Stakeholder Capitalism

I lifted the article below from the AlterNet webpage. Robert Reich was at one time the U.S. Secretary of Labor in the Clinton Administration. He's now a professor at U.C. Berkeley.  Over the last decade, Robert Reich has become a strident voice against the predatory brand of capitalism that emerged with Ronald Reagan in the eighties.   In this kind of capitalism, the only rights that count are those of the shareholder owners, who put profit ahead of all other considerations.  It's an ugly, sociopathic approach to business that allows a handful of CEO's and stockholder-owners to get very rich, while  employees and the public get screwed.

In the piece below, Robert Reich talks about a different approach to corporate capitalism that acknowledges employees and the public as stakeholders, whose perspective on corporate governance should count just as much as that of shareholders.

Germany has one of the most consistently successful economies in the world. In Germany, by law, a corporation's board must include members from the company's labor force and also from the communities in which the business operates.  That business paradigm works for Mercedes-Benz, BMW, Siemens, etc. etc. German companies are some of the most well-managed and highly regarded in the world.

Stakeholder Capitalism is kind of capitalism on which a sustainable, life-affirming future can be built.  As Robert Reich demonstrates in the article below, genuine stakeholder democracy does not exist these days in America. What we have now is a brand of legalized bribery that allows public policy to be shaped by bankers, big business, and bad billionaires.

How do we get the saner approach to Capitalism that Robert Reich advocates?  It starts with fundamental change to the rules we live by. We need a Constitutional Amendment. It should say, 'Corporations are not People', and 'Money is not Speech'. For more about this, check out my earlier blogs that are labeled, Move to Amend.

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The World Needs This Saner Approach to Capitalism

 by Robert Reich

 

AlterNet, August 10, 2014  |

  

In recent weeks, the managers, employees, and customers of a New England chain of supermarkets called "Market Basket" have joined together to oppose the board of director's decision earlier in the year to oust the chain's popular chief executive, Arthur T. Demoulas.

Their demonstrations and boycotts have emptied most of the chain's seventy stores.

What was so special about Arthur T., as he's known? Mainly, his business model. He kept prices lower than his competitors, paid his employees more, and gave them and his managers more authority.

Late last year he offered customers an additional 4 percent discount, arguing they could use the money more than the shareholders.

In other words, Arthur T. viewed the company as a joint enterprise from which everyone should benefit, not just shareholders. Which is why the board fired him.

It's far from clear who will win this battle. But, interestingly, we're beginning to see the Arthur T. business model pop up all over the place.

Patagonia, a large apparel manufacturer based in Ventura, California, has organized itself as a "B-corporation." That's a for-profit company whose articles of incorporation require it to take into account the interests of workers, the community, and the environment, as well as shareholders.
The performance of B-corporations according to this measure is regularly reviewed and certified by a nonprofit entity called B Lab.

To date, over 500 companies in sixty industries have been certified as B-corporations, including the household products firm "Seventh Generation."

In addition, 27 states have passed laws allowing companies to incorporate as "benefit corporations." This gives directors legal protection to consider the interests of all stakeholders rather than just the shareholders who elected them.

We may be witnessing the beginning of a return to a form of capitalism that was taken for granted in America sixty years ago.

Then, most CEOs assumed they were responsible for all their stakeholders.

"The job of management," proclaimed Frank Abrams, chairman of Standard Oil of New Jersey, in 1951, "is to maintain an equitable and working balance among the claims of the various directly interested groups ... stockholders, employees, customers, and the public at large."

Johnson & Johnson publicly stated that its "first responsibility" was to patients, doctors, and nurses, and not to investors.

What changed? In the 1980s, corporate raiders began mounting unfriendly takeovers of companies that could deliver higher returns to their shareholders - if they abandoned their other stakeholders.
The raiders figured profits would be higher if the companies fought unions, cut workers' pay or fired them, automated as many jobs as possible or moved jobs abroad, shuttered factories, abandoned their communities, and squeezed their customers.

Although the law didn't require companies to maximize shareholder value, shareholders had the legal right to replace directors. The raiders pushed them to vote out directors who wouldn't make these changes and vote in directors who would (or else sell their shares to the raiders, who'd do the dirty work).

Since then, shareholder capitalism has replaced stakeholder capitalism. Corporate raiders have morphed into private equity managers, and unfriendly takeovers are rare. But it's now assumed corporations exist only to maximize shareholder returns.

Are we better off? Some argue shareholder capitalism has proven more efficient. It has moved economic resources to where they're most productive, and thereby enabled the economy to grow faster.

By this view, stakeholder capitalism locked up resources in unproductive ways. CEOs were too complacent. Companies were too fat. They employed workers they didn't need, and paid them too much. They were too tied to their communities.

But maybe, in retrospect, shareholder capitalism wasn't all it was cracked up to be. Look at the flat or declining wages of most Americans, their growing economic insecurity, and the abandoned communities that litter the nation.

Then look at the record corporate profits, CEO pay that's soared into the stratosphere, and Wall Street's financial casino (along with its near meltdown in 2008 that imposed collateral damage on most Americans).

You might conclude we went a bit overboard with shareholder capitalism.

The directors of "Market Basket" are now considering selling the company. Arthur T. has made a bid [3], but other bidders have offered more.

Reportedly, some prospective bidders think they can squeeze more profits out of the company than Arthur T. did.

But Arthur T. knew may have known something about how to run a business that made it successful in a larger sense.

Only some of us are corporate shareholders, and shareholders have won big in America over the last three decades.

But we're all stakeholders in the American economy, and many stakeholders have done miserably.
Maybe a bit more stakeholder capitalism is in order.


Here is a link to Robert Reich's webpage... http://robertreich.org/






 

Birthing the Solar Age

This morning, I viewed an amazing video that reflects the exciting,  renewable energy paradigm  that is rapidly unfolding  around the world, but particularly in Europe, Japan, and China. It's happening in America as well, but progress is being  undermined by the utility industry and traditional providers of energy. The Koch Brothers own much of the tar sands oil production in Canada.. These two men, who are already worth about 50 billion dollars, are determined to use their money to block the progress of clean energy in America.

Despite the resistance of the energy old guard, the trends are inevitable. The cost of solar power has dropped precipitously over the last decade, to the point where energy from the sun can be produced  increasingly, for even less than energy from nuclear, coal, oil, or natural gas. 

The intransigence of deep pockets, dirty energy providers is the primary impediment to the rapid adoption of wind, solar, and other clean energy technologies. I'm happy to report that there is huge momentum among institutional investors to sell off the parts of their portfolios that are mired in dirty technologies. Now, if we could just get rid of the corrupt politicians in Washington that are brought and paid for by energy giants like Exxon Mobil.

Cost of Solar Energy

Check out this very encouraging video from Yale Climate Forum...https://www.youtube.com/watch?v=UnUNnW2DH_M


Here's a bit of additional evidence of the swift emergence of solar energy from the Earth Policy Institute... http://www.earth-policy.org/data_highlights/2014/highlights47

Hitler Hates the Tesla S

I pulled this off the Clean Technica website.  It seems this movie footage of Hitler has been twisted numerous times to deliver an effective message about something that Der Fuhrer might not have liked.

I actually think Hitler would have said 'Heil!'  to the Tesla Model S had it been around during the Third Reich. Very clever ad. The guy who plays Hitler is scary.

Here is the link to 'Hitler Hates Tesla' ... http://cleantechnica.com/2014/02/21/hitlers-response-tesla-takeover-video/?utm_source=Cleantechnica+News&utm_medium=email&utm_campaign=6b92e0a5b4-RSS_EMAIL_CAMPAIGN&utm_term=0_b9b83ee7eb-6b92e0a5b4-331969041

Energiewende in Germany

I'm pasting in below an article just out by Thomas Hedges about Germany's emerging transition to clean, renewable forms of energy.  At the moment, Germany gets 25% of its energy from clean, renewable sources like wind and solar. By 2050, it will be 80-100%  powered by clean renewables.  No other advanced nation comes close.  The only reason the U.S. isn't in the same place, doing the same thing is politics pure and simple. In Germany, energy policy is based mostly on what's best for it's citizens and their quality of life. In the US, energy policy is controlled by big oil, coal, and nuclear.  It's no wonder we have no cogent energy policy.

Germany's example proves we can do a whole lot better.


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Published on Thursday, November 15, 2012 by TruthDig.com

How Germany Is Getting to 100 Percent Renewable Energy

by Thomas Hedges

 

There is no debate on climate change in Germany. The temperature for the past 10 months has been three degrees above average and we’re again on course for the warmest year on record. There’s no dispute among Germans as to whether this change is man-made, or that we contribute to it and need to stop accelerating the process.

 

 

Solar panels cover the rooftops of a German farming village. (InsideClimate News/Osha Gray Davidson)

 

 

Since 2000, Germany has converted 25 percent of its power grid to renewable energy sources such as solar, wind and biomass. The architects of the clean energy movement Energiewende, which translates to “energy transformation,” estimate that from 80 percent to 100 percent of Germany’s electricity will come from renewable sources by 2050.

Germans are baffled that the United States has not taken the same path. Not only is the U.S. the wealthiest nation in the world, but it’s also credited with jump-starting Germany’s green movement 40 years ago.

 

“This is a very American idea,” Arne Jungjohann, a director at the Heinrich Boll Stiftung Foundation (HBSF), said at a press conference Tuesday morning in Washington, D.C. “We got this from Jimmy Carter.”

 

Germany adopted and continued Carter’s push for energy conservation while the U.S. abandoned further efforts. The death of an American Energiewende solidified when President Ronald Reagan ripped down the solar panels atop the White House that Carter had installed.

 

Since then, Germany has created strong incentives for the public to invest in renewable energy. It pays people to generate electricity from solar panels on their houses. The effort to turn more consumers into producers is accelerated through feed-in tariffs, which are 20-year contracts that ensure a fixed price the government will pay. Germany lowers the price every year, so there’s good reason to sign one as soon as possible, before compensation falls further.

 

The money the government uses to pay producers comes from a monthly surcharge on utility bills that everyone pays, similar to a rebate. Ratepayers pay an additional cost for the renewable energy fund and then get that money back from the government, at a profit, if they are producing their own energy.

 

In the end, ratepayers control the program, not the government. This adds consistency, Davidson says. If the government itself paid, it would be easy for a new finance minister to cut the program upon taking office. Funding is not at the whim of politicians as it is in the U.S.

 

“Everyone has skin in the game,” says writer Osha Gray Davidson. “The movement is decentralized and democratized, and that’s why it works. Anybody in Germany can be a utility.”

 

The press conference the foundation organized with InsideClimate News comes two weeks after one of the biggest storms in U.S. history and sits in the shadow of the Keystone XL Pipeline, which would unlock the world’s second-largest oil reserve in Canada. The event also comes one day after a report that says that the U.S. is on track to become the leading oil and gas producer by 2020, which suggests that the U.S. has the capability to match Germany’s green movement, but is instead using its resources to deepen its dependency on fossil fuels.

 

Many community organizers have given up on government and are moving to spark a green movement in the U.S. through energy cooperatives.

 

Anya Schoolman is a D.C. organizer who has started many co-ops in the district although she began with no experience. She says that converting to renewable energy one person at a time would not work in the U.S. because of legal complexities and tax laws that discourage people from investing in clean energy.

 

Grid managers in the U.S., she explains, often require households to turn off wind turbines at night, a practice called “curtailment.”

 

“It’s a favor to the utility companies,” she says, which don’t hold as much power in Germany as they do in the United States.

 

Individuals and cooperatives own 65 percent of Germany’s renewable energy capacity. In the U.S. they own 2 percent. The rest is privately controlled.

 

The largest difference, panelists said, between Germany and the U.S. is how reactive the government is to its citizens. Democracy in Germany has meant keeping and strengthening regulatory agencies while forming policies that put public ownership ahead of private ownership.

 

“In the end,” says Davidson, who spent a month in Germany studying the Energiewende, “it isn’t about making money. It’s about quality of life.”

 

This article was made possible by the Center for Study of Responsive Law.

 

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Germany is a European nation with far fewer renewable energy resources available than we have in the United States.   In Europe, cloudy days are far more common than sunny days.  In the US, we have large stretches of land, especially in the Southwest, where the sun shines far more often than not.  Yet, Germany's energy policy as made it one of the world's most prominent adopters of solar PV. 

We do not have an energy policy in the United States.  We need one desparately. We need it to be focused on transitioning our country away from dependence on fossil fuels and nuclear power to a portfolio of emerging clean, renewable resources.  The one missing ingredient is political will. Let's hope the newly re-elected President Obama will seize the moment and provide much needed leadership.



 

 

 

 

This is What Integrity Looks Like.

 

 

 

I'm just passing this on from a blogger with a soul named Susan Lewis.

August Landmesser was a worker at the Blohm + Voss shipyard in Hamburg, Germany, best known for his appearance in a photograph refusing to perform the Nazi salute at the launch of the naval training vessel Horst Wessel on 13 June 1936.

 

 

 

Whether this defiant fellow is actually August Landmesser is not enitrely certain.  Whoever he is, the courage he reflects is all too rare in a world where 'going along to get along' is the rule rather than the exception.

 

 

Here is the Wikipedia link for August Landmesser...

http://en.wikipedia.org/wiki/August_Landmesser