(fwd) Rachel #620: Bridge to the High Road, Pt. 3


Richard Moore

Date: Fri, 16 Oct 1998
To: •••@••.•••
From: viviane lerner <•••@••.•••>
Subject: Re: (fwd) Rachel #619: Bridge to the High Road, Pt. 2

Wonderful stuff!!! Many thanks for posting it!
Viviane Lerner

Date: Fri, 16 Oct 1998
To: •••@••.•••
Subject: Rachel #620: Bridge to the High Road, Part 3
From: •••@••.•••
Sender: •••@••.•••
Reply-To: •••@••.•••

=======================Electronic Edition========================
.                                                               .
.           RACHEL'S ENVIRONMENT & HEALTH WEEKLY #620           .
.                    ---October 15, 1998---                     .
.                          HEADLINES:                           .
.              THE BRIDGE TO THE HIGH ROAD, PART 3              .
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.               Environmental Research Foundation               .
.              P.O. Box 5036, Annapolis, MD  21403              .
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In his path-breaking paper, BUILDING THE BRIDGE TO THE HIGH
ROAD,[1] Dan Swinney tells two stories that illustrate "the low
road of economic development."

Taylor Forge

In 1975, Swinney was a turret lathe operator for Taylor Forge in
Cicero, Illinois, a suburb on Chicago's west side.  Taylor Forge
made large industrial castings and pipe fittings.  That year
Gulf+Western (G+W) secured a huge loan from Chase Manhattan Bank
and began buying up successful manufacturing firms, like Taylor
Forge, breaking them up, and selling off the pieces.

G+W had no interest in the companies it purchased, the products
they manufactured, or the communities they supported.  Later, a
case study at the Harvard Business School described it this way:
G+W's strategy was to "milk the cash cow," sell off Taylor
Forge's assets and use the cash to acquire companies in more
lucrative sectors, such as Paramount Pictures.  G+W began selling
off Taylor Forge department by department. In 1982 G+W cynically
told employees they could save their jobs if they took pay cuts
and gave back part of their pensions, which the employees did.
But this turned out to be a trick to see how much G+W could
extract from the employees before closing Taylor Forge for good,
which occurred in 1983.

The city of Cicero lost half its good jobs in the next six years
as "the low road" became the norm and many other viable companies
went the way of Taylor Forge.  As a result, the U.S. lost a
significant portion of its productive capacity and speculators
like G+W turned enormous profits.  The low road became firmly
established as the modern way of doing business in the U.S., the
era of the "casino economy" emerged, and the pathology of the
inner city began to appear.

Stewart Warner

In the early '80s, Stewart Warner, manufacturer of gauges and
automotive instruments, and an economic anchor of Chicago's north
side, began asking its unionized workers for concessions during
contract negotiations.  Detailed analysis of the situation
revealed that Stewart Warner's management had lost interest in
the firm and was planning to sell its assets.  Dan Swinney's
Midwest Center for Labor Research (MCLR) urged the workers at
Stewart Warner to make an offer to buy the company, but for
various reasons this did not happen.  Within a year Stewart
Warner was purchased by British Tire and Rubber, a conglomerate
with a habit of buying U.S. companies and closing them or moving
them to the maquiladora zone in Mexico.  Sure enough, within 2
years, part of Stewart Warner's production was moved to Mexico,
the Chicago plant was demolished, and the British firm turned a
nice profit by building high-priced condos on the former factory

According to MCLR research, this plant closing cost the community
2500 jobs in related businesses, $10 million annually in federal,
state, and local taxes, and $24 million annually in lost consumer
spending. Furthermore, MCLR's analysis showed that a realistic
business plan could have sustained Stewart Warner as a profitable
source of income and investment for the Chicago economy, but the
workers and the community did not mobilize to keep the firm
rooted, so it was lost.

Simultaneously, another problem was brewing.  Hundreds of
Chicago's small manufacturing firms faced an uncertain future
because their founders were growing old and had no one to replace
themselves.  MCLR studied 800 Chicago manufacturing firms with an
owner 55 or older and found that 40% were in danger of closing
because they had no one lined up to take over.  MCLR discovered
that these companies could often be saved with a little effort
and creativity.[2]  Such firms often present good opportunities
for employee buyouts.  Or they may provide an excellent chance
for aspiring local entrepreneurs, who are typically African
Americans or Hispanics previously excluded from this kind of

As speculators created the "casino economy" and sold off many of
the nation's productive assets, those hardest hit were people of
color and women in the central cities.  In every serious analysis
of these problems, race remains a key indicator of inequality,
discrimination and oppression.[3]  While Republicans and
Democrats both sing the praises of our "Dream Economy," many U.S.
inner cities have become indistinguishable from the poorest parts
of the developing world. Fifty-percent (or greater) unemployment,
soaring infant mortality, hunger and homelessness are
characteristic.  If there is work to be had, it pays poverty
wages that won't support a family, so people grow cynical and
start seeing the underground economy as the only possible path to
success.  Over the past 25 years, life in our central cities has
become distorted by crime, drugs and all the other forms of
social pathology that accompany extreme poverty.[3]  The larger
society has responded with a policy of mass incarceration, plus
"white flight" to the suburbs, thus creating all the
environmental and social dislocations known as "sprawl."

As these events have unfolded, it has become clear that many
members of the business class have abandoned the obligations of
stewardship of the economy.  For the first 75 years of this
century, wealthy industrialists claimed the exclusive right to
make decisions about what products would be produced from what
raw materials, using what processes.  They controlled decisions
about management, investment, and production.  In return for this
awesome (and largely undisputed) power, they agreed to share a
modicum of the available wealth, thus creating the middle class.

Most of the time this social contract has worked well enough to
avoid major strife.

But starting in the '70s, it became clear that many of the
nation's business leaders were abandoning the social contract,
selling off the nation's assets, destroying America's productive
capacity, abandoning communities that depended on the jobs.

Now, Dan Swinney says, conditions are ripe for a new paradigm of
economic development --one aimed at ending historical
oppressions, putting democratic control and community well being
at the center of the picture, accepting responsibility for lean,
efficient, productive, profitable, and environmentally
sustainable business enterprises, rebuilding the nation's cities,
and thus putting limits on the environmental desecration and
social isolation created by sprawl. Swinney believes we can
attract a majority of Americans to such a vision because --done
right --the vast majority of people will benefit.

The key to success will be ownership, Swinney says (pg. 72).
"This is the critical determinant of how production is organized,
the link between the company and other companies or the
community; its patterns of employment and training, and the level
of commitment to affirmative action and environmental standards."

"We must be prepared to have people with our values and
priorities purchase and develop local industries.  This can be
accomplished in a number of ways: employee ownership, community
shares in local companies plus positions on the Board of
Directors, and ownership by local entrepreneurs directly linked
to community initiatives and organizations.  In these ways, we
can most directly promote development with new standards and
objectives consistent with community needs," Swinney says.

"To mobilize the grass-roots support necessary to our vision, the
relationship of an enterprise to the community must change in
three fundamental ways," Swinney says.

"First, we must democratize the workplace itself.  This involves
seeking non-discrimination and affirmative action, greater
control by working people over safety and other conditions of
work, and greater participation by employees in matters affecting
their lives, which have traditionally been reserved exclusively
for management.

"Second, we must democratize relations among enterprises of the
community.  This requires facilitating their cooperation with and
support for each other, and their common support for the
community as a whole.

"Third, we must democratize the relationship of the enterprise to
the community by finding ways for the community to evaluate and
monitor a business's contribution to its overall economic,
social, and cultural growth."

Obviously, none of these three requirements is simple or easy,
but all are consistent with the premiss that democracy has become
an essential requirement for any industrialized human culture
that hopes to survive for very long. (See REHW #618.)

Swinney goes on to describe briefly four essential organizations
that will be needed as we make the transition from low road
development to high road development:

technical side of development.  Such an organization is needed to
provide the full range of services and expertise to acquire,
manage, and develop businesses consistent with the economic and
social goals of a broad coalition.  The EDC can function as a
clearinghouse for information about local businesses gathered
from a network of sources, including churches, community
organizations, development corporations, city government, labor
(organized and unorganized), and residents.[2]

The EDC will assist a company to develop financial resources
through contacts with individuals, venture funds, banks and grant
sources, and also will provide technical services such as
accounting, legal, marketing, and management assistance. Examples
of EDCs are Cooperative Health Care Associates in the Bronx,
N.Y., and the Steel Valley Authority (SVA) in the Pittsburgh,
Pennsylvania area.

2) The LINKED ENTERPRISE NETWORK aims to promote communication
among companies that do similar work, to promote common
purchasing and marketing arrangements, promote worker training
and education, and establish links between businesses and
community groups.  At its most ambitious, such a network seeks to
tie companies together formally to pool capital and resources for
development, and to create educational, cultural and research
institutions that, together, can provide member firms with
greater economic strength and leadership.  Examples include the
Garment Industry Development Corporation in New York City and the
Candy Institute, serving the needs of candy manufacturers in

3) The umbrella community organization is harder to define, but
essential.  The key to this strategic concept is community
control of the economy.  However, as Swinney says, the ability to
control is earned, not declared.  At the beginning of such
projects, the level of control is minuscule.  Likewise, democracy
is created through a process.  A project cannot simply declare
that it is "acting on behalf of the community."  Democratic
structures must evolve as people take advantage of opportunities
to work together, develop trust, then widen the circles of
inclusion.  There is no formula for how such organizations can be
built, Swinney says.  Examples operating today include the
Naugatuck Valley Project in western Connecticut, Sustainable
Milwaukee, and the New Chicago Campaign.

4) It's not enough to work out the practical application of this
vision at the company and community level.  Comprehensive
development policies must be fought for in all the institutions
that help shape public opinion and are designed to serve the
public.  The work will almost always begin in a particular
company in a particular community, but ultimately it must
translate into public policy, and government must become the
agent for expanding and promoting the vision.

Swinney says, "People do not organize for change just because
they are oppressed or exploited.  They organize FOR something."
something we can all be FOR --a vision of a decent, fair,
environmentally sustainable society, and a commitment to apply
this strategic vision AT THE COMPANY LEVEL OF THE ECONOMY.  For
most of us, this is new.  And important.

Again we urge all our readers, including government officials and
business people, to join Sustainable America, so that, together,
we can build a strong infrastructure for ongoing multi-issue
work. Check out www.sanetwork.org, send E-mail to
•••@••.•••, or telephone executive director Elaine
Gross in New York City: (212) 239-4221.
                                                --Peter Montague
                (National Writers Union, UAW Local 1981/AFL-CIO)

Illinois: Midwest Center for Labor Research, 1998).  Available
from the world wide web --www.mclr.com --though you have to
download it in 14 sections and reassemble them into one piece.
You can also order a paper copy for $10 from MCLR, Room 10, 3411
W. Diversy, Chicago, IL 60647; phone (773) 278-5418.

available for $50.00 from Midwest Center for Labor Research.  See
note 1, above. It can also be ordered via the web:

Chicago Press, 1990).  ISBN 0226901319.  And see William Julius
(New York: Vintage Books, 1997), ISBN 0679724176.

Descriptor terms:  democracy; economy; wealth; poverty;
sustainable america; business development; gulf+western;
stewart warner; taylor forge; community development;

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