The Wealth of Neighborhoods

While President Bush’s ownership society only gives more to those who already have, a more equitable, progressive ownership society is taking shape at the grassroots.

By Gar Alperovitz

Tagged InequalityProperty Rights

President George W. Bush’s “ownership society” is a seductive idea: who wouldn’t want to become the owner of their home, health care, retirement, and destiny? From the “home on the range” to the adulation heaped on high-tech entrepreneurs, the concept is rooted in the American experience. No other nation places more value on the importance of individual autonomy. Ultimately, however, Bush’s promise of an ownership society is an empty one. In exchange for ownership, we receive increased risk while the wealthy and corporate interests benefit, as in his Social Security privatization plan. In Bush’s world,everyone gets a little piece of the pie, but at the cost of giving the wealthy extremely large helpings. Bush has, in fact, exacerbated a long-running trend: not only is income inequality greater in the United States than in any other advanced society, but the ownership of wealth is literally feudal in nature–and getting more so. The top 1 percent garners more income than the bottom 100 million Americans taken together. A mere 1 percent of wealth-holders, however, own just under half of all financial assets. A slightly larger group, the top 5 percent, own roughly 70 percent of all business assets. In 2003, the top 1 percent alone received 57.5 percent of all capital gains, rent, interest, and dividend income.

With recent rollbacks of the estate tax, incentives for retirement
savings from which the well-off disproportionately benefit, and tax
cuts that reward wealth, these inequities will only deepen. Morally,
this is offensive to progressives and anyone with even a semi-serious
conception of justice. Practically, this is troubling–and should be–to
people across the political spectrum, because societies in which wealth
disparities are so great are unstable societies. Divisions are
magnified. The bonds of citizenship and brotherhood are weakened. The
social fabric is frayed. A nation that begins down this path ends up
with a country that begins to look more like a developing nation in
Latin America and Africa: high walls keeping a restless and poor
population out of sight and out of mind.

Decrying such inequities is nothing new. Yet, unfortunately, the
progressive response of the twentieth century–redistributive tax
structures and public assistance–no longer has the capacity to alter
the dominant trends. Not only has income inequality continued to expand
despite large-scale entitlement programs like Medicaid and Social
Security, but there is little prospect that significant new programs
will come into being any time soon. In a world of deepening deficits,
an aging population, global competitive pressure, and persistent public
skepticism of government, the appetite for the tax hikes and
entitlement programs needed to rebalance these inequities is weaker
than ever.

Although the redistributive door is largely closed, the ownership
door is, in fact, open. Not ownership in Bush’s skewed sense, but
rather ownership in a democratic sense through the possibility of
community-based investment in, and control over, wealth creation.
Employees, companies, non-profits, cities, and states are using diverse
and innovative strategies to create community wealth. It is wealth that
improves the ability of communities and individuals to increase asset
ownership, anchor jobs locally, expand the provision of public
services, and ensure local economic stability, rather than just boost
corporate profits and shareholder fortunes. A common thread runs
through the employee-owned firms, community development corporations,
and even the traditional co-ops: the idea that real wealth equality can
only be built by communal involvement in the means by which that wealth
is produced. Such approaches provide ownership for millions of
Americans–in many cases, through a tangible asset that can appreciate
and be passed on to subsequent generations. Others create community
wealth by enabling businesses and jobs to stay in the United States.

But more than that, these ownership strategies give people a real
stake in their community, strengthening the bonds of citizenship and
the connections between people, institutions, and places. These are not
incidental by-products of a progressive ownership society; they lie at
its core. A country where more people have a tangible stake and believe
they can create better lives for themselves and their children is a
strong society–and a strong democracy. “Necessitous men are not free
men,” Franklin Roosevelt urged. Or as an earlier President, John Adams,
reminded a young nation: “The balance of power in a society accompanies
the balance of property.”

Interestingly, the idea of using investment strategies to benefit
non-elites has been difficult for some progressives to grasp–it sounds
too much like the other side’s programs. However, properly structured,
such strategies can be a practical and effective way to combat wealth
inequalities. Indeed, at the grassroots level, a progressive ownership
society is already quietly taking shape–one that enables the poor,
blue- and white-collar workers, and the middle class in general
(broadly, the vast majority of perhaps the bottom 95 percent of
American society) to create and gain the benefits of wealth ownership.
These various strategies, and they are indeed very diverse, are
beginning to change who gains from wealth ownership and investment.
Some do it directly, helping low-income individuals increase savings
and asset-holding. Others do it indirectly, but nonetheless
importantly, by increasing the numbers of non-profit corporations that
have established businesses to help finance neighborhood development or
various social missions. Still others use municipal and state
strategies to build community wealth. And all of these efforts are
found throughout the country, in states “red” and “blue.”

Community Wealth Strategies
Several proposals have emerged in recent years that move government
policy beyond conventional redistribution and toward wealth creation.
For example, prompted by the Clinton Administration, a bipartisan
coalition came together in the late ’90s to provide federal backing for
Individual Development Accounts (IDAs). In the typical IDA, the
government directly matches the savings of poor families or individuals
up to a certain level, thereby doubling their efforts and allowing them
to benefit from the ownership of capital. Although IDAs are still very
much in the experimental stage, roughly 400 community-based
organizations currently administer some 20,000 individual accounts; in
the San Francisco Bay Area, participants have consistently saved 5
percent or more of gross income despite averaging less than $20,000 per
year in household income.

Bush has committed only modest federal funding to the initiative,
but it has nevertheless spawned a number of proposed variations in
recent years, many with bipartisan backing. In 2005, for instance, the
America Saving for Personal Investment, Retirement, and Education, or
ASPIRE Act, was jointly introduced by two Republicans and two
Democrats: Senators Rick Santorum, Jim DeMint, Jon Corzine, and Charles
Schumer. ASPIRE would provide every child with a starter deposit of
$500, with children from households below the national median income
eligible for an additional $500. In Great Britain, a similar
“baby-bond” measure is now law, with the first “Child Trust Funds”
opened last year.

The most far-reaching effort so far proposed, however, is that of
Yale Professors Bruce Ackerman and Anne Alstott. This would provide
every young person a “capital stake” of $80,000 on reaching adulthood,
to be used for any purpose they chose. An interesting wrinkle here
challenges existing wealth inequality directly: the program would be
financed through a 2 percent wealth tax. Bill Gates, Sr. and Chuck
Collins of United for a Fair Economy have suggested an additional angle
of attack that, like the Ackerman-Alstott approach, also simultaneously
challenges existing wealth inequality through the tax code. They
propose a revised estate tax to begin at $2.5 million in assets, with
the proceeds used to support a “wealth-building” fund to finance a
variety of individual and community-benefiting strategies.

These programs and proposals, while noteworthy, are in some ways old
wine in new bottles: they focus on wealth creation, but still mainly
rely on the redistribution of funds through government policy as their
means of doing so. But beyond Washington, in the “laboratories of
democracy” that are the states, leaders in the private, public, and
non-profit sectors are exploring even more creative ways to build
community assets for broader groups and for communities.

Employee-Owned Firms

The most intriguing and instructive approach in the new mix is the
employee-owned firm. “Worker ownership of the means of production” used
to be a hoary radical demand; today it is increasingly an accepted
reality. Few realize that roughly 11,500 U.S. businesses are now wholly
or substantially owned by their employees–up from fewer than 300 a
generation ago. The 10 million individuals involved in employee-owned
firms include more people than the entire membership of private-sector
labor unions.

Take, for example, the 7,500 employee-owners of W. L. Gore and
Associates, manufacturer of Gore-Tex fabric, who control facilities in
45 locations around the world. Management is both sophisticated and
participatory: workers may lead one task one week and follow other
leaders the next week; teams disband after projects are completed, with
team members moving on to other teams. The firm, which regularly ranks
on Fortune’s “Best Companies to Work For” list, enjoyed revenues of $1.84 billion last fiscal year.

Other enterprises range in size and impact. Appleton Co. in
Appleton, Wisconsin, is a world leader in specialty-paper production
and is owned by roughly 3,300 employees. Reflexite is an optics company
with approximately 420 employee-owners in Avon, Connecticut. In
Harrisonburg, Virginia, ComSonics–owned by its 200 employees–makes
cable television (CATV) test and analysis devices and boasts the
largest CATV repair facility in the United States. These companies were
not birthed from some sort of commune or communal movement. Rather, the
typical employee-owned company is established when a retiring owner of
a medium-sized business decides to sell to his workers, taking
advantage of special tax incentives for firms organized through
employee stock option plans (ESOPs).

Previously, much attention on ESOPs has tended to highlight
employee-ownership failures. Press reports have often implied that
United Airlines’ financial problems, for instance, were due primarily
to its innovative ownership structure. But United suffered from the
legacy of a bitter strike that occurred nearly a decade before its ESOP
was formed. Moreover, flight attendants–the largest group of
employees–were not included as ESOP members. And, of course, nearly all
American airlines have experienced massive financial difficulties since
September 11. The only profitable major American airline in recent
years has been Southwest, which, strikingly, has significant employee

Indeed, the vast majority of ESOPs involve highly successful
businesses, not the decaying old-economy companies often emphasized by
the press. In fact, they are commonly dynamic and high-growth firms. A
recent survey by Rutgers University sociologist Joseph Blasi, Rutgers
economist Douglas Kruse, and BusinessWeek reporter Aaron
Bernstein demonstrated that such firms have consistently higher
productivity records than comparable non-employee-owned firms. Average
hourly pay in ESOP firms is also significantly higher than pay for
comparable work in non-ESOP firms. And employee-owners of ESOPs
commonly end their careers with higher retirement benefits than others
with similar jobs.

Yet the real advantage of employee-owned firms goes beyond the
companies’ walls to the wider community. Consider what happens when the
typical small-business owner is nearing retirement. Too often, they
have a hard time convincing a son or daughter to take over the family
business or find a willing buyer, especially one interested in running
the business where it is. Often, these small businesses (which
collectively employ half of the entire private-sector labor force) and
their jobs disappear. As a result, the government must spend large sums
to retain these positions or create new jobs elsewhere. In Ohio, for
instance, it is estimated that it can cost the state between $75,000
and $100,000 in assistance to attract a new job to the state. Yet the
cost of retaining jobs through ESOP buyouts averages less than $500 per
job, mostly for legal and other technical assistance. For the states,
employee-owned firms provide an inexpensive way of keeping jobs in
communities and keeping communities healthy and vibrant, both through
the jobs retained and the assets accumulated for each worker. In this
way, employee-owned firms not only help create wealthier, more
equitable communities, but in doing so actually reduce the burden on
state and local governments.

Hybrid Non-Profits

While employee-owned firms are a private-sector solution to creating
more wealth and assets for working people, there are a host of
strategies being employed by the non-profit sector as well. Most
involve either a non-profit enterprise that owns and develops assets on
behalf of low-income communities or one that sets up a business to
finance services for selected groups. A recent Chronicle of Philanthropy
study estimated that more than $60 billion was earned through business
activities by the 14,000 largest non-profits in 1998. Income from fees,
charges, and related business activities are estimated in other studies
to have grown from 13 percent of non-profit social-service-organization
revenues in 1977 to 28 percent in 1997.

One of the most prominent of these hybrids is the community
development corporation (CDC), of which there are now more than 4,000,
operating in virtually every reasonably sized U.S. city and in many
rural areas. CDCs first attained major federal backing in the 1960s,
when then–New York Senators Robert Kennedy and Jacob Javits teamed up
to provide bipartisan support for significant-scale CDC development
both nationally and in New York (especially in the Bedford-Stuyvesant
neighborhood of Brooklyn). Although most CDCs are mainly involved in
low-income housing, several have evolved into multifaceted approaches
to community wealth-building, combining the administration of
individual wealth programs (like IDAs); the development of community
infrastructure including affordable housing and community facilities
(community centers, child care, parks); and the direct ownership and
investment in “anchored” community-owned businesses.

Two of the most impressive are the New Community Corporation (NCC)
in Newark, New Jersey, and the oddly named Mid-Bronx Desperadoes,
established in the South Bronx in 1974 at a time when “arson for
profit” had become common and local unemployment was 85 percent. NCC
owns an estimated $500 million in real estate and other ventures,
including a shopping center and some 3,000 units of housing. It employs
1,500 neighborhood residents, with profits used to help support
day-care and after-school programs, job training and health education,
a nursing home, and a medical day-care center for seniors. Mid-Bronx
has amassed over $200 million in real-estate assets, including 2,300
units of affordable housing and an ownership stake in a large shopping
center. The proceeds from managing and developing these projects, in
turn, go toward supporting community services, including a highly
successful job-training program. By moving in where most market actors
fear to tread, CDCs revitalize communities, create jobs, and begin to
use a community’s wealth to its benefit.

The second, even more rapidly expanding category of hybrid
non-profits is focused not on a particular neighborhood, but on
providing particular services. Pioneer Human Services (PHS) in Seattle,
Washington, for instance, provides drug- and alcohol-free housing,
employment, job training, counseling, and education to recovering
alcoholics and drug addicts. PHS was initially totally dependent upon
donations and grants, but it is now 99 percent self-supporting, with an
annual operating budget of roughly $60 million, almost entirely earned
through fees for services and the sale of its products. Nearly 1,000
employees–about 700 of whom are theoretically unemployable, ex-drug
dependent people–manufacture parts for Boeing and other customers, run
two restaurants, and manage a money-making food distribution service
for other non-profit organizations. Similarly, the Green Institute in
Minneapolis, Minnesota, helps fund a variety of energy-conservation,
land-use, and other environmental programs with profits generated by
its ReUse Center and DeConstruction Services, which sells building
materials to roughly 60,000 customers. San Francisco’s Golden Gate
Community Inc. operates a print shop, a restaurant, and a bicycle
repair shop; its profits support programs providing at-risk youth and
young adults with employment, housing, and other services. Taken
together, both kinds of hybrid organizations go beyond the typical
nonprofit service approach to actively create community wealth in parts
of the country and among sections of the population where both the
private sector and government programs have failed.


Yet another category that blurs the line between corporate entity
and community organization is the traditional co-op, an institution
that is much more alive and well at the grassroots level than many
realize. Current co-op membership totals 120 million nationwide–more
than a third of the U.S. population. This number includes a majority of
the nation’s farmers (who market approximately 30 percent of their
produce through co-ops); 37 million people who purchase electricity
from rural and urban electric co-ops; and the 84 million who are
member-owners of roughly 9,000 credit unions, with total assets of over
$600 billion. Co-ops are also expanding into new areas. Retail-food
cooperatives, for instance, now constitute the fourth-largest “chain”
in the natural-foods industry. Purchasing cooperatives that help local
businesses are a growing response to the power of big-box stores like
Home Depot and Wal-Mart. Especially impressive gains have been made in
connection with hardware (True Value, Ace) and non-profit hospital
joint purchasing (VHA Inc.). Other prominent purchasing co-ops include
the “is.group” (which jointly purchases office supplies for independent
office supply stores) and AMAROK (which purchases drywall on behalf of
independent distributors). Such efforts not only help those directly
involved, but as Southern New Hampshire University expert Christina
Clamp observes, they also are a proven “strategy for stabilizing small
proprietors on urban and rural main streets ” [and] holding on to
family-owned businesses” in many communities. Unlike the Wal-Marts of
the world, which extract profits to be sent to the home offices far
away, co-ops create wealth that stays in, and strengthens, the

The Enterprising City

These kinds of efforts also have found their way into the public
sector. As David Osborne and Ted Gaebler noted in their 1992 book, Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector,
“Pressed hard by the tax revolts of the 1970s and 1980s and the fiscal
crisis of the early 1990s, entrepreneurial governments are increasingly
… searching for non-tax revenues” to support essential services–a
community-ownership dynamic that has continued to gather force as
Bush-era cutbacks have steadily burned their way through city budgets.
What once might have been called “city socialism” is now commonly
dubbed “the enterprising city,” with Republican and Democratic mayors
alike involved in entrepreneurial efforts ranging from land development
to Internet and WiFi services. They are using tough-minded business
strategies to develop public-sector, and through it, community, wealth.

Real estate is one major focus of such endeavors. As early as 1970,
the city of Boston embarked on a joint venture with the Rouse Company
to develop the Faneuil Hall Marketplace, a downtown retail complex.
Boston kept the property under municipal ownership and negotiated a
lease agreement through which the city secured a portion of the
development profits in lieu of property taxes, thereby increasing
revenues by an estimated 40 percent. While revolutionary at the time,
such arrangements are now widespread. Especially interesting are
development efforts around subway stations and other mass-transit
facilities where public investment inevitably increases land values,
with potentially large financial gains for any city or transit
authority that maintains ownership rights.

Land development, however, is old economy. High-tech Internet and
related services are fast developing as new areas of activity,
particularly, but by no means exclusively, in rural areas where
privately provided services are scarce. In Glasgow, Kentucky, the
municipally owned utility offers residents electricity, cable,
telephone services, and high-speed Internet access, all at costs lower
than private competitors. Tacoma, Washington’s broadband network,
Click!, also offers individuals and private companies Internet and
cable service, as does Cedar Falls, Iowa. At the end of 2005, 105
municipal utilities were providing cable television, 175 were leasing
fiber-optic networks, 132 were Internet service providers, 272 offered
municipal data networking, 47 provided long-distance telephone service,
and 57 provided local phone service. Although not primarily aimed at
direct city profit-making, more than 50 cities–including Philadelphia,
San Francisco, and Tucson–have also developed or are beginning to
develop publicly owned municipal WiFi systems.

Hundreds of municipalities also generate revenues through
landfill-gas-recovery strategies that turn the greenhouse gas methane
(a by-product of waste storage) into energy, which they then sell at a
profit. In Riverview, Michigan, more than 4 million cubic feet of
methane gas are now recovered daily; the sale of the gas for power
production helps produce 40,000 megawatt hours of electricity per year,
with royalties flowing back to the city. These municipalities are
taking a community-owned liability–a garbage dump–and converting it
into a source of community wealth, which is shared among citizens in
the form of better city services.

Cities have an even more direct effect on the local economy and the
bank accounts of their residents when they use their funds to invest in
small businesses that find it difficult to attract capital. Over the
past few years, there has been an explosive change in municipal
investing, with cities using a variety of loan, equity, and hybrid
“near-equity” tools to support the development of locally anchored
industry. A recent survey suggests that more than half of all cities
with populations greater than 100,000 now invest in local businesses; a
mere 10 percent did so in 1989. Similarly, municipalities that utilize
venture-fund investment strategies for local industry increased from 5
percent to 33.2 percent during the same period. The city of Austin,
Minnesota, makes investments as low as $5,000 and as high as $500,000
in local companies by participating as a leading member in its
community’s economic development corporation. Cleveland, Ohio, takes
equity positions in housing and community redevelopment projects
through Neighborhood Progress Inc., a consortium of city, foundation,
and corporate representatives. San Diego, California, operates a
Technology Loan Fund to meet the finance needs of small-growth
companies, in which it seeks “upside participation” through royalties,
warranties, and other near-equity instruments, aiming for an effective
rate of return of roughly 25 percent on committed funds.

This type of investment is also taking root at the state level. The
Alabama state pension agency, Retirement Systems of Alabama (RSA), for
example, aggressively invests in numerous Alabama-based industries;
investments range from aerospace to tourism development and include the
Alabama Pine Pulp Company, a statewide golf course network, and two
media conglomerates involving numerous newspapers and 36 TV and radio
stations. Funds in more than half the states invest in private-equity
placements and venture capital; in some states, a portion is explicitly
earmarked to help fill local investment gaps. CalPERS, the California
state employee pension fund, invests part of its more than $200 billion
through community investment funds such as Pacific Community Ventures
(PCV), an entity that in turn makes venture capital investments in
local businesses likely to generate high-wage jobs. New York’s state
pension fund runs a $7 billion alternative investment portfolio of
which approximately $300 million is invested with fund managers who are
instructed to seek opportunities in underserved communities in upstate
New York and in inner-city areas. Similar investment strategies are
pursued by Massachusetts and Wisconsin. These investments create a
one-two punch of community wealth-building: not only do wise
investments produce higher public revenues, but investing in local
startups creates a wealthier, healthier local economy.

Land Trusts and Financial Institutions
Two final elements in the emerging progressive-ownership paradigm
are community land trusts (CLTs) and community development financial
institutions (CDFIs). Non-profit land trusts use ownership strategies
to help stabilize housing costs in areas threatened by gentrification,
and they are one of the few ways to provide low- and moderate-income
housing in an era of ever-declining subsidies. In most cases, a trust
will develop housing and sell it to families in a manner that restricts
resale: in exchange for a low purchase price, the family agrees that if
it sells the property, it will not be at inflated market prices. One of
the best-known efforts, Vermont’s Burlington Community Land Trust,
provides low-cost housing for 2,500 member-residents who average less
than 70 percent of the area median income. Some do more than just
development: in addition to its housing efforts, New Jersey’s
non-profit North Camden Land Trust also owns a construction company
that employs Camden residents on rehabilitation jobs.

CDFIs provide credit, technical assistance, and other financing
services in support of a broad variety of community-building efforts.
Their mission is to direct lending to higher-risk areas and to provide
guidance to businesses and individuals, as well as CDCs, land trusts,
and other economic initiatives unable to access traditional commercial
lending. The clear leader in the field is Chicago’s ShoreBank, the
nation’s first–and largest–community development bank. ShoreBank has
over $1.6 billion in assets, and it works with affiliate organizations
in Cleveland and Detroit and rural development projects in Washington
and Michigan’s Upper Peninsula. Other financial institutions that
provide infrastructure support for ownership efforts include community
development loan funds, community development venture-capital funds,
community development credit unions, and micro-enterprise loan funds.
Indeed, the community financial-support sector has expanded more than
twenty-fold over the last two decades, with assets currently under
management totaling roughly $20 billion. In 2003 alone, CDFIs extended
$4.1 billion in new loan and equity finance, thereby assisting more
than 9,000 businesses to create jobs, build 44,000 units of affordable
housing, and construct or renovate almost 800 community facilities in
economically disadvantaged communities. CDFIs do the hard, day-to-day
financial blocking and tackling in support of new ownership efforts.

Toward a Progressive Ownership Paradigm

Taken together, the various strategies start to form the outline of
a progressive ownership society–one in which neighbors work in concert
to build wealth that benefits them, sometimes directly and often
indirectly. Municipal and state economic efforts help strengthen
community finances–and a sense of community as well. At a time when
globalization and interstate job-chasing often mean economic and job
dislocation, “anchoring” strategies (such as employee-owned enterprises
and co-ops) keep jobs in place. They also contribute to the local tax
base, thereby helping to provide resources for local services in a time
of great fiscal pressure. A company owned by local residents rarely
packs up and moves to Mexico.

These ownership efforts also begin to offer a genuine response to
the extraordinary inequality of income–and especially wealth–that now
characterizes the United States. Unlike tax breaks or income supports,
wealth-building efforts, such as employee-owned companies, land trusts,
and IDAs, also create the kind of assets that can be passed on to
future generations. More than half of Americans–including 39 percent of
those 55 or older nearing retirement–have less than $25,000 in non-home
savings, and the absence of real assets presents a huge potential
burden for their children and for society. Other efforts, such as
community land trusts, enable low-income Americans to save more by
defraying costs for housing and other expenses.

Finally, the anchoring feature of most community-wealth efforts has
implications far beyond the purely economic. A growing body of research
has shown that democratic participation is strongly related to
community economic stability. Political scientists Sidney Verba, Kay
Schlozman, and Henry Brady have demonstrated that “years in community”
is a positive predictor of both national and local-level civic
involvement, with the effect nearly twice as strong for local
participation. Another recent analysis found that citizens who have
lived in the same home for five or more years vote at much higher rates
than those who have lived in the same home for a shorter time. Stable
jobs produce not only strong communities, but also a strong citizenry.

Making It Work

These various ownership strategies are not free of problems.
Non-profits in business, for example, can sometimes lose sight of their
primary mission. CDCs are often too dependent on patronage and find
themselves operating for the benefit of local politicians rather than
the community. And employee-owned firms can easily come to replicate
the hierarchical and undemocratic power structures of traditional
corporations. This is where governments can have a real impact–for
instance, by providing tax benefits that support broad and independent
CDC coalitions and by providing additional support for esops that go
the extra mile to fully enfranchise employees.

But these and other measures are a matter of implementation. The
real question is whether this mix of strategies, programs, and
experiments can become something more than a list of intriguing
possibilities. In part, the answer derives from sheer necessity: there
is a growing fiscal crisis at all levels of government, precluding the
possibility of broad new programs cut from the traditional progressive
cloth. Federal domestic discretionary spending has declined from 5.2
percent of GDP in 1980 to 3.5 percent today, and the cascading impact
of cutbacks has been felt from city hall to Capitol Hill. There is very
little prospect of rebuilding a serious political capacity to reverse
this long and continuing trend in the coming period. One fundamental
reason is that the labor movement, central to progressive movements in
all advanced nations, has declined in the United States from 35 percent
of the labor force in the mid-’50s to a mere 7.4 percent of
private-sector employment (12.5 percent of all employment). Many
experts anticipate continued decline as time goes on, and with it a
further steady weakening of a key element of the traditional
progressive organizational base.

The effect of globalization adds to these difficulties by
systematically improving corporate America’s bargaining power against
labor and its lobbying power in Congress. Threats to move elsewhere
have been uncommonly effective in both reducing wages and achieving
favorable tax treatment. Harvard economist Dani Rodrik’s studies have
documented the resulting general reduction in revenue sources available
for public programs and a steady shifting of the tax burden to low- and
moderate-income groups. The worsening of the fiscal picture has been
accompanied by a shift away from the reliable Democratic majorities in
Congress–facilitated by the Republican Southern realignment–toward
Republicans and conservative Democrats who, if not always fiscally
prudent in practice, espouse hostility toward redistribution proposals.

The implications of these changes are profound: although a
Democratic president may well be elected again at some point, many
traditional programs are simply unlikely to be expanded, at least in
the foreseeable future. This does not mean progressives should stop
fighting for important social policies. However, it is obvious that the
fiscal pendulum is not going to swing back for a very, very long time.
This, in turn, means that very different programs, which offer some
possibility of positive benefits for non-elites, will have to be
developed. Although the origins of the various ownership strategies are
quite diverse, that most do not depend heavily on public spending is an
extraordinary and continuing advantage in this situation.

But the possibility of a coordinated government response to the
emergent community-wealth paradigm derives from more than simple
necessity; it also derives from its appeal to a diverse range of
political attitudes. All of these strategies involve work and
investment; most are highly decentralized; and, most broadly, all
emphasize ownership as central to achieving larger goals. It is no
wonder, then, that these initiatives often find broad support.
Employee-owned firms have long received strong bipartisan backing from,
among many others, Ronald Reagan, Ralph Nader, Jesse Jackson, and
former Senator Jesse Helms. Both Democratic and Republican mayors have
quietly backed numerous progressive ownership initiatives at the
municipal level, and they are likely to continue to do so as local
fiscal problems increase. As shrewd observers like Louis Winnick of the
Institute for Public Administration noted long ago, “the anti-statist
Right saluted community development as a proxy for government. ” On the
opposite end of the ideological spectrum, radical activists envisioned
community-based organizations as weapons of political empowerment,
instruments to liberate the poor from chronic neglect.”

It is not inconceivable that a progressive ownership strategy could
revive a progressive movement beyond its traditional base to include
many constituencies not normally accessible to traditional efforts. It
might well thereby also help create an America in which every citizen
feels they have a true stake in their community–which is, after all,
the ultimate ownership society.

Read more about InequalityProperty Rights

Gar Alperovitz , Lionel R. Bauman Professor of Political Economy at the University of Maryland, is the author, most recently, of America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty and Our Democracy.

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