more compelling evidence.

I'd also argue that corporate subsidies aren't a reflection of any sort of structure or philosophy, but simply the idea that money buys influence. If a coop were the single largest employer in the country, it'd receive roughly similar benefits.

And I'll be honest, I've taken multiple classes in business taxation and never even heard of subchapter T, so thanks for pointing that out.

A lot of the acrimony could have been spared if you had simply shared that earlier.

dogma wrote:Were it actually Walmart's driveway, and not state property, I would agree with your point. However, under the circumstances, I don't see how this is any different from any other federal program shifting the burden of public need away from corporate actors. Even something like national health care is far more favorable to large businesses than it is to small establishments; that's simply a natural consequence of scale. Even then, the issue isn't whether or not the state subsidizes corporations, because the state subsidizes nearly all business activity in the US, instead the issue is whether or not one particular category of business benefits from those subsidies more than others.

Moreover, I'm not sure that citing individual instances of what you view as corporate subsidies is the best way of supporting your argument. Certainly some kind of amalgamated statistic would be far more compelling evidence.

"That is not a rain drop. That is just a drop of water in the air. It could be anything. There is no storm."

Whatever dude, your Jedi mind tricks will not work on me. Back to ignore you go.

Whatever dude, your Jedi mind tricks will not work on me. Back to ignore you go.

You really need to bring it down a dozen notches, dude. The level of animosity and drama is not necessary.

You've got this perception of how the world works, and you expect everyone to know it, believe it and love it, even though it's your own imaginary world.

For example, you're raving that the "right wingers" are trying to lie, and say there are no corporate subsidies in the US... I can only surmise, based on the other things you say, that in your world this is something that "right wingers" try to cover up?

That whole worldview is so foreign, I don't even know how to understand it. There's no "pro subsidy" party. Both parties like them when it suits their agenda. Neither party tries to pretend they don't exist.

Also, you need to actually read what people are writing, instead of just skimming it, presuming it's disagreeing, and then launching off into another tirade. Look at what dogma said:

the state subsidizes nearly all business activity in the US

So, you're accusing him of denying your precious raindrop analogy, even as he says that ALL business activity is subsidized by the government.

Reading your posts gives a very strong impression that your sole goal is to reinforce your worldview, shoehorn as many people as possible into your "right wing evil" stereotype, and generally feel like a frustrated, persecuted genius.

It's not working as you're hoping.