Rachel's Democracy & Health News #830

November 10, 2005


Tim Montague

They say we're in an economic recovery -- corporate profits are up and
GDP (Gross Domestic Product) continues to climb at a rate of around
3.5% -- but ask the average American worker how they see it and you'll
get a different picture. Real wages are stagnating for middle- and
declining for low-income workers. In 1979 the average American earned
$15.91/hr (in 2001 dollars). Twenty years later, while the average
worker's productivity grew 42%, they were earning just $18.33/hr (a
gain of 15%). The figures are worse if you consider the 100 million
American workers with no college education -- their average wage has
gone down from $6.55/hr in 1979 to less than $5.00/hr in 2003.[1] In
the same period, CEO pay of the ten largest corporations increased
4,300% (from $3.5 million to $154 million).[2, p.10]

High-wage union jobs -- where the average worker makes 21% more than
their non-union counterpart, and where a person can expect healthcare,
a two-week vacation, and maybe even retirement benefits -- have been
in decline for fifty years. U.S. union membership peaked at 35 percent
of the labor force in the mid-1950's and is now down around 13 percent
(8 percent in the private sector).[2 p. 14] Big companies, in their
endless pursuit of profits are whittling away at medical, overtime
pay, and retirement benefits. United Airlines recently wiped out the
pensions of 120,000 retirees with the complicity of a federal
bankruptcy judge. Who's going to pay the rent, groceries, and medical
bills of all those retired people? In 2003, 45 million Americans had
no health insurance, up 1.4 million from the year before and up 5.1
million from the year 2000.[3]

Increasingly, the U.S. workforce has been put into direct competition
with low-wage workers in developing countries. This creates a "race to
the bottom" for wages, working conditions, and environmental standards
simultaneously -- all of which are ways to "externalize" costs of
production and thus to move a larger portion of the pie into the
domain of the owners. Nine out of ten workers is now an employee -- as
opposed to a business owner -- yet Americans overwhelmingly cling to
the values of freedom, independence, and entrepreneurial spirit which
ring so hollow in today's context of unequal distribution of wealth
and power.

Greg Burns of the Chicago Tribune recently reported that when the
mayor of Greenville Michigan "got the news that this city of 8,000
would lose its 2,700-employee refrigerator plant to Mexico, he figured
that other Rust Belt communities facing the same sort of economic
disaster would know just what to do." So he scoured the region for
examples of cities that "had turned back the forces of globalization
and kept their industrial base intact." The mayor couldn't find a
single city that was holding on to its manufacturing jobs.[4]

The loss of high-wage American manufacturing jobs -- one in six of
these jobs has moved overseas or south of the border in the last
decade -- reverberates throughout the economy. "For every
manufacturing job created, 2.7 additional jobs are created in other
sectors, resulting in a total of 3.7 jobs," says Dan Swinney, Director
of the Center for Labor and Community Research. Compared to factory
workers -- who earn an average of $40,000 per year in IL -- service
sector and retail jobs don't pay nearly as well or require as skilled
a labor force. Chicago area service-sector workers averaged $32,000,
and retail workers averaged just $17,000, according to Swinney who is
spearheading a manufacturing renaissance in the Chicago region.[5]

With the global economy now dominated by multinational corporations
that are systematically pillaging the environment and human health,
violating human-rights, and undermining democratic decision making --
what author David Korten calls the 'suicide economy' -- its time we
innovate from within and look closer to home for opportunities to
create jobs, build community, and reduce our impact on the

Fortunately, there is a movement afoot that does this. In
Philadelphia, Boston, Grand Rapids, Portland, and Toronto, indeed all
across the United States and Canada, a movement to humanize and green
the economy has taken hold from the grassroots and is growing
steadily. Judy Wicks, owner of the White Dog Cafe in Philadelphia says
"when I eat the food from my restaurant, I think of the farmers out in
the fields of Pennsylvania picking the fresh, organic produce they
will bring into town that day. I think of the goat herder, Dougie, who
says the cheese is better when she kisses her goats' ears! When I
drink my morning cup of coffee, I think about the Indians in Chiapas,
Mexico, who grew the beans. Business is about relationships. Money is
simply a tool." [6] Wicks' business is the heart of a sustainable
business movement -- the Business Alliance for Local Living
Economies (BALLE) an international organization dedicated to
strengthening and spreading socially responsible business -- where
people, profits and the planet matter.

In addition to her strong environmental ethic -- she purchases only
humanely grown meat and eggs, mostly organic produce, and uses wind-
generated electricity -- Wicks' cafe has become a community center for
other sustainable businesses known as the Sustainable Business Network
(SBN) -- a local network of independently operated businesses in
Philadelphia that exchange goods and services with each other while
adhering to basic principles that are good for employees, strengthen
the community and steward the environment. BALLE is an international
network of these home-grown networks that have sprung up all over.

The Birth of BALLE

Judy Wicks' success with the White Dog Cafe -- where she has proven to
be a vital catalyst in her local SBN -- spurred her to promote
socially responsible business at the national level. "These companies
consider the needs of all stakeholders -- employees, community,
suppliers, consumers, and the natural environment, as well as
stockholders -- when making business decisions," she says. "At
socially responsible businesses, employees are treated better and
environmental policies are improving. They also serve as a model for
other companies that may choose to adopt their progressive policies."
[7] Wicks witnessed the birth of the socially responsible business
movement that was gaining momentum in the 1990's but then faltered
with the buyout of companies like Ben & Jerry's, Odwalla, Stonyfield
Farm and Cascadian Farm by large conglomerates like Unilever.

With encouragement from David Korten, publisher of Yes! magazine and
author of When Corporations Rule the World, whom she knew through the
Social Venture Network, Wicks teamed up with Laury Hammel who was
founder of Business for Social Responsibility (BSR).[8] Together with
economist Michael Shuman, author of Going Local: Creating Self-Reliant
Communities in a Global Age they created BALLE which now has affiliate
networks in 22 cities throughout the U.S. and Canada with another 20
under consideration. Their mission is to create, strengthen and
connect local business networks dedicated to building strong local
living economies.

A Local Living Economy Defined

BALLE uses the following guidelines to define a local living
economy: "A locally-owned business would be one where the community
member has full autonomy and local decision-making authority with
respect to their business practices." A business must be privately
held. Greater than 50% of the ownership must reside in the local
region. The business should be able to make independent decisions
regarding name, look, and purchasing decisions (factors which
disqualify most franchises). And the business should pay all of its
own marketing, rent, and general business expenses without assistance
from a corporate headquarters.

"Living economy businesses are primarily independent and locally
owned, and value the needs and interests of all stakeholders, while
building long-term profitability. They strive to: Source products from
businesses with similar values, with a preference for local
procurement; Provide employees a healthy workplace with meaningful
living wage jobs; Offer customers personal service and useful safe,
quality products; Work with suppliers to establish a fair exchange;
Cooperate with other businesses in ways that balance their self-
interest with their obligation to the community and future
generations; Use their business practices to support an inclusive and
healthy community, and to protect the environment."

Shuman calls it the 'Smal-Mart revolution'. He divides the economic
universe into two groups affectionately named TINA and LOIS. TINA
stands for there is no alternative -- the business as usual model of
get big and dominate the market by any means necessary so long as it
returns a profit to shareholders. LOIS stands for locally owned import
substituting development. TINA requires no further explanation -- we
live under its auspices daily. Let's explore LOIS further.[11]

Import substitution is simply another way of saying "keep your
purchases of goods and services as local as possible." According to
BALLE, what is 'local' depends on the kind of community -- rural,
urban or suburban -- in which the business is based. Local could mean
your local tax entity (township or suburb); in a larger city local
could mean both the greater metropolitan area and the local business
district neighborhood, depending on the situation. In a rural setting,
one or more neighboring counties could be considered local.

Ownership can be one of several types as Korten explains, "Living
economy enterprises may be organized as partnerships; individual- or
family-owned businesses; consumer- or producer-owned cooperatives;
community corporations; or companies privately owned by workers, other
community members, or social investors. They may be for-profit or

"There is no place in living economies, however, for publicly traded,
limited liability corporations, the organizational centerpiece of the
suicide economy," says Korten. "This corporate form is legally
structured to allow virtually unlimited concentration of power to the
exclusive financial benefit of absentee shareholders who have no
knowledge of, or liability for, the social and environmental
consequences of the actions taken on their behalf. It is a legally
sanctioned invitation to benefit from behavior that otherwise would be
considered sociopathic -- even criminal."[9]

Advantages of LOIS over TINA

The more times a dollar is recycled (saved, invested or spent) within
the local community, the more jobs, healthcare, education,
transportation, housing, and other beneficial services that dollar
creates for the local community. LOIS is about keeping dollars in the
community -- what Shuman calls "plugging the leaks." Shuman gives the
example of Borders Books in Austin Texas -- spend $100 at Borders and
just $13 remain local vs. $45 -- triple the benefit -- if the $100 is
spent at an independent bookseller; LOIS creates jobs, improves human
health and strengthens the community.

TINA is costly to the community in shear economic terms. On the front
end cities are constantly offering significant tax breaks to large
companies in return for future jobs and tax revenue that the business
will generate. Shuman found that Lane County Oregon was shelling out
$33,000 for each TINA job created, vs. $1500 for each LOIS job.

On the back end, driven solely to maximize profits, TINA businesses
will pull out of a community as soon as it is more profitable to
relocate elsewhere. In July 2005, according to the AFL-CIO, American
manufacturing jobs fell to 14.3 million -- lower than it was in
1945.[10] The U.S. has lost over a million jobs in the last decade due
to the 'destructive exit' of publicly held companies -- a scenario
that is difficult to imagine with a LOIS business because local
ownership means local ties that bind. Take the Green Bay Packers
football team. The eighty six year old team was born and bred in Green
Bay and will remain a local fixture in perpetuity because the articles
of incorporation require that the proceeds of any sale of the team
remain local. The profit motive cannot come into play.

Ecological and social advantages of the LOIS economy abound. In the
LOIS model, all goods and services travel shorter distances. Worker's
commutes are shorter and they have more time for recreation, family
and community service. People are healthier, happier and more
productive which in turn benefits their employer, family and
community. There is less pollution and congestion -- the air, water
and food are cleaner -- and there are more resources (money and time)
for education, entrepreneurial ventures, charity, and community
development. These all feedback on themselves to build healthier and
stronger communities over time.

Shuman admits that despite its ancient roots -- most human ventures
have been LOIS style businesses since the dawn of civilization -- to
convert a modern economy to a LOIS model requires planning and
investment. And he consistently finds that communities have more
financial resources (pension funds, retirement accounts, venture
funds, etc.) than they knew -- it's just a matter of being creative
and choosing to invest the available resources locally.

While LOIS economies should be self-sustaining once they get
established, TINA economies have several Achilles heels. Consider
developing countries like China that produce much of the stuff we
consume and which are democratizing -- which means that workers are
going to demand higher wages over time. Simultaneously, climbing oil
and energy prices will make transportation more expensive making goods
and services more expensive. "The net result," says Shuman "Will be a
double whammy for big box retailers and national chains that depend on
cheap foreign labor and cheap oil for transportation." Shuman predicts
that many TINA economies will self-destruct when local goods become as
affordable as those made overseas.[11]

If BALLE is so good why didn't we think of it before? BALLE shares
some similarities with both the American Independent Business
Alliance(AMIBA) and Co-op America. AMIBA, founded in 1997, is
focused on the shared community benefits of networking local
independent businesses and does not appear to promote social
responsibility. Co-op America is a much larger and older (formed in
1982) network of socially responsible businesses: taking a responsible
approach to the environment, community and employees. Unlike BALLE,
Co-op America has national social responsibility standards against
which applicant companies are screened.

To become a member of Co-op America companies must demonstrate that
they: Focus on using business as a tool for positive social change;
are "values-driven," as well as profit-driven; are socially and
environmentally responsible in the way they source, manufacture, and
market their products and run their offices and factories; and are
committed to and employ extraordinary and innovative practices that
benefit: 1) workers, 2) communities, 3) customers, and 4) the
environment. It is not clear from their website if publicly owned
companies are discouraged or otherwise restricted.

Thus BALLE does fill a unique niche with an emphasis on the advantages
of local ownership, geographic proximity and social responsibility.
There is certainly much overlap between the three organizations and
they can all learn from each other.

There is no doubt that a U.S. economy based on local living economies
would be more sustainable than our current system. Industry would not
have nearly the incentives it does today to externalize costs to human
health and the environment. But the fundamental questions of resource
distribution and limits to growth remain. If we are going to survive
as a species, we must create an economy that lives in equilibrium with
the rest of nature -- a steady state economy. To achieve steady
state, we must first achieve zero population growth. Then we must
equitably distribute the resources of the commons so that everyone has
a vested interest in preserving the commons and we must find a
standard of living (energy throughput) that doesn't borrow from future
generations. We have effectively reached ZPG in the developed world.
And we know from the work of William Rees (see Rachel's 537 and 1)
that the world can only support about 6 billion people (an ecological
footprint of about 4.5 acres (2 hectares) per person. The average
American today lives with a footprint of 24 acres (9.7 hectares).
Therefore we would have to reduce average consumption by five-fold to
be sustainable and equitable. This is absolutely doable. We will
either make the choice by free will, adopt regulations that force us
to do so, or face the natural consequences of social unrest and very
likely ecological collapse. It's clear that free will is the most
desirable choice. The question remains how to motivate a consumer
culture to see beyond their growing waistline.


[1] Jack Rasmus, The War at Home: The Corporate Offensive Against
American Workers and Unions from Ronald Reagan to George W. Bush (San
Ramon, CA: Kyklos Productions, 2006). ISBN 0977106202

[2] Gar Alperovitz, America Beyond Capitalism: Reclaiming our Wealth,
Our Liberty, and Our Democracy (Hoboken, N.J.: John Wiley & Sons,
Inc., 2005). ISBN 0471667307a

[3] Robert Pear, "Health leaders Seek Consensus Over Uninsured," New
York Times, May 29, 2005, pg. A-1. Available here.

[4] Greg Burns, Greg Burns, "The Broken Heartland: Greenville, Mich.;
City left in the cold as refrigerator factory closes," Chicago
Tribune, November 6, 2005.

[5] Dan Swinney, The Chicago Manufacturing Renaissance, Center for
Labor and Community Research, July 28, 2005. Available here today.

[6] Frances Moore Lappe, Democracy's Edge: Choosing to Save Our
Country by Bringing Democracy to Life, (Hoboken, NJ: Jossey-Bass,
2005). ISBN 0787943118

[7] Jim Slama, "How enlightened businesspeople are changing the world
at the local level," Conscious Choice, May 2003. Available here.

[8] Business for Social Responsibility (BSR) was originally a
grassroots organization of socially responsible entrepreneurs from
companies like Ben and Jerry's, Patagonia and Tom's of Maine. In the
early 1990's it was hijacked by big business interests and eventually
forced Hammel out according to Russell Mokhiber and Robert Weissman,
"Hijacked: Business for Social Responsibility," CommonDreams.org,
November 3, 2005. Available here.

[9] David C. Korten, "Economies For Life," Yes! Magazine, Fall 2002.
Available here. See also David C. Korten, When Corporations Rule the
World (San Francisco: Berret-Koehler Publishers, 1995). ISBN

[10] AFL-CIO

[11] Michael Shuman, "The Smal-Mart Revolution," talk given at Loyola
University of Chicago, Center for Urban Research and Learning,
September 13, 2005. See also Michael Shuman, Going Local; Creating
Self-Reliant Communities in a Global Age (N.Y.: Free Press, 1998 ISBN
0684830124.) and of the forthcoming Local First; How to Strengthen
Your Community Economy.