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The Co-op Movement Is Taking On Big Tech

When most fathers and sons get on the phone, they might chat about the latest episode of Succession, or last night’s Cubs game, or the grandkids. Greg and Howard Brodsky are different. They talk about co-ops.

The father-son duo are two of the biggest movers in the co-op world. Nearly four decades ago, when Greg was still in elementary school, his father, who owned a carpet installation company, started a business owners co-op with a handful of small firms across the country. Today, that original small co-op is a multibillion-dollar empire, having expanded into a myriad of other services. (In 2019, Howard Brodsky won the Rochdale Award, known as the “Nobel Prize for co-ops.”)

Now, his son Greg is on a mission to bring the co-op model to tech startups through Start.coop, an accelerator program designed to launch co-op businesses. And recently, the three-year-old program had some major success: The Drivers Cooperative—which was showered with attention when it launched a few weeks ago in New York City—is one of Start.coop’s graduates. But the Drivers Cooperative is only the latest in a greater movement of entrepreneurs and activists rethinking business models and who they benefit.

Like many co-ops arriving on the market, the Drivers Cooperative is pitched as a more equitable antidote to the notoriously exploitative practices of its competitors, chiefly Uber and Lyft. The Drivers Cooperative’s members are paid a significantly larger commission on each ride, and any profits go straight to the drivers. With 2,500 drivers, the new co-op has already established itself as a force to be reckoned with.

The idea of a cooperative business, or co-op, sounds almost utopian: a shared-ownership model where profits are distributed to various stakeholders as opposed to shareholders only. Instead of an oligarchy—as is the case with Bezosworld, for instance—cooperatives are democratic. The collective group of owners—the workers, consumers, or small-business owners—share the profits and often have a say in the company’s governance.

“People know it’s better than the winner-take-all extractive economy that we’re in,” says Greg Brodsky.

Co-op zealots say it’s no surprise the progressive business model is taking off. Wealth and income inequality are at an all-time high, as the 0.1 percent continue to only get richer while wage earners’ incomes remain largely stagnant. Even as many Americans consider the country’s own democracy in peril, the democratic structure of co-ops strikes many as preferable to the corporate model in which the largest shareholders rule the roost and gobble up the rewards. The model’s biggest supporters say co-ops are an economic panacea.

The co-op model bucks the traditional venture capital approach to funding a startup.

Nathan Schneider, an assistant professor of media studies at the University of Colorado Boulder and author of Everything for Everyone: The Radical Tradition That Is Shaping the Next Economy, saw the early stages of this movement firsthand in the wake of the Occupy Wall Street movement.

“At that moment, there was this generation in response to 2008 and the crisis that was really clamoring for a deeper sense of democracy in everyday life,” he says. “They were a part of this movement that was obsessed with democracy. So why not get involved with companies that practice democracy?”

The co-op model bucks the traditional venture capital approach to funding a startup. Nearly every major tech company today—Facebook, Airbnb, Zoom, and WhatsApp, to name a few—started with VC funding. In the VC world, these highly lucrative startups are known as “unicorns” for their phenomenal rates of return. But launching a company using this sort of funding often comes at a cost.

“It’s a model of investment that’s based on highly risky companies that have a very high potential for return,” says Schneider. “It’s not something I’m universally opposed to. But when we rely on it too heavily, when a company is successful, the VC wants very, very high returns. And they’re going to push companies to achieve scale at all costs.”

This sort of high-stakes financial gambling often hits workers and consumers the hardest, as prices increase—as seen in Uber’s “surge pricing”—and workers’ pay is slashed. Congress opened the floodgates for VC funding in 1979 after making changes to the Employee Retirement Income Security Act, which allowed pension funds to invest in high-risk assets, such as venture capital funds. Schneider says this is what “supercharged” the phenomenon.

Such companies also have effectively limitless resources to protect their advantages. In California, Uber, Lyft, and kindred companies spent over $200 million last fall to persuade state voters to enact Proposition 22, which created a new category of workers for the gig economy who are barred from accessing basic labor protections and benefits—no sick leave, no workplace discrimination protection, and so on.

Programs like Start.coop are hoping to usher in a new generation of platform businesses, like Amazon and Google, designed as co-ops from the outset.

Although consumers instinctively like the sound of co-ops, most of them can’t accurately describe why they prefer them over traditional business models. A survey a few years ago found that although 78 percent of respondents would prefer to buy a good or service from a co-op, 89 percent couldn’t accurately define them.

Turns out co-ops aren’t just the local alternative food market, procuring local produce and bulk granola. Credit unions are co-ops that often fly under the radar, and so are household company names like the Associated Press, Land O’Lakes, REI, and Ace Hardware. These legacy companies prove that co-ops can be brought up to scale.

“People think small, local, cooperative grocery stores,” says Jessica Mason, co-director of Start.coop. “But this ownership model is actually viable for large businesses at scale.”

Now, programs like Start.coop are hoping to usher in a new generation of platform businesses, like Amazon and Google, designed as co-ops from the outset. Platform businesses famously scale astronomically, which means they are opportunities for extreme exploitation, or—if they’re co-ops—for equitable profit-sharing. Other organizations, like the Platform Cooperativism Consortium and Platform Co-op, are also taking part in this large-scale effort.

Some major producer and banking co-ops have long had the economic heft to win considerable political clout. “There is significant cooperative power in Washington,” says Schneider. “If you’re in Congress, you do not cross the rural electric co-ops and the credit unions. But they’re very siloed because they have distinct interests and specific policy. That’s why I’m interested in overlapping policy strategies that connect all these sectors.”

The Drivers Cooperative is far from the only new co-op attempting to take on the biggest platform tech giants with equity and social justice at the business’s core. Kinfolk, for example, is a new platform marketplace devoted to selling Black-owned brands. Consumers can become “member-owners” by clicking on a menu item on its website labeled “What the hell is a co-op, sis?” Companies like Kinfolk are harnessing the long-standing history of African American co-ops, which date back to Black-owned credit unions in the early 20th century, to direct profits directly back to the Black community.

With co-ops, “the profits go to Main Street and not Wall Street,” says Mason, the co-director of Start.coop. “That’s why we see the Drivers Cooperative getting so much attention: There’s a very clear David and Goliath [scenario]. If Kinfolk were able to grow notably in the next 18 to 24 months, then you could see the same scenario.”

5 Things Congress Learned from Deb Haaland in her Recent Appearance

Secretary Deb Haaland offered a bit of news on her return to Capitol Hill yesterday, telling members of a panel she once served on she didn’t expect her agency to place a permanent ban on new drilling in public lands.

But that wasn’t all. In her appearance before the House Natural Resources Committee, where she was once the second-most-senior Democrat, she was grilled on drought resources, monument designation in Western states, document request backlogs and the administration’s ambitious conservation efforts.

Often she frustrated her critics by refusing to make promises or offer specifics, prompting Republicans to demand a “simple ‘yes’ or ‘no.'” But there were a few instances where Haaland made some revealing admissions.

Below are five of them.

No plan for a drilling ban
Members of both parties, but especially Republicans, were eager to hear from Haaland on the fate of the federal oil and gas leasing program.

The president’s order to “pause” the issuing of new leases for drilling on federal lands has been among the most divisive actions of the Biden Interior Department so far, and a forthcoming report from the agency will determine whether that pause will continue or morph into some all-out ban.

Rep. Doug Lamborn (R-Colo.) was among the multiple members who sought, without success, to get Haaland to commit to a date for when the long-anticipated report will be released and what it will recommend.

Haaland would simply say to expect the report to be made public in “early summer,” but she did offer some hope to opponents of the leasing freeze: “I don’t think the plan right now is for a permanent ban,” she said.

“As I have said many times,” Haaland continued, “oil and gas production will continue well into the future, and we believe that is the reality of our economy and the world we’re living in.”

Haaland also repeated that the current pause only affected new leases, not the “more than 8,000 leases to drill that are not currently being used as of yet” across “millions of acres” of public land.

Haaland agrees to support more drought resources
The Interior secretary got an earful from both Republicans and Democrats about the Biden administration’s approach to managing the drought that has ravaged the West, including California, which has nine representatives serving on the House Natural Resources Committee.

“Your budget request includes no funding for new water storage capacity despite the severe drought conditions that we’re suffering in the West,” said California Republican Rep. Tom McClintock. “I wonder how can the administration expect to address our Western water crisis without proposing any funding for long-term water storage.”

Democrats told Haaland they also were displeased that the White House’s fiscal 2022 budget request did not include enough investments to mitigate drought damage, in fact proposing cuts to several water conservation grant programs known as Title XVI and WaterSMART.

“We need to plus them up,” said Rep. Jim Costa, a California Democrat. “I want you to urge every bit of creativity and thinking out of the box.”

Rep. Jared Huffman, another Democrat from California, also implored Haaland to reconsider: “This drought I think does merit recommendation of some of the budget amounts for Title XVI and WaterSMART. … To see that line item actually decrease in the budget was troubling.”

Haaland ultimately signaled she’d heard the message, though it’s congressional appropriators, not the administration, that will determine spending levels for these initiatives.

Congress should feel free to legislate on monuments
Another decision lawmakers were eager to hear about is one relating to two Utah monuments — Bears Ears and Grand Staircase-Escalante. The protections around both were significantly weakened during the Trump administration, and environmentalists are urging President Biden to restore them.

Haaland has reportedly recommended Biden use his executive authority under the Antiquities Act to institute more protections around Bears Ears and Grand Staircase-Escalante.

When asked about that recommendation, Haaland found ways to demure — Interior has neither confirmed nor denied that such recommendations were made — and wouldn’t say when Biden would make an announcement on his decision.

But she appeared to express support for a meeting, or some formal communication, with members of the Utah congressional delegation and the president beforehand, a request Utah lawmakers say has so far gone unanswered.

Haaland told Republican Rep. Blake Moore of Utah: “We’re happy to make sure that [Biden] knows of your request … and I’m happy to let the White House know that you have requested that again.”

Moore, representing the delegation’s unanimous opposition to making changes to the two monuments’ boundaries, also asked Haaland whether she supported changes to national monuments through “executive fiat or a legislative solution.”

Haaland replied that, “as a former member of Congress, I understand the value of legislation. That’s what you do. And I wholeheartedly support your decision to move ahead with any legislation if that’s what you choose to do.”

The outlook on oversight
Unsurprisingly, Haaland agreed to be responsive to Natural Resources Committee requests for information relevant to its authority to conduct oversight on the Interior Department.

After all, Haaland knows from experience how difficult it was at times to pry information from her predecessors at the agency: One of her document requests during the Trump years at one point resulted in hundreds of pages of unrelated documents written in the nonsense wingdings font (E&E Daily, Jan. 12).

Her commitment to “be as responsive as we possibly can” was cheered by Committee Chairman Raúl Grijalva (D-Ariz.), who said this marked a “day-night change from what the majority had to endure over the last two years in terms of access to Interior.”

But Haaland warned that a backlog was occurring at Interior, where “now we are processing oversight requests from the last administration,” including those “requests from the chairman that were unfulfilled in the previous Congress.”

Haaland also cautioned that Interior was busy fulfilling requests from “seven full committee chairs in the House [who] have written to our department requesting documents related to Jan. 6,” the date when a violent mob stormed the Capitol to protest the congressional certification of the 2020 presidential election that favored Biden over former President Trump.

It’s ‘America the Beautiful,’ not ’30×30′
Haaland stayed largely on message yesterday, and perhaps there’s no better example of that than her refusal to refer to the Biden administration’s ambitious conservation goal by its original name.

Several times, Haaland was asked by Republicans about the “30×30” plan, which refers to the administration’s mission to conserve 30% of all U.S. lands and waters by the year 2030.

In each instance, Haaland — who was a lead sponsor of a 30×30 resolution as a member of Congress — replied by alluding to the “America the Beautiful” initiative.

“America the Beautiful” constitutes the rebranding of 30×30 first rolled out this past spring, when the administration put forward a report of “principles” for how the federal government would go about achieving the mandate.

The rebranding was intended to soften the image of “30×30,” which conservatives are calling a “federal land grab” that would “lock up” multiple-use opportunities largely across the West. Proponents of the effort insist this isn’t the case, and Haaland took opportunities to make that plug as well.

“How much additional land being locked up by the federal government is appropriate?” Rep. Tom Tiffany (R-Wis.) asked Haaland.

“Are you speaking about the ‘America the Beautiful’ initiative?” she replied.

Tiffany said he was not. Haaland still proceeded as though he was.

Top U.S. Officials Consulted With BlackRock as Markets Melted Down

part 1

As Federal Reserve Chair Jerome H. Powell and Treasury Secretary Steven Mnuchin scrambled to save faltering markets at the start of the pandemic last year, America’s top economic officials were in near-constant contact with a Wall Street executive whose firm stood to benefit financially from the rescue.

Laurence D. Fink, the chief executive of BlackRock, the world’s largest asset manager, was in frequent touch with Mr. Mnuchin and Mr. Powell in the days before and after many of the Fed’s emergency rescue programs were announced in late March. Emails obtained by The New York Times through a records request, along with public releases, underscore the extent to which Mr. Fink planned alongside the government for parts of a financial rescue that his firm referred to in one message as “the project” that he and the Fed were “working on together.”

While some conversations were previously disclosed, the newly released emails, together with public calendar records, show the extent to which economic policymakers worked with a private company as they were drawing up a response to the financial meltdown and how intertwined BlackRock has become with the federal government.

Mr. Mnuchin held 60 recorded calls over the frantic Saturday and Sunday leading up to the Fed’s unveiling on Monday, March 23, of a policy package that included its first-ever program to buy corporate bonds, which were becoming nearly impossible to sell as investors sprinted to convert their holdings to cash. Mr. Mnuchin spoke to Mr. Fink five times that weekend, more than anyone other than the Fed chair, whom he spoke with nine times. Mr. Fink joined Mr. Mnuchin, Mr. Powell and Larry Kudlow, who was the White House National Economic Council director, for a brief call at 7:25 the evening before the Fed’s big announcement, based on Mr. Mnuchin’s calendars.

Mnuchin’s frequent conversations on March 21-22, 2020.
The Treasury secretary spoke with the Fed chair and BlackRock’s chief executive as the government’s rescue plan was coming together over a frantic weekend.

The records reveal how often federal officials engaged with a Wall Street executive at a moment of crisis, as they strategized about how to turn around markets that were descending into chaos. Mr. Fink’s firm is a huge player across many stock and debt markets and its advisory arm helped to execute some of the Fed’s crisis response during the 2008 financial meltdown. That market insight and experience got him a front-row seat at a pivotal moment, one that may have put him in a position to influence a rescue with huge ramifications for households, businesses and the entire U.S. economy.

“They’re about as close to a government arm as you can be, without being the Federal Reserve,” said William Birdthistle, a professor at the Chicago-Kent College of Law and the author of a book on funds.

On March 24, 2020, the New York Fed announced that it had again hired BlackRock’s advisory arm, which operates separately from the company’s asset-management business but which Mr. Fink oversees, this time to carry out the Fed’s purchases of commercial mortgage-backed securities and corporate bonds.

BlackRock’s ability to directly profit from its regular contact with the government during rescue planning was limited. The firm signed a nondisclosure agreement with the New York Fed on March 22, restricting involved officials from sharing information about the coming programs.

Part 2

But how the Fed and Treasury devised their rescue package mattered to BlackRock. The company makes a profit by managing money for clients in an array of funds, generally charging a preset fee. It earns more when it grows its assets under management. In the early days of the coronavirus crisis, as people converted financial holdings into cash, parts of its asset base were contracting and its business outlook hinged on what happened in certain markets.

While the Fed and Treasury consulted with many financial firms as they drew up their response — and practically all of Wall Street and much of Main Street benefited — no other company was as front and center.

Simply being in touch throughout the government’s planning was good for BlackRock, potentially burnishing its image over the longer run, Mr. Birdthistle said. BlackRock would have benefited through “tons of information, tons of secondary financial benefits,” he said.

Mr. Mnuchin could not be reached for comment. Asked whether top Fed officials discussed program details with Mr. Fink before his firm had signed the nondisclosure agreement, the Fed said that Mr. Powell and Randal K. Quarles, a Fed vice chair who also appears in the emails, “have no recollection of discussing the terms of either facility with Mr. Fink.”

“Nor did they have any reason to do so because the Federal Reserve Bank of New York handled the process with great care and transparency,” the central bank added in its statement.

Brian Beades, a spokesman for BlackRock, highlighted that the firm had “stringent information barriers in place that ensure separation between BlackRock Financial Markets Advisory and the firm’s investment business” and said it was “proud to have been in a position to assist the Federal Reserve in addressing the severe downturn in financial markets during the depths of the crisis.”

Andreessen Horowitz starts a $2.2 billion crypto fund for ‘all weather’ markets.
The disclosed emails between Fed and BlackRock officials — 11 in all across March and early April — do not make clear whether the company knew about any of the Fed and Treasury programs’ designs or whether they were simply providing market information.

Emails indicate that Mr. Powell spoke with Mr. Fink on March 23, hours after the Fed announced its corporate bond program.

“Larry Fink is available to speak today regarding the project you will be working on together,” an email from Mr. Fink’s assistant directly to Mr. Powell said. “Please let us know if there is a convenient time for you.”

“Now is good,” Mr. Powell replied.

The call does not appear on the Fed chair’s official schedule from last March. Those calendars generally track scheduled events, and may have missed meetings in early 2020 when staffers were frantically working on the market rescue and the Fed was shifting to work from home, a central bank spokesman said.

Mr. Powell’s calendars did show that he talked to Mr. Fink in March, April and May, and he has previously answered questions about those discussions.

“I can’t recall exactly what those conversations were, but they would have been about what he is seeing in the markets and things like that, to generally exchanging information,” Mr. Powell said at a July 2020 news conference, adding that it wasn’t “very many” conversations. “He’s typically trying to make sure that we are getting good service from the company that he founded and leads.”

BlackRock’s connections to Washington are not new. It was a critical player in the 2008 crisis response, when the New York Fed retained the firm’s advisory arm to manage the mortgage assets of the insurance giant American International Group and Bear Stearns.

Several former BlackRock employees have been named to top roles in President Biden’s administration, including Brian Deese, who heads the White House National Economic Council, and Wally Adeyemo, who was Mr. Fink’s chief of staff and is now the No. 2 official at the Treasury.

Unspent unemployment benefits expected to be among funding used to pay for infrastructure package in bipartisan agreement, source familiar says. Details TK

— Jeff Stein (@JStein_WaPo) June 24, 2021

Translation: I’ll probably be out of a job if Congress doesn’t act and Dems are still allowed to gerrymander my state. https://t.co/5btkp6DqTw

— Dave Wasserman (@Redistrict) June 24, 2021

I hope we vote Davis out next year! Worthless rep. Our last rep was a GOP who seldom took initiative, but he did listen to all of his consitutents when they needed some information.