Co-op Board Report: Thoughts for the Cooperator-in-Chief
added 12/17/08
The Board Report
by Don Kreis
Co-op Board President
With the inaugural season in full swing, consider this seldom invoked phrase from the memorable speech delivered on the steps of the U.S. Capitol on January 20, 1961 by a new, young president: “United, there is little we cannot do in a host of cooperative ventures.”
Admittedly, President Kennedy was referring to cooperation among nations. But, nearly a half century later we have elected a new, young president who used to buy groceries at the Hyde Park Co-op in Chicago. It is thus fair to assume he has encountered the Cooperative Principles. Regardless of how you voted in November, if you are reading this column I hope you are intrigued by the prospect of a cooperator-in-chief in the White House.
It is, after all, high time for the cooperative movement to take center stage as politicians of all parties confront the task of resurrecting the economy. As CEO Paul Hazen of the National Cooperative Business Association recently observed, it isn’t greed or deregulation or predatory lending that caused the present mess.
“[T]hese are symptoms, not causes, of our financial system,” Hazen noted. “Investor-owned businesses, pressured by investors’ beckoning for higher returns, place the highest value on profit. An unsatiated pool of investors can flee, destroying a company’s primary source of capital and bankrupting the business. For business leaders, this is clearly not an option.
“This high-risk, profit-first model has, in many ways, failed,” Hazen continued. “While it made our country affluent, it also left us vulnerable.
“People want to know where we go from here, what sort of business model could have averted the crisis. The answer is simple, and decidedly American. We need to invest in business cooperatives.”
Two phrases from Hazen’s comments stand out: “business cooperatives” and “decidedly American.” Our cooperative, like its siblings around the world, truly is a business, managed by creative opportunity seekers who are looking to extend our reach and, in the process, provide a livelihood for more than 300 employees. And we are quintessentially American: According to the estimates I have seen, at least 120 million—and perhaps as many as 160 million—Americans belong to at least one cooperative, including credit unions.
In comparison, the Economic Policy Institute reported in 2007 that only 20.7 percent of American households directly owned shares of publicly traded stock corporations (a figure that grows to 48.7 percent when you include indirect holdings like mutual funds, 401(k) accounts and the like). The point is that cooperatives enjoy a rightful place, alongside companies dedicated to maximizing return on shareholder investment, in the (currently weatherbeaten) pantheon of our market economy.
Corporations and cooperatives have something else in common that is fundamentally American: We are constitutionally protected, thanks to the First Amendment right of free association, and, indeed, the people through their elected representatives nurture us via perhaps the greatest gift that government can bestow: limited liability. Shareholders of both kinds of entities can lose their investment, but nothing more.
Think about that one again. Be it corporation or cooperative, a business entity can wreak havoc—despoil the earth, put thousands of people out of work, trigger a foreclosure tsunami, even leave people in the dark (as happened in California in 2000)—yet the shareholders are not themselves legally responsible.
At this juncture in our nation’s history, it is fair to ask: What kind of entity has a nearly unblemished record of giving something back to the community in exchange for this gift of limited liability? To what kind of entity shall we turn when investor-owned corporations cannot rise to the challenge? In that regard, it is worth noting that as part of the New Deal, rural electric cooperatives wired up the 70 percent of the continental U.S. that investor-owned utilities deemed it too unprofitable to serve.
Forty-eight years ago, President Kennedy referred to “tyranny, poverty, disease and war itself” as the common enemies of humanity and asked the world: “Can we forge against these enemies a grand and global alliance, north and south, east and west, that can assure a more fruitful life for all mankind? Will you join in that historic effort?”
As I write, in late November, I do not know what kind of challenge will be posed at the 2009 inauguration or, indeed, what our crisis-ridden economy will look like by then. But, as compellingly illustrated by our own cooperative’s 73-year record of public service and successful business, President Kennedy got it just right: There truly is little we cannot do in a host of cooperative ventures.
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