The Winter Lands.

Meandering through my Internal World

I hate how cynical my generation is.

Like sure, I am depressed, and engage in cynicism myself from time to time, but there is this almost knee-jerk reaction that young people have towards any shred of optimism, and it drives me insane. “If something is bad then it is the end of my life, but if something is good, then I will downplay it till I make myself miserable.” Look, sometimes you have to have faith and let it go; This has been reality for the vast majority of people throughout time.

Also, I am tired of depression being romanticized. We get it. You are a sad e-boy/e-girl looking for a sad e-boy/e-girl to go on suicidal dates or whatever. Except, Sadness is not supposed to be an aesthetic. It's also not supposed to be an intellectual position. Many get disillusioned with rugged individualism, and think by peddling to the other extreme, that they somehow will protect themselves from disappointment. But guess what? Living behind walls damages you just as much as disappointment. You can not live life by hiding away from it. Averting responsibility is meaningless, because responsibility is the only thing worth living for.

Fatalism is, ironically, a coping mechanism just as much as escapism or naive optimism. By constantly telling yourself that your decisions do not matter, you cope with the terrible fact that maybe some of your decisions actually do matter, and that frightens a lot of people. The fact that they missed out on life because of their own sloppiness scares them: because it is easier to wallow in sorrow when you think you are a victim of external sources, instead of yourself; even if external sources were the ones entirely at fault, individuals need to believe in the simple fact that their decisions matter to some extent, in order for that society to function.

Yes, everything sucks. Yes, we all die. You're not the first to notice this nor will you be the last. However, what you can do is live your life and put effort, as if your own merit is the only thing that matters, but stay aware of societal injustice to moderate your expectations, and prepare yourself. Small progress everyday can be everything. Do not count or obsess about how many days, or how much money, or how many friends, or how much sex you have had. Just do things. It's really simple. Work with your hands and leave the ruminations in the back-door.

The fact of the matter is that a lot of popular cultural movements and upheavals are/were not representative of the average person at the time of their inception. This is because, in the grand scheme of things, only a minority of humans ever truly mattered.

You had many songs during the sixties and seventies' that decried the Vietnam war, and the Nixon administration (especially within the rock genre). But it was all for naught: America stayed in Vietnam for nearly two decades, while Nixon managed to get elected twice. This had to do with what Nixon referred to as the “Silent Majority”, but it extends further than that.

The French revolution was, in reality, not a struggle between the rich monarchs and the poor peasants, as it is often depicted in media. The revolution was primarily catalyzed through frustration against fief-holders who collected high taxes and tolls to the dismay of many shop owners and artisans. It was this elite class of “peasants” ⁠— made up of professionals, clerks, and shop keepers ⁠— that propelled the Revolution into motion, and only then after, did the people at the bottom of the hierarchy actually join in. It was a schism between the elites, not a conflict between those with wealth and those without any. It makes sense, when you think about it: if revolutions could have been initiated by the lower classes at the bottom, then they would have happened far more often.

The Roaring Twenties were only truly roaring for the top five percent. For 95 percent of Americans, everything was the same as always unlike what a bad reading of Fitzgerald's the Great Gatsby would tell you (Which was actually criticizing the mentality of that period).

Rosa Parks was, in fact, not the first to try and defy segregation in busses. Nine months before Rosa Parks' incident, 15-year old Claudette Colvin did the very same thing when she refused to leave a segregated bus. Many African American women did the same exact thing that Rosa Park did. So why did only Rosa Parks become famous as an image of the movement? Because she was educated, came from a well-off family, and was decently attractive. This isn't my personal theory either. The official reasons listed by the NAACP as to why that they did not choose Claudette Colvin were that she was not fair-skinned, her hair looked weird, and that she got pregnant. The NAACP needed “good representation” and so they specifically made sure that it was Rosa who got popularized and not the other African American ladies. The sad thing is that it actually worked. Rosa's good looks and background did help the Civil Rights movement gain momentum among moderate whites.

So what is the point of all of this? Why is it that change tends to only occur once people up the hierarchy approve of it? Why is it that only a minority of people end up defining just about everything?

Questioning the status quo, and desiring to change it, always comes from those who have the most tools, both mentally and societally.. In order to even have the capacity to ponder about cultural issues, one must have the free time to do so. Not everyone has the same access to education, and resources to be able to correctly critique society. However, it is also a self-selecting process; Those who desire change will tend to have more creativity, and those with creativity will tend to have lived in households and nations where that creativity was fostered. This is why so many thinkers, poets, writers, and artists tended to come from the same well-off educated families and married each other. Furthermore, in order to be taken seriously by those in power, one must either appease them or have some sort of standing to them. The suffrage movement did not win because enough women were convinced of the idea: It was the opposite. Enough men, especially those in the federal government, had been convinced of the movement that it finally could proceed.

Assessing Workplace Democracy

Introduction

Discussions concerning capitalism and socialism often involve comparing state ownership with private ownership, or the nationalization vs the privatization of industries such as USSR vs USA, East Germany vs West Germany, or North Korea vs South Korea. One part of the debate that is often overlooked is direct worker control of industries and economic sectors. This includes things such as cooperatives/labour owned firms, co-determination policies, Employee Stock ownership plans etc…

Libertarian socialists, syndicalists, market socialists, and anarcho-communists often support cooperatives on both a moral and economic principle. They believe that it is more moral if a workplace were to be managed democratically by the workers who operate in it rather than by a few shareholders. They argue that workers would feel more engaged, They also believe that these firms would be far less wasteful, more efficient, and a meaningful countermeasure against inequality.

A relevant example to cooperatives is Mondragon in Spain. Mondragon is a federation of cooperatives, that is owned and managed by its workers. They mostly focus on retail and small scale industry. Mondragon has been able to climb all the way to the top, amassing more than 80 thousand workers, and having a total asset value that is one of the biggest in all of Spain. Such examples show that cooperatives are not entirely alien to our world and can even achieve a lot of success. However, what are the advantages and disadvantages of this model? Are there any to begin with? Would a partial, or even complete transformation be justified? What other types of employee ownership are there?

In this essay, I will attempt to answer those questions with the available data at hand. I will draw comparisons and parallels over a set of multiple criteria.

Productivity

Which structural firm is more productive?

This question is extremely difficult to answer. The reason is that finding company “twins” with controlled variables is not easy at all, and even if we were to find a difference in performance, it’s hard to gauge how much the structure of the firm contributes to that difference and not local factors and fluctuations.. Evidence remains rather inconclusive, and there is yet to be a consensus formed around the issue. However, I will use existing empirical evidence in order to formulate some form of general statement.

A 1995 study analyzed cooperative firms, and classical firms in Plywood production. The cooperatives were shown to be, on average, around 6 to 14 percent more productive than capitalist firms. Cooperatives were also shown to adjust the wage ratio between workers rather than laying off employee or cutting their hours, as classical firms usually do (the effect of this will be covered in a later section)

However, interestingly enough, the cooperatives have not been able to drive out classical firms. As a matter of fact, the number has remained consistent within the Pacific Northwest region: seven firms are classical, while eight are cooperatives. According to the study, this is because the difference is not significant enough. To be more specific, it is not significant enough to offset the disadvantages that these cooperatives go through: Primarily the lack of external equity investment and capital markets within cooperatives. As explained within the paper:

“The experiences of the plywood co-ops in the Pacific Northwest testify to the relevance of these capital market problems. The workers have constituted the major source of capital both through the sale of shares at the founding of the company and through subsequent loans (in the form, for example, of the sale of further stock or deferred earnings). Often a co-op was constrained in its attempt to raise capital by two factors: first, it attempted to restrict the number of shares to the number of workers expected to be employed in the mill; and, second, it tried to keep the price of the shares to a level within range of a typical working household's wealth. Given these constraints, it is not surprising that, soon after the founding of a co-op venture, it was common for the mill to return to its worker-owners for more funds.” [1]

These difficulties in acquiring capital also explain why the Plywood cooperatives have been unable to expand into the South like the classical firms have. Another factor that could potentially explain the inability to expand, but the ability to compete and even surpass classical firms in aspects is cultural ties and background:

“The establishment and success of the first coop in the plywood industry in Washington state were the product of the foresight of some shrewd men who, prior to its formation, were already skilled in the work relevant to plywood production and who shared a common Scandinavian heritage. This co-op served as the model for many imitators in the area. These factors seem to be present in other sectors where cooperatives have been important. In many instances, a group of workers with training in a given line of work and who share cultural ties form a collective organization that enjoys remarkable success. It serves as a prototype, and other firms are established along the same lines so that the cooperative form of organization constitutes a substantial component of the industry”

Another interesting feature is that classical firms exhibited higher output elasticity, implying that classical firms are more responsive to changes in input overall and have more constant/increasing returns to scale (i.e increase in input leads to a proportional increase in output)

Looking at other studies, yields different, yet somewhat similar results. For example, a study on Italian cooperatives showed that there were no differences in productivity between cooperatives, and classical firms, but also adds that capital intensity was significantly smaller in cooperatives, which implies that they’re less likely to invest and expand overall [2]. Research on firms in Portugal, found that cooperatives might perform worse, however, the evidence is still inconclusive. [3]

Conclusion: While the results are inconclusive, the evidence we have does show that cooperatives have the potential to compete with capitalist firms and that worker decision making does not have bad effects on the efficiency of a firm, and in some cases, might be even positive. Overall, there is no significant divergence from classical firms, no matter if the performance is slightly better or worse. However, even in a case of productivity gains, cooperatives can run into certain limits such as capital market constraints.

Resilience and Stability

Which form of business is more likely to survive during a recession? Which structure gives more stability to its employees?

According to the empirical evidence we have, cooperatives enjoy a significant advantage. For instance, the average three year rate survival rate for all cooperatives in France is at 80-90 percent, while in classical firms, it remains at 66 percent. [4] Cooperatives have also been shown to have higher survival rates both during the 2008 recession and the COVID-19 epidemic in the United States. [5] A significant factor is that, as previously mentioned, worker cooperatives tend to distribute the damage between their members, by lowering the wages of some, in order to make sure that no one gets fired. This leads to more employment stability in contrast to capitalist firms which usually rely on either firing employees or cutting hours. This employment stability results in increased engagement in the workplace, and better long term survival.

Another contributing factor could also be self-selection into industries. As explained here:

“the fact that WMFs survive longer may partially reflect self-selection by both WMFs into industries and workers into organizational forms. It may be the case that WMFs are not randomly sorted into industries but, in other words, enter industries where they might have better survival prospects. Moreover, workers may be self-selected into organizational forms according to unobservable characteristics that might also affect firm survival. As Chiappori and Salanié (2003) pointed out, the combination of unobserved heterogeneity and endogenous matching of agents to contracts is bound to create selection biases toward the parameters of interest. For instance, cooperatives may be able to attract highly motivated workers (Elster 1989). This selection problem is a potential identification threat common to all studies on WMFs based on observational data (Kremer 1997: 13).” [6]

A great example of this is that many grocery store chains are cooperatives. This is important because grocery stores tend to be one of the more resistant types of businesses to recessions mainly because demand for basic good remains the same or even increases during recessions due to people avoiding restaurants [7] However, when looking at the technological sector, one notices that it is dominated by venture capitalist firms, which matters a lot given that the technological sector has one of the lowest survival rates of any industry.

Conclusion: Cooperatives are able to give more stability to employees, especially in times of recessions. However, it is not entirely clear to what extent this is caused by internal structural factors, or self-selecting factors or something else completely.

Wages

Which firm structure offers better wages?

The answer to this question is rather complex and not clear cut. For starters, due to the already mentioned effect of wage distribution in cooperatives, there are significant variations between studies on this subject. The wage flexibility in cooperatives means that a direct comparison is very difficult and perhaps not very meaningful. However, there are a couple of trends that are extremely important and evident. [8]

Let’s start with the first one: worker cooperatives tend to exhibit less inequality overall. Cooperatives in France were shown to have less inequality by 14 percent compared to classical firms. [9] Another example: In Mondragon, workers usually vote on the ratio of inequality between the lowest and highest paid members, which tends to be around 1:9, a far cry from the high inequality at firms like Amazon or Google. This means that cooperatives have a more compressed structure with less inequality. This, however, leads to a problem….

An analysis of cooperatives and classical firms in Uruguay points out significant differences between cooperatives and classical firms when it comes to wages. According to the analysis, cooperatives offered a small wage premium to workers at the very bottom. This wage premium, however, disappears almost entirely when you go to the middle portions, and is actually negative at the top. This is where the second trend comes in: Brain Drain. Logically speaking, if cooperatives have much less inequality, but cooperative workers at the very bottom earn around the same as ones in classical firms, this can only mean one thing: High skilled workers in cooperatives earn significantly less than their counterparts in conventional firms. This means that highly skilled workers are much more likely to leave than low skilled ones. Indeed, this is the case, according to the analysis. Workers in the top 20th percentile of cooperatives were 4.5 times as likely to voluntarily leave to work at a conventional firm than low skilled workers. This “Brain Drain” effect was not observed to happen in conventional firms (i.e the inverse of this did not happen). As a matter of fact, by merely being a highly skilled worker in a cooperative, your “survival time” (employment duration) is lowered by around 77% . This could be one of the reasons that cooperatives have been unable to dominate in Uruguay, despite having a similar level of productivity [10]

However, There are two things that usually limit the brain drain: 1) If conditions in capitalist firms in terms of growth don’t look too good and 2) When the workers were more ideologically and emotionally attached to their workplace, they were less likely to leave overall. Another interesting trend within these Worker managed firms is that the employees in WMFs were older on average than those in conventional firms, and that WMFs tended to employ less women on average, implying that cooperatives tended to be founded and operated by more experienced members (since women are still new to those industries) with a lot of social cohesion between them. This could lead more credence to the idea that cooperatives are more selective about their employees and industries, and explains why, despite their ability to compete with capitalist companies, they usually do not expand regionally, let alone internationally.

Conclusion: Cooperatives usually exhibit significantly less inequality. Yet, Cooperatives do not offer much if any advantage to workers at the bottom and middle in terms of wages. However, the lower pay for the more talented workers at the top drives a brain drain that could be detrimental to a company’s growth and productivity.

Yugoslavia

Sadly, we do not have many large scale cases of cooperatives dominating an entire region/country. This is why the example of Yugoslavia is both intriguing and important. The region, while starting out as a state socialist regime, later developed into something resembling (but not quite) market socialism under Titoism. Studying the economic policies of Yugoslavia at the time and their effects can yield valuable insight.

From the 1950s to the 1970s, Yugoslavia carried out a process by which it reduced the state’s role and control over the economy. However, private property was very much still banned, so instead they handed over control to worker councils and cooperatives as a part of a mix of policies that fostered worker self-management. This led to more self-determination in the workplace. Despite using market mechanisms, Yugoslavia also enjoyed a much more modest level of inequality (Gini coefficient) compared to other capitalist market economies. The level of GDP growth was also impressive compared to other soviet economies. There was also more trade with Western Europe, which represented a larger share of the Yugsolavian economy compared to other countries in the eastern bloc. However, these reforms were not fully realized. For instance, 40 percent of prices were still fixated by the government. The party still retained a lot of control over the economy and even within the democratic workplaces. [11]

“for large and important enterprises, some workers’ rights were curtailed because Republican governments and through them the Republican Communist Parties appointed its nomenclatura members to top positions. It was thus a “controlled” workplace democracy. Very often these appointees were not well qualified to run companies. They were basically Party hacks who tried to pretend to be businessmen. Slobodan Milošević is the most famous example. He became the head of one of the largest Yugoslav banks and although he always bragged of dealing skillfully with Rockefeller and Chase Manhattan he probably knew very little about banking”

Perhaps most disappointingly, the reforms did not help much with investment or unemployment. As a matter of fact, they exacerbated them:

“The first flaw has to do with the maximand of SME (Self-Management enterprises). Like US cooperatives, they maximize average output per worker because at that point the wage is the highest. This means that SMEs will not go all the way to marginal products of labor=wage and would thus employ fewer workers than an entrepreneur-run company. This is indeed something that was confirmed in practice. Yugoslav SME were loath to expand employment. Unemployment in Yugoslavia, despite massive workers’ emigration mostly to Germany, always stayed around 10% through the 1970s and 1980s As Friedman rightly says in the interview, Yugoslav policy-makers constantly complained that companies were distributing too much in wages, and tried to set, through heavy wage taxation, incentives to move more money into investment. But the results were nugatory.” [12]

This culminated in a severe stagnation with little GDP growth (and even a decline) in the 1980s. Speaking of which, one of the main reasons that Yugoslavia relied heavily on IMF loans in the first place was the fact that the labour managed firms did not commit to investment. While this system had its advantages, it was not sustainable in the long run, and eventually, after the dissolution of Yugoslavia, each country privatized its economy, some at a higher pace than others such as Slovenia, which already had a higher GDP than pre-transition by 1997. Other states were not lucky due to war and political turmoil. While the experience in Yugoslavia could sour some on the idea, it is still worth mentioning that Yugoslavia still used a lot of state efforts, and that political instability and corruption can have bad consequences regardless of the system.

Co-determination and ESOPs

Since finding more empirical evidence specific to cooperatives is limited and exhaustive, I decided to look at other forms of employee ownerships and found two interesting examples: Co-determination, and Employee Stock Ownership Plans.

What is Co-determination? Co-determination within Western Europe refers to a policy by which workers elect a part of the executive board within the company. It is similar to Elizabeth Warren’s plan by which 40 percent of the executive board would be elected by workers in large companies. One of the most famous examples is the Mitbestimmungsgesetz policy within Germany, by which mid sized and large firms have anywhere from one third to 50 percent of their supervisory board (Aufsichtsrat) be elected by workers directly. This policy emerged after WWII when worker unions, who were thrown out entirely after Hitler nationalized many industries, demanded from the allies that the industries be privatized again, but on the condition that they get a say in the decision making process. While this is not entirely reflective of cooperatives, it does share the essence of worker self-determination so it is worth observing nevertheless.

According to studies, co-determination has no negative effects on productivity, and as a matter of fact, increases productivity as workers feel more engaged with the decision making process. However, co-determination has shown a negative effect on profitability. As the paper states:

“Summing up, then, productivity appears to be higher and profitability likely lower in corporations that have a co-determined supervisory board. This result is congruent with the idea of Freeman and Lazear (1995), who claim that worker participation raises productivity as the employees put more effort into their work, but lowers profitability as highly productive workers exert more influence on the distribution of a company’s rent” [13]

Overall, this mode of corporate governance has led to more employment stability within Germany [14] However, it has had some shortcomings. For example, an analysis that compared firms with 50 percent representation with those that had one third worker representation showed that:

“We find that companies with equal representation of employees and shareholders on the supervisory board trade at a 31% stock market discount as compared with companies where employee representatives fill only one-third of the supervisory board seats. We show that under equal representation, management board compensation provides incentives that are not conducive to furthering shareholders' interests, possibly because labor maximizes a different objective function than shareholders.” [15]

It was also observed that companies with equal representation often had longer payroll, implying that negotiations took longer to find a consensus and act than in companies with one third representation.

Some feel like the system of co-determination adds more layers of rigidity that often stifle innovation within Germany. A great example of this is the Telekom internet provider, which often opted out for investing in copper instead of fiber optics, due to the tendency of workers wanting to keep their benefits and save up rather than invest in new technologies. This is one of the key reasons that Germany has some of the worst internet in the entirety of the EU, especially compared to countries like Romania or Estonia that opted out for a more free market approach. [16] Such cases have led some in Germany to rethink co-determination, and in some cases, some corporations would even change their public legal entity type as a loophole to avoid having to implement co-determination. [17] Although, overall, co-determination does remain an industry standard within Germany that promotes stability in times of recession, and fosters long term strategies that include the interest of workers.

Most important to point out is that there are difficulties with implementing this system of co-determination elsewhere. For starters, Collective bargaining agreements and unions are an important part of the German economy, with around 80 percent of workers in Germany having some form of collective bargaining, and a unionization rate of around 22 percent. This means that German employers, in general, are familiar with negotiating with unions and thus the policy of co-determination wouldn’t represent a huge barrier. However, compare this to America, where unionization is below ten percent and declining. This means that a policy of coercive co-determination laws could lead to a lot of tensions as a Harvard report on corporate governance finds. Furthermore, Germany has a two tier structure: The Management board that governs day to day tasks, and the supervisory board that governs long term strategies. The Management board has no elected members in Germany, which means that elected workers would probably not translate into the same benefits and disadvantages within the one tier board structure of the US. Finally, Germany has a significant part of its industry dedicated to manufacturing and industry, while the US mainly a service economy. Unionization and worker determination usually diminishes in the transition from industry to service economy, which also explains why unionization rates in Germany have been falling off as the service sector has been growing rapidly. [18]

Moving over to ESOPs now. ESOPs are employee stock ownership plans where the worker’s savings and retirement fundings are invested into a private security in the company that is owned by the worker. A relevant example of this is the 401k plan which is very popular among Americans, as around 14 million workers are covered using ESOPs especially in the manufacturing and technology sectors. Companies that offer ESOPs are often more productive as workers are more attached to their company and are more invested in the welfare of the company. [19, 20, 21]. However, cases like the famous company Enron also show a darker side of employee ownership. Enron infamously faked their data and stock value, and managed to raise their stock price partially through the usage of ESOP plans. This, in return, meant that when the stock price fell from 200 dollars to 0.25 cents, that multiple workers lost their entire retirement funds. Generally speaking, there is a huge risk that often comes with employee ownership, and that’s why it’s usually advised to diversify. However, diversification might not be so simple for the average worker. [22] Some cooperatives like Mondragon have found a way around this by giving out non-voting shares, and hiring workers with no ownership in the company. However, this has led a tendency, in which workers with no ownership have been growing at a much faster pace than worker-owners, and as noted by Vincent Naravvro, there are multiple grocery stores operated by Mondragon where the workers with no ownership far outnumber worker-owners, resulting in a “capitalism-lite” sort of situation. [23].

Business Ethics

Ethical issues within classical firms is by no means uncommon. These issues range from lobbying, environmental damage, forging documents, anti-competitive practices, and worker exploitation. Are cooperative inherently more ethical or do they have the potential to be as unethical as some other corporations?

Sadly, there are multiple cases of cooperatives committing unethical business practices, For instance, as Noam Chomsky points out, Mondragon usually exploits workers in South America. Furthermore, cooperatives have been contributing to environmental damage in forest lands, yet the international cooperative alliance has done little to fix the issue. [24] The Wheatsville retail and food cooperative also runs into many issues where worker demands are not implemented, despite being structured in a democratic way [25]

What this all seems to imply is that cooperatives are susceptible to the dark side of market mechanisms, and are thus in need of regulation just like regular companies.

Concluding Thoughts

Employee ownership is a viable method of organizing economic life. It shares similar characteristics to private ownership of the means of production, but has its own set of advantages and disadvantages. It is very important to be aware of these differences before implementing any sort of radical policies. Encouraging employee ownership could be a band aid solution to some of the issue pertaining our economic lives, but evidence remains skeptical of a full transition, and whether they can entirely replace the classical firm.

References

  1. https://www.brookings.edu/wp-content/uploads/1995/01/1995_bpeamicro_craig.pdf
  2. https://www.researchgate.net/publication/235304990_The_Productive_Efficiency_of_Italian_Producer_Cooperatives_Evidence_from_Conventional_and_Cooperative_Firms
  3. https://ideas.repec.org/a/bla/annpce/v89y2018i2p377-414.html
  4. https://www.researchgate.net/publication/287576212_The_relative_survival_of_worker_cooperatives_and_barriers_to_their_creation
  5. https://truthout.org/articles/pandemic-crash-shows-worker-co-ops-are-more-resilient-than-traditional-business/
  6. https://journals.sagepub.com/doi/10.1177/001979391406700108
  7. https://www.investopedia.com/financial-edge/0811/9-businesses-that-thrive-in-recession.aspx
  8. https://web.archive.org/web/20170113124521/https://www.uk.coop/sites/default/files/uploads/attachments/worker_co-op_report.pdf
  9. https://ideas.repec.org/a/liu/liucej/v14y2017i2p303-329.html
  10. https://core.ac.uk/reader/205579470
  11. https://doc-research.org/2018/03/rise-fall-market-socialism-yugoslavia/
  12. http://glineq.blogspot.com/2020/10/milton-friedman-and-labor-managed.html
  13. https://www.leuphana.de/fileadmin/user_upload/Forschungseinrichtungen/ifvwl/WorkingPapers/wp_177_Upload.pdf
  14. https://www.bloomberg.com/opinion/articles/2018-08-24/why-german-corporate-boards-include-workers-for-co-determination
  15. https://econpapers.repec.org/article/tprjeurec/v_3a2_3ay_3a2004_3ai_3a5_3ap_3a863-905.htm
  16. https://www.handelsblatt.com/english/companies/fiber-optics-high-speed-internet-a-hot-button-election-issue/23572118.html?ticket=ST-1053903-IamcQGnmRrEihqHAOpdX-ap6 https://www.handelsblatt.com/english/opinion/boardroom-battles-its-time-to-rethink-co-determination/23502360.html
  17. https://www.economist.com/business/2020/02/01/deutschland-ag-rethinks-workers-role-in-management
  18. https://corpgov.law.harvard.edu/2020/04/28/co-determination-a-poor-fit-for-u-s-corporations/
  19. https://www.di.net/articles/employee-stock-ownership-plans-the-pros-and-cons/#:~:text=Research%20shows%20ESOP%20companies%20are,recruit%20and%20retain%20top%20talent.
  20. https://www.nceo.org/articles/employee-ownership-by-the-numbers#2
  21. https://www.bizjournals.com/kansascity/stories/2002/02/25/smallb2.html
  22. https://digitalcommons.law.seattleu.edu/cgi/viewcontent.cgi?article=1266&context=sjsj
  23. https://www.counterpunch.org/2014/04/30/the-case-of-mondragon/
  24. https://www.theguardian.com/social-enterprise-network/2013/aug/09/cooperatives-and-ethical-business
  25. https://www.austinchronicle.com/news/2019-09-06/wheatsvilles-frustrated-employees-call-for-change/

Right off the bat, I want to clarify that I support making immigration easier, and that the way most countries deal with immigrants is inhumane; I should know that myself since I was an immigrant in my own country and now I am an immigrant in Europe. Furthermore, I would like to concede that the neoliberals have the academic literature on their side, as there is good evidence suggesting that ALL types of immigration are economically beneficial, and that even open borders is not an economically unsound idea.

My concern here is not economics. It never was. It has always been about the culture.

And I don’t mean the culture in the way that the right wing populists always push it. I do not care for pretty looking churches, bizarre customs, or the color of someone’s skin. As a matter of fact, the culture I am speaking of is a common enemy of both the populist right and many of the immigrants I will be discussing here: Namely liberalism and other variants of social progressivism. What inspired me to write this was the massive amount of backlash that Macron got for his comments on Islam. Mind you, I do think there are issues with his approach, but outside observers often look at the issue with the wrong lens. Especially Americans.

The aim of this essay is to criticize the approach of many American or “American-ized” liberals AND leftists when it comes to the rhetorical battle around this subject. Furthermore, I will be pointing out concerning trends and some of the internal contradictions that liberals and leftists often run into. I will also point out the differences between liberals and leftists in how exactly they botch up.

Are we clear?

Let’s start:

Being able to contemplate the idea of Open Borders to begin with is essentially an American privilege.

Despite Donald Trump’s election victory in 2016, and the rise of right wing populism, America remains one of the best countries when it comes to treatment of its immigrants. Yes, even when compared to Europe.

There are currently 3 million gypsies in America. These Roma in America have integrated so well that nobody even notices them or talks about them. Meanwhile, France in 2009, decided to deport the entire gypsy population indiscriminately. And while this decision was met with some level of outrage, most Europeans felt apathetic about it. Some even encouraged it. Not only are gypsies treated as a separate entity, but they’re not even tolerated.

This extends to Muslims as well. Sure, you occasionally do get the cringe-worthy article from the Huffington Post, but overall Muslims in America view themselves as Americans, take pride in their own country, tend to be more educated and richer than the average American, and are even more secular than Evangelicals as many more Muslims believe in evolution than evangelicals. Muslim Americans are not a society within a society, they are a part of that society. Muslims in Europe, however, are much poorer on average, commit more crime, and feel more detached.

This is more of a personal observation than anything I can empirically prove but even among those who support immigration, the difference is clear as day between Americans and Europeans. Americans ACCEPT different groups. Europeans only TOLERATE at best. Americans think that diversity is good in and of itself, while Europeans only accept diversity under conditions. This even extends to linguistic expression. Many Turks are still called Gastarbeiter (guest-workers) that live in their Gastland (guest-country) despite being born in the country. Minorities in Europe are seen as guests that should be treated kindly, but if they “overstep their boundaries” or “overstay their welcome” then they are to be disposed of. This sort of perspective isn’t unique to Europe either. This is very much the norm worldwide.

These comparisons have all been with other liberal Western democracies. When you compare America to developing nations, It paints an even grimmer picture. Libya enslaved many of its immigrants under Gaddafi’s police state, Asian-looking people in India faced heavy discrimination after the COVID outbreak, Filipino maids are regularly abused and raped in the gulf states, China has essentially erased the Mandschu culture, while running sterilization camps on Uighurs, and Lebanon is simply Lebanon.

Macron was on the mark when he spoke about “Islamic separatism”. What he said was of no controversy in my opinion. Macron also acknowledged that France had failed its immigrant communities, creating “our own separatism” with ghettos of “misery and hardship” where people were lumped together according to their origins and social background. “We have thus created districts where the promise of the Republic has no longer been kept, and therefore districts where the attraction of these messages, where these most radical forms were sources of hope,” he added.

If the advocates of immigration fail to recognize this problem then they will lose the spiritual and rhetorical battle with the illberal right.

So how is this related to my overall thesis? Doesn’t this prove that integration CAN be done and that it’s mostly Europe’s fault for how it treats its immigrants?

Yes, it is partially Europe’s fault, but this doesn’t mean we should blindly support mass immigration or expect the issue to resolve itself.

Pointing fingers at Europe isn’t going to solve the fact that, simply put, Europe does not have the institutions or the cultural Zeitgeist to integrate these immigrants fully or even properly. And that blindly increasing immigration will only cause further tears in social cohesion and empower the populist right, and that is especially the case if the advocates of immigrants fail to reform and rephrase their positions and rhetoric. Europe simply lacks what America has and it’s important to realize that these deficiencies in the European system ought to be solved first.

What are the results of those deficiencies?

The result is that 63 percent of German Turks voted for Erdogan. In Austria, that percentage was 71 percent. As a reminder, Erdogan is an Islamist authoritarian Leader who has repeatedly denied or justified genocide, and imprisoned many journalists, including German ones. And mind you, Turks in Germany have been a significant minority for over 60 years now, ever since they came as Gastarbeiter (guest-workers). The claim that the Muslim immigrants from the Refugee crisis in 2015 will eventually integrate does not sound as reassuring when you take that fact into consideration.

One interesting fact is that Turks in Turkey vote for Erdogan by a lower percentage at 53 percent. It seems that Erdogan exploited how ostracized many of these groups feel by signaling Turkish identity and nationalism which is why even more Turks supported him in Germany than in Turkey. This theory seems to be consistent as well since Austria had even more people voting for Erdogan, and Austria is overall more xenophobic than Germany. This is a theory according to a professor in the University of Duisburg-Essen and goes to show how failed institutions can lead to radicalization, not just of the native populace, but also the immigrants.

It’s very obvious that these communities are neither liberal nor socially progressive by any stretch of the imagination. In fact, in some cases, they are more violent than the populist right. While most antisemitic incidents in Germany happened due to the far right, most of those done by the far right included things like verbal harassment but not a lot of physical violence. Meanwhile, 80 percent of the Jews that did experienced physical violence have said that they have been attacked by someone with a Muslim or Turkish background. Furthermore, what these reports define as “far right” often includes Islamist organizations and demonstrations such as Hizbollah and Hamas.

In the UK and France, the birth rates between the Native population and Muslim population are laughably disparate. The non-Muslim French and British population hover around 1.9, while the Muslim population hovers around 2.9.

What’s concerning here is not the “White Genocide” as many right wing populists and racists are quick to point out. Rather, what’s concerning, is that higher birthrates are correlated with having lower or no education/employment for women on average, and a more “traditionalist” (I prefer calling it a misogynistic) culture. Women are clearly seen as “breeders'' for the lack of a better term in much of these communities.

For comparison sake, the highest difference in the US birthrates is between whites and Hispanics, whites having a 1.65 birthrate and Hispanics having a 1.95 birth rate — a mere 0.3 difference — and yet Republicans have exploited the differences in birth rates over and over to fear monger about the extinction of white people...can you imagine how much more ammo the right wing has in Europe?

Oh and remember the statistics about Erdogan? Turns out that only 16 percent of American Turks have voted for Erdogan. This has been overwhelmingly due to the fact that American turks are much more educated on average than European-Turks.

In Birmingham, Muslim communities have been at the forefront of the anti-LGBT movement that seeks to remove LGBT and sex ed from schools. Even more concerning is that these trends don’t just apply to Muslim minorities, but to many Easteren Europeans as well. A recent survey of school children in Germany found out that homophobic views were almost just as widespread among children from ex-Soviet countries as those from Muslim countries, and that both groups had a far higher rate of homophobic views than German children. In the German state of Baden-Württemberg, Yugoslavian women and Serbian women had a higher birth rate than Turkish women.

So what’s happening here? Clearly, America has better institutions, but how are those institutions exactly better?

In America, cultural integration is made possible due to several factors:

  1. Economic activity has been shown to be the best way to integrate immigrants. Labor union and market regulations have been shown to be much more flexible in the US, which has given many immigrants the economic opportunities that they need to blend in within society. Protectionism also runs rampant in Europe, especially when it comes to qualification of degrees. For example, many of the refugees that came to Germany had education and a degree, but due to very protectionist policies that only recognized German or European degrees, these immigrants faced great discrimination in the labor market. Another example is that many high skilled Muslims in Sweden are deported due to strict union contracts and regulations.
  2. America has much higher standards and vetting for those who it lets in. This means that the sample of immigrants that arrives in America will not be representative of what views average Muslim holds, as they will be more educated and richer on average. However, this factor might not be as effective as previously thought since even low income American Muslims showed signs of being more integrated than low income European Muslims.
  3. America has less “cultural and historical” baggage. The colonial past between the Middle East and France/UK is a heavy one. 1.5 million deaths in the Algerian struggle against France, plus burning down entire forests on their retreat. Things like that will always push these groups of people towards anti-West and anti-liberal views. The American psyche is not defined by such historical scars...except for a certain group that we will cover later in this text.

Many are quick to point out that America had a period of time where open borders was the norm, and that “everything was fine” back then, however, they forget two important factors

  1. For a significant period of time, these “open borders” only allowed white, able bodied men to enter the country. Furthermore, most people did not have any level of higher education back then, so the disparity in education that we see in Europe nowadays is much more concerning.
  2. Cultural Liberalism was not as big of a thing as it is right now. What is meant with this is that back then, most people were homophobic, sexist, bigoted, and so on. Women’s rights, gay rights, civil rights and many other liberal values only developed much later on, and every since then, there has been a huge divergence between developed countries and developing countries on these issues. The political framework was not at all the same and pretending that the cultural impact would have been the same.

Returning to a previous point, there is one ethnicity in America that can be compared to the plight of European minorities in terms of discrimination and integration. You probably guessed it by now, but yes...it’s African Americans.

Remember the study that compared European Muslims with American Muslims? One interesting finding is that the overwhelming majority of American Muslims who felt like they were detached from American society, and felt unsatisfied with their conditions, were African Americans. African Americans also face similar issues to the Roma, Arabs, and Turks when it comes to finding proper housing and job applications.

I do think it’s intriguing, however, that it took 400 years of historical scars in the form of slavery for an ethnicity to be treated the same way that many Europeans treat their minorities on a regular basis, whether their arrival was new or not. If anything, this only demonstrates even further how much better America is at this.

Now we come to where I think liberals and leftists have failed, and why they have failed in the rhetorical battle against the right.

Many people who support immigration are wary of the term “merit-based immigration”. They say that the term is usually just a dog whistle because how exactly do we define “merit”?

They are correct that the “merit-based” has been used to justify racist views. However, I still think it is important to think of “merit” in terms of liberalism. I find it funny that the same leftists that will go on and on about the “paradox of tolerance”, fail to apply it when it comes to immigration.

Of course, the paradox of tolerance is entirely correct. A tolerant society needs to crush intolerant elements in order to survive in the long run. However, it is bizarre that this always only applies to the Republican party or the conservative opposition in general, and not the illiberal trends among immigrants.

It should also be noted that voting patterns do not necessarily mean that a group of people has embraced the values of that party. Many minorities only vote Democrat due to the rampant racism in the Republican party. African Americans have a homophobia problem, and have more conservative views on criminal justice, as 80 percent of African Americans support more or the same level of policing. Many Hispanic immigrants tend to be very religious and conservative.

It was only a matter of time before Democrats got a taste of what it means to have an illiberal minority. I fondly remember the meltdown that happened when the results from Cuban Americans in Miami Dade county came about. Despite Biden’s attempt to distance himself from socialism, he couldn’t beat how right wing many of these minorities skewed. Another example was in Texas. One of the major factors as to why Democrats underperformed with Hispanics in Texas, was that many of these groups were no longer immigrants. Many were already third or fourth generation, had a green card or even citizenship, and so Democrats’ support towards illegal immigrants did not strike them as sympathetic. Some even viewed border patrol as protectors and not enemies.

This returns to my main thesis. We simply can not blindly support open borders in regions that are less than ideal when it comes to integration, and constantly chastise anyone with right wing beliefs at the same time. If you fear the rise of illiberalism in Western countries, you can not simply shrug your hands at existing illiberalism within many immigrant communities. That is a privilege that you can afford as an American due to the fact that your country is capable of integrating immigrants (albeit not perfectly)..

Our political situation has reached a crisis, as one side has the right values yet does not call for the assimilation to these values, and the other side does call for assimilation but not assimilation to the right values. That is the issue that haunts the liberal/populist divide when it comes to the immigration debate.

On the rhetorical side of things, I would like to note an incident that made me realize how bad liberals are at marketing their ideas. I fondly remember an Anti-AfD demonstration (AfD being the far right party in Germany) where many activists held a sign that said “Rassisten essen heimlich Döner” which translates to “Racists eat Döner in secret!” (Doener being a type of Turkish street food). The next day, I saw the caretaker of our dormitory, who has repeatedly said racist and xenophobic things to me and other students, eat a Doener in front of the Turkish shop owner.

The idea that immigrants are somehow good because of “food” reflects the white suburban nature of many liberals. Immigrants like me are merely commodities that make exotic foods for them. It screams of patronization and commodification. I am an Arab who has never worked in the food industry. My value to a community extends far beyond food, yet liberals are keen on mentioning Gyros, Tacos, and Doener whenever they express their support. As an immigrant, I want to be a part of society and climb new heights. I am not here to make you your favorite dishes.

Even worse, it highlights how detached liberals and leftists are from the working class. The working class does not care for delicious food. The working class does not desire revolution or utopia. What most working class natives want is security and stability. This is exactly how the right managed to tap into their fear: Fear mongering. What liberals needed to do was give assurance. Rambling about human rights or how “arbitrary” borders are is not a discussion that the average person cares about. However, the average person does care about crime and economic opportunities within their own community. Instead of endlessly romanticizing immigrants or screeching about racism, activists could have pointed out, for instance, that crime in Germany has been the lowest it’s been since 1992 , despite the influx of refugees. Utilizing statistics like that is what gets people to take your side. Not vague calls for humanity.

Among leftists, there is a popular theory that capitalism and neoliberalism are the cause of the rise in the far-right. However, this idea is simply incorrect. For starters, it is ironic how the biggest surges in far right populism were actually in ex-communist states such as East Germany, Poland, and Hungary.

Secondly, many of the labor regulations and union contracts that made integration hard for immigrants, were passed by leftists. People are too quick to forget that it was the socialists and social democrats who pushed the heaviest for protectionism in the past. Thirdly, the last major economic recession happened in 2008 (excluding COVID). However, most of the far right in Europe saw its surge immediately only after the refugee crisis in 2015, so it’s obvious that the recession only played a minor role in enabling the right compared to the refugee crisis, as there were already many Muslim communities in Europe way before 2015 and 2008. Lastly, many of these immigrants are moving out to begin with precisely because capitalism in the West offers them better opportunities.

Even phrasing such as “Open Borders'' is problematic. When a xenophobe, or even an average person, hears the phase “Open Borders'' they think it implies being vulnerable or weak to foreign attacks. It’s similar to “Defund the Police'' in terms of bad marketing. Changing to something like “Flow of Labor'' might prove to be better.

In conclusion, those who advocate for immigration must change their approaches and must seek the correct institutional change in order to help out immigrants and avoid damaging social cohesion. Immigration is indeed beautiful, but we have to be careful about how we conduct things, and avoid viewing minority groups as helpless victims, and instead understand that they have just as much agency as the populist right.