My Thesis Flashcards

Statistics on what percentage of Americans control the national wealth

• The top 10% of wealthy Americans control 60% of the nation’s wealth

• The country’s bottom 50% holds only 6% of total wealth

Statistics on wage growth — for whom have wages grown?

• Since 1979, the wages of the top 1% have skyrocketed by 206%

• Wages of the bottom 90% (144 million families) have barely budged by 39%

Statistics on the possibilities of aggregate annual income

• Had equitable income distributions continued…

  • Aggregate annual income of the bottom 90% would have been $2.5 trillion higher in 2018 alone

  • This would be enough to pay every single working person in the bottom 90% an additional $1,144 a month

What are the main policy choices that have led to this nationwide inequality crisis

• Depression of the minimum wage

• Erosion of collective bargaining

• Tax policies favoring the rich

• Overall deregulation and financialization of the economy

How much did Black workers earn compared to White workers in the second quarter of 2021?

74.9% as much

How much did the gap between the median wealth of White families and Black families grow larger over time?

From 1983 to 2019, the gap increased from $93,700 to $189,100

How is homeownership the most notable driver of this racial wealth gap

• Residential segregation. This:

  • Artificially lowers demand

  • Places a forced ceiling on home equity for Black homeowners in non-White neighborhoods

    • Means that because of residential segregation, homes in majority-Black neighborhoods are not valued as highly, even if the homes are similar to those in White neighborhoods

Why was half the collective wealth of African American families stripped away in the foreclosure crisis of 2007-2009?

• Home equity’s prevailing role in their wealth portfolios

• Predatory high-risk loans in communities of color

How much wealth did the Latinx community lose during this crisis?

They lost 67% of their total wealth.

What is shareholder primacy?

The belief that a company’s primary obligation is to maximize returns for those who own its shares

How does Richard Wolff describe the worker-owned enterprise?

Comprised of enterprises in which the employees democratically perform the following key activities:

1. Divide: divide all the labors to be performed

2. Determine: determine what, how, and where things are produced

3. Decide: decide on the use and the distribution of the output or revenues

What are the four key principles that the Standard Shareholder Model is based on?

1. Ultimate authority: shareholders have ultimate authority over the corporation, and managers should act in their best interests

2. Contract protection of non-shareholders: non-shareholder entities like employees and customers are protected through contracts/regulations rather than by direct participation in corporate governance

3. Protection by shareholders from exploitation: “noncontrolling” shareholders should receive protection from exploitation by shareholders with more control.

4. Interest in market value: the market value of the publicly traded corporation’s shares is the main measure of its shareholders’ interests

What are worker cooperatives?

Autonomous enterprises involving:

1. Ownership: many worker-members own stock

2. Distribution of ownership: ownership is widely distributed among the workers who own much of the voting stock

3. Participation: worker-members participate in the enterprise’s management and control

4. Sharing the surplus: they share in the distribution of surplus, usually on the basis of work rather than stock ownership

How are worker cooperatives distinguished from employee stock ownership plans?

They grant workers stock ownership, but they do not necessarily grant them decision-making power

How do cooperatives (especially medium-to-large ones) operate?

• Worker-members vote for board of directors: they exercise their democratic control of a cooperative by voting for a board of directors on a one-worker, one-vote basis

• Board of directors voting and overseeing:

  • It establishes long-term business strategies

  • It votes for and oversees the cooperative’s management

  • The cooperative’s management in turn oversee the worker-members

What does the structure of worker cooperatives incentivize members and managers to do to workers?

Treat workers with dignity and respect their priorities — if not, they may be voted out of their position

Rather than receiving a set wage as in a conventional firm, how do worker-members in worker cooperatives receive compensation?

• Chunking and distributing:

  • The company sets a chunk of its income into a pool

  • The company distributes shares of that income to worker-members

How are “patronage dividends” in worker cooperatives like and unlike shareholder dividends

• Surplus profits: they are surplus profits distributed to the enterprise’s owners

• Labor rather than capital: these surplus profits are based on the total amount of labor contributed to the cooperative rather than the amount of capital invested by workers into the business

What is the average starting wage for a US worker cooperative?

$19.67 per hour, which is more than $7.00 higher than the minimum wage int he 13 states with the most worker co-ops

How do worker cooperatives maintain jobs amid declining market conditions better than conventional firms?

• Drop rather than layoff: they slightly drop wages rather than reducing their workforce

• Making up for lost pay: this ensures that when business picks up again, the company can make up for pay lost over time.

  • Owning a share: this is because the worker-members enjoy a share of the profit

How come employees tend to fare better in worker cooperatives than in conventional capitalist firms (in terms of overall benefits)?

Holding a voting share = direct control: because since each worker-member in the cooperative holds one voting share in the company, each one of them has direct control over their own wages, working conditions, and job security.

How can worker cooperatives potentially degenerate into capitalist enterprises?

• Outsourcing labor due to potential value reduction: if the business wants to grow it may choose to hire wage labor rather than admitting new members.

  • This is because under certain legal structures, if it adds new shares (which are owned by members), that reduces the value of the current members' shares.

• Selling to outside investors: they may degenerate by being sold to outside investors; this may be precipitated by members growing closer to retirement age and being more interested in accumulating wealth for themselves

How is the Mondragon cooperative network’s legal structure good at preventing degeneration into a capitalist enterprise?

• Internal capital accounts: since workers can’t have a tradable share of equity, they have an internal capital account whose value increases in proportion to how well the business performs and how much the member works.

• Compulsory entrance fees: new members have to pay large entrance fees, which are mostly credited to their interest accounts

  • Yes to interests, but no to withdrawing principal: they receive interest at the end of every fiscal year, but they can’t withdraw the annually accumulating principal from their account until retirement

• Division of profits between accounts: almost all profits are divided between these individual accounts and a collective account that helps the company last long

What is principal in economics?

The initial amount of money involved in financial transactions